Trends in COVID Recovery: Management and Legal Challenges

It is becoming increasingly difficult to fill vacancies and retain existing employees. HBR’s survey of pay increases shows a doubling of increases to 4% from the historical norm of 2%. But not every company can compete in a spiraling upward “top dollar” arena. HBR notes, “[W]We are seeing some employers reduce the number of hours worked by their employees and keep compensation flat. . . Ultimately, we’ll likely see a handful of organizations adopt 32-hour workweeks with the same pay as a new way to compete with knowledge workers. (Credit: denisismagilov/Adobe Stock)

Editor’s note:
This is the first part of a two-part series focusing on trends shaping the workforce.

By all accounts, Americans are on a bumpy road to recover from the COVID-19 pandemic. Along with the tragic loss of life, COVID has disrupted in-person communication and commerce, with lasting effects on how people live, work and connect.

On January 13, 2022, “Harvard Business Review” (HBR) released a forecast of the challenges business leaders will face during this COVID recovery season, titled “11 Trends That Will Shape Work in 2022 and Beyond.” Building on these predictions, this two-part article examines some of their legal implications.

Part 1 of this article focuses on the first five trends: increased emphasis on justice and equity; various workplace vaccination mandates; shorter working weeks; increase in turnover; and automate management tasks. Part 2 will cover the other six.

Trend 1: Justice and equity will define organizations. HBR calls issues such as diversity, equity and inclusion (“DEI”) “flashpoints in society.” HBR studied the earnings calls of Standard and Poor’s 500 CEOs from 2018 to 2021 and found a 658% increase in DE&I discussions.

“Talk” may be the key word. Treating DE&I in practice as an aspiration raises legal eyebrows. Imagine a CEO being cross-examined in a lawsuit: “Your company’s website, diversity policy, and bulletin boards state that you are ‘inclusive,’ but your records show that only 4% of your directors are diverse and 5% are women. Were you aware of this when you fired my client, which is both?”

CEOs have given investors “a lot more talk” but, to paraphrase country music star Toby Keith, need “a lot more action”.

Trend 2: The thorny issue of vaccination mandates. HBR cites a survey by Gartner, Inc., which found that human resource managers expect to see nearly 7% of the workforce quit if vaccination mandates are issued — 15% in some regions. HBR also notes the legal risks associated with the imposition of such mandates.

Balancing the risk of litigation for issuing warrants, federal and state laws impose workplace safety obligations on most employers. The California Department of Industrial Relations requires that “for indoor locations, the employer shall…maximize ventilation with outdoor air;” install “the highest level of filtration efficiency compatible with the existing system”; and assess whether high-efficiency particulate air (HEPA) or other filtration units would reduce the risk of COVID-19 transmission.

Health regulations are not all cut from the same cloth, they are more like a surreal quilt. Company vaccination policies must comply with federal, state, and local requirements and contractual commitments that dictate vaccination. Companies with sites in multiple jurisdictions should tailor their vaccination requirements for the given locality.

Trend 3: The four-day work week. It is becoming increasingly difficult to fill vacancies and retain existing employees. HBR’s survey of pay increases shows a doubling of increases to 4% from the historical norm of 2%. But not every company can compete in a spiraling upward “top dollar” arena. HBR notes, “[W]We are seeing some employers reduce the number of hours worked by their employees and keep compensation flat. . . Ultimately, we’ll likely see a handful of organizations adopt 32-hour workweeks with the same pay as a new way to compete with knowledge workers.

Would a 32-hour work week apply to everyone, and if so, can the organization succeed with a 20% reduction in productivity? Like salary increases, they must be applied fairly. If women or people of color, for example, are disproportionately excluded from the program (all other all other things being equal), this is cause for concern. Equity includes reasonable accommodations for workers with ADA-recognized disabilities that reduce their ability to work.

Trend 4: Remote work can inadvertently lead to increased turnover. As HBR says,Flexibility in how, where and when people work is no longer a differentiator, it’s now table stakes. Employers who ignore this “will see an increase in turnover as employees move into roles that offer a value proposition that better matches their desires,” HBR predicts.

HBR notes, however, that greater flexibility could increase turnover, as remote workers tend to have weaker social ties with co-workers, making them more likely to jump ship. HBR reports that the risk of attrition exists even when workers have to go to the office once or twice a week. Loyalty remains the weak force. Strength: higher pay or better opportunities.

Employers cannot prevent turnover, but can apply reasonable non-compete clauses that do not deprive the wandering employee of the ability to earn a living, but not with the company’s proprietary information or trade secrets.

Trend 5: Automation of managerial tasks. The work of managers is often repetitive (planning, approving expense reports, and tracking delegated tasks) and can be done with existing technology.

Louie Castoria (Credit: Kaufman, Dolowich & Voluck) Louie Castoria (Credit: Kaufman, Dolowich & Voluck)

HBR plans to automate other tasks, even giving employees feedback on their performance: “Our research shows that up to 65% of the tasks a manager currently performs have the potential to be automated. ‘by 2025.”

How will automation affect management liability, the risks typically insured by directors’ and officers’ liability policies? Who will be responsible for machine errors, the CEO or IBM?

If the past two years have taught us anything, it’s how to adapt to the unexpected.

Louie Castoria is a partner in the San Francisco office of Kaufman Dolowich & Voluck LLP, mediator and adjunct professor of law at Golden Gate University. This article does not provide legal advice. The opinions expressed are those of the author and not necessarily those of the firm or its clients.

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