The laws are changing rapidly in the current pandemic/crisis. Therefore, the legal issues discussed here are subject to constant change. It is best to consult with your counsel concerning any specific legal advice you may need.
Many employees have been at home and not working due to the pandemic. Now, employers are bringing people back to work.
Those employers, however, are often omitting a crucial step – identifying the employees’ status in between stopping and starting work. Were they laid off and their employment terminated? Are they now being hired (or re-hired), such that they need to sign onboarding documents (again)? Were they furloughed (sitting on the bench waiting for work), so that re-onboarding is not necessary? Or is it?
During this pandemic we heard a lot about “furloughs.” Problem is, “furlough” has no clear definition in private sector U.S. employment law, although this model is used in government service. It seems to be being used to mean a period when an employee is temporarily not working, like a leave of absence, but remains employed.
In “other” times, depending on the length and nature of a leave, employees on a health insurance plan may have been put on COBRA benefits. However, during the pandemic shutdown, many insurance companies allowed employers to keep “furloughed” employees on health insurance plans as long as premiums were paid, likely recognizing the hassle of transitioning that many people off the policy and on to COBRA benefits, and then back on to the policy again, even though the employees were not working. In certain instances, extending insurance benefits was done for employees who had been laid off or even where the employer put no particular label on the out-of-work period.
To make things more complicated, almost all employees who were not working during the COVID-19 shutdown were eligible for unemployment benefits, which is usually thought of being a safety net for employees who lost their jobs. Thus, in many cases, there was little to no distinction made between employees who were fired and those who remained employed, even though they were not working.
Bottom line is that, in many cases, employers may be uncertain (or may not even be thinking) about their employees’ status while they were not working—which would govern what needs to be done when they are brought back to work. Without a clear definition of their employees’ status when not working, decisions regarding what documents need to be signed and what “onboarding” needs to be done for these employees can be complicated. Or potentially ignored altogether, to the company’s detriment.
- Most employers are aware of certain required forms for new hires (such as W-4s and I-9s). Do these need to be completed again?
- Many jurisdictions have various notice distribution requirements (regarding sexual harassment or paid sick leave for example). Do these also need to be signed/distributed again?
- Terms of employment (compensation, hours) may have changed for many employees returning to the workplace. Should employers provide new offer letters, or other documents specifying these terms, or new wage theft prevention act notices in jurisdictions that require them (such as New York and California)?
What about employment contracts that employees may have signed — are the terms of these agreements still in effect, or does the employee need to re-sign them?
- Employment Agreements
- Restrictive Covenant Agreements (containing confidentiality, non-solicitation, non-competition provisions)
- Commission Agreements
- Arbitration Agreements
What about emergency contact information forms, direct deposit authorizations or benefit elections? Do all these need to be re-done? Do you redistribute an employee handbook?
The very lawyerly answer is – it depends. It depends on what communication was given to employees when they were told to stop coming to work. If their employment was clearly terminated, or if they were laid off, the best practice would be to treat the employee as a rehire and to redo all usual onboarding steps.
In the case of a furlough or where the communication was “fuzzy” or nonexistent, the best practice would be to either redo everything, or to at least provide employees with a letter telling them what general documents that were previously signed/provided remain in effect and have any employment agreements signed again. It may be best to have documents such as I-9 forms and wage theft prevention act notices redone in all cases as well.
Employers should be mindful that this may be an excellent opportunity to review, revise and update their various employment agreements to make sure that these important documents provide appropriate protections for the business. For example:
- The law on arbitration agreements has changed, allowing employers to generally prohibit employees from bringing claims as a class or collective action. In other words, companies that might be ripe for multi-plaintiff litigations, such as under the wage and hour laws, could potentially forestall this result by requiring each individual employee to bring their claim as an individual arbitration.
- Confidentiality agreements should contain particular language to allow employers to bring confidentiality breach claims under the Defend Trade Secrets Act.
- Non-solicitation/non-competition agreements should be reviewed to ensure they provide the multiple potential protections available, and that they comply with newly enacted local laws.
- Commission agreements should be reviewed to ensure they contain necessary provisions: for example, specifying when and how commissions are earned and paid, and what happens to commissions when employment is terminated.
The list goes on in terms of an employer’s ability to seize this opportunity to upgrade and revise employment agreements in an endeavor to better protect the company where possible.
In some jurisdictions, changing agreements during employment may require additional consideration (exchange) for the employee to sign a modified agreement. This is generally not the case at the start (or re-start) of employment. Experienced management-side employment counsel can help review existing hiring documents and agreements, and provide guidance and suggestions regarding how they can be updated and strengthened for the company’s benefit.