As the United States begins to reopen from the COVID-19 pandemic and state-wide quarantine orders lift, many questions are emerging for employers about the months ahead, particularly about how they can continue to prepare for the unexpected.
How should organizations start bringing employees back to worksites, open their doors to customers and re-start regular business activities in a world so drastically impacted by social distancing? And how will benefits planning shift in this new economic reality?
Colonial Life is a leading provider of voluntary benefits and enrollment services, and our teams are constantly analyzing market trends and internal data – as well as conducting external research – to help our clients navigate complex challenges and prepare for life’s unexpected moments. Part of this research includes short “pulse surveys” of the market, in which we contact both clients and non-clients to understand business practice trends and sentiment.
From April 21 to 24, 2020, we surveyed 287 companies across the U.S. We asked employee-benefits decision makers and plan administrators how they have been managing the COVID-19 crisis and what their plans are going forward.
- Employers are struggling to do what is right for their employees – but are also faced with the reality of managing employment costs as a result of the pandemic-induced economic downturn.
- Although some companies have resorted to furloughs, half of employers with furloughed employees report they are covering their employees’ portion of the premiums for medical and life insurance benefits.
- Employers who’ve shut down offices and transitioned employees to working from home face significant concerns about bringing those employees back to work. Employee health and well-being are central to these concerns. Still, two-thirds are formulating their return-to-work plans, with almost all of these favoring a gradual, phased-in approach.
- One-third of employers foresee some level of change in their benefit plans going forward.
Actions to reduce employment costs due to the economic downturn
Q: Has your organization taken or is it planning to take any of the following actions to reduce employment costs due to the economic downturn related to the COVID-19 pandemic?
|Total respondents||Yes, already done||Yes, planning to||May, if necessary||No plans to yet|
|Furloughs||26% - Yes, already done||4% - Yes, planning to||19% - May, if necessary||51% - No plans to yet|
|Layoffs||14% - Yes, already done||2% - Yes, planning to||19% - May, if necessary||65% - No plans to yet|
|Hiring Freezes||37% - Yes, already done||5% - Yes, planning to||22% - May, if necessary||36% - No plans to yet|
|Salary Freezes||28% - Yes, already done||7% - Yes, planning to||22% - May, if necessary||44% - No plans to yet|
|Reduction in salaries/hours/shifts||26% - Yes, already done||5% - Yes, planning to||22% - May, if necessary||44% - No plans to yet|
|Bonus Freezes||22% - Yes, already done||5% - Yes, planning to||24% - May, if necessary||48% - No plans to yet|
|Retirement Plan Matching Elimination or Freezes||10% - Yes, already done||1% - Yes, planning to||12% - May, if necessary||77% - No plans to yet|
|Employer-paid Insurance Benefits Elimination or Freezes||1% - Yes, already done||1% - Yes, planning to||8% - May, if necessary||90% - No plans to yet|
Reducing employment costs
Amid the historic economic downturn caused by the coronavirus, organizations have taken significant actions to reduce employment costs, our survey reveals.
One in three (31%) employers we surveyed have laid off or furloughed employees since March 1, 2020. Among these organizations, approximately two-thirds of their workforce, on average, is still intact. However, two in ten (18%) employees still working have experienced a significant reduction in hours or compensation.
Nine in 10 employers are not yet planning to eliminate or reduce employer-paid insurance benefits as a means of reducing employment costs.
Even as companies have been forced to make hard choices, a silver lining is that many have been doing what they can to support their furloughed employees.
More than half of organizations say they will fully cover the employee-paid share of medical or life insurance premiums (52% and 54% respectively) to avoid a lapse in coverage during furlough and ease the financial burden on employees. Slightly fewer than half of furloughing employers claim they will do the same for dental (46%), vision (44%), while more than a quarter are doing so for supplemental health (26%).
As the easing of some state restrictions began to appear on the horizon in late April 2020, companies exhibited a wide range of responses in terms of how they would be returning to “the new normal.”
Nine in 10 (92%) of employers have transitioned at least some employees to a work-from-home arrangement due to COVID-19. Of these, two-thirds are currently planning how to return their workers to the workplace. Most are considering a phased-in approach, yet one in ten companies plans to allow their entire workforce to return at once.
Just under a third of companies (32%) said they haven’t yet crafted a return-to-work plan. It is unclear whether these companies are being cautious and planning to continue work-from-home arrangements for now, or whether the sheer complexity of the environment has prevented them from beginning to plan.
“I’m a little bit surprised at the 10% of employers who are going to have everyone come back at once,” noted Ellen McCann, Assistant Vice President and Legal Counsel at Unum Group’s Employment Law Group, during an HR Trends podcast episode that discusses the return-to-work data in this survey. Colonial Life is a subsidiary of Unum Group.
“It will take a lot of thought and planning, particularly [depending] on where the employers’ operations are,” said McCann. “We know we have some jurisdictions who are going to be requiring certain things of their employees when they bring them back, such as social distancing and other CDC best practices that will have to be followed. A lot of work will need to be done just to figure out the logistics.”
Keeping the building clean.
Continuging to maintain social distancing.
Employee safety and well-being is a key concern. When asked for their top concerns as stay-at-home guidelines began to ease in the U.S., many companies cited preventing the virus from spreading at the office/sanitization/maintaining social distancing, as well as employee health and safety.
Other themes that emerged include:
- Another outbreak/resurgence of the virus
- Returning to work/life too soon – when is the right time?
- Workers not wanting to return to office – due to fear or now realizing they can do their job from home
Employer’s top return-to-work concern is the health and safety of their employees.
Benefits planning in the coming year
With so much disruption to companies and the lives of employees, how much change do companies envision making to their benefits plan design in the coming months?
Slightly fewer than half of companies (46%) surveyed said they had no plans to change their benefit plans, although a third of companies do plan for some level of change in coming months.
The types of changes planned vary dramatically. Some organizations are considering boosting coverage – such as including more comprehensive coverage/increasing benefit options and promoting/adding telehealth coverage. Others are considering reducing the variety of benefits offered or shifting premium splits to more employee-paid.
As your trusted partner in preparing for the unexpected, Colonial Life will continue to monitor trends and conduct surveys to keep you informed on the best ways to protect your employees.