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Omicron Sharpens Labor Pains for Short-Staffed Businesses

Jan 17, 2022
The Business Journals

The Omicron variant is dealing a costly blow to employers that were already coping with staffing challenges.

Few industries are spared. Staffing shortages are hampering front-line efforts at hospitals and health care providers. Restaurants are being forced to limit their hours due to infections. It's significantly disrupting manufacturers and their supply chains. Some of the nation's largest pharmacies chains are temporarily closing some stores because of staff shortages.

The sheer number of Omicron-fueled Covid-19 cases is challenging many employers in a way prior variants — even the disruptive Delta — did not.

Data from payroll provider Gusto, for example, showed average hours per week worked by service-sector employees fell to 19.9 from 21 in December, despite the industry usually seeing an increase in hours due to the holidays.

"Many employers are dealing with the practicalities of having their workplaces closed or reducing operations because many of their employees are out with Covid," said Brittany Barrientos, a partner at Stinson LLP. "It's terrible."

Barrientos said many of those employers are bolstering efforts to ensure strong safety policies are in place and enforced to keep Covid out of the workforce and literally keep the workplace running.

Shannon Kelly, a shareholder at law firm Allen Norton & Blue, said many employers are just trying to keep going at this point, between the high rate of Omicron cases and pre-existing challenges on the hiring front.

It's one reason Kelly and other employment attorneys said many employers are relieved by the U.S. Supreme Court blocking the Occupational Safety and Health Administration's mandate-or-testing rule for large employers, as it will give them one less administrative headache to navigate.

Employers beefing up Covid-19 safety

However, it's also leading many businesses to reconsider their Covid-19 safety protocols.

"We have seen some office-based employers close their offices or delay reopening in light of Omicron," said Amy Kett, a senior associate at law firm Hogan Lovells. "Others have begun to collect information about employees’ booster-shot status, which is especially relevant now that the CDC has tied its latest quarantine and isolation guidelines to whether people have had boosters."

Dan Kaplan, of law firm Foley & Lardner LLP, said his clients are seeing considerably more absences. That is leading to more mask requirements and additional encouragement to be vaccinated.

But when it comes to mandates, Kaplan said it's a complex situation due to the labor situation.

"Employers need employees. If employees quit because they are mandated to get a vaccination — that is not good for employers," he said. "Similarly, if employees are ill because they are unvaccinated and therefore out of the workforce, even temporarily, that too is bad for employers."

Omicron and the return

The effect of Omicron on office reopenings is being closely watched by the commercial real estate community due to the potential long-term effects of continually delayed office returns. Many offices were eyeing a return last September before the Delta variant derailed those plans. After Delta, January became a new target before Omicron stuck.

Given the leverage employees have in this hiring environment and their desire for remote-work flexibility, many employers are already adopting permanent remote models and some believe the delayed caused by variants will accelerate that trend.

Omicron's trickle-down effect

But Omicron's impact is proving to transcend the workplace environment.

The variant's high case counts are also affecting employers by disrupting schools or child care centers — leading to further absenteeism, said Kelly Koster, partner at Munsch Hardt law firm.

"It's not an enviable time to be an employer," Koster said.

Experts have projected the Omicron variant is peaking in some parts of the country and could peak nationally in the coming weeks.

However, they have also warned it's unlikely to be the final variant, so it's likely an issue employers will continue to navigate throughout 2022.

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