CLIENT ALERT
By: Brian J. Bouchard
May 15, 2020
Businesses in New Hampshire are starting to reopen and employers are starting to call back furloughed or temporarily laid off employees. Some employees, however, have been reluctant to return to work, preferring instead to remain on unemployment. Employers confronted with this situation have options.
Unemployment benefits have expanded significantly in recent weeks. In New Hampshire that expansion came from Governor Sununu’s Emergency Order no. 5. Prior to EO no. 5, individuals who voluntarily left work or declined suitable work were generally barred from receiving unemployment benefits, except under the circumstances specifically enumerated by the unemployment statute (RSA § 282-A). That changed with EO no. 5. In perhaps the most controversial provision, EO no. 5 extended unemployment eligibility to individuals who go into “self-imposed” quarantine to stop the spread of COVID-19. Benefits are also available for individuals caring for a family member or dependent who is unable to care for him/herself due to a COVID-19 closure, including schools, daycares, and similar programs. For employers outside of New Hampshire, it is important to remember that the Pandemic Unemployment Assistance program under the federal CARES Act provides an expansive catalog of federally funded unemployment benefits as well, including for school closures.
Whether an individual qualifies for benefits under EO no. 5 in New Hampshire or the federal PUA, he or she will receive an additional $600 per week in federally funded benefits until the end of July 2020, unless benefits terminate earlier.
The confluence of expanded eligibility, federal funding, and in many instances fear or uncertainty has created a situation where many individuals would rather remain on unemployment than return to work as businesses reopen. Many individuals are actually bringing home better pay through the provision of unemployment benefits. For employers struggling with employee reinstatement, there are options available, a few of which are outlined below.
- Engage with employees. Employers should work with employees and offer creative solutions to alleviate genuine concerns about returning to work. Some solutions may include staggering shifts, teleworking, the provision of protective equipment, or more aggressive sanitation protocols. Employers must be mindful that not everyone is trying to game the system. Some employees have preexisting conditions that will make exposure to COVID-19 particularly detrimental. Others may simply be unable to return to work while caring for their minor children.
- Offer incentives/ bonuses. Some employers may consider offering incentives such as pay raises or bonuses to entice employees back to work. Employers going down this road should carefully assess how these payments may affect an employee’s regular rate of pay for overtime purposes.
- Document offers of reinstatement. Employers offering reinstatement should document those communications carefully. At a minimum, employees being called back should receive written notice that declining reinstatement (in order to remain on unemployment) may adversely affect their eligibility for continued unemployment. For companies with funded PPP loans, the SBA recently announced that an employee’s declination of reinstatement will not affect loan forgiveness so long as the offer of reinstatement is made in good faith and the employee’s declination is documented.
- Consider workshare programs. Employers dealing with recalcitrant employees may also consider workshare programs, where applicable. Workshare programs are administered by the state unemployment office and are intended to benefit both employers and affected employees. Under these programs, employers reduce an employee’s hours by a predetermined percentage, and in return the affected employee (or employees) is eligible to receive a proportionate percentage in unemployment benefits without his/her earnings having a negative impact on benefit eligibility.
An example may help illustrate how these programs work and how they may benefit both employers and employees. Suppose an hourly employee in New Hampshire earns $586 a week and has her hours reduced by 30% under a workshare program. With unemployment benefits, her weekly compensation would likely increase to $1,103.50. Here’s how: $410.20 will come from work earnings (or 70% of her weekly pay), $93.30 will come from New Hampshire unemployment (or 30% of her would be benefit amount of $311 per week), and $600 will come from federal unemployment compensation, at least until the end of July. The New Hampshire workshare program allows for a 10% to 50% reduction in workforce hours, which may be beneficial to companies seeking to partially reopen. The caveat is that an employer cannot simply implement a workshare program at will. Setting up a workshare program requires a formal application to NHES and a 21 day waiting period.
- Encourage employees to seek partial unemployment (if available). In New Hampshire, individuals who are otherwise eligible for unemployment benefits are able to earn up to 30% of their benefits. Thus, someone receiving the maximum benefit amount of $427 per week is able to earn $128 week. After that, benefits are reduced dollar for dollar. This may not seem like much, but when combined with federally funded PUC money (i.e., $600 per week), eligible employees can still receive a significant amount in unemployment benefits while returning to work part-time. And employers who may not be ready to reopen fully benefit from reduced payroll costs.
Dealing with these issues can be frustrating and can involve a dizzying array of statutes, regulations, and orders that are not always intuitive. Still, there are options for companies to explore as the economy begins to reopen.