WeddingPro Guide to COVID-19 Employment Issues: Furloughs, Layoffs, and Wage Reductions

Coronavirus (COVID-19), and the resulting business interruptions, is forcing many wedding pros to make difficult decisions about their employees. To help, WeddingPro has partnered with the employment law firm Littler Mendelson to answer your most pressing questions about how to handle these tough employment decisions. 

Let’s break down the basics – what are my options and what do they mean?

Employers can take various approaches to their operations during the COVID-19 pandemic. Some employers are continuing operations with a fully remote work staff. Others, however, are not able to continue operations remotely. Many WeddingPro vendors are finding that they need to temporarily close because their state or local government is prohibiting large social gatherings like weddings. If this is the case, you may need to cut costs and expenses, including salary costs for your employees. 

Some of your options are: 

• Furlough your workers: Requires your employees to take unpaid leaves of absence, either days or weeks. The employees are still employed by you and generally return to their jobs once the furlough ends, but are not working and are not being paid during the furlough. Most furloughs are temporary and should not last for more than a few months.
• Layoff your workers: Completely terminates your workers’ employment. A layoff can be permanent, or it can be temporary where you may hire the employee back after a period of time.  
• Reduce your workers’ hours and/or pay: Keeps workers employed but at a reduced schedule and/or pay. Although this may be the right solution for you, keep in mind that a reduction in pay or hours may be difficult for your staff.

If I furlough my employees, would they be eligible for unemployment benefits?

In light of COVID-19, many states have eased the eligibility requirements for unemployment benefits and furloughed employees may be eligible. Keep in mind that a reduction in hours, not just a full termination of employment, may qualify an employee for unemployment benefits as well. This may help if you need to reduce your employees’ hours, but would still want to keep them on staff part-time.

The federal Coronavirus Aid, Relief, and Economic Security Act (CARES Act) temporarily expands the unemployment insurance system through December 31, 2020 to provide payment to nearly every employee displaced by COVID-19, and even to those not traditionally eligible for unemployment benefits (self-employed, independent contractors, those with limited work history, and others).  The CARES Act expands benefits by temporarily raising the maximum payment across the board by $600 per week, extends benefits for 13 weeks beyond what states already allow, and waives the usual one-week waiting period for unemployment benefits. 

What notice do I need to provide my employees for a furlough or a layoff?

There are state laws that may require you to provide notice of a change in pay or scheduled hours, or a termination of employment, whether through a furlough or a layoff.  For a change in pay or hours, you should generally give notice in writing no later than the day before the change will be effective and some states may require earlier advance notice.  You cannot make the change effective retroactively.  

There are federal and state laws that require certain notices for a large furlough or layoff, but these requirements may not apply to small businesses.  Littler’s guide to these federal and state notice laws, including information on when they apply, is here. 

If I furlough my employees, do I need to offer them any of their benefits, including any paid sick leave?

In the event of a furlough, wedding pros should check their policies and applicable state law to determine whether employees may choose to use available sick leave, PTO, or vacation during this time.  There is also some risk that a furlough could require a wedding pro to payout an employee’s accrued PTO but this will depend on a variety of factors. You will need to check your benefits plan document to see if furloughed employees are entitled to continued health benefits under your plan. For more information, please refer to the information provided by Littler here.

What other things should I consider?

If you offer other benefits like dependent care spending accounts, healthcare flexible spending accounts, and qualified transportation expenses, you may want to tell furloughed employees to change their elections for these benefits during the furloughed period.

As you can see, in each of these situations, there are many legal aspects to consider.  We encourage you to review the additional information that Littler Mendelson has complied to help you evaluate these legal aspects.

Information on COVID-19 and related legal requirements is changing rapidly, and we will update this post and our website as more information becomes available. This post is for general informational purposes. If you have specific questions related to your business, we recommend that you contact a legal or financial advisor.

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