Will COVID-19 change workplace benefits forever?

As the American workforce went remote overnight, companies, including community banks, were forced to accommodate this new way of working. We ask if there could be long-term changes in workplace benefits, from WFH to enhanced sick leave—and if employees will be driving them.

By Elizabeth Judd

When the coronavirus pandemic hit, Kennebec Savings Bank president and CEO Andrew Silsby began looking for a way to thank his employees for helping small businesses weather hard times. His answer was to give each of the 144 employees at his Augusta, Maine-based community bank a weekly $50 bonus to be used at local restaurants with takeout service during April and May. “I feel an immense amount of empathy for the restaurant community,” Silsby says. “They were hit instantaneously with a lack of patrons, and money just stopped.” He dubbed the program #ksbeatslocal.

The gesture by this 150-year-old, $1.2 billion-asset community bank represents one innovative approach to workplace benefits, albeit a temporary one. Every community bank is examining the impact of the COVID-19 pandemic on workplace benefits, including how the Families First Coronavirus Response Act (FFCRA) and state/local leave provisions coincide with paid time off policies and practices; how various stay-at-home mandates impact prior, present and future telecommunications arrangements and travel; the availability of workers’ compensation and other short- and long-term disability benefits for those experiencing COVID-19 symptoms or who have been diagnosed with COVID-19; and unemployment benefits for furloughed employees.

“Do you change your benefits package today? No, I don’t recommend that. Things are just too fluid.”
—Jennifer Nodes, Jackson Lewis

While experts believe that the novel coronavirus pandemic may affect how community banks view benefits like working from home or paid sick leave, most advise against making hasty changes that would be difficult to reverse later.

Now is the time for reevaluating and reimagining benefits packages rather than making sweeping changes, says Jennifer Nodes, an attorney at Jackson Lewis, a national labor and employment law firm at the Minneapolis branch. “Do you change your benefits package today? No, I don’t recommend that,” she says. “Things are just too fluid.”

As a temporary fix, some community banks have given their employees a one-time payment to be used for child or elder care or anything else they need. Others have increased paid time off (PTO) or have surveyed employees about the hardships they face.

Experts agree that making one-time accommodations to benefits makes sense, praising banks for how quickly and comprehensively they have acted. When it comes to modifying benefits, “industry wide, banks have been incredibly accommodating of individual specific requests,” says Ashwin Adarkar, senior partner and leader of McKinsey’s global retail banking practice. “We’ve seen a great deal of effort to accommodate the requests of employees.”

Teleworking goes mainstream

Historically, working from home has been viewed as an employee benefit, one that only a handful of employees enjoyed.

Prior to COVID-19, a mere 7% of U.S. employees had the option to regularly work from home, according to the Bureau of Labor Statistics. These numbers rose dramatically once the pandemic hit. According to Gallup data, at the end of April 2020, 63% of U.S. employees said that they had worked at home within the past seven days.

At some banks, changes have been seismic. Silsby notes that within nine days’ time, Kennebec went from 2% to 82% of its employees working remotely. “We had a pandemic plan in place,” he says, “but in full disclosure, I never expected we’d reach the 50% mark.”

Such turnarounds are not unusual. “Many banks,” according to Adarkar, “have surprised themselves in their ability to rapidly shift to a work-at-home environment. It’s been a heroic and herculean effort by the banking industry to provide a continuity of service through this crisis.”

“It’s easy to assume that working from home is a benefit, and in many cases, it really is. In other cases, it’s extremely difficult, especially if people are providing care for someone else or they don’t have an ideal work-from-home situation.”
—Randell Leach, Beneficial State Bank

Randell Leach, interim CEO at $1.2 billion-asset Beneficial State Bank in Oakland, Calif., says working from home shouldn’t be considered a benefit.

“It’s easy to assume that working from home is a benefit, and in many cases, it really is,” he says. “In other cases, it’s extremely difficult, especially if people are providing care for someone else or they don’t have an ideal work-from-home situation. … Really, we need to have this extreme empathy and not have assumptions about what’s best for any individual.”

A Gallup poll conducted between March 28 and April 2 bears out the suggestion that employees are not monolithic in their preferences. Gallup found that almost 60% of Americans who were working from home would prefer to work remotely “as much as possible” even after the lockdown had ended, with 40% preferring to return to the workplace.

Janet Olawsky, an attorney at Jackson Lewis, points out that even though community banks quickly—and for the most part, successfully—pivoted to working at home, the return to traditional work sites may be bumpier.

For community bankers anticipating this transition, she underscores the importance of understanding all applicable laws. For instance, employees who feel unsafe in their working conditions might report violations to OSHA and stop coming to work. And under the ADA, employees with medical conditions can request workplace accommodation requests. Olawsky predicts that working from home may top the list of popular accommodation requests.

Companies are only required to provide reasonable accommodations unless doing so poses an undue hardship. Olawsky points out that employers are going to have a tougher case for denying these types of requests once the lockdown ends. “Now that we’ve been forced to work from home,” she says, “people are more confident that the workforce can work remotely and be productive.”

Steven Klein, president and CEO of $5 billion-asset Northfield Bank in Woodbridge, N.J., was devising a more formal work-from-home policy when the coronavirus hit. Based on recent experience, he says that the policy will prioritize “safety, adaptability and resilience.”

Klein continues: “We’re looking to have an adaptable model where in a normal circumstance with no threats of COVID, we’re at 50% capacity. And if there’s a vaccine and little to no threats, then maybe we’d be at 75% capacity.” In even the rosiest scenarios, he anticipates getting rid of 25% of desks and creating more of “a hoteling structure.”

Protecting sensitive information with a remote workforce

“Maybe it comes from being at home and working in your sweatpants, but employees tend to be a bit more lax about security when they’re outside the office,” observes Brendon Liner, vice president at Nology Networks, a managed cybersecurity and technology consultancy based in Minneapolis. He emphasizes that community bank employees working from home need the right procedures and technologies to safeguard sensitive information.

Liner recommends that community banks:

  • Implement VPNs, or virtual private networks. Setting up a VPN is easier than it sounds, generally requiring just a few days of work by a consultant and a price tag of “a couple thousand dollars,” he says.

  • Require multifactor authentication for internal technologies, from email and file management systems to customer records. Community banks have insisted that customers confirm their identities with multifactor authentication (those four- or six-digit codes sent to an independent device) but have not held employees to the same standard, Liner says. He explains that multifactor authentication is easily implemented and not particularly costly, running around $6 per user.

“Two years ago,” Liner says, “the Department of Homeland Security said that every business should have multifactor authentication turned on for every possible service. And we see two years later … less than 10% of businesses are actually deploying that technology.”

Finally, Liner urges community bankers to shore up security now in case a second wave of coronavirus hits. “It’s unfortunate,” he says, “but there are hackers and bad actors out there taking advantage of the pandemic and civil unrest. … Now is the time to take a step back and be prepared in case something like this happens again.”

Revisiting everything from sick leave to vacation pay

Community bank managers have only so much control over workplace benefits. When it comes to sick pay, for instance, many cities, counties, and states have rules or regulations dictating how an employer must offer sick pay, says Jackson Lewis’s Nodes. She notes that the federal government’s Family First Coronavirus Response Act (FFCRA) required private companies with fewer than 500 employees to provide two weeks of paid sick leave to an employee who is unable to work because the employee is quarantined (pursuant to federal, state, or local government order or advice of a healthcare provider), and/or experiencing COVID-19 symptoms and seeking a medical diagnosis.

That said, community banks can use a variety of ways to encourage sick employees to stay home longer. Mark Hanna, president and CEO of $829 million-asset F&M Bank in Timberville, Va., says that he has stopped charging employees a PTO day for staying home sick, hoping to encourage anyone who is ill to maintain “social distance from coworkers and clients.” He continues: “Whether we continue that post-reopening is a question. I think we probably will to some degree, but we haven’t worked through all the details.”

What will happen to childcare benefits is another unknown. Under the FFCRA, employees who must stay home to care for children while schools and day care facilities are closed are eligible for two weeks of leave at two-thirds of their normal pay. FFCRA benefits currently expire on Dec. 31, 2020. Nodes says it is too early to opine on whether employers will voluntarily extend FFCRA benefits beyond the expiration date, but it seems unlikely that there will be a wide-scale adoption given the associated cost.

One of the issues employers face once the workforce returns may be workers’ compensation claims. “People may be very diligent at home and not see anyone,” Olawsky says. “If they’re then forced to return to work and get coronavirus, they may file for workers’ compensation, claiming their illness arose out of their employment.”

For some banks, the best and simplest approach is to view benefits holistically, as part of a bank of hours that fall under the heading “paid time off.” Northfield’s Klein created a “support bank” for COVID-related issues in mid-March. As of early June, 50 of the bank’s 370 employees had used some of the 80 PTO hours they had been granted in addition to the 80 hours or more of PTO each employee receives annually. Klein wanted PTO to alleviate some of the stresses of pandemic life: “We said, ‘Even if you’re at home, take time for yourself.’ This isn’t business as usual.”

Another approach was to give employees a monetary bonus to use however they saw fit. Going this route, F&M paid all nonexempt employees a one-time bonus, ranging from $800 for full-time employees to $200 for those working 20 hours or less.

“We have a lot of parents—and single parents—in our employee base, and many had unexpected responsibilities. Even if there were no new needs, this [one-time bonus] was a way to say ‘thank you.’”
—Mark Hanna, F&M Bank

“We wanted to recognize that the work you’re asked to do is more challenging than it was 30 days ago,” Hanna says. “We have a lot of parents—and single parents—in our employee base, and many had unexpected responsibilities. Even if there were no new needs, this was a way to say ‘thank you.’”

Fostering community in the new normal

Many community bankers are starting to reflect on what it will mean to be a community bank in the post-pandemic future.

Klein notes that this crisis was a wake-up call about “how many of our employees are taking care of others” and how difficult life becomes when plans for care are disrupted. “We have to think through the entire benefits package and see how things need to change going forward,” he says. “In employee benefits, when things aren’t working for people, we get the feedback very quickly and can adapt very quickly, too.”

Meanwhile, Beneficial’s Leach foresees a chance to reinvent workforce benefits. “Things that we thought of as baseline aren’t the case anymore,” he says. “This has challenged the basic assumptions we’ve all been operating under.”

He maintains that there are important implications from the widespread use of Zoom and other videoconferencing technologies.

“What has been wonderful,” he says, “is we’re now seeing each other in our living rooms and kitchens. Family members come by, and pets, too. It really has helped us see each other for the individuals that we are. That’s powerful.”

If, as many experts believe, more teleworking and videoconferencing are in the cards, community bankers will need to find ways to project their friendly, customer-service-oriented image in a more remote environment.

“Community banking has taken an enormous amount of pride in providing face-to-face relationships and good customer service,” Silsby says, “and it’s harder to do that over video or a screen.”

That said, Silsby points out that in the first week of June, Kennebec used DocuSign to open 167 new checking accounts electronically or over the phone. He attributes these new accounts to the fact that community banks such as his “are longtime staples of the community and many people turn to us in times of uncertainty.”

He concludes: “We’re a nimble group and this is another moment for community banks to shine.”

How to handle employee requests for new and different benefits

In the coming months, community bankers will almost certainly face requests for changes to benefits. Here are some ways to prepare.

Canvas employees. Randell Leach, interim CEO at Beneficial State Bank in Oakland, Calif., has relied on employee surveys to gauge sentiment. “We have a wealth of insights from our team,” he says, “and these ideas will inform how we create work-from-home benefits for the future.”

Early in the pandemic, Andrew Silsby, president and CEO of Kennebec Savings Bank in Augusta, Maine, surveyed employees to learn who would face serious challenges if schools and day care centers closed. He worked with the 15 employees who said that these situations would create a hardship and “prioritized them in our deployment activities, trying to let them work from home.” His motto has been that “we’re in this storm together, but we’re all in different boats.” Communicating regularly allows him to help employees solve whatever problems they face.

Form a taskforce. Janet Olawsky, an attorney at Jackson Lewis, a labor and employment law firm in Minneapolis, recommends creating a coronavirus taskforce to consider everything from the safety of branch facilities to changes in workplace benefits. When it comes to making employees feel confident about returning to branches and offices, having a well-articulated plan, she says, is critical. “We want banks to communicate their plans,” she says. “Then if an employee says, ‘I don’t feel safe here,’ the bank can say, ‘No, we are completely prepared, and here’s our taskforce and what we’re doing. This is a safe environment.’”

Encourage many voices in decision-making. Olawsky advises community bankers to listen to “a mix of people within the bank.” Ideally, she says, a taskforce might include people “who can put a stamp on something and make it happen,” as well as tellers and employees in administrative positions. “A lot of times,” she adds, “employees have a better finger on the pulse of what other employees are feeling—and what their concerns are.”

Be flexible. Jennifer Nodes, an attorney at Jackson Lewis, considers adapting policies rather than making permanent changes a wise strategy given the uncertainties ahead.

“I’ve seen bankers really try to work with their team to make minor exceptions to policies and procedures, documenting that it is temporary and it’s for addressing the current circumstances we find ourselves in,” she says. “Flexibility is paramount; the pandemic is unlike anything employees have experienced before, and existing policies and procedures may need to be periodically amended to reflect these unusual times and circumstances.”

Elizabeth Judd is a writer in Maryland.