As governments start easing stay-at-home orders and other restrictions, businesses that closed their doors to help contain the COVID-19 spread will be permitted to reopen, some sooner than others and most on a gradual basis. Often broad and sometimes inconsistent guidance from federal, state and local governments creates confusion as to when, and to what extent, different businesses can reopen. Even for those that can fully reopen, the staggered and phased reopening of other companies further blurs business outlooks and prospects. It is clear, however, that each business must create new workplace measures and policies to safely and effectively reopen.
The pandemic has impacted nearly all businesses, especially those forced to reduce operations or close completely. Most have never faced situations like those precipitated by COVID-19, and thus, will be navigating unchartered waters both from a business and employer perspective. The ultimate best course of action will differ from business to business. This article highlights some of the key considerations to reopening from a business and employer perspective.
1. Providing a Safe and Healthful Workplace: The Occupational Safety and Health Act (the Act) requires that all employees be given a workplace “free from recognized hazards that are causing or are likely to cause death or serious physical harm to” employees. The scope of this duty takes on a new meaning in the context of the COVID-19 pandemic. The Occupational Safety and Health Administration (OSHA) has made clear that the Act and OSHA requirements and standards apply to prevent an employee’s exposure to COVID-19 at work. Both OSHA and the Centers for Disease Control and Prevention have issued guidance on steps employers can take to reduce an employee’s risk of exposure to COVID-19 in the workplace. In addition to guidance issued by these agencies, employers should also consider guidance issued by other federal agencies, as well as state and local entities.
The nature of the recommended steps varies based on the risk of exposure associated with the job at issue, with the most stringent recommendations applying to those jobs classified as very high risk, such as certain health care and morgue jobs. Employers should consider the following actions to ensure the safety and well-being of workers:
COVID-19 is an ever-changing situation, resulting in frequent modifications to applicable guidelines. As a result, employers should regularly monitor guidance issued by federal, state and local entities to remain abreast of current recommendations and best practices.
2. Screening Employees for COVID-19: The U.S. Equal Employment Opportunity Commission’s (EEOC) guidance related to the COVID-19 pandemic indicates that employers may screen employees entering the workplace to determine if they may have COVID-19 without running afoul of the Americans With Disabilities Act. Currently, such screening may include standard questions about symptoms and travel history, measuring body temperature and administering a COVID-19 test before letting an employee enter the workplace. The EEOC emphasizes that the COVID-19 test must be accurate and reliable. All information obtained from the screening must be kept confidential and stored separately from an employee’s personnel file. Some businesses may also consider screening others who enter the workplace, including vendors, customers and other visitors.
3. Transitioning from Home to Office: Businesses starting to reopen will also face the transition of some or all employees from home back to the office. Given the nature of the pandemic, it is unlikely that requiring all employees to return to the office once doors reopen will be workable for logistical and health reasons. Instead, in developing a home-to-office plan, many factors should be considered, including:
4. Recalling Laid-Off or Furloughed Employees: Employers that furloughed or laid off employees due to COVID-19 may begin to recall them as businesses can reopen and restrictions are lifted. Employers are not required to rehire laid-off employees and may, instead, hire new employees. However, many employers may also choose to rehire their laid-off employees. In addition to changes precipitated by the lifting of restrictions, the Paycheck Protection Program (PPP), which is described below, has also prompted some businesses to recall previously laid-off and furloughed employees. Employers should consider having a written plan to govern the recalling of these employees to mitigate against claims of unlawful discrimination. This plan should be based, to the extent possible, on objective factors, such as jobs needed, years of service, work location and documented performance reviews.
5. Getting Your House in Order: A gradual or staged reopening of markets, businesses and industries means vendors, customers and clients may not be fully operational upon reopening. Take this opportunity to clean up your books and tackle previously neglected administrative tasks. Consider re-organizing or streamlining back-office functions. Doing so will position your company for success once your business ramps up to pre-pandemic levels.
6. Marketing: Your clients, customers and relationships need to know that you are preparing to reopen. Use advertising and social media platforms to inform the public that you are taking the proper precautions and ready to get back to work. Effective and optimistic communication can also reinvigorate your employees and position them for success upon returning to a “normal” work environment.
7. Maintaining Business Contacts: Most businesses are already in contact with their lenders and landlords. Each situation is unique and dependent on your lenders’ and landlords’ willingness to share your cash flow burdens. Still, businesses should request and consider taking advantage of all available relief and extensions on loan payments and rent reduction, deferral or abatement. Be mindful of the unintended tax consequences that could flow from significant loan and lease modifications and consult with your legal and tax advisors during this process.
Identify your most critical vendors, contact them early and keep open lines of communication regarding your ability to pay. Consider requesting discounts or extended payment plans where appropriate and available. Many vendors will have the same cash flow concerns and may be willing to liquidate their accounts receivable at a discount.
8. Conserving Cash: If your business has maintained healthy cash reserves, great! But avoid, where possible, dipping into or exhausting those reserves too soon. The road back to pre-pandemic levels is uncertain and may be prolonged. Instead, take advantage of available loans and grants. Consider liquidating accounts receivable by offering a discount or installment plan to customers and clients who may want to accelerate payment. Focus on utilizing available cash to maintain your workforce, keep your loans and leases in good standing, and preserve relationships with your most critical vendors.
9. Taking Advantage of Available Capital: The highly publicized PPP loan program administered by the U.S. Department of the Treasury (Treasury) and Small Business Administration (SBA) is providing, through banks, low-interest and potentially forgivable loan funds to qualifying businesses. The initial $349 billion of PPP funds was exhausted within 13 days. While Congress authorized an additional $310 billion in PPP funds on April 24, many expect this will soon run out as well. If you can obtain a PPP loan, use these funds for payroll expenses and other designated purposes. Be sure to document those expenses and payments during the measurement period.
If you are ineligible or missed out on PPP, other government-backed loans and grants may be available. Loans and grants are being made available under SBA’s Economic Injury Disaster Loan Program for certain businesses affected by COVID-19. The Treasury and Federal Reserve are also administering the Main Street Lending Program, providing $600 billion in loan funds to qualifying businesses. Many state governments are also providing financial assistance. The Louisiana Loan Portfolio Guaranty Program, for instance, is making low-interest loans of up to $100,000 to help eligible businesses recover from the pandemic. Consider taking advantage of these opportunities and consult with your banker and lawyer to help guide you through the process and advise you on any pitfalls.
Please contact Jessica Huffman, Brad Kline or Phelps’ Labor and Employment and Business teams if you have any questions or need compliance advice and guidance. For more information related to COVID-19, please also see Phelps’ COVID-19: Client Resource Portal.