News & Events

Top Advice from In-House Counsel: Part 2

April 6, 2020

On April 2^nd, the In-House Advisor convened a second video conference of General Counsel and Corporate Counsel to discuss how their businesses are dealing with the COVID-19 crisis. As with the prior meeting, the in-house counsel present were from entities ranging from small, local companies, to large, multi-national enterprises. Here are some of the key takeaways from the session:

Working from Home

Don’t assume that because people are working from home, everyone is available all the time.
Employees with small children have to take care of them; people with school-age children have to homeschool them.
Employees with roommates may not be able to talk/video conference all the time.
Don’t assume that people who had already been working at home part time can adapt any quicker and better than others. They were used to a different pace and working part time, so keep that in mind when you reach out to them.
Everyone agreed that employees must create boundaries around working from home to prevent burn out.
Video conferences are much more effective than telephone calls. People are more engaged and more get accomplished. In some respects video conferences are even more efficient than in-person meetings, as people tend to be much more focused and not get sidetracked as much.
One company has twice per week virtual lunches to keep people connected.
Another company’s executive team meets daily and then reports back to the company.
Communicating with your remote workforce remains a key factor.

Some companies are doing it daily, others are doing it weekly.
Some are including customer/client feedback in their communications.
Some have implemented questionnaires of their work force. If you do this, it is important to publish results and make sure people see you are valuing/implementing the feedback.

For most companies, the number one issue is stopping the outflow of cash…

Delay your payments!
Determine which debts/accounts can be delayed without the entity/individual coming after you legally. While you want to avoid a lawsuit, generally, you want to avoid a lawsuit from someone who has the ability to cripple your business by injunctive relief, foreclosing, etc.
You may be able to pause 401K payments for 6 months. Additionally, you may be able to stop matching 401K payments at some point during the year. Consider your options if necessary.
Delay/eliminate traditional merit pay increases.
As an alternative to laying off half your employees, consider reducing employees’ hours by 50% or reducing their pay by 50%
Consider instructing employees to use their vacation. This is especially important for those people “working from home” who really aren’t able to perform as much work at the moment. It also is important because when things get back to normal, you will want everyone to be working at maximum capacity to boost business, and you may not want a lot of employees then taking their vacations at once. Note that if you do this, be sure that you are not running afoul of the new FFCRA laws. If an employee needs COVID-related sick time or emergency FMLA, you cannot force them to draw down their PTO banks first before availing themselves of emergency sick leave or FMLA. Of course, at their option, employees can choose to use PTO first (which some may do, if it is a better pay out than the federal relief).

Miscellaneous Observations and Advice

When you are giving legal advice, don’t just date stamp it — time stamp it. The landscape and laws are changing so quickly that you will want to be able to illustrate that your advice was correct at the time it was given. Likewise, be sure to tell your internal clients that your advice may be different one day or one hour from now, so they should come back to you if they won’t be relying on your advice right away.
Don’t be the first or the last to act. The Philadelphia 76er’s received terrible backlash when they were the first sports franchise to take harsh action with respect to their employees and then had to reverse course. If you are last to act (see, Boston Bruins), you also can get very negative publicity.
You have to find a way to create redundancies in your work force beyond just your key executives. For instance, if you only have one person that processes payroll, and s/he gets sick, what are you going to do?
In light of the COVID-19 crisis, most companies have stopped giving out severances when terminating employees. While some companies are not particularly worried about being sued, consider your options and make the best choice for your business.
With all the new laws in place, companies seem to be making reasonable guesses and not over-analyzing or becoming paralyzed if they don’t know if their actions are permissible. In this environment it seems more reasonable to do what you have to do and then be prepared to ask for forgiveness, as opposed to asking for permission and waiting to act.
However you set up your Crisis Management Team, you want to be sure that all business units are represented.

Silver Linings

Forcing people to step up and do things they haven’t done before has shown that many employees have more capabilities than we thought.
Having video conferences has literally given us a window into the homes of some of our employees and helped us understand them better and forged stronger relationships.
Companies have learned the value in being nimble and learning how to pivot their business model both internally and externally.

As the workforce weathers the spread of COVID-19, we will continue to keep you updated with the latest “need to know” news and ideas to help improve your business practices in this unprecedented time. Stay tuned for further developments from Shepard Davidson, and please reach out with any questions.

About the Author: Shepard Davidson
Shepard Davidson is a partner and former co-chair of Burns & Levinson’s Business Litigation Group, as well as a current member of its Executive Committee. He also is a member of the Labor, Employment & Employee Benefits practice. Shep concentrates his practice in the areas of complex business torts, contract claims, non-compete litigation and disputes involving closely held businesses. He can be reached at sdavidson@burnslev.com or 617.345.3336.