CORONAVIRUS CRISIS
Employment and Benefits Cost-Savings Option
| Cost Saving Option | Ease of Implementation; Duration | Key Legal Issues | Cost Savings | Employee Impact |
| Reduction in employee hours/salary | Easy to moderate; duration within the control of employer | FLSA, nondiscrimination laws, coordinate with welfare benefit providers (COBRA, conversion options, etc.) | Moderate | Mild to moderate; not considered terminated for retirement plan and welfare plan purposes; watch for deferred compensation/ severance triggers |
| Reduction in retirement plan benefits | Easy to moderate; duration generally within the control of employer | Nondiscrimination testing, benefit accrual and compliance issues | Depends on the existing level of benefits | Potential loss of employer funded benefits |
| Moderately difficult; no later than 4/2/2020 through 12/31/2020 | Smaller employers (less than 500) only; available only for employees unable to work because of loss of child care; paid for through tax credits; potential reinstatement rights | Moderate (capped at $200/day and $10,000/employee) | Mild | |
| Use of federal subsidies – tax credits for paid leave under the Emergency Paid Sick Leave Act | Moderately difficult; no later than 4/2/2020 through 12/31/2020 | Smaller employers (less than 500) only; generally available only for employees subject to quarantine/isolation order or told to self-quarantine (or caring for a person in either category), experiencing COVID-19 symptoms and seeking diagnosis, or caring for child with closed school/childcare site due to COVID-19 precautions; paid for through tax credits | Moderate (capped at $511/day and $5,110/employee if for employee’s own use and $200/day and $2,000/employee if caring for child or quarantined individual) | Mild |
| Moderately difficult; limited pool of $349B; applications 4/3/2020 through 6/30/2020 | Smaller employers (less than 500) or in hospitality or dining industry; funds needed to support ongoing business operations and used to retain workers, maintain payroll or make certain mortgage, rent and utility payments; employee retention obligations and limits on future personnel reductions | Substantial (loan principal capped at 2.5 times average total monthly payroll costs for 12-month period prior to loan; capped at $10M) | None | |
| Moderately difficult; applies to wages paid after 3/12/2020 and through 12/31/2020 | Available to all employers (unless “forgivable”loan described above is obtained), although calculation varies for large (more than 100) and small employers; business either fully or partially suspended by COVID-19 related government order or more than 50% reduction in comparable prior year quarter receipts[, employee retention obligations, limits on future personnel reductions – TRUE??] | Mild to moderate (50% of qualifying wages, including proportion share of cost of employer provided health care, up to $10k/employee) | None | |
| Furlough | Moderate | Nondiscrimination laws, FLSA, WARN Act (and state equivalents), coordinate with welfare benefit providers (COBRA, conversion options, etc.) | Moderate to extreme | Extreme; may not be considered terminated for retirement plan, deferred compensation and welfare plan purposes |
| Permanent/temporary layoff | Moderate | Nondiscrimination laws, FLSA, WARN Act (and state equivalents), state wage laws, severance agreements, COBRA, retirement plan vesting (partial termination), retirement plan and deferred compensation / severance distributions | Moderate to extreme | Extreme |