As some states begin lifting shelter-in-place restrictions and businesses are looking to restore their workforce, especially to qualify for maximum forgiveness of their Paycheck Protection Program loan, how companies approach this process should be calculated and mindful.
The Center for Disease Control as an entire site dedicated for businesses and workplaces to “plan, prepare and respond” to the virus and its effects. The site includes:
- Interim Guidance for Business and Employees
- Checklist and Guidance to Prepare your Small Businesses and Employees
- Strategies for Respirator Shortages in Non-Healthcare Sectors
- Cleaning and Disinfection Recommendations
- Possible Exposure of Critical Workers Guidance
- Factsheets for Specific Industries
- OSHA Guidance
- FAQs
- Recorded Webinar from the Deputy Director for Infectious Disease for the Response for Private Sector Organizations dated 04/20/20
The MidwestHR Risk and Safety team will be developing another article that addresses the CDC recommendations and further advise on keeping employees safe when they return to work.
But, having your employees return to work also has many other considerations outside of the risk of the virus. MidwestHR has put together the following items that should be reviewed as you contemplate the return of your staff looked at from the HR and benefit prospective:
When Should Employees Recalled/Rehired
When your state specific stay-at-home order expires, you may wish to call back your management staff for the first week or two as you ready the office for the return of the rest of your staff. At that time, managers can review workflow processes and determine the proper location of employee workspaces to allow for social distancing. This could mean moving workstations, taping off work areas, marking traffic flow directions, create break and meal areas with schedules to minimize employees in one area at one time. This time could also be coordinated with a deep cleaning to all areas with the development of upkeep processes to keep all areas sanitized.
If you received a PPP loan and wish to maximize your forgiveness amount, any employee terminated, laid off or furloughed earlier in 2020 will need to be recalled prior to June 30, 2020. Otherwise, the number of employees you request to return will be dependent on your business needs. You may recall employees in phases as your business activity increases. You may also choose not to recall workers if there isn’t a business need or if their performance prior to separation was not as desired. If this is your scenario, be very cognizant of who you choose not to re-hire to make sure they are not of a certain protected class and your actions could be construed as discriminatory.
Send Official Notice
Whether through US mail or email, an official letter to the employee should be issued informing them that they are being recalled to work. The letter should outline the date and time along with a confirmation of the schedule, title and work duties. The letter should request an acknowledgment as well as statement that if the employee does not return at stated date or time, it will be considered their refusal to work and your state unemployment office will be notified of such, ending their eligibility to unemployment compensation benefits.
Drug Testing
If your company has a hiring policy of drug testing employees at time of hire, you may be required to have all re-hired employees comply with testing prior to call back to comply with your policy. If you decide to excuse recalled employees who were separated only due to COVID-19 business effects, write an interim policy outline the exemption. Remember, the policy is applicable for all recalled employees of the same classification. You may also decide to excuse any employee that were recalled back within a certain timeframe such as 30 days or less. If you are going to adhere to your employment drug testing policy, without exception, make sure that all results are received and reviewed before the employees report to duty.
Employee Paperwork
Employees normally called back within six months of the same calendar year are often not required to recomplete employee paperwork such as W4s, Form I9s and direct deposit information. Once the employee is re-activated for payroll, you may want to direct employees to verify their tax and direct deposit information before the first payroll. Otherwise, no further action would be needed.
If employees last worked for you in a previous tax year, it will be necessary to have them complete a new W4 for 2020 for both state and federal. If the employee last worked for you three years ago or more, it is recommended they complete all new paperwork and a new Form I9 is required.
Employee Benefits
Many carriers are allowing employees to become eligible for benefits upon rehire if their discharge was due to the COVID-19 crisis. You will need to check with your benefit administrator to see what your specific carrier allows. If your employee elected COBRA/State Continuation after their separation, make sure your carrier knows that employee is back to work and will covered as an employee. If you brought your employee back mid-month, look to return any premium that would have been paid as an employer contribution that they paid for continuation coverage for that month and make sure not to take payroll deductions until the next month. Some carriers are also allowing for an open-enrollment opportunity, so employees can elect to take coverage they may have declined in the past.
For other benefits, employees on FSA will often see their deductions resume at a higher per check amount as many payroll systems will take the uncollected yearly election and recompute it to a new payroll amount, so the entire amount is collected by year end. For those on HSA, their per check dollar amount or percentage will not change, but, if their intent was to max out the contributions for the year, they should increase their payroll deductions to accomplish that goal. Lastly, for those who were on short/temporary lay off or furlough, may see an increase in their deductions for life, disability and other ancillary benefits increase for a few weeks as their missed contributions are collected. It is best to have your employees work with your benefit and/or payroll administrator to make sure benefit deductions are done correctly and at the proper amount.
401k Plan
Most plan provisions allow employees to be rehired and become immediately eligible to contribute to the plan if they were eligible at time of separation. If your employee was contributing to the plan before termination, confirm with them if their contributions should resume. Ask for any changes, including opting out, in writing.
If your employee was still in their waiting period when they were separated, the clock will resume when they were rehired. For instance, if you have a one year waiting period and your employee was laid off in month eight, they will only need to work four month months after rehiring to become eligible to contribute to the plan.
If an employee had a 401k loan at time of separation, check if the loan is still active. Since 401k plans usually don’t allow loan payments outside of payroll deductions, the employees payments may be in arrears. Reach out to the 401k administrator or plan and request that the employee’s loan be re-amortized, which is being allowed under the CARES Act. This will extend the term of the loan and recompute the employee’s payment. This will prevent the employee’s loan from defaulting and creating a taxable event. Some employees, unsure if/when of their recall, may have taken a distribution from their 401k account. This may have closed out their loan, in which no further amounts would be due. Make sure to ask your employee if this is the case for them so payments are not taken on a closed loan.
There is a lot to consider when recalling your workforce, especially in the shadows of the COVID-19 crisis. First, you must ensure the safety of your workforce and continue efforts to keep them protected and healthy all while complying with your state specific orders, re-establishing your supply chain and restoring your business. When it comes to the human resource aspect of the process, clients of MidwestHR can rely of their service team to help with plans, procedures, and policies to help.
To speak with your MidwestHR service team or to find out more information how to become a client, please contact us at (630) 836-3000.
