The recent flooding in Louisiana has been a stark reminder for many business owners that natural disasters can be a costly and debilitating occurrence. No matter where your business is located, establishing an emergency preparedness plan is an essential obligation to both your employees and your company. The Federal Emergency Management Agency (FEMA) estimates that approximately 40% of businesses affected by a natural disaster never reopen. If you don’t have a plan to react quickly & effectively after a disaster, your business could be one of those facing catastrophic business loss.
When an emergency or a natural disaster occurs, the first priorities are preserving life and stabilizing the situation. There are multiple actions to consider to stabilize a situation, be it a natural disaster or other type of emergency event. Some things to include in your stabilization blueprints are:
- Identify members of your designated emergency response team, including staff familiar with building utility and protection systems and those who may assist with property conservation activities
- Outline warning, notification, and any other protections systems
- Detail plans and team leaders for possible events including evacuations, severe weather/tornados, lockdown or shelter-in-place orders, and fire emergencies
Some weather events, such as hurricanes, can be forecasted days before they arrival. This provides valuable time to prepare and safeguard a facility and staff. Businesses should establish a plan and ensure that necessary supplies are available, or quickly available, to prepare a facility. The plan should also include a process for damage assessment, salvage, protection of undamaged property, and cleanup following an incident. In addition, it may be helpful to create a list of emergency evacuation numbers and addresses for employees to ensure you have a way to get back in touch with staff after the incident. A well prepared Emergency Response plan can help minimize damage and disruptions to a business and their employees. For assistance developing an emergency response plan, click here to access a worksheet from the Department of Homeland Security.
Once the immediate danger of a natural disaster passes and the recovery period begins, employees may find they need to seek additional resources to rebuild their homes and get their lives back on track. A resource that employees may be able to consider is a 401(k) hardship withdrawal.
Typically, employees can not withdraw funds from a 401(k) until they leave a job or reach retirement age. But in some cases, the IRS will ease the procedural and administrative rules to allow for 401(k) hardship withdrawals and retirement plan loans. Most recently, the IRS announced such relief assistance to victims of the flooding in Louisiana in Announcement 2016-30.
According to the IRS announcement:
- Plans will be allowed to make loans or hardship distributions before the plan is formally amended to provide for such features.
- The plan can ignore the reasons that normally apply to hardship distributions, thus allowing them, for example, to be used for food and shelter.
- If a plan requires certain documentation before a distribution is made, the plan can relax this requirement as described in the announcement.
“A retirement plan may, but is not required to, provide hardship distributions and/or loans,” said Rob Masson, Director of 401(k) at Netchex. “This should be a last resort for employees when looking for emergency funds, but can be an option for an immediate or heavy financial need. There are many rules surrounding hardships and loans so you should check with your company plan administrator for more details on your specific plan.”
Helping your employees return to normal is crucial for business survival after a disaster. A few ways employers can help their team better adjust after disastrous loss include:
Whether you are distributing payroll or qualified disaster relief payments to employees, you want to make sure they can access funds during the recovery periods. Offices may have been impacted or inaccessible for staff, therefore, it is always a good idea to have a direct payment method in place such as direct deposit or Netchex’s Paycard Pre-Paid Mastercard. This will allow you to get critically needed funds to employees, even if they can’t reach the office.
Dealing with the mental and emotional toll of a disaster can have a tremendous impact on your employees. Employee assistance programs can be a necessary resource to help your team members cope and better adjust to the changes going on around them. It’s important to make sure employees have access to Employee Assistance Program information during and after a disaster. Posting a flyer or important event information directly to the Employee Dashboard on the Netchex platform gives staff access to important information remotely, right where they access their pay and insurance information.
Remember that employees are entitled to unpaid leave under the Family and Medical Leave Act for conditions, caused or exacerbated by, the disaster that meet the definition of “serious health condition” and keeps them from performing their job. Employees may also take time to care for a spouse, child or parent with a serious health condition affected by the disaster. One of the best ways to do this is to allow employees to submit requests for FMLA from the Netchex platform remotely. Then all paperwork can be transmitted and exchanged electronically through Netchex’s NetGuide solution.
To learn more about how Netchex can help your company be prepared for the unexpected, contact us today. We are here to help.