Changes to Work Status During Covid-19

During Covid-19 employers have had to make many changes within their businesses. Many of these changes impact the work status of their employees. Cost cutting measures include salary reductions, furloughs, and layoffs.

Employers may reduce employees’ hours and salaries. The rate of pay for hourly non-exempt employees must still meet federal and state minimum wage requirements. The pay for salaried/exempt employees must remain at or more than the Fair Labor Standards Act minimum of $684/week. Employers should inform employees of changes in compensation and/or hours in writing. Employee benefits are not usually affected with these reductions. Employees may be eligible for unemployment benefits if there is a significant pay reduction.

Furloughs have become more common during the pandemic. A furloughed employee is on an unpaid leave of absence with the expectation that they will return to their job in the future. They are still employees of the business. Hourly non-exempt employees are paid at their pre-furlough rate for any work they do during the furlough period. Employers must pay salaried/exempt employees for a full week for any work they do during the pay period. Lengthy furloughs may result in the loss of health care benefits. If health care benefits are lost the employee is most likely eligible for COBRA. The employee should apply for unemployment.

An employer may lay off an employee on either a permanent or temporary basis. When an employer lays off an employee, they are no longer employees of the business. When employers lay off employees all earned wages, commissions, and accrued unused vacation must be paid. The layoff will most likely result in loss of health care benefits which means that the employee should be eligible for COBRA. When an employee is laid off, he or she should apply for unemployment benefits.

Many businesses have been greatly impacted during the pandemic. Businesses have had to change course in so many ways including but not limited to employment status. Feel free to contact Shoffner & Associates for your small business guidance during these uncertain times.

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