Alternatives to Layoffs in Massachusetts During the COVID-19 Crisis

Alternatives to Layoffs in Massachusetts During the COVID-19 Crisis

During the pending COVID-19 crisis, many employers are considering layoffs to make sure they can keep their companies afloat. However, because the duration of the crisis is unknown and may be temporary, employers may wish to consider other cost-saving measures that are designed to be temporary and reversible in the event that the economy bounces back sooner rather than later. This article will address some of the cost-cutting strategies that Massachusetts employers can use in lieu of layoffs which will ensure that employers have an available workforce to call upon once business rebounds, and also save jobs.  

1. Mandatory Furloughs
One alternative is placing employees on a temporary furlough, which is an unpaid leave of absence with an expected return-to-work date (with or without benefits). A furlough without benefits is essentially a short-term layoff. 

Under newly released, emergency unemployment regulations in Massachusetts, employees placed on a furlough will be considered to be in a new “standby status” category and may collect full unemployment benefits without the obligation to search for new work. While in “standby status,” employees will be required to take reasonable steps to remain in contact with their employers and remain available for all hours of “suitable work” offered by their employer. The maximum “standby status” is eight weeks, though an employer may request an extension from the Department of Unemployment Assistance (DUA). Thereafter, the usual requirements for collecting unemployment benefits apply, including the obligation to actively be looking for work.

Work is not considered “suitable” if it endangers the health of the employee or others in the employee’s household. Therefore, if an employee is quarantined or self-quarantined due to a reasonable fear of exposure to COVID-19 or is caring for a family member who is sick, or a child who is at home, the employee does not need to accept work until those conditions resolve.

This caveat can also apply to situations where an employee has a medical condition which may prevent performance of essential job functions without a substantial risk to the employee’s health or safety.

When an employee is furloughed, the employee should not perform any work, including checking email or voicemail. However, employers may offer occasional, part-time work to employees during the furlough period, if needed, in which case the employee must report any such income to the DUA. This option is trickier with exempt employees who must be paid their entire salary for the week if they perform any work at all. Therefore, employers should make sure that exempt employees are furloughed for entire weeks and any part-time work offered should be for a full workweek. Employers should also inform all employees that they may not perform any work during a furlough period, unless they have been offered part-time work during this timeframe. 

Other issues that employers will need to consider prior to implementing a mandatory furlough are as follows: (a) potential usage of paid time off/vacation, (b) what happens to healthcare continuation, PTO accrual, and retirement benefits contributions during the furlough period, and (c) the potential overlap with the new emergency coronavirus paid and unpaid leaves laws.

2. WorkShare Program
The Massachusetts DUA also offers a WorkShare program as an alternative for employers to avoid laying off workers. This option allows the employer to reduce work hours anywhere from 10% – 60% for a designated business group or unit, while also allowing employees to recoup partial unemployment benefits. All employees on the WorkShare plan must be subject to the same reduction percentage, but employers can have more than one plan at a time and can include both full-time and part-time employees. WorkShare plans must affect at least two employees and can include both exempt workers as well as non-exempt workers. 

The affected employees in a WorkShare program can receive partial unemployment benefits equivalent to the percentage by which their working hours were reduced. The WorkShare plan generally provides employees with a greater benefit than if they were to simply file for regular unemployment benefits on their own while reporting their part-time income, because part-time income is treated differently under the WorkShare program.

When evaluating whether to implement a temporary furlough using “standby status” or reducing workers’ hours through a WorkShare plan, one important different to keep in mind is that a WorkShare plan still requires employers to maintain health insurance and defined retirement benefits for affected employees. 

3. Reduced Job Hours and Pay
Another option for employers is to prospectively reduce job hours and corresponding pay across-the-board for identified business units, without implementing a WorkShare plan. This should certainly be considered if employers need to reduce hours more than the maximum of 60% allowed under the WorkShare program, or if the reduction of hours means employees are no longer eligible for continuation of health benefits. Employees in Massachusetts are eligible for unemployment benefits if their hours are reduced, but their weekly unemployment benefits will be reduced by any part-time income received that is greater than 1/3 of their weekly benefit amount.

Employers can adjust the days and hours of non-exempt employees without concern. However, employers must be cautious with exempt employees who must be paid their full salary for any workweek in which they perform any work. Therefore, employers must reduce both hours as well as pay for exempt employees and should ensure that such reduction begins prospectively at the beginning of a new workweek. Alternatively, barring an employment contract or policy to the contrary, an employer could direct exempt employees to take accrued vacation time to cover the difference for any partial week worked.

Other Considerations

  • In considering any of these actions, employers should not single out employees for reduced hours and/or pay on any basis prohibited by any state or federal EEO laws.
  • For employers with foreign workers on visas, employers should also consider the potential impact a furlough or reduced hours may have on those employee’s visa and any corresponding obligations that may be triggered to notify the United States Citizenship and Immigration Services or the Department of Labor about a change in work status.
  • Finally, employers should also consider whether they must comply with the emergency paid sick leave and emergency paid family and medical leave laws for which they can receive reimbursement from the federal government in the form of payroll tax credits.

Employers have several options to immediately cut costs, in addition to reductions-in-force. Multiple federal and state laws must be considered prior taking any action along these lines; therefore, we encourage employers to seek legal advice prior to implementing a furlough, reduction in hours, or layoff to ensure proper legal compliance.

For more information, please Contact Us

This publication should not be construed as legal advice or a legal opinion on any specific facts or circumstances not an offer to represent you. It is not intended to create, and receipt does not constitute, an attorney-client relationship. The contents are intended for general informational purposes only, and you are urged to consult your attorney concerning any particular situation and any specific legal questions you may have. Pursuant to applicable rules of professional conduct, portions of this publication may constitute Attorney Advertising.

Subscribe to Our Blog