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Rehiring Furloughed and Laid-Off Employees After COVID-19

June 15, 2020
 

You may have had to make the difficult decision to furlough or lay off staff at the start of the COVID-19 crisis. But as states across the country lift restrictions for certain businesses, now is a great time to think about your recovery plan. How do you plan to bring employees back and rebuild your staff?
 

If you can safely reopen your business, you may find that rehiring staff quickly is a challenge — even during this time of high unemployment. Some employees may still have health and safety concerns, for example, while administrative considerations — like new hire paperwork or background checks — can slow the process of hiring employees and getting your business back to normal operations.
 

In this guide, you’ll find ideas on how to handle the rehiring process efficiently, including how to:

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Determine if you need to redo employee paperwork

When preparing to return employees from a furlough or layoff, identify what paperwork needs to be redone or updated. These may include:
 

Form I-9s: To verify an employee’s eligibility to work in the United States, employers have the option of completing a new I-9 or reverifying the employee’s existing I-9 on file (depending on when the employee was first hired). Find out more here.
 

Tax forms: While the IRS doesn’t have specific rules on filling out Form W-4 for employees that are rehired in the same tax year, consider having rehired employees complete new forms to verify that their information is current.
 

Direct deposit information: Consider asking rehired employees to confirm that their bank account information is up-to-date before their first paycheck.
 

Agreements and contracts: Since you’re forming a new employment relationship when you rehire a laid-off worker, look into whether or not they need to re-sign contracts like confidentiality agreements, arbitration agreements, non-compete agreements, etc.
 

Onboarding paperwork: You may be required to provide rehired employees with some of the onboarding paperwork and notices they’ve received before. For example, California requires employers to provide a lactation accommodation policy to all new employees — regardless of whether or not they’ve worked at your company before. Check to ensure you’re in compliance with your state and local laws for these types of documents. It may also be a good idea to have rehired employees re-review and acknowledge your employee handbook and code of conduct.
 

Reexamine compensation package offerings

A return to work may look different for certain employees, with potential organizational changes, changes in work roles or duties, or new schedules and working arrangements (e.g., remote work). That could also mean you may have a need or desire to modify compensation and benefit plans for returning employees. For example, consider whether or not a change in an employee’s position could convert them to a non-exempt employee, or ask things like: Will bonuses or commissions be modified in any way?
 

If you took a PPP loan, there are few additional things to keep in mind when reexamining comp packages. Making an offer to rehire an employee for a lower wage and/or number of hours than they previously worked may have an impact on PPP loan forgiveness if the employee chooses not to accept your offer. Reducing an employee’s wages by more than 25% can also impact how much money you get back through the PPP — even if the employee agrees to your offer.
 

Come up with a process to re-run background checks

Employers in certain industries, including healthcare, education and financial services, may be required to re-run background checks for returning employees, depending on federal and state laws. If this is the case for your business, consider asking employees for their consent to perform another background check — even if you received permission when they were first hired.
 

If you normally complete background checks but aren’t required to do so by law, you may still want to come up with a background check policy specifically for rehired employees. For example, you could decide to waive background checks for employees who are rehired within 30 days. As always, be sure to check with your legal team when developing new HR policies.
 

Decide if you should reinstate vacation, PTO and sick leave benefits

What happens to an employee’s leave benefits after a furlough or layoff? When it comes to accrued vacation and PTO, it’s generally up to you to decide if you want to give rehired employees credit for past service, or treat them as new hires. Will an employee who previously accrued several weeks of vacation start with that amount, or does the clock reset when they’re rehired? Review your company’s PTO policies for rehired employees — or develop new ones — to guide your decision.
 

For paid sick leave, however, you’ll want to follow state and local rules for reinstating accrued and unused leave for rehired employees. A handful of states have mandatory sick leave laws, like Arizona, for example: if an employee is rehired within nine months of being laid off, any unused, previously accrued paid sick days must be reinstated. If you’re in a state that doesn’t require paid sick leave, review your company’s current policies, or consider adjusting them to encourage sick employees to stay home.
 

Rehired employees may also be able to access paid leave for COVID-19-related reasons under the Family and Medical Leave Act (FMLA) of the CARES Act, regardless of whether or not your state has mandatory sick leave laws.
 

Writing offer letters to recalled employees (with templates)

Some furloughed or laid-off workers may not be interested in returning to their pre-pandemic jobs. They may already be in a new position at a different company, or have other obligations that prevent them from returning to work (e.g., taking care of children or elderly family members).
 

So what happens if an employee declines your offer of re-employment? If you took a PPP loan, the SBA will not penalize employers in the loan forgiveness calculation if the employer can show that they made a good faith, written offer of rehire, and can document the employee’s rejection of that offer. That’s why it’s so important to get your written communications right.
 

Provide both furloughed and laid off workers with formal offer letters. Letters should include a return-to-work date, an overview of what’s changed and what hasn’t, the status of their benefits, a summary of new health and safety procedures for reassurance and a deadline to accept or decline the offer.
 

It’s also a good idea to have a legal professional review your recall offer letters before sending.
 

Furlough recall letter template

Dear [Employee name],
 

We’re pleased to notify you that [Company name] would like to recall you from furlough and reinstate your [full-time, part-time, etc.] position of [job title] with a start date of [start date].
 

[Option 1: Use this paragraph if terms of employment are the same as before the furlough period.] This is the same position you held prior to the furlough period at [rate of pay] and [hours of work per week]. As before, you will be reporting directly to [manager/supervisor name] at [workplace location].
 

[Option 2: Use this paragraph if terms of employment have changed since the furlough period.] This recall letter includes slight changes to the terms of your employment. [Detail any changes to the terms of employment — e.g., manager/supervisor, workplace location, responsibilities, pay, employment classification.]
 

Your employment with [Company name] will be on an at-will basis, which means you or the company are free to terminate the employment relationship at any time, for any reason. This letter is not a contract or guarantee of employment for a definitive period of time.
 

We understand that you might have concerns about returning to work. Rest assured that the health and safety of our employees is our top priority, and we’re committed to doing everything we can to maintain a healthy work environment. Here’s what we’re doing to keep the workplace safe, in accordance with CDC, OSHA and state and county health guidelines:
 

[Highlight new health and safety measures your company is taking (e.g., social distancing rules, staggered shifts, remote work options, reduced customer capacity, workplace mask policy, increased ventilation, cleaning and sanitizing procedures, etc.)]
 

Please sign and return this letter by [due date] to confirm your acceptance of this offer.
 

We appreciate your patience during this challenging time, and look forward to welcoming you back to [Company name]. We also know these have been difficult and uncertain times for many, so if you have questions, concerns or need assistance, please reach out to [point of contact].
 

Sincerely,
[Your name]
 

Layoff recall letter template

Dear [Employee name],
 

We hope this letter finds you safe and well. As you know, due to the economic impact of COVID-19, [Company name] had to make the difficult decision to eliminate certain [positions, teams, departments], including your role, on [date of layoff].
 

Since then, we’ve been able to [reopen our doors, increase/resume some operations, etc.]. As a result, we’re pleased to extend you an offer for the [full-time, part-time, etc.] position of [job title] with a start date of [start date], [contingent upon a background check, I-9, etc.].
 

[Option 1: Use this paragraph if terms of employment are the same as before the layoff.] This is the same position you held prior to being laid off at [rate of pay] and [hours of work per week]. As before, you will be reporting directly to [manager/supervisor name] at [workplace location].
 

[Option 2: Use this paragraph if terms of employment have changed since the layoff.] This offer includes slight changes to the terms of your employment. [Detail what’s changed — e.g., manager/supervisor, workplace location, schedule, responsibilities, pay, employment classification.]
 

Your employment with [Company name] will be on an at-will basis, which means you or the company may terminate the employment relationship at any time, for any reason. This letter is not a contract or guarantee of employment for a definitive period of time.
 

[Optional paragraph on benefits] Since you were with [Company name] for [number of years] prior to your layoff, your seniority will not be affected, and your employment benefits will be fully reinstated, including previously accrued but unused paid time off and sick leave, if applicable. If you have questions about how this offer affects your benefits, please contact us for further information.
 

We understand that you might have concerns about returning to work. Rest assured that the health and safety of our employees is our top priority, and we’re committed to doing everything we can to maintain a healthy work environment. Here’s what we’re doing to keep the workplace safe, in accordance with CDC, OSHA, and state and county health guidelines:
 

[Highlight new health and safety measures your company is taking (e.g., social distancing rules, staggered shifts, remote work options, reduced customer capacity, workplace mask policy, increased ventilation, cleaning and sanitizing procedures, etc.)]
 

Please confirm your acceptance of this offer by signing and returning this letter by [due date].
 

We appreciate all of your past contributions at [Company name] and look forward to welcoming you back. That being said, we know these have been difficult and uncertain times for many. If you have questions, concerns or need assistance, please reach out to [point of contact].
 

Sincerely,
[Your name]
 


There’s a lot to consider when rehiring staff, especially during these uncertain times. But by keeping these rehiring guidelines in mind, you can more effectively handle the logistics of bringing furloughed and laid-off employees back to work, position your company for loan forgiveness and help your business recover as conditions start to improve.
 

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