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How Will COVID-19 Impact Wages and Salaries?

How Will COVID-19 Impact Wages and Salaries?

Employees face a heavy burden with the COVID-19 pandemic. A business owner may be anxious to keep their operation afloat during the economic crisis. At the same time, an employee may be completely dependent on the income from their job to support their families and themselves. The primary federal law that governs employee wages is the Fair Labor Standards Act (FLSA).

However, many state and local level governments add further provisions, such as establishing a higher minimum wage. In general, the FLSA and other wage and hour regulations bifurcate employees into two categories: exempt and non-exempt employees. The category that an employee falls in will impact their right to continue to receive payment if their work has been affected by the coronavirus outbreak.

The future of their financial security is certainly a concern for employees who fall sick or lose their jobs. It is important to be aware that new federal regulations entitle many employees to paid sick leave if they fall ill or are impacted by the pandemic in certain ways.

Additionally, the federal government is strengthening state unemployment benefits to ensure assistance to employees who have lost their jobs.

In the next section, read more about paid sick leave and unemployment benefits that you may be able to collect if you lose your employment.

Non-Exempt Employees

Employees who are covered by FLSA provisions are known as non-exempt employees. This law establishes minimum wage and overtime regulations. However, the number of hours an employee works in a workweek is factored into these rules.

For instance, the employer needs to pay overtime pay at the rate of one and a half times the employee’s regular pay for each hour they work over 40 hours during a workweek.

The employer is usually not required to pay wages under the provisions of the FLSA if a non-exempt employee is not working. There may be some exceptions, such as if a collective bargaining agreement, an employment contract, or an enforceable employer policy provides clauses for specific circumstances.

On a different note, not paying employees who are unable to work due to the virus outbreak, even if not legally required to do so, could affect employee morale and bring poor publicity to the business.

If non-exempt employees are working on a fluctuating workweek basis, the FLSA provides a distinct set of rules for this group. The work hours of these employees vary weekly, and they are paid a specific “fluctuating workweek salary” for any week in which they undertake the work. This rule remains in place during the COVID-19 pandemic.

Exempt Employees

Exempt employees refer to employees who are not covered by FLSA regulations, and therefore, are not subject to hour and wage requirements. It can be complicated to enlist the difference between exempt and non-exempt employees, but exempt employees typically comprise executive, administrative, and professional workers.

Exempt employees also include individuals involved in the computer industry and outside sales work. An employee is considered to be exempt based on their job duties and not their job title.

In general, exempt employees must be paid their full wages for a workweek if they undertake any work during that week. But an employee might not be entitled to their full salary if they do not show up to work and perform no work on a day when the business is open.

The employer might consider reducing this time from the accumulated vacation time of the employee. While the FLSA does not address this option, it may be addressed by a collective bargaining agreement, an employment contract, or an enforceable employer policy.

Again, employers need to view not paying a worker, while retaining that worker, from the perspective of the potential damage this could cause to the employment relationship.

Best Practices for Companies

 Unemployment benefits may help employees who have lost their jobs. However, over 50 percent of employees get medical coverage through their employers. Former employees not only have to worry about routine expenses such as food and rent, but also determine what to do after they lose their company-provided medical insurance.

Today’s low-wage and hourly employees face unique challenges, but there are some best practices that businesses can consider, including:

  • Approving budgets for additional supplies or additional paid leave
  • Allowing paid time off for COVID-positive employees, employees who need to care for their family member diagnosed with coronavirus, and/employees with diagnosed cases of COVID-19
  • Granting unlimited unpaid leave without penalty
  • Offering payment for time spent in quarantine
  • Informing employees about employer-sponsored insurance and other pertinent benefits
  • Revising policies pertaining to employee compensation and benefits

Schedule a Consultation with a Qualified Attorney

Today, the COVID-19 outbreak is changing the face of the business world. At such a precarious time, employee rights must be protected. If you have been laid off due to the pandemic or want to understand more about your rights as an employee, consult an experienced employment law attorney to discuss your case.