During the last four months, the word “coronavirus” has become a permanent part of our vernacular. While it has outstayed its unwanted welcome, the ailment has swept the normal maneuverability of society, specifically for members of the workforce. Here is how to best handle the casualties of COVID-19, according to two experts.
Although termination, layoff and furlough are terms employers should be familiar with, Michael Maggiotto, senior human capital advisor at BEST Human Capital & Advisory Group, says the terms are often used synonymously, but have different legal definitions and treatment. While termination is the complete end of employment, layoff and furlough are more complex.
“Furlough is a temporary but mandatory unpaid leave,” Maggiotto says. “Oftentimes, furloughs are used for partial weeks or short weeks at a time. It keeps that employment relationship active even though employees are not being paid during that time frame. It saves the company on labor costs, some that might occur from separations, severance packages or even when asked about placement services. When the furlough’s over, bringing employees back is simple. There’s no recruiting expenses or other related expenses or training and development of new staff because they can just literally pick up where they left off.”
For layoff, Maggiotto says it is the combination of termination and furlough and is intended to be temporary. While companies intend to replenish that spot, it is still considered a “clean separation” from the company and involves related expenses.
“You have costs associated with severance packages, outplacement services and other types of separation costs that have to be incurred by the organization,” he says. “One of those — and it all depends on the volume of employees impacted by the layoff — could be triggering of the Worker Adjustment and Retraining Notification Act unless [layoffs] are done as the WARN Act. This does require and place certain burdens for notification to employees, certain costs and burdens from an outplacement and options for certain classifications on employees. A lot of things need to be done.”
During a pandemic, state or national emergency, these are generally handled the same unless executive orders motion otherwise, like the Families First Coronavirus Response Act (FFCRA) and Coronavirus Aid, Relief and Economic Security Act (CARES Act), for example.
When determining which route to take, however, Maggiotto says there are four factors that should be considered: people first, planning, ethical decision making and cashflow/cash reserves.
“From the people first standpoint, it’s really, ‘Does the company have the focus on people? Are they committed to caring for the people first and foremost?’” Although this sounds like basic leadership, Maggiotto says there are businesses that look at people as replaceable.
“This crisis and future crises alike, is really going to shine a great light on the significant magnitude of businesses where leadership is not focusing on people as much, versus those who really do,” he says.
According to Maggiotto, strategic planning is the “cornerstone” of businesses and it is “critical” to have a continuity plan, infectious disease control plan and disaster recovery plan.
Ethical decision making
Since a large part of the green industry is made up of smaller companies, Maggiotto says he often sees owners neglect creating missions, visions and values. But according to him, when entrepreneurs build their business plan and complete the required documentation, they can be drawn from those files.
“It's time to pull those out and put them on something employees can see because those missions, visions and value statements form the ethical culture of your organization and should be the yardstick against which all decisions are being made.”
Cashflow and cash reserves
Given the nature of COVID-19 and its abruptness, Maggiotto says cashflow and cash reserves are causing “knee-jerk reactions.” While most businesses share concern for their employees and aim to make ethical decisions, having cashflow and cash reserves is a determining factor.
But even given these circumstances, Maggiotto says referring to your “yardstick” is important.
“You should always be referencing the mission, vision and values to ensure that the decisions you're making are ethical and that you are transparently communicating the what, why and how with your employees. How you exit is just as important as how you enter and how you operate your business,” he says.
Todd Downing, managing partner and co-founder of Best Human Capital & Advisory Group, agrees with Maggiotto and says candid conversations are best.
“If we don't know information, it's human nature to start conjecturing and making up facts,” he says. “That's why we have to be transparent, especially at a time like this. How you treat people during a crisis is a reflection of the leadership's values and who you really want to be.”
But how are terminations, layoffs and furloughs completed without discriminating? Since many smaller employers lack strategic HR professionals, Downing says they’re needed to help ensure ethical, yet professional decisions and to avoid disparate treatment or disparate impact.
Disparate treatment is considered intentional discrimination and disparate impact is considered a product of a “good faith attempt” gone wrong that negatively impacts one or more protected classes. To eliminate their potential, both Downing and Maggiotto stress the importance of hiring an HR professional; one who is strategic and equipped to protect companies from liability, but also provide employer rights.
“When a business decision is made, as long as it can be supported by a solid business case focused on business necessity, then in general, the business should be able to avoid any difficult situations,” Downing says.
During a pandemic like COVID-19, to balance this, they suggest making decisions that surround the idea that everyone — employers and employees — have an obligation to protect society, their families and do what’s best for one another.
“One of the key things to remember — which is hard to do since we're still in the early stages and have not yet hit peaks almost anywhere in the U.S. — is that this will pass,” Maggiotto says. “And businesses need to be prepared to have a plan to normalize those operations as quickly as possible.”