With many businesses shuttered or stalled due to the coronavirus mitigation effort, employers may regretfully need to take stock of their workforce as part of short or long-term cost containment strategies.
If your organization must navigate these uncharted waters, you may wonder where to start. Whether you’re considering a temporary furlough of workers, permanent reduction in force or another solution, how do you evaluate your workforce? And ultimately, how do you find the best way forward for your business and your team members?
RKL’s Human Capital Management team supports organizations through these difficult decisions and helps implement critical measures to protect the sustainability of their operations. Below are some common questions we hear from employers, and our advice on where and how to start:
What’s the difference between furloughs and layoffs?
Furloughs typically mean a temporary absence or reduction in work hours, while a layoff may be temporary or finite with no intention of bringing the employee back. Generally, employees who are on furlough continue to accrue vacation and sick time offered by the employer, and continue to receive medical benefits. Furloughs allow employers to keep valued employees on payroll to prevent layoffs and having to hire a new workforce. It also avoids severance pay and higher unemployment premiums due to large layoffs.
Employees who are laid off typically do not continue to receive benefits, though they may be able to continue health coverage through COBRA. A reduction in force is a permanent position elimination without the intention of replacing it. A layoff may turn into a reduction in force. To avoid confusion, it is best to notify the employee if a recall is possible. If the employer uses the terms interchangeably and is not clear with their communication, it may unintentionally prevent the employee from actively seeking employment if they believe a recall is possible.
Our business may have to make the unfortunate decision to furlough, layoff or reduce our force. How do we determine who should be included?
As an employer, you should carefully consider and document the selection criteria you are going to use. If you are unionized, you’ll need to take additional measures to ensure you don’t violate an existing collective bargaining agreement. Among the questions to ask yourself: Do I have multiple employees performing the same job role? If so, you can evaluate workers by seniority, status and performance – including attendance record and work quality – followed by the identification of any necessary or unique skills among your workforce.
What other options do I have?
Employees already out on family or medical leave could be given the option to extend their leave, unpaid.
How soon will my furloughed or laid off employees receive unemployment compensation?
With the waiting week requirement temporarily suspended due to the coronavirus crisis, new and approved unemployment compensation claimants will receive payment for their first week of unemployment. Note: Employees who perform part or all of their normal job duties during a furlough day are working while performing such duties. As an employer, you are required by law to provide two resources (phone number and website) in the notice to your employees, whether it is a termination or furlough letter. Affected, Pennsylvania-based employees can learn more through the PA Office of Unemployment Compensation.
How do I execute these tough decisions with compassion?
Following a documented and clear criteria as mentioned above also allows employers to respond to concerns over selection. Transparency is required when communicating to employees about the selection criteria. It’s important to underscore to your workforce that the layoff is not about the employee themselves, but rather the position the company is in.
These are emotional decisions, and RKL’s Human Capital Management consultants can help you apply a logical and rational strategy, with employment laws and regulations in mind. For guidance on this and other workforce challenges, contact your RKL advisor or reach out to the RKL team using the form at the bottom of this page.
