Guidance on Modifying Employment during the Coronavirus (COVID-19) Pandemic

Disclaimer: As this situation is evolving daily, MagMutual recommends reviewing the latest guidelines for the most current information. Visit the MagMutual COVID-19 Resource Center to learn more.

Healthcare organizations continue to be significantly impacted by COVID-19. Some organizations are struggling with maintaining staff and increased patient volumes. Others are encountering significant decreases in patient volume resulting in cash-flow reductions and are considering workforce furlough and/or workforce termination measures. This article discusses strategies for ensuring healthcare staff continue to report to work as well as strategies concerning workforce reduction.

Strategies for ensuring continued staff presence at work

After reviewing your organization’s financial status to determine what is practical, your organization can employ several options to incentivize your employees’ presence during this time.

• Offer increased pay to employees. Increased pay could be offered as either incentive pay for completing a certain number of shifts or as a pay differential for hazardous duty pay.
• Provide regular workplace education on the measures your organization is taking to prevent the spread of COVID-19 to employees. Education should include transparent communication with your employees about what is happening with your business.
• Focus on internal encouragement and boost employee morale by affirming the vital role healthcare personnel play in stemming the tide of the pandemic. Ensure your employees know that we could not get through this without them. Sometimes just a little recognition can go a long way.
• Explore new benefits to reduce outside stress for employees, such as offering childcare subsidies or a grocery delivery service.
• Potentially offer employees additional days off if they defer taking time off during the pandemic or provide additional days off once the pandemic ends.

This article provides some more considerations if your organization is thinking about modifying employee compensation in some way.

Strategies for handling workforce layoffs

Alternatively, many organizations are struggling with greatly reduced patient volumes impacting the organization’s financial viability. In these tough circumstances, there are several options your organization could consider, including reassigning employees to areas of more critical concern, reducing employee wages/salaries for a temporary period, reducing the hours of work per pay period, furloughing employees, or terminating employees. This article provides some general considerations when laying off employees during this time.

Furloughing employees

Our experience is that most practices are now requesting guidance regarding furloughing employees, as it is uncertain when this pandemic will end and sufficient patient volumes will return. A furlough is known as a temporary layoff, temporary unpaid leave, inactive status or “on reserve” with the expectation that the employee will eventually return to work. Every state has different notice requirements for furloughs. You should consult an employment attorney or your payroll processing company to see if you are required to provide advanced notice of furlough. Additionally, an employee who is furloughed is generally able to receive unemployment benefits. For more information regarding your state-specific COVID-19 unemployment laws, please visit this guide created by Jackson Lewis, P.C.

If you intend to furlough a non-exempt employee (such as a nurse, front office staff or billing clerk), be sure to notify your payroll processing company to assist you. They will have sample furlough notices and be able to walk you through the process of notifying your state department of labor so the furloughed employees will be eligible for unemployment. Before you furlough any employee (exempt/primarily salaried employees or non-exempt/primarily hourly employees), be sure to review MagMutual’s Considerations for Employee Benefits, regarding a furlough’s impact on employee’s health insurance benefits.

If you are furloughing a provider (physician, nurse practitioner, physician assistant) who has an employment agreement, the employment agreement remains the controlling document regarding the employer-employee relationship even during the pandemic. This means you should carefully review the employment agreement to determine if there is a termination without cause or force majeure provision. Most likely, the employment agreement does not have a reasonable termination without cause provision (most require 60-90 days’ notice) or force majeure provision. This means that legally, the provider/employee could attempt to enforce the employment agreement and argue breach of contract for being furloughed without compensation, but realistically the court system is closed and the provider/employee would not get their day in court for at least a year.

We have found that most providers/employees are aware of the current drop in patient volume and recognize the organization’s financial dilemma and are willing to work with the organization on an acceptable solution. Accordingly, we advise that an employer considering a true furlough, with an intent to bring the provider back once sufficient patient volume returns, should amend the employment agreement before furlough to indicate that intent. The amended agreement should also indicate that the employer intends to use its best efforts to make up the lost compensation with additional hours/patients when the practice picks up satisfactory volume. We believe this show of goodwill to your providers will reduce the risk of the provider/employee attempting to enforce the termination without cause provision of their contract and maintain a strong relationship between both parties. Our experience is that providers understand the current environment and are willing to work with their employers.

If your organization has employment practices liability (EPL) coverage with MagMutual and has any specific employment-related questions, please utilize the Jackson Lewis, P.C. Hotline by calling 1-866-758-6874.