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Pay Cuts, Furloughs and Layoffs Employers Facing Difficult Decisions As They Look to Weather the Storm

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Pay Cuts, Furloughs and Layoffs Employers Facing Difficult Decisions As They Look to Weather the Storm LONG ISLAND BUSINESS NEWS I April 10-16, 2020 I LIBN.COM I 23 LIFOCUS LAW Pay cuts, furloughs and layoffs Employers facing difficult decisions as they look to weather the storm By BERNADETTE STARZEE Finalized March 27, the sweeping federal reducing everybody down to where they’re apply for a loan to cover payroll (and other legislation includes a $600 weekly incre- all worse off?’” expenses), and the payroll portion will be few short weeks ago, the big mental benefit for people who are eligible Put another way, Trafimow said, an forgiven as long as current staffing levels question employers were asking to receive unemployment benefits under unintended effect of the CARES Act is that are maintained. “The loan essentially can be themselves was, “How do I keep state law, through July 31. Coupled with it may incentivize well-meaning employers converted to a grant,” Trafimow said. “The my workforce safe?” Now, the New York State’s weekly unemployment to lay people off. intent of that provision is to incentivize em- issue du jour is, “What do I do with my A maximum of $504, an eligible worker who “No one likes to lay off employees, but a ployers to not lay people off, and I think the workforce?” is let go can receive up to $1,104 in benefits lot of people will be eligible for $1,104 in hope is that the incentive will be enough Employers across the economic spectrum each week. unemployment benefits and may actually so we will not see the CARES Act result in are mulling layoffs, furloughs and reductions “Many employers are good-hearted and be earning more than they would as an more unemployment rather than less.” to hours and pay rates as they wrestle with well-intentioned and are really trying to do employee, which makes the employer’s One option for cutting expenses is to cut meteoric drops in revenue resulting from the the best they can under the circumstances decision to do so a little easier,” said Mark hours across the board, which shares the COVID-19 crisis. for their employees,” Trafimow said. “You Reinharz, a member in the Garden City pain and keeps everyone working. might have an hourly employee who is office of Bond, Schoeneck & King who con- “Most people want the security of Cutting employees or hours? making $18 per hour working 40 hours, but centrates his practice on labor and employ- knowing they have a job – whether they’re now you can only use her for 10 hours. If ment law. “The employer might say, ‘I’m working in it now or are coming back to it “Employers might face the question of you push her down to 10 hours, she’ll only hoping this will be temporary; I’m going to after a temporary furlough – and that they whether they should furlough employees be getting $180 per week. So she might lay these people off rather than reduce their have health insurance in case something or reduce hours,” said A. Jonathan Trafi- be better off on unemployment. So the pay” (or hours). goes wrong,” said David Tauster, an associ- mow, partner and co-chair of the employ- question becomes, ‘Do I want to structure However, there is another piece of the ate in the labor and employment practice ment law practice group at Moritt Hock & my layoffs so that I lay off half my employ- CARES Act that may serve to counteract group at Nixon Peabody, which has offices Hamroff in Garden City. “For many, their ees, and they can get unemployment, and any unintended consequences: the Pay- in Jericho. answer might have been different before the keep the other half working enough hours check Protection Program. CARES Act.” so they are better off working, rather than With this piece, eligible employers can See EMPLOYERS, Page 24 24 I LONG ISLAND BUSINESS NEWS I April 10-16, 2020 I LIBN.COM LIFOCUS Employers mull furloughs, layoffs and cuts to hours or pay Continued from Page 23 There is no legal definition of the word “furlough.” “It can be another name for a layoff, or it can be a situation where employers continue offering full benefits in anticipa- tion of bringing employees back on when things pick up,” Tauster said. “Most benefits carriers are going to relax the minimum hours required to keep people on the plan. But you have to figure out who’s paying for coverage. I have seen furloughs ranging from, ‘OK, we plan to bring you back when this crisis blows over, and you’ll get your COBRA notice’ to those who are giving fully paid benefits.” By and large, Tauster is seeing more furloughs than permanent layoffs. A. JONATHAN TRAFIMOW: Many employ- MARK REINHARZ: Because of the CARES DAVID TAUSTER: When cutting salaries, “Most employers are not using this as an ers are well-intentioned and want to do opportunity to cut fat,” Tauster said. “They Act, employees who are laid off can be employers must be mindful of the mini- right by their employees. eligible for up to $1,104 in weekly benefits. mum wage and the minimum threshold for don’t know what to do, other than they exempt employees. can’t keep everyone on payroll right now, company to reduce employees’ hours, you manner, they risk liability under anti-dis- and they’re hoping to bring everyone back.” might do it across the board in that depart- crimination laws,” Trafimow said. than to say, ‘I lied about the furlough; he’s Whether it’s better to furlough some em- ment to be fair.” Tauster noted one trap an employer can a bad performer.’” ployees and keep others working full-time, fall into. Whether they lay off workers or reduce or to reduce everyone’s hours, is going to “An employer who has an employee their hours or pay, employers should depend on a company’s particular circum- Avoiding discrimination who is a performance concern might say, provide employees with written notice, stances, Trafimow said. ‘I can put him on furlough right now, Employers should keep in mind with Reinharz said. “A company may have critical employees wink wink, and not bring him back,’” he furloughs or layoffs that all the rules Under New York State’s Worker Ad- that will still be very busy, and it may not said. “I would say make the decision now, about nondiscrimination must be fol- justment and Retraining Notification make sense to reduce their hours,” Trafi- lay that employee off. If you don’t take lowed. (WARN) Act, private-sector employers mow said. “You may have to reduce their action on a bad employee when you can, “Employers may be fully justified in with more than 50 employees must file pay, but you’re not going to want to reduce you may have to explain later on why you doing a reduction in workforce, but if their hours. But if you have a department didn’t bring him back. It’s a lot easier to they implement it in a discriminatory where it would not be a detriment to the justify the action when it happens rather See EMPLOYERS, Page 27 ■ Ones to Watch Law Amy Bedell Daniel Levin Neera Roopsingh Partner Special Counsel Associate Lewis Johs Goldberg Segalla Sahn Ward Coschignano Lewis Johs in Islandia elevated Amy Daniel Levin joined Goldberg Segalla’s A new member of the legal team at Sahn Bedell to the partnership earlier this year. Garden City office as special counsel in the Ward Coschignano in Uniondale, Neera global insurance services group earlier this Roopsingh is an associate focusing on The attorney focuses on complex litigation year. The attorney focuses his practice on the zoning and land use planning, municipal and appeals in all areas of civil defense, defense of insurance coverage matters and law and legislative practice, and litigation from medical malpractice and nursing appellate advocacy and post-trial practice. and appeals. Prior to joining Sahn Ward, home litigation, to insurance coverage dis- He has more than 20 years of experience Roopsingh gained experience in municipal AMY BEDELL LORRAINE putes and municipal, premises and general counseling major property-casualty insurers and governmental matters by serving as a STACKNOWITZ BOSS liability actions. Prior to joining Lewis on coverage and claims-handling issues as deputy town attorney for the Town of North Johs, Bedell practiced for several years as both in-house and outside counsel, and he Hempstead. Roopsingh, a graduate of Alba- a commercial litigator, and served as a ha- has provided coverage opinions on liability ny Law School of Union University, served as beas law clerk to the Hon. Joanna Seybert, and first-party issues in the areas of mari- executive editor for research and writing for the Hon. Arthur D. Spatt and the Hon. time and aviation insurance. He earned his the Albany Law Review. Juris Doctor from University of Chicago Law Denis R. Hurley in the U.S. District Court School. for the Eastern District of New York. Amy Silver Partner Gregory Pond Rivkin Radler Lorraine Stacknowitz Boss Partner and Co-Chair of Trusts and Estates Practice Group Amy Silver recently joined Union- Partner Certilman Balin dale-based Rivkin Radler as a partner in DANIEL LEVIN GREGORY POND Forchelli Deegan Terrana Partner Gregory Pond co-chairs the trusts the real estate, zoning and land use practice Lorraine Stacknowitz Boss is a recent and estates practice group at East Mead- group. The attorney’s experience includes a addition to the partnership at Forchelli ow-based Certilman Balin. The attorney wide range of commercial real estate transac- Deegan Terrana in Uniondale.
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