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Temporary Leave, Layoff or Pay Cuts: How to Handle Your Workforce Now That Your Business is Closed
Many states have instituted a mandatory “Stay Home” Order closing all but essential life-sustaining business. If your doors are closed, you may be making some tough decisions, and we’re here to help. Some options are outlined below.
- (1) employees must be given notice prior to the reduction in wages;
- (2) an hourly employee’s wage rate cannot fall below federal or state minimum wage requirements and you must still pay overtime appropriately;
- (3) a salaried employee’s wage must not be reduced past the minimum threshold to keep their exemption.
- Reach out to the unemployment commission and inquire as to whether you can file a mass claim on behalf of the employee. In Kentucky, this is available for employers with at least 50 employees who are laying off at least 15 employees. This helps your employees receive expedited benefits and may prevent your employer account from being negatively affected.
- Employers should reach out to their benefit providers to ensure they understand when benefits expire.
- Employers should confer with their IT department to set a plan regarding when to eliminate access to technology.
- Employers should consider how to reclaim company property that is at the employee’s home due to the shelter-in-place orders. One option is to send them a return-addressed pre-paid courier box.
- For an extra layer of protection, employers could consider offering a severance in exchange for a release. Prepare all necessary documentation prior to the layoff.
- It is better to tell employees about the layoff in person (or whatever substitute is available in a situation where many employees are working from home). Create a script in advance and stick to it.
- Let them know the layoff does not have anything to do with their individual performance.
- Offer to provide letters of recommendation.
- Don’t promise that they will be reinstated.
- If you filed a mass claim, let your employees know so that they don’t file duplicate claims.
- Ask if they have any questions.
- Follow up in writing and give information about continuation of COBRA.
Claire M. Vujanovic, member with McBrayer, is located in the firm's Louisville office. Ms. Vujanovic's practice is concentrated in the areas of labor and employment law and includes NLRA compliance, drafting and reviewing employment manuals and policies, drafting severance, non-compete and employment agreements, and counseling clients related to overtime and wage and hour regulations, laws and claims and workplace discrimination. Ms. Vujanovic can be reached at cvujanovic@mcbrayerfirm.com or (502) 327-5400, ext. 2322.
Services may be performed by others.
This article does not constitute legal advice.