By As we all know, the COVID-19 (Coronavirus) pandemic has had a significant impact on employers and employees all over the world. Businesses have been forced to close their doors to comply with stay-at-home orders, and as a result, employees have been impacted by reduced hours, temporary furloughs, and even layoffs.
Considered an essential infrastructure per guidance issued by the Department of Homeland Security, most automotive repair and maintenance facilities continue to operate, while taking precautions to keep their employees and their customers safe and healthy. Essential businesses are still required to enforce social distancing and take other steps to prevent transmission of COVID-19. For tips on best practices for a compliant shop, refer to this previous post from Shop-Ware.
With more people staying home and less vehicles on the road, it's possible that your automotive repair shop is slower than usual. This may lead to difficult personnel decisions. Although we are all hopeful for a quick turnaround, it's best to be informed of your options.
Important resources and information to consider as you're navigating through your options:
Familiarize yourself with the 'Families First Coronavirus Response Act', which goes into effect on April 1, 2020, and applies to businesses with less than 500 employees. This new law offers paid sick leave benefits (up to 80 hours) and paid emergency leave benefits (up to 12 weeks) to employees affected by COVID-19, including but not limited to self-quarantine orders and school closures.
You are required to post a notice (email is fine for those employees who are telecommuting). The notice must be posted and distributed prior to April 1st.
For multi-shop operators, or businesses with 100 or more employees, if you are planning to lay off more than half the workforce, be sure to check your requirements under the federal Worker Adjustment and Retraining Notification (WARN) Act. Even if your business does not qualify under the requirements for the federal WARN Act, several states have their own "mini-WARN" laws that may apply. Be sure to check your state's requirements.
The 'Coronavirus Aid, Relief, and Economic Security (CARES) Act' Stimulus Bill was recently passed, in an effort to provide capital and loan forgiveness to small businesses impacted by COVID-19. This program is intended to provide employers with assistance so that they can continue to cover payroll costs and other expenses during the pandemic. Check with your tax accountant for more details on the Stimulus Package.
If your business has been financially impacted and you are considering a reduction in force, you may be considering one of three options:
Reduced Schedule
A reduced schedule consists of reducing an employee’s work hours, and only paying them for hours worked. This is easier for non-exempt/hourly employees, but there are federal and state laws which dictate minimum salary requirements for exempt employees. Be sure to check your state's requirements before making any changes to an exempt employee's status. Employees may be able to file for unemployment benefits due to a reduced work schedule.
Furlough
A furlough is a temporary, usually unpaid, leave of absence. Furloughs are generally used as a cost-saving measure, with the intention of having the employee return to work after a designated period of time. During a furlough, the employee retains their seniority, their health insurance, and other benefits. Note that according to your state's regulations, you may be required to pay out an employee's earned wages and accrued vacation time on their last day worked, even if the furlough is temporary. Employees may also be eligible to file for unemployment benefits during the furlough period.
Layoff
A layoff is generally considered to be a reduction in force. It should be tied to a restructure or position elimination, and not related to an employee's performance. Employers should be careful not to use a "layoff" as a reason for terminating a poor performing employee. If needed, the business must be able to show a viable reason for the position elimination, and the layoff must be handled lawfully in order to prevent any future claims. Layoffs are treated as terminations under the law, and as such, all final pay requirements apply. A laid-off employee is generally eligible for unemployment benefits.
The information provided here is intended for educational purposes. Your situation and your shop is unique, as is the best course of action for your business. As the regulations are changing rapidly, please refer to the most updated federal and state guidelines before making any important personnel decisions. The Department of Labor offers an FAQ page which is updated regularly.
A cloud-based shop management system allows for contactless communication with your customers. Let Shop-Ware work for you.
People Person, Inc.
If you need assistance implementing any employee related changes and/or have questions about the laws and how to maintain compliance, feel free to contact Trudi Simmons, PHR at People Person, Inc. We are here to assist small and mid-sized businesses through this pandemic and beyond.
Shop-Ware will keep you posted here, as the regulatory outlook changes. Thank you to Trudi Simmons for your assistance to our user base.
If you’d like to learn more about implementing Shop-Ware as the solution in your shop, request a demo.