Q+A with HR Vice President, Heather Wagner, SPHR
Human Resources VP, Heather Wagner, SPHR. Photo by Abby Jiu.
A Splendid Note from Liene:
I’ve been fortunate to have worked with wedding pros from 94 countries over my career and I’ve heard from a ton of them this past month – all with similar questions, stories of lost business, uncertainties of what to say to clients who are completely stressed.
We’re all in this together. If you have questions on Coronavirus and your wedding business, feel free to email me at hello@thinksplendid.com.
I’ll be sharing my answers here on the Think Splendid blog so that everyone can benefit. I’ll also keep your name anonymous. Totally free, no strings attached – I truly do not care if you never hire me.
Focus on the Splendid
We're an industry that makes our living by celebrating life's milestones, so I'm going to start each of these update posts with a few positive COVID-19 things we can all smile about:
TOTAL GLOBAL RECOVERIES
The number of global recoveries is now more than 430,000 people, up from 356,000 on Friday.
This 17-Year Old’s Non-Profit Is Delivering Food to Boomers in 12 Cities
From Forbes: “When all of my extracurriculars and eventually school got shut down, I was left at home doing my best to social distance to flatten the curve.
Almost every day, I saw my dad leave for work in the ER, and it inspired me to do more for my community. This led me to think about what I could do to help, and it was during this time that I realized that we had no systems in place to get the elderly food.
The elderly and immunocompromised should be sheltering in place, and if they can’t get food deliveries, they would eventually need to go to the store, which is too big of a risk. That is when the idea for Zoomers To Boomers was formed.”
The Wedding Business Owner’s Guide to Handling Employee Layoffs and Furloughs Legally
One of the topics that has come up in numerous emails and conversations I’ve had with wedding business owners over the past month is how to appropriately handle laying off or furloughing employees in the best way possible.
I should be clear that NO ONE wants to be in this position. Employers are losing sleep and shedding a ton of tears over not just the economic hit on their companies but on the impact it’s having on their team members.
These are not giant corporations refusing to touch the cash they have stashed away in offshore accounts in order to save jobs; these are small business owners who spent years building their dream company and who genuinely know and love their employees like their own family (and in some cases have employees who are their own family).
For many wedding industry employers, layoffs are a last resort decision after they’ve tried everything else, including applying for the Paycheck Protection Program (PPP) loans.
To help all of us navigate this correctly, I’ve asked human resources expert Heather Wagner to share some of her professional insights on how layoff and furlough decisions can be handled in a way that is both legally appropriate for you as an employer and that maintains as much dignity as possible for your employees.
Before we get started, here’s Heather’s official bio so you know her background and why she is qualified to speak on this:
Heather Wagner is the Vice President of Human Resources and Employee Experience at the American Heart Association. Prior to that she served as an HR executive for a multi-million dollar company in the restaurant industry as well as for a multi-million dollar marketing firm. Even though she is well-versed in the corporate and nonprofit sectors, Heather's specialty is in creating legally compliant human resources departments for small- to medium-sized businesses from the ground up. She holds an MBA with a specialization in Human Resources Management as well as SPHR and SHRM-SCP certifications.
Heather speaks and trains on the topics of #Awkward: How To Have Hard Conversations at Work, From Workaholic to Literal Coma: Cultivating Work-Life Satisfaction, P2: Productivity and Prioritization, Classified: Employees vs Contractors, Influence Without Authority: How To Get What You Want When You're Not the Boss, and Leadership Under Pressure, among others.
Below are Heather’s expert insights and answers to FAQs on handling employee layoffs and furloughs. While Heather is an expert and holds professional HR certifications, this is not legal advice. As always, please consult your own attorney for advice on your specific situation.
1. What is the difference between firing an employee and laying them off?
From Heather:
Layoffs:
A layoff occurs when the employer can no longer justify the position.
It is through no fault of the employee.
If an employee is laid off, they will always qualify for unemployment.
Firings:
An employee is fired (aka terminated) when the employee’s performance does not meet the requirements or standards of the job.
Most of the time an employee cannot qualify for unemployment if they are fired for cause.
A fired employee typically won’t get severance. They sometimes might be given separation pay in agreement that they won’t sue the company.
In order for that separation contract to be enforceable, there has to be an exchange of money. If they don’t accept the separation pay, you cannot prevent them from suing you.
If someone you’ve fired files for unemployment, you have a right to contest their claim. You, the employee, and the unemployment judge will get on the phone and you’ll each argue your case and then the judge will decide.
2. What is the difference between furloughing an employee and laying them off?
From Heather:
Layoffs:
A layoff means the employee is not guaranteed a job to come back to.
The employee’s benefits have ended, unless they have elected to extend their health benefits through COBRA.
A note on health insurance benefits: being laid off is considered a qualifying life event under the Affordable Care Act. This means your employees have 30 days or until the end of the month after being laid off to enroll in the ACA marketplace, instead of having to wait for the annual open enrollment period. Depending on their circumstances, this might be a less expensive health insurance option than COBRA.Employees who are laid off ARE qualified to file for unemployment.
Furloughs:
A furlough means the employee doesn’t have a job right now, but they will when things get better.
Their benefits typically continue while furloughed because you as the employer are still paying these.
A note on health insurance benefits: while you are still paying the employer portion of the benefits for furloughed employees, your employees may no longer be able to afford paying their share of the premium. Being furloughed is considered a qualifying life event under the Affordable Care Act. This means your employees have 30 days or until the end of the month after being furloughed to enroll in the ACA marketplace, instead of having to wait for the annual open enrollment period. Depending on the insurance plan you offer, this might be a less expensive option for them than their portion of their health premiums.
Most furloughs don’t pay anything, but you can opt to furlough at a reduced pay rate, paid on the normal pay cycle.
You can think of a furlough as a temporary layoff but with benefits.
Employees who are furloughed ARE qualified to file for unemployment.
A furlough can last a maximum of one year.
3. What do I need to know when deciding to furlough an employee?
From Heather:
You should ONLY furlough if you know for a FACT that you are bringing these employees back to work within one year.
If you do not know that for certain, you should not furlough them, you should lay them off.When you furlough an employee, you as the employer set the terms: how much they will be paid, if anything, and how long the furlough will extend for (maximum amount of time is one year).
Each state has different rules about this, but in general, if you choose to pay your employee an amount while they are furloughed, they can still apply for unemployment benefits but the amount they receive will be reduced by the amount you’re paying.
For example, let’s say they qualify for $1000 in unemployment a pay period and you’re paying them $200 a pay period while they’re furloughed. The amount they would receive from the unemployment office would be $800.
If you pay them too high a rate, they may be ineligible for unemployment (as an example: if you furlough them at 40% pay, they can apply for unemployment, but if you furlough them at 80% pay, they won’t be eligible).
4. What do I need to know when deciding to lay off an employee?
From Heather:
If you do not know for a FACT that you will have a job for the employee to come back to, you need to lay them off.
Do NOT give them false hope by furloughing them if you do not know for sure you can bring them back.
Unemployment is backed up and will only get more so because of the impact of Coronavirus on the economy – you want your employees to be able to file for and receive unemployment as soon as possible.
I cannot stress enough how important it is that you NOT give false hope.
Here’s why I say that: Some employees will think, “Okay, I’ve got enough money to float six months and she said she’d bring me back so I’m not going to actively search for a job.”
They often have a misguided notion of how bad things really are for your business and may think you’re doing better than you really are. In this economy and this unprecedented job market, you want them looking for work – actively looking for work – immediately because it could take them a long, long time to find a job.
You don’t want them clinging to the hope that in four or five months you’re going to bring them back and then they’re four to five months behind where they could have been in their job search.
If you know you’re going to bring someone back, that’s what a furlough is for. If you don’t know, lay them off.
You can always call them when things are good and offer them their old job and let them decide between keeping their new job or going back to you – but let that be their choice. Be as transparent as you can.
Make sure you get their final paycheck to them on time.
Each state has different rules on when this is due. For example, in Minnesota you have to give them their final paycheck the same day you lay them off. In other states it’s the end of the next business day. In most states, it’s the end of the next regularly scheduled pay day.
You have to follow the laws of the state they physically work in, not the state your company headquarters are in. So if they are a remote employee living in Florida and your main offices are in New York, you need to deliver their final paycheck according to Florida’s laws.
You CAN pay them severance.
Severance doesn’t reduce their eligibility for unemployment, it just reduces what the government gives them.
The unemployment office will deduct the severance from what it pays them.
If you are able to give your employee severance, I recommend doing so because unemployment is so backed up right now that something is better than nothing in the meantime.
5. Since I can’t tell my employees in person right now, what is the best way to have these conversations? Email? Zoom? Phone?
From Heather:
Definitely do NOT do what Hobby Lobby did. They sent a mass email laying everyone off and basically said a courier is going to come by and pick up your badge, etc. It was really callous.
Your employees work for you and deserve respect. Yes, this is incredibly hard for you as the employer, but it’s hard for them to receive the news, too.
Since you can’t have these conversations in person, you want them to be face to face via a program like Zoom or over the phone.
Do not just send an email because it may be easier or less uncomfortable for you. Your employees deserve the respect of being told directly.I recommend doing these calls one-on-one rather than delivering the news in a group Zoom call.
If you’re concerned that employees may text each other before you’re able to deliver the news to each person, I recommend telling each employee something like,
“Everyone will be notified by XX PM today and out of respect for them, I’d like to be able to tell each of them personally, so if you can hold off on reaching out to them until then, it would really be appreciated.”
I find most people honor that.After the call, follow up with an email that says they have been laid off or furloughed.
You’re going to encourage them in this letter to file for unemployment.
This needs to be just a one page letter.
This needs to be clear that they have been either laid off or furloughed (and you need to specifically say which one), because this is the letter they are going to present to the unemployment office.
6. I hate delivering bad news. What’s the best way to handle these conversations? What should I say or not say?
From Heather:
There is no right way to do this, but there is definitely a wrong way to do this.
Before I do a layoff – every single time – I take 5-10 minutes and think, “How would I want this news delivered to me?” I focus on more about what I wouldn’t want.
I wouldn’t want small talk.
I wouldn’t want to have a conversation first for several minutes where everything seems fine and then receive this type of news.
I wouldn’t want my boss or the person delivering the news lounging casually in their chair.
I wouldn’t want to be spoken to in a condescending tone. There’s no good way to deliver the news, but you can be respectful and give them dignity when you deliver it.
The one thing no one ever thinks about but needs to is their exit strategy for the meeting.
It will be on you as the employer to lead the conversation.
Have a “goodbye statement” so that you can get off the phone and move on in a gracious way.
This can be the most awkward part for everyone if you haven’t thought about how the call will end.
When you’re delivering the news:
Keep it short and to the point without being callous.
Thank them sincerely for what they’ve done for you. Show appreciation and let them know you’re sending the letter for them to use for unemployment.
Tell them you’re happy to be a reference and referral for them.
Don’t make it about you. Don’t tell them how bad you feel, because they feel worse.
It’s fine to show emotion, but you show it through your tone, not through giving them false hope or making it about you.
Use your goodbye statement to give them a way out at the end. Don’t try to drag on and keep carrying a conversation. They need to go and grieve in their own way and they don’t need to grieve in front of you.
No matter how you do this – even if you handle everything “right” – they are going to think you handled it wrong. For a lot of them, this will be the worst moment of their lives.
7. Does all this just apply to full-time employees? What if I have part-time employees? Seasonal employees? Independent contractors?
From Heather:
Part-time employees:
Part-time employees are handled the same way with regards to unemployment benefits through lay offs and furloughs.
Seasonal employees:
In order to be eligible for unemployment benefits, seasonal employees have to have worked at your company for a certain amount of hours or have made a certain amount of money.
The required numbers for seasonal employees is usually 420-700 hours before they are eligible for unemployment. (The specific hours required varies by state.)
These are hours they’ve already worked this season, not hours they are projected to work.
Independent contractors:
Independent contractors are not eligible to apply for unemployment under your company.
Depending on the specifics laid out in your contracts with your independent contractors regarding their payment schedule, you will have to keep paying them.
If you have a force majeure clause in those contracts, you may no longer be responsible for payments.
(Note from Liene: remember that COVID-19 is considered an act of man, not an act of God. If your contractual clauses only include acts of God, you are most likely not covered).
8. Can my employees volunteer to do any work or join in on company meetings while on furlough? I wouldn’t require it, it would be optional.
From Heather:
No. If they’re on furlough and collecting unemployment they cannot work on projects, sit in on calls, attend daily Zoom stand up meetings, answer emails, post for your company’s social media, etc. Being furloughed means they are not working.
If they do any work while being furloughed, they have to report that time to the unemployment office as hours worked.
You will have to pay them for those hours.
If they do not report, you will face penalties AND your employee will face penalties.
You cannot ask them to do things that would be inside the scope of what they would normally do for you nor can they volunteer their time for you.
An example: Say you are having a Zoom call about a wedding that’s happening after the employee comes back from furlough. You cannot ask them to be on this call without paying them (and them reporting that time and income to the unemployment office) and they can’t decide they’ll participate anyway for free.
If you are a for-profit company, you CANNOT have volunteers at all.
This is not referring to interns, but volunteers. If you are not a registered non-profit or a government entity, you are NOT eligible to have volunteers and this INCLUDES YOUR FAMILY.
When I spoke on HR at the Coterie Retreat in December, this was the topic I received the most questions on, so for the wedding industry here are some examples:You cannot have a volunteer do your social media.
You cannot have a volunteer sweep up the floors in your flower shop.
You cannot have volunteers help you manage your booth at bridal shows.
You cannot have volunteers run the registration desks or stuff gift bags at your workshops or conferences.
You cannot have volunteers help you set up or break down a wedding reception.
You cannot have volunteers organize your office or help you catch up on your filing.
You cannot have volunteers carry your camera bags or set up any equipment.
You cannot have volunteers assemble invitations.
You have to pay for any help you receive. People are NOT allowed to volunteer for your company, even if they are your friends and family who just want to help, or furloughed employees who are bored.
This is an especially “dangerous” time to have volunteers because for any work they do (or have done), they can file a wage claim with their state’s department of labor, saying you misclassified them and that you owe them.
If they file this claim, and you are investigated, then you will owe them backpay in the form of minimum wage for the hours they worked plus double or triple wages depending on your state plus penalties and fines.
9. I’ve run the numbers and I can avoid laying off my team if I give pay cuts. Can I cut an employee’s pay so that it’s less than what they’re making now but more than they would make from unemployment?
From Heather:
Yes, you can. This means they still have their job, they’re just working at a reduced rate of pay.
The first thing to know about pay cuts is that you can cut someone’s pay for the future, but not for the past.
You don’t need their consent to change their pay, you just have to let them know it’s going to be changing on a specific date.
You cannot cut their pay to below minimum wage.
Two exceptions: if you have an employment contract with an employee or they are a union employee, then you cannot cut their pay without renegotiating their contract.
10. I didn’t have my business finances and paperwork set up correctly and didn’t know I was supposed to be paying separate unemployment taxes and never filled out the annual state forms. Does this mean my laid off or furloughed employees can’t apply for unemployment?
From Heather:
Your employees can still file for and receive unemployment, but you will get hit with fees and penalties.
11. Are there other HR-related mistakes I may have made that might get me in trouble?
From Heather:
A recession is when people file claims with the department of labor and unemployment.
When people can’t feed their families, they look for money they are owed.
Most claims are filed by employees (former and current).
No matter how much they liked you as a boss, they will file a claim.
They may file a labor claim with their state’s department of labor. These claims might happen:
If you misclassified them (the most common is hiring someone as an independent contractor when they should have been classified as an employee)
If they worked over 40 hours but weren’t paid time-and-a-half.
If you owe someone a paycheck, you need to do anything and everything in your power to pay them on time.
That is the top reason people file wage claims – because their employer didn’t pay their paycheck in full or on time.
If you didn’t pay your employees correctly, you have two options:
Figure out what you owe them and pay them to make it right, on your own.
Wait for someone to file a claim, wait for the state to investigate, then pay back monies owed plus fines and penalties.
Once the Department of Labor starts investigating – they’re investigating.
When states need money, one tactic they will often do is open investigations for things they can easily make money on, like penalties, fines, wage claims, etc.
If they find other things you made mistakes on, you will be fined.
This is the state Department of Labor, not the federal level. (Your state may call it something different, but each state has their own version of a Department of Labor.)
*This is not legal advice and should not be construed as such. Remember that laws and regulations vary by city/county/state/province/country. Please check with your own attorney for legal advice on your specific situation.
Written by
LIENE STEVENS
Liene Stevens, the founder and CEO of Think Splendid, is an author, speaker, and award-winning business strategist. Armed with $2000, a healthy work ethic, and an undeserved dose of privilege, Liene bootstrapped Think Splendid from a scribble in a notebook to a successful wedding business consulting firm with a client list spanning 94 countries.
