The destruction that a Hurricane may cause is a reminder that natural disasters can have a devastating effect on businesses and employees.
How an employer navigates a significant crisis can have a lasting impact on business operations, its reputation with customers, and more importantly its employees. Last year at this time the law firm of Ogletree Deakins published the following checklist of issues an employer needs to face in the immediate hours and days following this event:
Emergency Response Plan
Employers will likely pull their Emergency Response Plans off the shelf long before a disaster strikes. This preparation will now pay dividends and keep employers' activities and actions on track to effectively triage a current crisis.
Crisis Management Teams
The division of labor and responsibility among an employer's management team is critical to navigating a crisis well. Management teams and department leaders should understand their roles as soon as a crisis presents itself. Employers should assign separate responsibilities within each department to address immediate issues. In addition, employers should assign a separate group within each department to the continuation of business operations. Pulling together this team may require employers to reassign employees and supervisors from other regions and divisions to assist the locations and offices impacted by the disaster.
There are four key stakeholders that should be part of your communication plan:
- Crisis management team. To effectively navigate any crisis and formulate the company's messaging plan, it is critical for an employer to coordinate the activities between company management. An employer's Crisis Management Team should be comprised of members of senior management, operations, security, human resources, finance, communications, and perhaps other departments. Members of the group should convene at scheduled times to discuss the status of their respective areas of responsibility and their plans going forward.
- Employees. Your workforce needs to be updated on scheduling, resumption of operations, the Employee Assistance Programs (EAPs) that are available, and the status of the company's response. Company websites and/or intranets in addition to a predesignated crisis phone number should be updated frequently with the latest relevant information.
- Customers and clients. Your customers and clients will want to be assured that you are still operating (albeit in difficult circumstances) and that you appreciate their business and understanding. If business operations are interrupted in such a way that customers and clients will be affected, companies should be prepared to notify these contacts of their reasonable estimates of restored operations.
- Public. The public at large, as well as the appropriate civil and regulatory authorities, should also be kept abreast of the status of your operations. For example, a company's website could advise the public that some operations in the affected areas may be disrupted for a specific duration but that company operations in unaffected regions are ongoing and taking on extra capacity to bridge the gap. Federal and state regulatory agencies—especially those that regulate certain industries—may have an interest in your response as well. Keep in mind that the public image that a company displays of good judgment in preparedness and an effective response to the immediate crisis will create an image of industry leadership.
Electronic Information and Technology
Access to electronic data is critical to the continuation of your operations. Your ongoing operations may need immediate access to back-up power sources and remote servers to continue operations with as little interruption as possible. In addition, your employees who have the capability of working remotely should have access to the support they need to continue their work. So your information technology (IT) department should focus on ensuring that all electronic data is backed up, preserved, and accessible.
Provide your property insurer with prompt notice of the property damage and/or interruption of business operations that occurred as a result of the event. Many insurers have disaster response teams that can be deployed to assist you in resuming operations. The financial department should be tracking all extra expenses the company incurs as a result of the event since these expenses may be recoverable under an insurance policy. Take the time before disaster strikes to understand the coverage that may be available to your company as a result of an unforeseen incident.
Employment Law Issues
A myriad of legal issues will arise during the immediate aftermath of a disaster or crisis but also in the days, weeks, and months that follow. Employers may need to face some of the following issues:
- Nonexempt employees. Nonexempt employees are paid for work performed. Your nonexempt employees will likely earn overtime compensation as increased demands are placed on them to cover for other employees during a crisis. If employees work from home or do other work away from the business premises they must be compensated. Keep your record-keeping obligations in mind (as discussed below) since employers must record and track all the hours that a nonexempt employee works. If an employee cannot make it to work due to disaster-related transportation issues, that may be considered an absence for personal reasons under the Fair Labor Standards Act (FLSA) (so long as the employee does not work from home).
- Exempt employees. Exempt employees must still be paid for an entire week even if they work any portion of a work week and even if the location is closed for part of the week because of a natural disaster. If the facility is closed for one week or more and no work is performed the employer has no obligation to pay that employee if he or she does not perform any work.
- Record keeping. The FLSA does not provide any relief from its record-keeping requirements because of weather-related emergencies. Employers must still maintain records of time worked. Employers should instruct employees who routinely track time electronically to manually record the times they have worked.
- WARN. The Worker Adjustment and Retraining Notification (WARN) Act includes an exception for natural disasters when a plant location closes due to a natural disaster. Nevertheless, if possible, an employer will want to follow the law's notification requirements.
- FMLA. Employers may need to grant qualifying employees leave under the Family and Medical Leave Act (FMLA) if they have developed a serious health condition as the result of a natural disaster. Remember, employees may qualify for leave if they need to care for a spouse, parent, or child suffering a serious health condition or medical emergency caused by the disaster.
- Benefits and continuing coverage. Employers continuing coverage for their employees should contact their benefits vendors to determine how and to what extent coverage is to be maintained. These vendors often have specific hotlines for their customers to contact during a disaster since life, health, and disability coverages will be impacted. Employers must meet the continuing coverage requirements imposed by the Consolidated Omnibus Budget Reconciliation Act (COBRA) for employees who are no longer working or who have been discharged.
- Workplace safety. Employers are responsible for protecting their employees from unreasonable dangers. During natural disasters, employers should ensure the safety of their employees who are working in and around a damaged workplace. In particular, employers should protect employees from unreasonable exposure to hazards that may be present as a result of a natural disaster, such as slip and fall hazards, electrical exposures, and even exhaustion from working extended shifts. Employers should continue to make personal protective equipment available and ensure that employees put such equipment to use.
- Emergency responders. Some of your employees may be members of the National Guard or volunteer responders that may be called up for duty by the state governor or president of the United States. Job protections are in place for these employees and some state laws may be implicated to address unique situations.
The Human Impact
The true costs of a natural disaster transcend their business costs. A natural disaster has its most acute impact on people, including your employees. Your employees may have suffered injuries, deaths, and significant property damages that can have a lasting and profound impact on their personal lives.
Employers should not lose sight that those who work in their businesses may need support in many ways during a crisis. For this reason, employers may need to adapt to the needs of their employees to the extent possible. Employers may find that being supportive, reasonable, and understanding with its workforce during these critical times is the best course of action. Corporate responsibility and good citizenship will reflect well on your organization during a crisis.
Please reach out to your Advice & Resolution team should you need further information or support on this issue.