Is your business considering labor reductions such as layoffs or furloughs in response to COVID-19? There is a lot to consider when making these difficult choices. Not only do you want to ensure your employees are able to collect unemployment, but there are several other factors to consider. LGA’s Managing Partner John Geraci, CPA discusses some of the questions you may want to discuss with your HR professional or attorney.
Hi, this is John Geraci, managing partner at LGA. And I wanted to talk to you today about some of the considerations with respect to either furloughs or layoffs that a lot of employees are considering as a result of the impact that COVID -19 has had on their business. A lot of employers take this from the perspective of wanting to make sure that their employees are able to collect. And so the main question that we’re fielding, has to do with their ability to claim unemployment as a result of a layoff or a furlough. But there’s actually a lot of other considerations as well that deal more with how it affects their return to work, if that is one of the desired options and some of the benefit plans that have been set up with respect to either health, a 401k and profit sharing plans and things of that nature.
Depending on how your plans are written, some plans look at eligibility from a look back perspective. And so to the extent that you had a temporary layoff and rehired employees, they would still be okay and it would be covered under the look back approach. Whereas some other plans are written where it focuses on time of employment without respect to a rehire date. And in those situations, you could have unintended consequences of exclusion from participation in plans as a result of making one of these decisions. So we really are encouraging all of our clients to reach out to either their HR professional or their employment labor attorney and talk through what their strategy is and understand both the short term, desired impact in the long term, so that the decision that they’re making is actually factoring in a lot of issues that just are not a top of mind with everything that we’re dealing with these days. So, you know, if we want to bounce anything off of us, we’re happy to have a conversation with you, see if we can start you in the right direction. And as always, we’re here for you to help you through this. Thank you.