How to maintain critical continuity amid furloughs, layoffs

The hotel industry is nothing if it is not resilient. After 9/11, the SARS heath crisis and the Great Recession, hotels rebounded, better and wiser than before.

Most, if not all, hotels have scaled back operations. Furloughing or laying off employees is never an easy task, but there are several ways to do so that will let employees know how important they are to your operations while also giving you needed flexibility during this crucial time.

Depending on the size of your hotel, the CARES Act may help U.S. employers in the short term. Part of the act establishes a lending program administered by the Small Business Administration. It allows for loans to be provided to hotels (and restaurants) with less than 500 full- or part-time employees per location, which can be turned into grants if the employer spends at least 75% of the money obtained on paying salary and providing benefits to employees.

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The authors are Los Angeles-based Helene Wasserman and Philadelphia-based Rachel Fendell Satinsky, both shareholders at Littler.

This is intended as an incentive for qualifying hoteliers to maintain their employees on payroll.  Maintaining existing employees will dramatically increase the ability to be nimble and reopen or fully open operations once this crisis is over.

If employers need to continue with furloughs or layoffs, the act expands unemployment benefits, increasing payments by US$600 per week per recipient. Thus, even if hotels need to continue furloughing or laying off employees, and even though employees will be receiving a greater unemployment benefit, that contact will be key to bringing back your experienced workforce and maintaining continuity for when full operations resume.

Furlough versus layoff

To further minimize some of the challenges with resuming operations, hoteliers should consider furloughing employees rather than laying them off. A furlough is a mandatory, temporary, unpaid leave. A layoff is a full separation of employment. Both allow affected employees to collect unemployment, but a furlough lets employees know that they will have a job when this crisis is over.  Again, the goal is to resume operations in as seamless a way as possible. 

In addition, employers should consider simply reducing hours across the board. In many jurisdictions, the employees will still have the opportunity to collect some partial unemployment benefits while maintaining some connection to working.    If a layoff is the only option for your operations, be certain to follow any federal or local requirements around proper notification. 

To the extent operations continue, it is vital to understand the Families First Coronavirus Cares Act (FFCRA). The FFCRA contains two paid leave provisions: emergency paid sick leave (EPSL); and emergency paid family and medical leave (EFML). These leaves are available only if there is work for the employee to perform, but the employee cannot perform the work because of one of the covered reasons. Employees may take these leaves any time from April 1 to December 31, 2020. EPSL and EFML run concurrently.

Employees may take up to 80 hours of EPSL for one of six COVID-19-releated reasons: 

  • Subject to quarantine;
  • Advised by a health care provided to self-quarantine;
  • Experiencing symptoms of COVID-19 and seeking a medical diagnosis;
  • Caring for an individual subject to quarantine;
  • Caring for a child whose school or place of care is closed; and
  • Experiencing symptoms similar to those of COVID-19. 

Depending upon the reason for leave, EPSL is paid at an employee’s full pay or two-thirds pay, subject to certain caps. For hotels in jurisdictions with paid sick leave laws, EPSL is over and above any pre-existing paid leave requirements.   

Employees may take up to 12 weeks of EFML to care for a child whose school or place of care is closed. Employees must be employed for at least 30 days to take advantage of EFML, which counts against existing FMLA unpaid leave. 

Depending on your jurisdiction, there may be other leave requirements to be aware of. Understanding and applying these new requirements appropriately not only affords your valuable workforce the benefits to which they are entitled, but shields your operations from future litigation that undoubtedly will arise once this crisis is over.

Continuity will be key to “keeping the lights on,” and having them burn as brightly as ever, after this crisis. Ensuring that your employees are treated properly, and lawfully, will protect your operations and allow your hotel to be as resilient after COVID-19 as ever.