| Mar 17 2020

Designing a Covid-19 Emergency Leave Policy: Four Key Considerations

Rich Fuerstenberg
Senior Partner, Health, Mercer

In a recent blog post, I described the three leave scenarios employers will need to contend with due to the coronavirus pandemic. The most complex of those scenarios – employees who are healthy but are unable to work – is starting to become a reality for many employers. The San Francisco Bay Area announced a “shelter in place” requirement, which went into effect on March 17 and will last until at least April 7. Under the “shelter in place” rules, many employees who cannot work remotely or do not work at the few businesses that will remain open (e.g., hospitals, supermarkets, etc.) will not be able to work at all.

In response, employers will need to determine how to handle the portion of their employee population that is unable to work remotely but not permitted to go to a worksite due to government orders. San Francisco may be the first to implement “shelter in place” requirements, but they are unlikely to be the last. A number of employers are considering implementing an emergency leave policy. What are the key ingredients of such a policy? Here are the top four provisions to consider:

What will the emergency leave policy provide?

Employers may choose to continue employee pay in full, in part or not at all. Obviously, if pay is partially continued, the policy will need to determine the percentage of pay that is continued. If pay is continued in full or in part, the policy will also need to determine how “pay” is calculated for part-time or hourly employees and how it is defined (e.g., tips, commissions, bonuses, etc.).

If an employer chooses not to continue pay, they may continue to provide health benefits for employees for a specified period. Continuing health benefits may be critical for employees who are actually diagnosed with COVID-19 and need treatment. If pay is not continued but health benefits are, how will the employer choose to handle required employee contributions? Under the circumstances, the most likely answer is that the employer will pick up the entire cost of health benefits. Continuation of other benefits like dental, vision, life insurance and other employee paid benefits would also need to be determined during any periods when employees go without pay.

How long will the policy last?

This will also be tricky for employers as no one knows how long “shelter in place” and other similar government mandated closures will remain in effect. Like other coronavirus-related shutdowns – of sports events, schools, Broadway, and so on -- an employer’s emergency leave policy may be for discrete periods of time. For example, an employer policy may say that it will continue pay and benefits for two weeks. At the end of the two weeks, the policy may be extended, modified or end, based on the facts available at that time and the financial implications of such a decision.

In deciding how much time to permit in an emergency leave policy, employers should consider current employee access to paid time off benefits. Once continuation of pay ends under an emergency leave policy, paid leave benefits such as vacation and paid sick leave would apply. An employer whose current paid time off policies are extremely generous may not need as robust an emergency policy as an employer whose policies are less generous. 

Speaking of existing time off policies, employers will also need to determine how an emergency leave policy intersects with those policies. For example, it is possible that while on an emergency leave an employee (or family member) may become ill with COVID-19 or another health condition. At that point, the employer’s other applicable leave policies – most likely paid sick leave, short-term disability (STD), FMLA, and paid family leave – would kick in as normal. Regarding STD, if the employer’s plan pays less than 100% of pay, can an employee use emergency leave to top up that benefit to 100%? The answer to that question will likely depend on whether the plan is insured or self-funded and whether such a top-up raises any compliance considerations.

How does the policy vary by type of employee?

The need for emergency leave will likely vary significantly within an employer’s population. Some employees may be able to work effectively from home while others cannot. For example, employees whose jobs can be done remotely may have limited availability due to a lack of childcare. Current paid time off policies may vary between salaried and hourly employees, union and non-union employees and between full and part time employees. How much an employee is paid for emergency leave may also vary based on how they are typically paid (bonuses, tips, commissions, etc.).

As a result, employers will want to target the design of their policy to segments of the population where the need is greatest. Doing so will require employers to review collective bargaining agreements, if any, as well as the legal implications of such variations.

For employers with workers who will be expected to work throughout a “shelter in place” mandate – healthcare workers, certain manufacturing workers, supermarket employees – the emergency leave policy will need to be different. For them, the policy may take the form of an emergency paid sick leave policy, providing paid time off to employees who are actually diagnosed with COVID-19, are exhibiting symptoms, are quarantined on the orders of a public health official or need to care for a family member with such issues. Many of the provisions that apply to an emergency leave policy would also apply to an emergency paid sick leave policy.

How will emergency leave be administered?

Administration of emergency leave itself may be very simple if the policy is to just extend pay and benefits for all employees for a specified period. If the policy itself is complicated (e.g., different policies for different segments of the population), administration becomes more challenging. Key considerations include:

  • Identifying eligible employees and what policies apply
  • Determining how much to pay hourly employees, especially those who work irregular schedules
  • Coordination with other paid time off policies (e.g., FMLA, STD, statutory disability and paid family leave) for employees who become ill while on emergency leave or need to care for a sick family member

For most employers, emergency leave administration will be handled largely internally, with some assistance from disability and leave administrators. Given that the departments responsible for administration are likely working remotely and may be understaffed, employers will likely rely on manual workarounds in the short term.

The need for an emergency leave policy will vary from one organization to the next, and the design process must take into account not only the unique needs of employees but also how the new policy fits in with the employer’s current paid time off policies. Employers must consider the administration and compliance implications as well, especially if the policy varies for different employee groups. In a time when the world seems to be changing by the minute, employers need to move both quickly and carefully to decide what is best for them and their employees.

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