Managing Your Workforce and Understanding CARES & FFCRA

Legal and HR experts discuss how startups can handle layoffs, furloughs, and other tough decisions.
By Lindsey Marlowe

Last Updated: October 7, 2020

Published: April 19, 2020


COVID-19 has caused organizations to face unprecedented scenarios, particularly as it relates to workforce planning and employee retention. Everyone is grappling with a fog of uncertainty that has caused our lives to change dramatically, resulting in an incredibly stressful time for both employers and employees. At M13, we believe we're brighter together, and this couldn’t ring more true in the wake of a global crisis. We’ve had the privilege of witnessing firsthand the power of community, particularly as it relates to strengthening our ability to navigate uncharted waters.

M13 Partner and Head of Talent Matt Hoffman discussed how organizations can manage their workforce during this unprecedented time employment with insights from:

  • Lynne Hook, a lawyer and expert who has been advising and defending employers in employment law matters for over 25 years. She counsels human resources and operations professionals on the legal aspects of employment policies and conducts training and workplace investigations.
  • Emily Chardac, a HR leader and co-founder of HRWired who started her career in the midst of the 2008 recession working with tech companies in Silicon Valley and helping them build through IPO. She was most recently at one of the largest investment banks in the world. Today with her company HRWired, she helps founders create engagement, drive performance, and strategize organizational planning.

    Having Lynne and Emily’s guidance on this topic was invaluable, as organizations look to navigate the new legislative landscape and understand the Coronavirus Aid, Relief, and Economic Security Act (CARES) and Families First Coronavirus Response Act (FFCRA). Managing employee retention and planning for the right size team during a period of decreased revenue requires both legal and organizational lenses.

    Below is a recap of the discussion, followed by the video that you can watch for more detailed information. We’re sharing with the disclaimer that this is not targeted legal advice but general recommendations and best practices. For further guidance, we recommend visiting the Department of Labor’s website.

There is a ton of information circulating around the new laws and rules that are going into effect. Where should an employer start?

  • Start with a general overview of new federal benefits. Traditionally, state benefits come first and everything else follows, but we’re in a different place now, particularly if you’re an employer with less than 500 employees.
  • Families First Coronavirus Response Act (FFCRA or Act) went into effect on April 1. This provides 80 additional hours of paid sick leave for any U.S. employer with less than 500 employees (part-time or full-time) and is available to employees immediately.
  • Most states (including CA) have partial unemployment benefits up to 26 weeks. This helps accommodate employees who can only work part-time due to childcare or other related circumstances.
  • Be aware that many states are mandating that employers start to file unemployment requests on behalf of their employees, including remote. Check your state’s department of unemployment website to ensure you’re doing your obligation as an employer.

What's the difference between a layoff, RIF, and furlough?**

Layoff means that a company does not have the funds or work to provide its employees. It could be temporary or permanent – there is not much of a practical difference.

RIF refers to “reduction in force,” meaning a position is eliminated, and you have no intention of returning that headcount. RIF occurs due to a business downturn and was common in the 2008 recession.

Furlough means a suspension of work without pay. State laws apply here. For example, the CA Labor Commissioner considers a furlough of more than 10 days a termination, in which case you’d want to free the employee up to collect unemployment. Check your state’s legislation to confirm if this is the right route for you.

Benefits apply differently in layoff versus furlough. It’s really important that you work with your broker to determine what you can offer those employees.

Which of the above options is best?

Whether you’re a small or large business, there are benefits to keeping most of your workforce intact. For small businesses, new loans that are surfacing require employers to retain at least 90% of their employees. Regardless of the circumstances, companies have a duty of care to care for their staff fairly; they must act in good faith.

It’s important to distinguish a true layoff versus “something else.” True layoffs mean the role will not be replaced or backfilled, and/or the company is suffering extraordinary economic hardship.

This may not be the ideal time to lay off low performers. These individuals should be performance managed under a standard process due to legal risks and increased scrutiny

If you must reduce staff, consider a “first in, last out” approach. Seniority is a legally neutral factor, and an easy message for staff to understand.

Regardless of the route you choose, reducing staff should be a last resort. There are irreversible cultural implications fear, uncertainty, anxiety, and frustration as well as brand implications for how you handle these hard conversations, and transparency, empathy and communication are key.

This happens so fast it’s something that employees understand employers are trying to adjust as quickly as possible, but the compassion element is really important.

Lynne Hook

What are some best practices employers should have in place to reduce staff in an equitable, justifiable way?

Having a regular cadence of transparent performance feedback is crucial. No one should ever be surprised to be fired. Creating a culture where there’s always a cycle of feedback is the best way to drive performance. The better your process around employee feedback, the easier it is to make performance-based terminations if needed.

Have a paper trail. If there’s no written record, you can’t lay off an employee due to performance. Make sure your layoffs are defensible.

When all else fails, create an employee scorecard a binary, numeric way to look at the data from a meta perspective. You can eliminate using names so it’s truly unbiased. The data can be around tenure, location … there are a variety of ways to be neutral and fair.

Communication is so important. In times of uncertainty and anxiety, you cannot over-communicate enough. You want to do so with honesty, integrity and empathy.

Matt Hoffman

What are the best ways to frame a conversation around termination?

Have a script. These are emotional conversations, and we now have an added layer of complexity that they’re happening remote. It’s difficult for everyone involved, so practicing what you want to say is important.

Speak the facts. Speak plainly, simply, and directly. Less is more.

But lead with empathy and be supportive. Some employers are offering to send a courier to pick up electronic items. Others are offering to help place talent at organizations that are still hiring. Determine what you can do to help support your employee during this already difficult time.

Last but not least take a deep breath, and know that no one has it all figured out just yet. There is new information surfacing every day, including new laws that are going into effect. We're all human, and we're all just trying to make sense of an incredibly challenging time together.

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