Hourly Workers Lose Pay Due to Coronavirus

Some companies say they will pay even if workers can’t come to work

Stephen Miller, CEBS By Stephen Miller, CEBS March 10, 2020
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restaurant workers

Workers in the U.S. who are paid by the hour, with extra for overtime, are expected to bear the brunt of pay losses as the new strain of coronavirus—and the respiratory illness it causes, known as COVID-19—spreads. But employers are taking steps to mitigate the pain by paying workers for missed shifts if they can't come to work and can't perform their jobs from homes and by expanding paid time off for sick workers.

As U.S. companies send workers home in response to the virus, whether through layoffs, furloughs or directives to telecommute, "the uncertainty these measures have prompted poses the biggest threat to the labor market since the 2008 financial crisis," reported Politico's Tim Noah. "Hourly workers are likelier than salaried workers to be laid off. Many white-collar professions can adapt with relative ease to telecommuting from home for a temporary period, but workers in the bricks-and-mortar retail, restaurant and hotel sectors cannot."

"People are already losing pay," Sara Nelson, president of the Association of Flight Attendants-CWA, told Noah, citing flight attendants' loss of overtime hours.

While hourly workers are taking a hit, employers are changing pay policies to help: The Wall Street Journal, for instance, reported that "the biggest ride-sharing and food-delivery companies in the U.S. are in talks to set up a fund to compensate drivers" affected by the virus. Uber, Lyft, DoorDash, Postmates and Instacart are "involved in the discussions and are weighing how to band together for potential payments [for workers] who have been infected or quarantined by a public health agency."

Politico noted that "the plan comes as app-based companies face greater pressure to provide their workers—who are usually classified as independent contractors—with benefits typically provided to employees," like sick leave or workers' compensation. Sen. Mark Warner, D-Va., penned a letter on March 6 urging employers to "attempt to address the potential financial hardship" for workers affected by the virus.

Along similar lines, Microsoft, Google, Facebook and Twitter all told Axios that they plan to pay their hourly workers regular wages even as they encourage many of their staff to work from home, reducing their onsite support staffing needs. "We recognize the hardship that lost work can mean for hourly employees" and contract workers, Microsoft President Brad Smith said in a March 5 blog post. "This will ensure that, in Puget Sound for example, the 4,500 hourly employees who work in our facilities will continue to receive their regular wages even if their work hours are reduced."

Starbucks said it will offer "catastrophe pay" to employees for up to 14 days if they have been diagnosed with, exposed to or in close contact with someone with the coronavirus. Workers who may be considered higher risk because of underlying health conditions are also eligible for catastrophe pay with a doctor's note.

The nation's private largest employer, Walmart, announced on March 10 that it will provide up to two weeks' pay for workers who are quarantined or if one of its locations falls under a mandatory quarantine. If a Walmart worker is diagnosed with coronavirus, the company will offer two weeks' pay and additional pay replacement for up to 26 weeks.

Workers Hesitant to Use Sick Leave

"Hourly employees may be hesitant to use sick leave if they are not seriously ill, and reports are that many COVID-19 cases are mild, especially among young, healthy people," although they can still spread the disease to other people, said Aaron Goldstein, a partner in the Seattle office of law firm Dorsey.

Employees may have bills to pay and will be afraid to miss work if they run out of sick leave or other paid time off (PTO), he added.

Darden Restaurants, parent company for Olive Garden, announced it will begin offering its 170,000 workers paid sick leave amid coronavirus concerns. The company was already developing the policy but it's rolling it out sooner following a report that workers were coming in sick because they couldn't afford to take time off.

"Allowing a temporary program of unlimited sick leave could have long-term morale benefits for your workforce," Goldstein said.

Similarly, when hourly employees are told not to come to work, consider extending PTO to cover the missed hours, even if workers have used up their available time off, recommended Al Robinson, an attorney with Ogletree Deakin in Washington, D.C.

"If employees exhaust their PTO, you can allow them to run a negative balance and replenish that 'borrowed' PTO when they return to work," he advised.

Employers can also compensate employees at reduced rates for missed work due to schedule reductions.

Prepare to track the time of hourly employees who can work remotely, in case the worksite shuts down, Goldstein said. While employees can record hours worked with punch-in/punch-out time-management apps, "these systems could run the risk of being overloaded if they are suddenly being used by much of the workforce," he cautioned.

[SHRM members-only HR Q&A: Can we require an employee to use PTO if he or she hasn't requested it? Can we limit when an employee can use PTO?]

Flexibility for Parents and Caregivers

"Be sure to monitor what's going on that might affect your employees. At or near the top of the list is school closings," if they become widespread, Goldstein said.

Consider alternative shifts for hourly workers outside the standard 9-to-5 workday or on weekends, "which could allow a parent to be at home during the day," he added. Employers could also temporarily allow liberal shift swapping among employees.

"Ask you employees what would help," he advised.

Keep in mind that actions taken during the crisis will affect public perceptions and a company's brand image, Goldstein pointed out. "An employer perceived as being hard-hearted could pay a price after the crisis subsides."

President Pitches Hourly Worker Relief

President Donald Trump said on March 9 he will ask Congress to provide relief to hourly workers suffering from the economic fallout of the coronavirus. Trump said he wants help for hourly-wage workers to ensure they're "not going to miss a paycheck" and "don't get penalized for something that's not their fault." Details on a legislative proposal were still to come, however.

House Minority Leader Kevin McCarthy, R-Calif., expressed interest in a "surgical way" to help hourly workers and to keep the economy moving.



Related SHRM Articles:

COVID-19 Reveals the Value of Caregiving Benefits, SHRM Online, May 2020

Pay Cuts Become More Common in Pandemic DownturnSHRM Online, May 2020

Employers Adjust Pay and Incentives Amid Economic Turmoil, SHRM Online, April 2020

Use Caution When Cutting Exempt Employees' SalarySHRM Online, April 2020

Pandemic Forces Employers to Cut PaySHRM Online, April 2020

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