Navigating employment issues in this post-pandemic world has been and continues to be a rollercoaster for employers to say the least. Since the onset of COVID-19, employers have had to learn how to navigate through shut-downs; lay-offs and retirements; news of a booming job market amid historic low interest; dizzying changes in vaccine mandate requirements; general mental and physical health concerns and fears; the ever expanding legal and regulatory landscape; the need to stay creative and flexible to attract and retain talent; and new risks as a result of working virtually. In addition, none can escape the news of recession and the realities of inflation and the effects on labor. The ride through COVID-19 and beyond continues to be anything but normal.
But we may ask how are we entering a recession when we can’t walk 10 yards without passing a ‘Help Wanted’ sign? A virus that brought with it a wave of unemployment appears to have receded and returned nearly 96% of the jobs that it took away.1 However, its effects are certainly still being felt and have not been distributed equally across the labor force. Months of unabashed excitement at the hottest job market in years has been curtailed by news of layoffs and rescinded job offers in certain sectors.2 Nevertheless, when viewed from a distance, it seems that the labor market as a whole is surprisingly shaking off recessionary concerns. Although certain sectors may be responding negatively to the market woes, the latest jobs report indicates that US labor force added 263,000 jobs, wage growth appears to be cooling, and unemployment dropped back down to 3.5% in September.3
Yet, the headlines about the booming job market have been a tad misleading, as the largest share of these job-openings are in sectors devoid of interested applicants specifically, hospitality and construction where employee demand remains high.4 Yet, we hear that job offers in the technology and finance sectors are being rescinded especially in the current state of economic uncertainty.5 Ironically, Fed Chairman Jerome Powell cites the agreeable job market of the past 18 months as a contributing factor to inflation and the looming recession that are now leading to such layoffs.6
Additionally, with recent interest hikes by the Federal Reserve, most strategists predict a significant cooling of the job market by the beginning of next year.7 Although the market has remained resilient thus far, with steadily low unemployment rates, experts agree that the Fed will continue hikes until the job market declines, or even crashes.8 In fact, large companies including Intel, Beyond Meat, and tech-giant Meta are already seeing massive job cuts and hiring freezes in response to a projected dwindling of the economy.9
The pandemic has left its mark on the job market in profound ways – not only reshaping its current makeup but altering the hiring process and expectations employers and employees have of one another. The private sector appears to be faring better than the public sector in terms of filling positions which is likely because they have been able to better respond to changing labor and economic conditions with higher wages. Pent-up demand for consumer goods has also led to a spike in employment within the supply chain management, transportation, and warehousing sectors with the latter two making up a larger share of the workforce than ever before.10 And as we are aware, private employers have had to become more flexible to cater to a labor force that has become disinterested in the rigid workplace of a few years ago. We have all watched employees from all industries demand hybrid work models that afford them the opportunity to work remotely and will go elsewhere if not part of the offer. Although this has required employers to redefine the workplace, the opportunity to work remotely has allowed employers to broaden their search for talent globally which has been a positive.
Interestingly, this altered labor landscape is affecting certain segments of the population differently from other groups. Due to a lack of interested candidates, employers looking to fill positions that do not require college degrees have had to respond by raising wages. Many young people have responded by delaying higher education or foregoing it entirely – opting instead to enter the lucrative job market. Although some experts still state that a college education pays off, it appears to be a tougher sell in an era of seemingly endless tuition hikes, and a job market that promises higher wages without demanding an expensive degree. However, young people should think long and hard about delaying higher education, as history has proven time and again that when the market takes a turn for the worse, less-educated workers and recent hires can be the first to lose their jobs.11
As for older employees, it has been observed that they have departed the labor market at much higher rates than their younger counterparts. Initially, it was believed that the decision by older workers to remain out of the labor force was a precautionary measure, especially given the pandemic’s disproportionate impact on the health of older workers. However, a recent study suggests that this decision by many older workers may not have been voluntary after all.12 In fact, the study concludes that nearly 10 times as many employees retired involuntarily as a result of the pandemic when compared to pre-pandemic figures, and they have not been able to find comparable work since. According to that study, some believe that this pushing of older employees out of the workplace was the direct result of ageism - which generally assumes that older people are more susceptible to complications from COVID-19 and are less able to adapt to social media and working virtually. This could lead to increased claims of age discrimination if older employees are not availing themselves of virtual tools which could adversely affect their productivity and lead to performance issues and even termination. Employers will have to take a hard look at how the new workplace will therefore affect various classes of employees. In anticipation of same, it would be prudent for an employer to include ageism in its diversity, equity, and inclusion (DEI) strategy and ensure that their employment practices policies are current as statistically, age discrimination claims are consistently some of the most frequent and/or severe employment claims being filed.
From everything we read and have experienced ourselves since COVID-19, we can all agree that remote work is here to stay. Contrary to what we may have thought when we began working from home, removing workers from the office has not eliminated liability concerns for employers but the virtual setting has created additional risks regarding harassment and privacy.
Despite being shut in for most of 2020 and 2021, a recent report reveals an increase in harassment between 2021 and 202213 which is not only based on gender, but also age and race/ethnicity.14 The casual atmosphere of one’s kitchen table or home office has blurred professional boundaries. This is spurred, in part, by the fact that many of the avenues in which remote work is conducted – texts and phone calls – happens beyond employer sponsored mediums.15 While work from home may have created a barrier for physical harassment, the lack of bystanders and the ability to use words and images can encourage improper behavior. And as more companies are turning to “metaverse” technology with the use of avatars to conduct trainings and other employer sponsored events, this creates new complexities around harassment and discrimination which will require employers to review their policies and procedures concerning how harassment and discrimination are defined.
Yet proving that one was harassed virtually has yet to play itself out in the courts. It may be challenging as Title VII and state equivalent statutes currently require one to show that the harassment is severe or pervasive which is generally met by showing there was physical or threatening or frequent conduct and that it interfered unreasonably with one’s employment. This standard may be difficult to meet as one can simply leave an online meeting or mute the speaker and therefore end the interaction. However, the burden will be on the employer to manage these platforms, train employees and discipline offending employees accordingly to provide a safe online working environment.
Privacy infringement is another casualty from COVID-19 given that employees do not have the ability to simply walk down the hall to converse with a co-worker but must utilize online methods of communication. Digital messaging platforms such as “Slack” have seen a significant increase in use since the onset of the pandemic and are utilized in most Fortune-500 companies.16 The increased use of company-run software to communicate amongst employees allows employers access to any conversation on a company messaging platform17. In addition, many employers require its employees to download software that provides their employers significant access to everything that occurs on their electronic devices. Employers can now monitor employee usage and metadata to stay informed of when employees sign on, who they communicate with, and what devices they use. Use of more intrusive “Bossware” allows employers to track employee’s mouse movements, what webpages they visit, their location during workhours, and can take photos of employees while they are on the clock.18 Such invasive software can turn an individual’s living room into an extension of the office they hoped to escape. So, although the remote working model provides employees with a flexible environment, many of the problems associated with the workplace have followed us home.
In a recent Business News Daily article concerning employee monitoring, the author states that federal and state privacy laws, which stem primarily from the Electronic Communications Privacy Act of 1986, generally give discretion to employers as to how far they can go with their employee monitoring programs as long as the program has a legitimate business purpose and, depending upon state and local laws, employee consent is obtained.19 The same author also quotes Matt Pinsker, Adjunct Professor of Homeland Security and Criminal Justice at Virginia Commonwealth University, who states that “as a general rule, employees have little expectation of privacy while on company grounds or using company equipment, including company issued computers or vehicles.” So, although such monitoring appears to be permissible, this can be a fine line for employers in terms of employee morale and can be risky in terms of an employer acquiring too much employee information which can run afoul of privacy laws like HIPAA if they disclose such private information as well as BIPA should they collect and use biometric data, and if not secured, could lead to data breaches and further litigation and exposure.
It remains to be seen when the post-pandemic labor market and economy will begin to return to some form of normalcy. We have never experienced such a rapid recovery from the dramatic spike in unemployment following the onset of the pandemic and we also have never witnessed an economic drop-off of the magnitude that stemmed from the lockdowns and accompanying halt of the global economy. Uncharted territory would be an understatement to describe the state of the labor market as it stands. What is clear is that the labor market has permanently shifted into one with differing expectations from both employers and employees.
Post COVID-19 employment trends and concerns will continue to dominate the conversation into the future, and therefore it is critical to ensure that a company’s executive risk insurance policies will respond when a claim is filed. Ensure that these policies, particularly, your management and professional liability and employment practices policies, extend to wrongful acts by way of electronic communications, including the use of social media and networking sites and that they also include coverage for invasion of privacy as these claims become more prevalent in the remote workplace. While most policies exclude coverage for actual HIPPA and BIPA violations, some insurers may offer defense cost coverage which should be maximized as the defense of such claims or investigations can cost more than the cost to resolve them. It is also therefore important to negotiate favorable allocation language beyond “best efforts” which provides defense cost coverage when some claims or parties are not covered.
1 The composition of America's labor market changed during the pandemic (axios.com)
2 https://www.wsj.com/articles/more-companies-start-to-rescind-job-offers-11655865283
3 https://www.nytimes.com/2022/09/02/business/economy/august-jobs-report.html?smid=url-share
4 Job market seeing historic levels of open positions (heraldnews.com)
5 Recession-Fearing Bosses Scale Back Hiring Plans as ‘Stealth Slowdown’ Kicks In - Bloomberg
6 Job market power is swinging back to employers (axios.com)
7 https://www.cnn.com/2022/10/10/economy/jobs-recession-unemployment
8 https://markets.businessinsider.com/news/stocks/federal-reserve-rate-hikes-job-market-cracks-unemployment-economy-inflation-2022-10
9 https://finance.yahoo.com/news/the-fede-labor-market-economist-says-102844584.html?guccounter=2
10 The composition of America's labor market changed during the pandemic (axios.com)
11 The Potential Dark Side of a White-Hot Labor Market - The New York Times (nytimes.com)
12 Study Shows Ageism Pushed Older Workers Out of The Job Market During the Pandemic (forbes.com)
13 https://www2.deloitte.com/content/dam/Deloitte/global/Documents/deloitte-women-at-work-2022-a-global-outlook.pdf
14 https://projectinclude.org/assets/pdf/Project-Include-Harassment-Report-0321-F3.pdf (Age: 14% increase; Race/Ethnicity: 10% increase; Gender: 26% increase)
15 https://www.nytimes.com/2021/06/08/us/workplace-harassment-remote-work.html?searchResultPosition=1
16 https://slack.com/blog/transformation/fortune-100-rely-slack-connect-build-digital-hq
17 https://www.nytimes.com/wirecutter/blog/how-your-boss-can-spy-on-you/
18 https://www.eff.org/deeplinks/2020/06/inside-invasive-secretive-bossware-tracking-workers;
https://www.npr.org/2020/05/13/854014403/your-boss-is-watching-you-work-from-home-boom-leads-to-more-surveillance
19 Spying on your Employees? Better Understand the Law First (bunessnewsdaily.com)
Willis Towers Watson hopes you found the general information provided in this publication informative and helpful. The information contained herein is not intended to constitute legal or other professional advice and should not be relied upon in lieu of consultation with your own legal advisors. In the event you would like more information regarding your insurance coverage, please do not hesitate to reach out to us. In North America, Willis Towers Watson offers insurance products through licensed entities, including Willis Towers Watson Northeast, Inc. (in the United States) and Willis Canada Inc. (in Canada).
