Monday, April 27, 2020

Coronavirus Update 4-27-2020: Bringing your employees back to work when unemployment pays them more than you do

At 2 pm today, Governor DeWine will announce his plan for restarting Ohio’s economy (currently expected to begin on May 2). One huge issue, however, is how businesses can incent their employees to return to work if unemployment is paying them more than you will.

Including the CARES Act’s $600 unemployment bonus that expires on July 31, an employee earning maximum unemployment benefits from the State of Ohio earns $1,247 per week, the equivalent of an hourly rate of $31.17 or a yearly salary of nearly $65,000. My guess is that most of your employees do not earn this much. It’s one of the worst unintended consequences of the CARES Act—employees are making more money unemployed than they did employed.

Thus, how do you incent your employees to come off unemployment and return to work, either because you are reopening or you need to end their furlough? You can either use the stick or the carrot.

The stick? Employees who refuse return-to-work offers might be disqualified from collecting further unemployment benefits (unless their refusal is because of coronavirus), and you can advise employees that refuse a recall that you will be asking the state to terminate their benefits. You can also advise that with unemployment at record-high numbers, there are plenty of people waiting to fill their jobs, and there is no guarantee a job will be waiting for them when the CARES Act’s $600 expires at the end of July.

The carrot? Employees might need a financial incentive to come off unemployment and return to work. Temporary hazard pay? A return-to-work incentive bonus? A longer-term retention and/or attendance bonus for employees who report by a certain date and remain employed through December 31 (or some other target date)? The possibilities are endless, but the reality is that certain employees will need some amount of financial incentive to come back to work.

Which tool you use will depend on which you think will best motivate your employees and your financial ability to pay for the carrot. You may have to do something, however, as this reality is that some (many?) of your employees might be too short-sighted to realize that a job in the long-term is better than few extra dollars in the short-term.

I’ll be discussing this and other issues related to restarting your business in the world of coronavirus, tomorrow at 11 am on Zoom. Pre-registration is required, and space is limited:

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Finally today, a favor. My daughter and her band have used their time during quarantine to finalize their first-ever single, which they are releasing on May 4. If you use Spotify, you can pre-save the song to your account by clicking the link below. It helps you by automatically placing the song in your Release Radar playlist, and it helps the band by telling Spotify’s algorithm that the song is worthy of early promotion. Plus, they’d really appreciate it.

* Image by Gerd Altmann from Pixabay