November 08, 2005
The aftermath of Hurricanes Katrina and Rita serves as a graphic reminder for businesses that they need to revisit their emergency preparedness plans and consider how they might respond in the event of an emergency. An employer that fails to take reasonable steps to prepare for and respond to emergencies will not only suffer greater immediate physical and financial impact from the event but also may be liable for losses incurred by employees, surviving relatives and investors. In the event of a natural disaster or other emergency, numerous employment laws may be implicated. This article will touch upon a few of those laws and provide some advice to employers in terms of how they can prepare for such disasters.
FMLA and USERRA Leave:
Injuries sustained during disasters may qualify employees for leave under the Family and Medical Leave Act (FMLA) to care for themselves or a family member. In addition, the Uniformed Services Employment and Reemployment Rights Act (USERRA) may apply to those employees who are called to duty in securing the damaged cities. Employers should obtain as much information as possible from employees seeking leave following an emergency to determine whether it qualifies as protected leave.
Americans with Disabilities Act (ADA) and Reasonable Accommodation:
Employees who are physically or emotionally injured as the result of a catastrophe may be entitled to reasonable accommodation under the ADA or corresponding state laws.
Layoffs and Reduction of Work Hours:
Disasters may force some employers to implement the unpleasant task of laying off some employees to counteract diminished revenues, and to maintain overall commercial viability. This option may trigger the notice obligations of the federal Worker Adjustment and Retraining Notification Act ("the WARN Act"). Similarly, significant reductions in employees’ work hours, such as reductions of more than 50% each month for at least six months, may also trigger the advance notice obligations of the WARN Act. While one could certainly argue that natural disasters or other emergencies constitute a sufficient exception to the WARN Act, certain preexisting circumstances may void the application of the exception. Employers should not initiate layoffs without careful consideration of the consequences, and alternatives to layoffs.
Delayed Wage Payments:
One anticipated effect of a disaster is the delayed processing of employees’ wage payments. Employers’ wage payment obligations vary from state to state. For example, Louisiana law requires employers to pay employees no more than 10 days following close of the pay period. California law, on the other hand, requires that employees be paid not more than seven days after the close of the applicable pay period. Although states could conceivably relax these requirements in the event that an unforeseen disaster made it impracticable for an employer to meet payroll, employers should nevertheless be prepared to comply with their wage payment obligations. Employers should promptly notify their employees of any wage payment processing problems and advise them of when they can expect payment, particularly where employees are on direct deposit and might otherwise write checks against anticipated deposits.
Continuation of Employee Benefit Programs (ERISA and COBRA):
In a disaster, the widespread closure of facilities and the wholesale displacement of employees create unprecedented benefits issues. Employers will be required to make coverage decisions such as whether they will maintain benefits for employees – especially where the employees, or the business, may at least temporarily not be working or operating. Should an employer decide to continue coverage, the employer should contact its benefits vendors to determine how coverage is to be maintained during this period. ERISA-covered benefits such as life, health and disability coverage are the most likely employer-provided benefits that employees (and their dependents and beneficiaries) will be seeking to maintain in time of disaster.
In the case of a health plan, if an employee is no longer eligible for coverage under an ongoing plan because the employee is not working, then a COBRA-covered plan needs to notify its plan administrator (often the employer). In turn, that administrator will need to send COBRA packages to employees and their covered dependents. The DOL has taken the position that COBRA notices can be timely when sent up to 45 days from the COBRA “qualifying event,” The general rule for all notices is that they need only be sent to an employee’s last known address. If a decision is made to discontinue coverage and terminate any and all benefit plans, this must be communicated to the employee within 30 days or less under most states’ insurance laws.
In terms of preparing for an emergency, employers are encouraged to familiarize themselves with NFPA 1600, the National Fire Protection Association Standard on Disaster Management and Business Community Programs. Available at www.NFPA.org, NFPA 1600 contains a roadmap that an employer may follow when developing an emergency preparedness plan. Indeed, the 9/11 Commission recommended that NFPA 1600 be adopted as the country’s National Preparedness Standard. The U.S. Congress and other government agencies have also endorsed this voluntary standard for private-sector businesses.
While NFPA 1600 is a voluntary standard, it is increasingly becoming the benchmark against which preparedness is measured. Employers should remain mindful that guidelines and recommendations can quickly evolve into legal requirements.
According to NFPA 1600, an employer’s disaster preparedness plan should include the following elements:
- Historical threats, such as natural disasters, and possible acts of terrorism;
- Infrastructure disruption, including transportation, power, sanitation and distribution;
- Accommodation of staff (on- or off-site) for up to 72 hours without outside assistance
- Reunification plans for employees’ families;
- Communications with employees, customers, suppliers and safety agencies;
- Security of operations during and following the disruption and possible security measures for employees’ homes; and
- Distribution of cash to employees when banks and ATMs are unavailable and credit cards cannot be processed.
Employers are strongly encouraged to develop and implement disaster preparedness plans in order to safeguard their employees, revenue and physical assets.
Patrick Hicks is the managing shareholder of the Las Vegas and Reno offices of Littler Mendelson, the nation’s largest labor and employment law firm exclusively representing management. Deborah Westbrook is an associate in the firm’s Las Vegas office. If you would like further information, you are encouraged to contact a Littler attorney at 1.888.LITTLER, [email protected], Mr. Hicks at [email protected] or Ms. Westbrook at [email protected]