Labor Dept. guidance urges leave vs. termination for employers hurt by COVID-19

Elizabeth Williams sees the numbers.

According to figures published on Yahoo! Finance, unemployment claims surged by 70,000 at the end of last week, bringing the total number of claims filed to 281,000, the highest since 2017.

Williams, the corporate HR director for Ann Arbor-based Arotech, a defense and security products and services company, says creative solutions, such as offering reduced work schedules, a work-share program or mobilizing employees to work from home are “very smart moves.”

“We need to keep people working so they can continue to provide for their families, while helping the business continue to operate,” Williams said. “We need to provide extra support and solidarity for our families. We’re in this together.”

With companies across the business spectrum facing just such decisions, the state Department of Labor and Economic Opportunity is providing guidance on how employers can avoid layoffs related to the coronavirus outbreak. The guidance centers around keeping employees eligible for assistance.

“We know that many families and businesses are and will experience economic pain as a result of the COVID-19 pandemic,” said LEO Director Jeff Donofrio. “Through Governor Whitmer’s executive action and existing state programs, there are resources for employers affected by COVID-19. We are also strongly urging job providers facing work shortages to place their employees on temporary leave as opposed to termination, so that they may remain eligible for potential federal assistance.”

Work Share: The LEO is encouraging employers who are financially distressed but hoping to continue operations by cutting back hours to use the Unemployment Insurance Agency’s Work Share program. The program allows employers to maintain employment levels and business operations during declines in regular business activity rather than laying off workers. More information about the program can be found at

Temporary leave vs. termination: Due to the uncertainty regarding potential congressional action regarding whether and how furloughed workers will be able to access federal paid sick, family and medical leave resources, LEO is “strongly urging” employers to place employees on  temporary leave and advise the worker that they expect to have work available within 120-days, as opposed to termination.

More: Treasury’s tax delay affects payments, not filing deadline

More: Company owners, nonprofit leaders find new ways to do business during COVID-19

More: Detroit automakers suspend operations amid coronavirus concerns

There is no additional cost to employers, employees remain eligible for UI benefits through the state, and employees may remain eligible for potential federal assistance, according to the LEO guidance.

“If layoffs are unavoidable, the DOL’s advice to use this as a short-term solution while easing the unemployment costs that employers are charged with will also provide much-needed relief to weather this pandemic crisis we are facing,” Aerotech’s Williams said.

Steps for employers placing employers on temporary unpaid leave:

  • Do not terminate the employee – specify a temporary/indefinite leave with return to work expected that is within 120 days.
  • Do not create a contractual obligation to bring the employee back to work – Let the employee know that the situation is fluid and subject to change.
  • Provide the employee with a formal Unemployment Compensation Notice. Employers will need to provide their Employer Account Number and Federal Identification Number.  
  • Communicate to the employee about their rights. Under Governor Whitmer’s recent Executive Order, workers are placed on leave, or are unable to work because they are sick, quarantined, immunocompromised, or have an unanticipated family care responsibility, are eligible for unemployment insurance benefits.
  • Ensure employers are provided information on how to obtain unemployment insurance benefits. A factsheet can be found here.
  • Get each employee’s up-to-date contact information.
  • Let employees know if you will be putting updated information on the entity’s website or intranet, if applicable.
  • Appoint a single, or limited number of individuals who will field questions, and communicate that information to employees.
  • Keep a tally of all questions and answers. Periodically share with employees.

LEO officials said the state is “monitoring issues related to continued medical insurance coverage” and will update accordingly.

Under the governor’s order, they pointed out, an employer must not be charged for unemployment benefits if their employees become unemployed because of an executive order requiring them to close or limit operations. 

Other Resources
Governor Whitmer is also seeking additional solutions for small businesses impacted by COVID-19. Earlier this month, Congress passed legislation that makes $1 billion available to the U.S. Small Business Administration (SBA) to provide low-interest loans to small businesses, small agricultural cooperatives, and nonprofits that have suffered substantial economic losses as a result of the COVID-19 pandemic.  

The governor has informed SBA that she is seeking an Economic Injury Disaster Loan Declaration for the state and has initiated the process to receive the declaration from SBA. Once granted, small businesses in qualifying areas will be able to access low-interest loans through the SBA. In the interim, we are encouraging small businesses that could benefit from SBA loans to start collecting the information they’ll need to complete and submit their application. Examples of information needed can be found here. For additional information or to obtain help preparing the loan application in advance of the declaration,  contact the Michigan SBA offices in Detroit or Grand Rapids.