One Year In: The Pandemic’s Impact on Employers and Their New Normal

By Ashley Cuttino

Undoubtedly, the past year presented employers with unprecedented challenges. Employee safety, mass shut downs, remote work, return to work protocols, and basic business survival have been top of mind for employers since the COVID-19 pandemic hit with full force in March 2020. 

In the last year, more than 30 million Americans have become unemployed and eligible for unemployment. According to the Department of Labor (DOL), in the last year, more than $144 billion in unemployment benefits have been provided to American workers in need. The average duration of unemployment of an American employee during the pandemic is 15.55 weeks. Despite this statistic, many jobs have been permanently lost due to the pandemic. According to the monthly DOL jobs report, more than 4 million people have been unemployed for six months or more. Those who are long-term unemployed account for 41 percent of all currently unemployed people in the United States. This is a level of long-term unemployment not seen since the height of the Great Recession. Low-income workers, people of color, and women have been disproportionately impacted by the pandemic job losses. 

Since the peak on the pandemic, the unemployment rate has slowed but not all sectors of the economy have recovered equally. It is estimated that as many as 10 million jobs may be permanently lost. It is also no surprise that the leading sector of job loss is in the leisure and hospitality industry. Other hard hit sectors of the economy include mining and oil extraction, travel and transportation, construction, the motion picture and music industry, personal services, manufacturing, and self-employed jobs. 

The survival of many businesses during the pandemic hinged on the programs and tax incentives provided by the federal government. The Paycheck Protection Program is credited for providing a lifeline to over 5 million companies. The most recent reports from the Small Business Administration indicate the agency has processed more than 1.1 million loan forgiveness applications totaling $100 billion, with millions of additional applications for forgiveness pending. 

The impact of the pandemic has affected employers in dramatically different ways, not only based on industry, but also due to the area of the country in which the business operated. State differences in closure orders have had a vastly different impact on workforces. One key factor in workforce impact has been school closures. The Bureau of Labor Statistics estimated in 69.9 percent of married families with children, both parents worked outside of the home.  In total, 72.3 percent of women with children work outside of the home. The closure of schools and the use of virtual learning has drastically impacted working parents, particularly women who typically bear the weight of childcare. 

The Vaccines Have Arrived. 

With the arrival of multiple vaccines, there is hope that the end of the pandemic is near. Many states are now lifting pandemic closure orders partially, and in some states completely. There is also momentum to vaccinate teachers and reopen schools across the country. The lifting of closure orders allows those areas of the country and industries that have not reopened to begin the re-opening process. 

What’s Next: The “New Normal” 

Reality tells us that life post-pandemic will not return to normal. Many lessons have been learned during the pandemic. Business have been forced to rethink and re-evaluate operations from top to bottom. How work is done has changed, in some ways, forever. The “new normal” provides an opportunity to apply the lessons learned to operational functions that, in turn, benefit the employer and employees in the future.

Return to Work: Safety is the Number One Priority. 

An employer’s number one priority upon the return to work is providing a safe work environment for employees and other individuals who enter their premises. The Centers for Disease Control and Prevention (CDC) and the Occupational Safety and Health Administration (OSHA) have provided clear guidelines for how to re-open safely. An employer’s first job is to develop a plan for re-opening that is compliant with the CDC and OSHA guidelines. It is critical for employers to continue to evaluate the guidelines as they continue to change and evolve with the pandemic. An essential piece of any safety plan is communication with the workforce. Ensuring management and employees know and understand the safety plan in place is essential for successful re-opening. 

Remote Work: The Wave of the Future.

Post pandemic, many employers intend to allow employees to continue to work remotely on a full or part-time basis. If the employee lives in a jurisdiction that is different from the workplace, employers need to consider tax and other financial implications applicable to the remote worker. This includes the impact of a business nexus with certain states, workers compensation insurance, and unemployment insurance. Employers should also develop a long-term strategy for remote work. When the pandemic hit, remote work was thrust upon businesses and workers around the country. Employers and employees have proven it can be done. Short-term remote work versus permanent remote work require different ways of thinking. If permanent remote work is allowed, the organization should evaluate aspects of long-term remote work such as data privacy, technology used to monitor work efficiency, work product, work hours, development of a plan for the retention of work culture, and training management on how to evaluate and manage remote workers. 

Job Evolution.

During the pandemic, many employers eliminated positions and consolidated job responsibilities. Employers must now again evaluate if the newly created roles and responsibilities will remain or return to pre-pandemic levels. Employers should use this opportunity to review worker classification to ensure compliance comply with wage and hour rules related to an employee’s exempt versus nonexempt status.  

Impact on Diversity & Inclusion and Job Candidate Pools.

In companies where remote work continues, one added benefit is the ability to increase job candidate pools to include individuals living further away from the physical location of the company. A more diverse candidate pool can result in an increase in diverse hires leading to more diverse and inclusive workforce, a key goal of many companies today. 

The Future Cost of the Pandemic. 

The ultimate costs to employers resulting from the pandemic is still unknown. For one, litigation against employers related to Covid-19 is increasing. Resolving the wave of employment based Covid-19 litigation will have a direct cost to employers. Employers should be aware of the changes that may be required in unemployment in the future. Currently, 21 states have outstanding loans from the federal government to assist with unemployment payments. These loans total more than $51 billion. All state funds will have to evaluate what actions are required to restore unemployment fund balances after the pandemic. Like after the last recession, this may include increases in unemployment rates for employers, reduction of future benefits, or some combination thereof.

As the country turns the corner on the pandemic, so do employers. The key to successful re-opening is to focus on employees. Employees are the greatest asset of any company. Retaining and re-employing individuals while ensuring safety and company culture will be a determining factor in which companies thrive in our new, post-pandemic normal versus those that do not ultimately survive the pandemic.