CPA Practice Advisor - 20

A YEAR IN THE LIFE: PAYROLL

ACCOUNTANT

Avoiding Employee Recall Issues After Coronavirus Recedes:

LABOR LAW

By Richard D. Alaniz, JD

THE DESIRE TO get back to normal is growing by the day across the country. It
is a feeling that is shared by virtually every person in the country. As the effects
of the Coronavirus pandemic begin to dissipate, shelter-in-place orders expire,
and the preventative steps taken have their intended impact, employers will
begin the process of recalling furloughed employees. Careful planning will be
critical if potential issues, both legal and practical, are to be avoided.

As long as anti-discrimination laws are not
violated, neither the state nor federal government dictates how a recall of laid off employees
must be conducted. To the extent that there
are any rules or guidelines to be followed,
they are primarily the result of obligations
under a collective bargaining agreement or an
employer's policies such as those contained in
an employee handbook. Even if there are no
written guidelines, there may be an established
past practice, course of conduct or other written or verbal commitments that employees
might reasonably expect would be followed
when recalls begin.
Whatever recall procedure an employer
follows, it is imperative that employees be
thoroughly informed about the process. This
is a time for complete transparency. With
employees understandably desperate to
once again be earning a paycheck, those not
promptly recalled when operations resume are
sure to raise questions. Early and clear communications to all employees regarding the
recall process and schedule will help to ease
the anxiety while waiting for a call back. Since
it is very probable that the prolonged business
stoppage has resulted in the permanent loss of
some jobs, the issues of which jobs and whether
those whose jobs were eliminated have an
opportunity to fill other available positions
will be equally critical to address.

RECALL OBLIGATIONS
If an employer is subject to a collective
bargaining agreement, it is virtually certain
that it contains layoff and recall provisions.
Seniority generally dictates the order of recall
and employers are obligated to follow it or else

MAY 2020 ■

be subject to grievances and/or unfair labor
practice charges. In most non-union situations
the employer must look to its written policies,
usually contained in the employee handbook.
Many include language relating to layoffs
and recalls. If so, those procedures should
be followed absent unusual circumstances.
Since an employee handbook is generally not
considered a binding contract, failure to follow
its provisions may not result in a lawsuit, but
employee morale and the employer's reputation
will suffer, perhaps permanently.
In circumstances where there is neither
a contract nor written policies, employers
must next look to any representations made
to employees, either verbal or written. Were
any promises or commitments made in the
layoff notice, memos, letters or e-mails about
the employees' jobs when economic circumstances change? Did supervisors or managers
make promises of recall to employees? Such
representations may have created rights or
obligations where none may have existed
previously.

THE RECALL PROCESS
If there is no contractual or established policy
or commitments that mandate a process, an
employer is free to implement a policy on
recalling employees. A policy is imperative
if the recall is to proceed in an orderly and
legal fashion. In order to help avoid any legal
claims, the policy must be reasonable and nondiscriminatory. It must be applied in such a
manner as well. The policy must be specific
about the terms and conditions of recall. It
should address at a minimum, the following
issues: (1) How the recall decisions will be

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made. It should specify that the company
retains discretion to consider employee's
skills and the needs of the business; (2) Notice
requirements, including responsibility on the
employee to maintain contact to affirm availability and time frame for responding to recall
notice; (3) Impact of the furlough on vacation
accrual and other benefits; (4) The time limit
on how long an employee will be considered to
have recall rights; (5) Pay out of any accrued
vacation or similar benefits for employees
not recalled and/or whose jobs have been
eliminated. There are no legal requirements
for how long the period of recall rights may
be. While other matters may be addressed in
a recall policy, these listed are among the most
fundamental decisions that will be made in any
employee recall.

POTENTIAL DISCRIMINATION
CLAIMS
In most if not all operations, quickly resuming
production will be the priority. The potential
for discrimination arises in the selection of
who to recall. All of the protective provisions
of Title VII and similar state human rights
laws continue to apply. Since the majority
of today's workforce falls within a protected
category, there will be some situations where
an employee within one or more of the various
protected categories will be passed over for
recall or not recalled due to job elimination.
While potential claims of discrimination based
upon race, gender, national origin, or disability
are always possible in such circumstances,
perhaps the most potential lies in claims of age
discrimination under the Age Discrimination
in Employment Act (ADEA). The large number
of employees well past the protected age of
40 in today's workforce should be a cause for
concern for both the recall process, as well
as in the case of job eliminations. Whether
accurate or not, older workers are often viewed
as less productive and more expensive than
younger employees. They are sometimes the
first casualties in a workforce reduction.
The impact of the extended job

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