With many businesses in Massachusetts slowing (and shutting) down due to COVID-19 concerns, companies have found it necessary to drastically change employee hours, wages, and benefits. This blog addresses certain actions employers can take during this difficult and uncertain time.
Hourly/Non-Exempt Workers-Reduction in Hours Worked
If your business employs hourly (non-exempt) workers, you are only required to pay them for time they work. Consequently, you can choose to reduce their schedules and otherwise limit the hours they work. If you reduce an employee’s hours to zero, or furlough or lay off employees, the employee will be able to apply for unemployment benefits.
Salaried/Non-Exempt Workers-Furloughs and Layoffs
If you employ salaried workers, who are exempt from minimum wage and overtime laws, your options are somewhat limited; they must be paid their regular weekly salary if they perform work during their work week. The same pay must be provided even where work has slowed down and employees are not working the same amount of time during their standard work week.
There is an exception to the general rule that requires a salaried worker to be paid. If a salaried worker performs NO work during their regular work week, then the employer does not have to pay the worker anything for that period. This exception would only apply if a worker is totally free from job duties during that work week. The employee cannot be working from home, cannot be required to return calls/emails, or otherwise be performing work for the employer. Again, if a salaried worker works even a small portion of a work week, the employer must pay the worker the full week’s salary.
If work has stopped or significantly slowed down, you may decide it is necessary to furlough your salaried/exempt workers. A furlough is a forced hiatus from work. Generally, a furlough will last for at least 1 week. During that time, the worker should be instructed to STOP performing any work for the company and should not report to work. The worker will not be paid for that work week. At the end of the furlough period, the employer may decide to continue the furlough, or call the worker back into work. Typically, a furloughed worker will not be eligible for unemployment benefits because the worker has not separated from employment. However, the Governor recently signed legislation loosening the rules on unemployment benefits, so any furloughed employee should be encouraged to apply for unemployment benefits.
Another potential option is to lay off workers. If a worker is laid off due to work slowing down, the worker would be eligible to file for unemployment benefits. Layoffs are a much more drastic response but may be something to consider where the current economic situation is unclear, at best. If a worker is laid off, the workers MUST be paid all wages earned through the last day of work. Also, the worker must be paid all accrued and unused vacation time through the last date of employment.
Continuation of Benefits for Laid-Off/Furloughed Workers
Not all employee benefits plans are the same. Consequently, you should contact your benefit provider to determine what impact reductions in hours and/or furloughs will have on employee benefits.
Large-Scale Layoffs and Notice Obligations
Certain state and federal employment laws require employers to provide advance notice of anticipated large-scale layoffs and/or facility closures. The most common is the federal Worker Adjustment and Retraining Notification (WARN) Act. WARN requires larger employers to provide advance notice of mass layoffs or plant closings that will result in a certain number or percentage of employees losing their jobs. Employers are covered and must provide notification if they have at least 100 full-time employees or at least 100 employees who work a combined 4,000 hours or more per week.
Employees Under Contract and Unionized Employees
Please note that employees may have additional rights under employment contracts and/or employment policies. Similarly, union workers may have additional rights under collective bargaining agreements. If you have employees who are working pursuant to an employment agreement, or union workers, you must review those contracts/union agreements thoroughly before making any unilateral changes to wages, schedules, or other benefits.
If you have questions or would like to discuss COVID-19 concerns, please contact Attorney Michael P. Doherty, Attorney Andrew M. Kepple, Attorney Gabe Bell, or one of our other employment attorneys at 508-541-3000.
This blog is for informational purposes only. It should not be considered legal advice. All those who read this blog should seek the advice of a professional before taking action based upon any information provided herein.
© 2020 Doherty, Dugan, Cannon, Raymond & Weil, P.C.
Attorney Michael P. Doherty represents organizations and individuals in business, succession planning and litigation matters, and also assists clients with estate planning, wills and trusts.
124 Grove Street, Suite 220
Franklin, MA 02038
WEB : www.ddcrwlaw.com
FAX : 508-541-3008