MANAGING THE UNEXPECTED
One of C2’s government contractor clients recently called seeking guidance because an employee on leave for a family vacation did not return to work when expected. The client phoned the employee’s emergency contact, only to discover the employee unexpectedly passed away a few days before.
Everyone knows that death is a part of life. However, it can often come without warning. And while everyone’s first thoughts are always with the employee’s family and friends, an employee’s passing can sometimes create operational and compliance challenges for the employer. What follows are some keys to successfully navigating an employee’s unexpected passing.
A. An On-the-job Accident
If an employee’s death results from a work-related injury, the employer should immediately contact its workers’ compensation insurance provider. Employers are also required by law to report a work-related death to the Occupational Safety and Health Administration (“OSHA”) within eight (8) hours of learning of the death. (By contrast, employers must report an employee’s hospitalization, limb amputation, or loss of an eye to OSHA within twenty-four (24) hours.)
It is also a good idea to request a copy of the employee’s death certificate. While this may feel uncomfortable, asking for a death certificate is necessary to protect the company against potential fraud, and may help facilitate insurance related matters on behalf of the deceased employee.
B. Notifying Staff and Customers
Regardless of the manner of passing, management should quickly establish a communication plan to inform the employee’s colleagues, manager(s), internal and external customers, etc. Establishing and delivering a unified message can help ensure that employees who were close with the deceased employee learn of the passing in a respectful manner. Depending on your particular work environment, it may be appropriate to first quietly notify those who worked most closely with the deceased before making a general announcement. Employers should be sure to comply with federal and state privacy laws (the Health Insurance Portability and Accountability Act (HIPAA), for example) when sharing information about the employee’s death and its cause. For example, if an employee passes away suddenly from a heart attack, it would be appropriate to disclose to company staff or customers that the employee passed away unexpectedly. However, you should leave out that the employee suffered a heart attack.
If applicable, remind employees about the services of the Company’s Employee Assistance Program (EAP). The EAP has trained counselors available help employees through the stress and grief they might experience. If your company does not have an EAP, most local communities have a grief counseling organization to whom you can refer individuals who need to speak with someone, often at little to no cost to the employee.
C. Mitigating the Business Effects
Employers should be prepared to address time-off requests for employees planning to attend services or who may request time off to grieve. Management may find itself in the uncomfortable position of balancing multiple requests for leave on the same day(s). Considering the impact of the leave requests on the business is important, but care should also be taken so that leave requests are not denied “out of hand” without recognizing that the deceased’s close friends (or even family members who are employed) may wish to attend or even participate in funeral services.
An employer confronted with a large number of requests for leave should (if it has not done so already) create a “skeleton crew” plan that will allow the company to function normally for a short period of time with significantly less than its usual number of staff. Such plans are most often used in the event of an emergent situation (such as severe weather, terrorist attack, or another type of disaster). However, this plan may also be useful in the aftermath of an employee’s passing (particularly, a key employee).
Management should also make arrangements to cover the deceased employee’s workload. In the short term, management should first identify all pending assignments, meetings, or commitments and make a plan for covering or completing them. For example, was the person scheduled to meet with a customer? Or was the employee scheduled to speak at an upcoming event? For our federal contracting client, the employee who passed was important to their federal contract, so covering the work and identifying a replacement quickly was critical.
In addition to their workload, remember the deceased may have had permissions that allowed access to company or client computers, telephones, and physical premises that other employees may not enjoy. An employer should do two things: (1) go through its standard employment separation checklist to ensure that all accesses are disabled and all equipment, such as keys and laptop, is retrieved from the deceased’s family; and (2) make sure the employee(s) who will assume the employee’s workload in the interim is given the necessary permissions, site access, or equipment.
Lastly, for those individuals outside the company who may not know about the employee’s passing, it is helpful to engage an auto-response to the deceased’s email letting people know that somebody else will be responding to them, and auto-forwarding the deceased’s phone messages to the appropriate person.
D. Wage and Benefit Considerations
Many states have requirements regarding when and how final pay must be issued. Depending on the state, employers may be required to issue the employee’s wages to the employee’s next of kin, legal representative or to his or her estate. Sometimes, the check should be issued to the deceased employee, as normal, and then the estate administrator takes care of cashing or depositing it. Although less common, the deceased employee may also have previously given “power of attorney” to an individual in the event of the employee’s death, to whom the final check should be issued.
Employers should also treat any accrued, but unused paid leave as if the employee had simply resigned their employment and payout such leave in accordance with applicable state law or, if no such law exists, according to company policy. At the appropriate time, inform the next of kin or beneficiary about the timing of payment of remaining wages, including any leave balance. Such payment should ordinarily be made to the same person to whom the deceased employee’s final wages will be sent.
Regarding tax implications, employers must record and report payments to a deceased employee carefully, especially if payments to the deceased will occur in a different calendar year than the employee’s death. For payments made after the employee’s death but in the same calendar year the employee died, the employer must withhold Social Security and Medicare taxes. However, these taxes do not need to be withheld if the employer makes the payment after the calendar year in which the employee passed. Subject to certain exceptions, employers must also report payments to an employee’s estate or beneficiary on Form 1099-MISC.
In addition, employers that sponsor group health plans or retirement plans may be subject to requirements under the Employee Retirement Income Security Act (ERISA), including the continuation of health coverage under the Consolidated Omnibus Budget Reconciliation Act (COBRA) or state continuation of coverage laws (“mini-COBRA”). Remember to review flexible spending account balances and notify the next of kin of the procedure to request reimbursement. Locate beneficiary designations for all benefits, such as retirement, company sponsored life, and voluntary life plans and ensure instructions to retrieve benefits are clearly outlined.
Once you have compiled information about benefits and wages, employers should notify the employee’s beneficiary and next of kin and explain the benefits that are available and the timeline of any forthcoming wage payments. Ensure the family knows whom to contact at the company regarding benefits-related issues, and identify any personal belongings from the deceased employee that family members or next of kin may want to retrieve.
The death of an employee requires a delicate balance of compassion and compliance while still meeting the operational demands of the business. No person or company is ever completely prepared for the unexpected death of an employee; however, recognizing ahead of time the challenges it can pose and preparing accordingly will go a long way toward mitigating the confusion and ensuring a smooth transition during a very difficult time.
C2 provides strategic HR outsourcing to clients who want to develop optimal workforce strategies and solutions to allow them to be more competitive and profitable. C2 blog posts are intended for educational and informational purposes only.