Helping employees affected by COVID-19


The spread of COVID-19 across the globe is having a significant humanitarian impact and causing major economic disruptions, from eroding stock market prices to disturbing global supply chains. As governments move rapidly to contain the spread of the virus, global employers are also working to address how to manage employees in affected areas while continuing business operations. Employers are often eager to provide much-needed benefits and aid to their employees, but are unsure of the most effective ways to help or are unaware of the ways benefit and leave plans can be leveraged in support.

During these difficult times, it is imperative that organizations make informed decisions before changing their total rewards structure, as there can be compensation, benefits and payroll tax implications. Organizations should also evaluate the impact of state and local income tax and labor requirements, state payroll tax registrations and workers compensation policies.

As you consider various alternatives and approaches that may work best for your organization and employees, you may have questions regarding tax, accounting, regulatory and human capital issues. Below are some ways organizations can address current challenges and support their affected employees.




Provide direct financial assistance to employees


  • Provide financial support, ongoing or reduced pay, or leave of absence pay to affected employees unable to work due to a temporary reduction or elimination in work hours, school or childcare facility closures and quarantine requirements. If considering bonuses, gift cards, employee discounts or supplemental pay, be aware of payroll requirements as well as all federal and state tax implications of these programs.
  • Make cash payments or loans to affected employees and their affected family members for personal expenses incurred because of the virus, such as medical treatment, childcare alternatives, quarantine or medical supplies and meals for school-aged children who receive free or reduced meals. Organizations with affiliated not-for-profit vehicles may be able to utilize those entities in their COVID-19 support efforts. The rules in this area are very complex and constricting. Even organizations without their own affiliated not-for-profit entity may have some charitable options. Please contact a member of Grant Thornton’s Not-for-profit Tax Services group for more information.
  • In lieu of or in addition to cash, organizations can provide meals, non-perishable food, supplies or other essentials to affected employees and their affected family members.




Expand leave of absence, compensation and benefits programs


  • Provide employees additional paid time off to recover from the virus or to care for family members affected by the virus. Employers with fewer than 500 employees are subject to new, recently enacted paid family leave and sick pay requirements. See our story, “Tax credits paired with paid leave requirements” for more information.
  • Offer employees and covered dependents a telehealth benefit as part of their medical plan. Telehealth programs offer members the ability to meet with a physician, therapist or healthcare professional virtually, instead of an in-person office visit.
  • Expand services and employee communication under the employee assistance program (EAP). Employers can communicate on the specific ways in which the plan can provide assistance in recovering from the virus, dealing with stress or anxiety related to the virus and researching and locating alternative childcare or elder care services.
  • Provide information on recovery or leave of absence options available through the organization’s employee assistance or benefit programs, such as those offered through the organization’s medical and disability plans, federal leave programs and procedures and governmental and nongovernmental sources for assistance.
  • Communicate plan eligibility and program requirements to employees for loan and hardship distributions from the organization’s retirement plan. Organizations can consider setting up or expanding loan and hardship distribution programs under their current retirement plan.
  • Allow employees to telecommute for a specified period of time to ease their concerns and recovery.
  • Prepare and send communications to employees in appropriate forms such as texts, emails and letters reminding them of mental health benefits available under the organization’s medical plan and employee assistance program that can assist with conditions such as stress, anxiety and post-traumatic stress disorder.
  • Explore whether the organization’s medical plans can waive co-pays or reduce deductibles for virus-related medical and prescription drug treatment.
  • Implement or expand the mail-order prescription drug program through the organization’s prescription drug vendor. This allows employees to receive prescriptions through the mail instead of physically visiting a pharmacy.




Facilitate ways for employees to help fellow employees


  • Create a leave-sharing plan for employees to surrender accrued leave, with the surrendered leave contributed to a leave bank for use by other employees who may need time off in excess of their accrued leave as a result of the virus.
  • Ask employees if they need assistance with various tasks, such as grocery shopping, child care or prescription pick-up, and whether they would like assistance from other employees or community organizations.
  • Develop a communications tool to allow employees to share information and resources with each other.




Think outside the box, identify needs proactively


  • Evaluate potential needs of employees affected by the virus, such as finding daycare for employees with young children when schools will be closed for a prolonged period of time. Consider providing subsidized or customized daycare services through donations or other sources.
  • Contract with a national home visit or house call provider, local physicians or healthcare providers to provide home visits for employees and family members. Most physicians and providers will file claims with the insurance provider on the employee and employer’s behalf.
  • Provide discounted or free web-based educational tools and programs for children who are affected by school closures.
  • Establish a supplemental unemployment benefit plan, which supplements a laid-off employee’s state unemployment benefits.

There are also a number of ways organizations can support charities that are active in assisting individuals affected by the virus.


  • Make cash contributions to selected charitable organizations, private foundations or donor-advised funds that support pandemic-relief efforts, such as providing meals to those in need, childcare and elder care support and subsidized income for individuals with lost wages as a result of the virus.
  • Create a leave-based donation program where an employee can elect to forgo vacation, sick or personal leave in exchange for cash payments by the employer to a charitable organization.
  • Encourage employees not affected by the virus to support organizations involved in the recovery by donating their time and money.
  • Establish a corporate foundation or a disaster or pandemic relief fund to facilitate the solicitation and collection of employee gifts for future unforeseeable disasters and events.

Many of these alternatives require consideration of the tax treatment of them, as well as other factors. For example, certain types of financial assistance to employees may be tax-free if structured in the appropriate manner. The IRS also provides relief in the form of special treatment for things like hardship waivers for early distributions from retirement plans and donations of leave. Please contact any Grant Thornton professional with any questions.



Tax professional standards statement

This content supports Grant Thornton LLP’s marketing of professional services and is not written tax advice directed at the particular facts and circumstances of any person. If you are interested in the topics presented herein, we encourage you to contact us or an independent tax professional to discuss their potential application to your particular situation. Nothing herein shall be construed as imposing a limitation on any person from disclosing the tax treatment or tax structure of any matter addressed herein. To the extent this content may be considered to contain written tax advice, any written advice contained in, forwarded with or attached to this content is not intended by Grant Thornton LLP to be used, and cannot be used, by any person for the purpose of avoiding penalties that may be imposed under the Internal Revenue Code.

The information contained herein is general in nature and is based on authorities that are subject to change. It is not, and should not be construed as, accounting, legal or tax advice provided by Grant Thornton LLP to the reader. This material may not be applicable to, or suitable for, the reader’s specific circumstances or needs and may require consideration of tax and nontax factors not described herein. Contact Grant Thornton LLP or other tax professionals prior to taking any action based upon this information. Changes in tax laws or other factors could affect, on a prospective or retroactive basis, the information contained herein; Grant Thornton LLP assumes no obligation to inform the reader of any such changes. All references to “Section,” “Sec.,” or “§” refer to the Internal Revenue Code of 1986, as amended.


More COVID-19 insights