Apex Benefits and Axiom Human Resource Solutions present “Rapid Response,” a breakdown of legislative and compliance issues affecting Indiana employers and workers. The videos and content on this page address employee benefit considerations when COVID-19 leads to workforce reductions.

Video & Text: Workforce Reduction Considerations

Video: Q&As on Workforce Reduction

FAQs: Indiana Unemployment Insurance Employer FAQs

The following video outlines a Health Plan Checklist to use when considering a reduction in force or furloughs. Another variation of this checklist is available here.(Your health insurance consultant should do/help with all of this)

Decide if you wish to continue medical benefits for employees

Sponsors of self-insured group health plans may choose to waive any eligibility requirements.

    1. Check the Health Plan’s requirements related to hours of service (e.g., a requirement that an employee must work at least 30 hours a week on average to be eligible).
      1. A plan amendment may be required in connection with such a change.
    2. Review any stop-loss policy tied to a self-insured plan to see if it permits a waiver of the eligibility requirement
      1. Ensure the stop-loss carrier will also agree to waive eligibility requirements.
    3. Sponsors of fully-insured plans should review policies to determine whether there is any flexibility in eligibility requirements
      1. Contact insurance providers to discuss adopting new eligibility terms
      2. A plan amendment may be necessary
      3. Failure to get permission from the insurance company (i.e., either a stop-loss insurer or a fully-insured plan) could result in the employer having to self-insure that benefit for those employees.
    4. ACA consideration during reduced hours or lay-off
      1. Reduction of work hours might impact the medical eligibility in a subsequent year.
      2. Consider crediting hours for the period the employee is on furlough or reduced hours for this purpose (but not required).
    5. Premiums – will you subsidize or not?
      1. Employers may decide to pay some or all of the premium.
      2. Employee can pay back when they return. This may have to be done over several payrolls to be practical and/or comply with state or local wage laws.
      3. Employees can pre-pay using pre-tax dollars – if they have accrued unpaid compensation or the employee can be billed and pay with after tax dollars.
      4. HSA’s can be used by employee; they must be taking unemployment.


Life insurance, disability, long-term care and add-on plans

Self-funded STD – must amend for those on reduced hours to remain eligible

Fully-insured STD – must get insurer’s permission to do so

If employees do lose eligibility – they should be informed

LTD, Life etc. are insured products – must get insurer’s permission to change eligibility

LTD and Life products that are based on pay – consider how this affects the benefit and if considering any changes – again – must have insurer’s permission


COVID-19: Special Considerations

The Current Tax Law: IRS Section 125 does not permit employees to change their coverage elections due to a pandemic.

However, many people may have qualifying events, due to a partner or spouse losing coverage


Waiver of Eligibility Conditions – ERISA: Benefit plan documents, including wrap plans, need to be reviewed and amended, as needed.

Under ERISA, the terms of the plan control benefit entitlements.

Even though insurance carriers are relaxing terms, employers should ensure plan documents reflect the coverage being offered.


Fair Labor Standards Act Pay Rules

  1. Non-exempt employees

Only need to be paid for actual hours worked

Employers may require they take the day off unpaid

Employers may require they use any available vacation time or PTO

Employers allow employees to choose between taking an unpaid day, using vacation or PTO

  1. Exempt employees

Must be paid their regular salary – whether the office closure is for full or partial days.

May require exempt employees to use accrued vacation or PTO during a closure if you have a policy that indicates you will do so, or if this has been your practice in the past.

For exempt employees who do not have sufficient vacation or PTO to cover the closure – employers are still required to provide their full regular salary.

The only scenario where you will not be required to pay an exempt employee their full salary is if the office is closed for an entire work week (or the employee does not come in for an entire work week) and they do no work at all from home.


Does the WARN Act apply?

  1. Requires employers with 100 or more full-time employees to provide 60 days’ advance notice to impacted workers, local governmental agencies and applicable bargaining unit representatives
  2. Where an “employment loss” occurs due to a plant closing (i.e., shutting down a facility or operating unit where at least 50 employees, excluding part-time employees, at such location are terminated)
  3. Or – a mass layoff (i.e., employment loss of 500 employees, or one-third of the workforce, with a minimum of 50 employees, excluding part-time employees)
  4. During COVID -19 the WARN Act rules may be relaxed – attempt to give as much notice as possible.



Indiana Dept Workforce Development



NOTE: This presentation/information is not intended to be exhaustive nor should any discussion or opinions be construed as legal advice.  

Frequently Asked Questions Regarding Workforce Reduction

Indiana Unemployment Insurance
EMPLOYER FAQs for COVID-19 Work-Related Issues

Q1. If I lay people off due to COVID-19, will it affect my Merit rate / tax rate next year?

A1. Layoffs due to COVID-19 will not be charged to contributory employers, but will be mutualized to the entire contributory employer pool. More information regarding this will be sent to employers soon. Layoffs by reimbursable employers will be charged to the employer dollar-for-dollar, in the same manner they have always been charged, but a retroactive credit of 50% of the charges will be applied to the account once reimbursement is received under the federal CARES Act.


Q2. Is DWD going to waive penalties and interest for late filing of Quarterly Wage reports and for contribution payments first quarter 2020?

A2. Yes. DWD will waive penalties and interest for 31 days. Reports and payments made on or before 05/31/2020 will not be assessed any penalty or interest.


Q3. If I lay-off workers and pay their healthcare insurance coverage through COBRA, how does that impact unemployment insurance (UI) benefits?

A3. If you pay for your employees’ COBRA coverage, this is considered deductible income and must be reported to DWD and could impact the amount of UI benefits a claimant is eligible to receive.


Q4. If I reduce my employees’ hours but they are still employed, are they still eligible for UI benefits?

A4: They may be eligible for benefits, but part-time employment during the week claimed will reduce the amount of benefits paid for that week. If employees do work while receiving benefits, those employees must report any money earned on the voucher for the week they worked (not the week they ultimately get paid for the work). Failure to report money they earned is fraud and can result in denial of benefits, collections actions, and criminal prosecution.


Q5. If I pay my employees a bonus during the period of separation, will they be eligible for UI benefits?

A5. Maybe. If you make payments to your employees while they are collecting UI, they may have to declare the payment as deductible income. Sick pay, vacation pay, severance pay, payment in lieu of notice, and holiday pay are all deductible income for the claimant. Bonuses are wages for tax purposes, but they are not deductible income for the claimant, thus they do not impact the employee’s UI benefits.


Q6. If my employees are independent contractors or I am self-employed, are regular unemployment insurance benefits available?

A6. No. Independent contractors and the self-employed are not engaged in covered employment for the purposes of UI, so benefits would not be available. They are likely eligible for Pandemic Unemployment Assistance (PUA) under the federal CARES Act. More information on that program will be provided as soon as available.


Q7. If I am a church or church daycare, will my workers be eligible for UI benefits?

A7. No, employees of churches and church daycares are not engaged in covered employment, for the purposes of UI, so benefits would not be available. They may be eligible for Pandemic Unemployment Assistance (PUA) under the federal CARES Act. More information on that program will be provided as soon as available.


Q8. Is the one-week waiting period for UI benefits being waived?

A8. Yes. The one-week waiting period for payment of UI was waived by the Governor’s Executive Order on March 26, 2020. The waiver is retroactive to the week of March 8, 2020. This means that benefits will be paid for the first week the individual is eligible. This week of benefits may not appear immediately in the claimant’s account, but DWD is working diligently to get this week added on each eligible claim.


Q9. Can I receive and respond to UI claims electronically?

A9.Yes. For additional information about the DWD SIDES E-Response program, go to https://www.in.gov/dwd/sides.htm.


Q10. How can an employer file an appeal if they do not have access to a fax machine?

A10. If you receive a base period separation notice, 640R, and the workers are applying for UI benefits due to a COVID-19 layoff, you do not need to respond. Only complete and return the Unemployment Insurance Protest (Employer) form, 640P, if the reason for separation is Quit or Discharged for Cause. If you cannot fax any required 640P, you may mail the form:

Indiana Department of Workforce Development

10 North Senate Ave. SE 005

Attn: 640P

Indianapolis, IN 46204


If you are responding to a Determination of Eligibility and you do not have access to a fax mmachine, you may file an appeal by emailing your appeal to AppealsDepartment@dwd.in.gov or by mailing your appeal to:

Indiana Department of Workforce Development

10 North Senate Ave.

Attn: Appeals Department

Indianapolis, IN 46204

For more information on filing your appeal, please go to the Indiana DWD website.

Q11. How do I know if I am an essential business?

A11. The Governor has set up a call center to address employer questions on essential businesses. This is for business and industry questions only: 877-820-0890 or covidresponse@iedc.in.gov.


Q12. Do I have to provide information on unemployment insurance to my employees prior to

lay off or separation from employment?

A12. Yes, you have a legal obligation to provide unemployment insurance benefits information prior to layoff or separation from employment. This notice can be provided to your employees as a letter, email, text message, or flyer/poster. DWD is asking for assistance from employers. If you have the means to assist your employees by allowing them to file from a computer from your business, please assist as you can. Any assistance you can provide in getting these important benefits to your employees is greatly appreciated.

Below is approved language:

Unemployment Insurance (UI) benefits are available to workers who are unemployed and who meet the requirements of state UI eligibility laws. You may file a UI claim in the first week that employment stops or work hours are reduced.

For assistance or more information about filing a UI claim or questions about the status of your UI claim once filed, visit www.unemployment.in.gov. You will need to provide the state UI agency with the following information in order for the state to process your claim:

  • A valid email account – your email address will become your Uplink Username.
  • Driver’s license or valid ID, address, Social Security number, date of birth and phone number.
  • Last employer’s name, mailing address, phone number, dates of employment and reason you are unemployed.
  • Bank routing number and account number if choosing direct deposit as your payment option (NOTE: Key2Benefits prepaid MasterCard® is also available).


SOURCE: https://www.in.gov/dwd/files/Indiana_Unemployment_FAQ_Employers.pdf