Difficult Choices for Alabama Employers: Furlough, Layoff, Reduce Hours, Stay the Course?

March 27, 2020

By: Blake Brookshire and Barbara Wells

Due to the COVID-19 crisis and the related economic effects, many businesses are making tough decisions about employees. Should an employer reduce employees’ hours, furlough employees,  lay-off employees, or keep current employee numbers. These decisions are extremely difficult, not only because of the emotional and personal concerns relating to the effect on employees, but also navigating a constantly evolving legal landscape. Congress enacted the Families First Coronavirus Recovery Act (FFCRA), and the CARE Act is about to become law. States are changing unemployment compensation benefits and qualifications for them.

Choices Have Consequences Especially With New Laws

We know employers want to do the right thing for their employees as well as for their businesses. Employers need help understanding the consequences of choices. For instance, a decision to reduce employees’ hours, likely results in new benefits and protections for those employees under FFCRA. On the other hand, a reduction in force might create WARN Act responsibilities for some employers as well as COBRA compliance issues. Additionally, new small business loans available under the CARE Act, which is still just a bill as of the date of this article, have difference terms depending on an employer’s staffing levels now and in the future. These decisions involve these and other complexities. With help, employers can make an informed decisions that is best for their employees and their bottom-line.

Terminology Matters

Even once an employer selects a path forward, the terminology to be used in communicating it to employees matters. A “lay-off” occurs when the employer does not expect the employee to later return to work with the employer. A “furlough” describes a temporary release of an employee when the employer hopes to later return the employee to work. Employers should keep this difference in mind when making employment decisions. This distinction may have consequences to an employee’s ability to draw unemployment compensation, but some states including Alabama have temporarily eliminated that consequence.

Unemployment Compensation Changes May Matter Too

Employers should be aware that Alabama recently expanded unemployment benefits to individuals that would not ordinarily receive unemployment benefits. The Alabama Department of Labor expanded benefits to include:

1. those quarantined by a medical professional or government agency;
2. those laid off or sent home without pay for an extended period due to COVID-19;
3. those diagnosed with COVID-19; and
4. those carrying for an immediate family member diagnosed with COVID-19.

Partial Claims for Unemployment Compensation

In a press release, the ADOL requested that all employers that are capable should file these “partial claims” for unemployment benefits on their employee’s behalf. For those that cannot, the employer should notify the agency of that they waive the right to response to any Request for Separation information (email ben241waiver@labor.alabama.gov or fax 334-309-9098). Finally, the ADOL will not charge unemployment benefits against the accounts of those employers that follow the process set forth by the ADOL and had to lay-off or furlough employees due to COVID-19.

Bottom Line:

These are just some of the legal considerations. Good employers will obviously also be concerned about the effect of these choices. These effects have an impact on: workplace anxiety, workplace morale, future hiring options, employee retention, and other management issues.