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After the Disaster 10 Issues for Employers

While many companies have faced and resolved some of the issues outlined below, employers everywhere may someday confront similarly daunting circumstances, whether because of hurricane, earthquake or other natural—or even manmade--disaster.

November 23, 2005
Hurricanes Katrina and Rita devastated the Gulf Coast in 2005 and presented employers who had operations in the affected areas with unprecedented workplace challenges. And while many companies have faced and resolved some of the issues outlined below, employers everywhere may someday confront similarly daunting circumstances, whether because of hurricane, earthquake or other natural--or even manmade--disaster.

    The following is a list of the top 10 issues that are likely to present themselves to employers after large-scale disasters. For employers that have not yet adapted their policies and operations to circumstances that, to this point, had not been foreseen, this list represents a place to start. Stay tuned for additional information, as both government agencies and legislatures are crafting new opinion letters and laws to address the issues facing employers after a widespread disaster.

    1. Establishing Communication With Displaced Workers: After a disaster, many displaced workers find themselves in unfamiliar locations, without much more than the clothes on their back. It might take some time before displaced employees can "check in," or otherwise establish communication with their employer. In the hurricanes of 2005, many companies created space on their Web sites for employee communications or established an avenue for employees to make contact from any location (such as toll-free number). In the future, employers with operations in cities where evacuees relocated might consider establishing a communication center where employees can check in with local company officials.

    2. Payment of Wages: Government aid may not be available immediately, or in large amounts. In 2005, some employers voluntarily chose to continue paying their employees, while others made available fixed one-time payments to affected employees. Employers should clearly communicate the terms of such payments to avoid any confusion after the fact. For example, a charitable gift is different from an advance on future wages, and should be clearly communicated as such. Moreover, employers in affected areas who have been unable to make payroll should be cognizant of state laws governing deadlines for the payment of wages (as well as taxes). Although employers may not know the whereabouts of all employees, employers should make a good-faith effort to pay all wages owed.

    3. Other Wage/Hour Concerns: Some employees in affected areas will no doubt be working long hours, under situations where working time and off-duty time will blur together. Some employees may be temporarily living in employer housing, for example. Employers should be cognizant of the need to accurately record employee work time, and keep in mind that any work done for the benefit of the employer (even ostensibly as charity) might be considered work time.

    4. Transfer of Workers to Other Operations: In the aftermath of the 2005 hurricanes, it became evident that thousands of people would either never return to the hardest-hit areas, or would return only after an extensive rebuilding effort was completed. Employers should consider whether affected employees could be transferred to other operations in surrounding areas, so that valuable skills and experience are not lost. Once the rebuilding is complete, these employees will be an integral part of returning to the area and re-establishing operations. Employers with collective bargaining agreements governing transfers between operations should be cognizant of any restrictions contained therein, and should also consider negotiating with the representative union for a one-time exception to these limitations.

    5. Flexible Leave Policies: Most company handbooks make no allowance for the type of disaster that befell the Gulf Coast in 2005. For the most part, human resources has been left with no choice but to improvise answers to critical questions such as how long to wait for employees to make contact before initiating termination. Obviously, flexibility and compassion should be the order of the day in this area. Moreover, it is important to note that many employees affected by the storm will qualify for family and medical leave (FMLA), bereavement leave or other types of leave provided under either company policy or federal and state laws. Employers should be aware that post-traumatic stress, or depression resulting from the aftermath of the storm, might qualify employees for medical leave under the FMLA, or similar company policies. Extreme care should be taken before denying leave or terminating employees for a failure to return to work.

    6. Medical Insurance Coverage: Many affected employees use medical insurance to assist with recovery after the disaster. Consider providing important benefit information on company Web sites, or through communication centers in cities providing shelter, so that employees are best able to address issues that might arise, such as using benefits in another state or outside of a HMO/PPO coverage area.

    7. Employee Assistance Programs (EAP): Most employers have EAPs either separately or as a part of their health insurance benefits. Employers should communicate the availability of such programs to affected employees and contact benefit providers to explore ways to facilitate the use of such programs, including making qualified counselors available on site or in areas where a large number of employees have evacuated. These services are invaluable, and may facilitate employees returning to normalcy, including the resumption of employment.

    8. Immigration Issues: Many evacuees face not only the challenge of finding new employment, but the secondary hurdle of doing so without the paperwork required to show that they can work legally in the United States. The government made it possible for local employers to hire such individuals. Specifically, on September 6, 2005, the Department of Homeland Security announced that, for the next 45 days, it would not seek civil sanctions from employers who hire hurricane victims who lack the documentation required to satisfy the Form I-9/Employment Eligibility Verification requirements. Nevertheless, employers still must have the employees complete Section 1 of the Form I-9, but they need not review the employees’ documents if they are not available. In an update on October 21, the agency announced that employers were "expected to fully complete the Form I-9 for recently hired victims of Hurricane Katrina who were previously unable to provide proper documentation." It added: "Employers who have made reasonable, good-faith efforts to comply with existing requirements, but are still unable as of October 21, 2005, to complete the required information, should note with specificity on the Form I-9 what steps they have taken to verify employment eligibility."

    9. Donating Co-worker Leave: On September 8, 2005, the IRS issued IRS Notice 2005-68, which permits an employee to donate unused paid leave in exchange for employer cash payments to a qualified charity providing relief to Hurricane Katrina victims. Across the country, citizens and co-workers have searched for ways to help their neighbors deal with the recent tragedy. Several large companies have made available opportunities for employees to donate accrued vacation leave or paid time off to other employees within the company who may be in greater need of these benefits. Before implementing such programs, it is important for companies to establish procedures and guidelines for the implementation and take into account any potential legal and tax implications of the program.

10. Layoffs/Business Closures: Unfortunately, Hurricanes Katrina and Rita has forced many business owners to make the difficult decision to lay off employees or relocate or cease operations in affected areas. These actions will have both legal and community ramifications, which employers should carefully consider. Most notably, certain employers may have notice obligations under the federal Worker Adjustment and Retraining Notification Act (WARN Act) if employees are laid off or suffer a significant reduction in work hours for more than six months. Although a hurricane may constitute the type of unforeseeable business circumstance warranting an exception to the WARN Act, employers are strongly advised to seek legal counsel in this area if layoffs or closings become necessary.

    Thousands of companies and workplaces will never be the same in the aftermath of the hurricanes of 2005. Now that the essential needs of those affected are largely met, they are turning their attention to re-establishing employment and associated issues. Although there is not yet an existing playbook for handling such catastrophes, the 10 points discussed here should provide a starting point for companies seeking to manage their companies’ response to a tragedy.