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Firms debate how long to pay storm-displaced workers

By Kathy Gurchiek   10/18/2005
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Nearly half of large companies with employees who are out of work as a result of Hurricane Katrina will keep those employees on the payroll indefinitely, according to a Mercer Human Resource Consulting survey released Oct. 11.

This has truly been a test of employers compassion, Erin Packwood, survey director and an Atlanta-based Mercer principal, told HR News. In the last several years we have come to think of employer-employee relationships as less loyal than they used to be. What we found, for the most part, is a sense of compassion.

In September, Mercer surveyed 31 large organizations, all of which have significant operations in the Gulf Coast area. Those surveyed covered a wide range of businesses, including insurance, manufacturing, retail, food and financial services, hospitality, energy and utility companies. The size of companies surveyed ranged from 1,000 to 1.7 million employees; on average employers had nearly 1,200 employees who were affected by the hurricane.

The survey results are not necessarily reflective of how smaller firmswith shallower pocketsare handling such issues. Anecdotal evidence and press reports have indicated that some small companies continue to pay idled workers while others simply dont have the ability to do so.

The Hurricane Katrina: Special Pay Practices Survey was conducted after employers contacted Mercer for guidance after Katrina hit.

We were hearing employers saying, We want to do whats right; can you give us a sense of what other employers are doing? Packwood said. These organizations have strong ties to the community and a sense of taking care of the people, she said, adding,

These large organizations are seeing themselves as examples of how to handle these unusual circumstances.

More than half of the companies surveyed have displaced employeespeople working in a city other than their normal location because Katrina interrupted or destroyed their workplace.

Almost three-fourths are providing special payments or assistance to employees who cannot work, the survey found. That assistance comes in the form of additional pay, donations, relief fund grants and no-interest loans. One utility company, which had a special, formalized hazardous pay policy, implemented it after Katrina hit, Packwood said.

While 46 percent of the firms said they will keep out-of-work employees on their payroll indefinitely, 36 percent will cut off paychecks to out-of-work employees after a specified period, according to Mercer, with a median cutoff period of four weeks.

Ten companies said they would provide severance for displaced employees, and one company is pondering a severance policy unique to the circumstances, Packwood said.

An example of one company that has extended pay to its employees for a while is Biloxi, Miss.-based Isle of Capri Casinos Inc. While it is not known whether it was included in the survey, its salaried employees are to receive pay and benefits until April 30, 2006, and hourly employees are to receive the 12-week average, including tips, for a minimum of 90 days with benefits, according to a Sept. 4 report by

Employers are realizing they need to think ahead and consider how they will react in such a situation and what sort of special pay policy they need to have in place, Packwood said.

Eleven of 17 organizations have employees working in an office setting while a small number have employees telecommuting from a hotel. Among employers with displaced workers, a little more than half are paying for temporary housing and 42 percent are paying for their food.

Dispatched employees

Sixteen of the 31 companies have sent employees to aid in their companys recoverycalled dispatched employeesand some are traveling long distances to do so.

Temporary housing and food is provided by 16 of the 17 organizations that answered the surveys question as to whether they are providing for dispatched workers; 13 of 17 are providing airfare and other travel costs when an employee needs to return home, Mercer found.

Nonexempt hourly employees are receiving overtime for their efforts, but employees who are not required by law to receive overtime are not necessarily receiving any special payments or assistance beyond what they normally receive, according to Packwood.

Many dispatched employees are contributing largely out of their commitment to their companies and to those affected by the hurricane, she said in a press release. They are not seeking additional cash compensation, but she added that when bonus time comes around there will be the question among employers as to how to recognize employees who went above and beyond their duties in responding to this disaster.

Katrina-affected companies need to monitor their pay practices closely, she said. Its an unprecedented situation for many of these firms.

Kathy Gurchiek is an associate editor at HR News. She can be reached at

For more articles and information related to the natural disasters, go to SHRMs Hurricane Response Page

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