4 critical issues when designing emergency paid leave

When designing an emergency leave pay program, larger employers have a few main questions to answer.
By: | March 26, 2020 • 3 min read

In creating a COVID-19 emergency leave policy, employers have much to figure out, and according to one expert, those with more than 500 employees can boil it down to four key considerations.

According to Rich Fuerstenberg, senior partner in Mercer’s Life, Accident and Disability national specialty practice, the recently signed Families First Coronavirus Act extends paid sick leave and expands FMLA requirements for employees impacted by COVID-19. However, the law only applies to employers with less than 500 employees.

“That leaves employers with more than 500 employees on their own to decide what to do,” says Fuerstenberg, who wrote a blog post on the issue. “For employers who do decide to implement their own emergency paid-leave policy, it will inevitably be compared to the provisions included in the federal law.”

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The $2 trillion-plus novel coronavirus-driven federal legislation is expected to be on the books this week, and that also could affect emergency leave policy decisions for larger employers. But, even so, Fuerstenberg says, many should be focused on solving four main challenges:

What will the emergency leave policy provide?
Employers can choose to continue employee pay in full, in part or not at all. Obviously, if pay is partially continued, the policy will need to determine the percentage of pay that is continued. If pay is continued in full or in part, the policy will also need to determine how “pay” is calculated for part-time or hourly employees and how it is defined (e.g., tips, commissions, bonuses, etc.). If an employer chooses not to continue pay, they may continue to provide health benefits for employees for a specified period. Continuing health benefits may be critical for employees who are actually diagnosed with COVID-19 and need treatment.

How long will the policy last?
This is a tricky scenario for employers, as no one knows how long “shelter in place” and other similar government-mandated closures will last. Fuerstenberg says an employer’s emergency leave policy may apply to specific periods of time, but those could require constant adjusting. In deciding how much time to permit in an emergency leave policy, he advises employers to consider current employee access to paid-time-off benefits. Once continuation of pay ends under an emergency leave policy, paid-leave benefits such as vacation and paid sick leave would apply.

How does the policy vary by type of employee?
Fuerstenberg says the need for emergency leave will likely vary significantly within an employer’s population. For one thing, some employees may be able to work effectively from home while others cannot. How much an employee is paid for emergency leave may also vary based on how they are typically paid (bonuses, tips, commissions, etc.). As a result, employers should focus policy design to employee population segments with the greatest need. Doing so will require employers to review collective bargaining agreements, as well as the legal implications of such variations.

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