- Restaurants, hotels, and other companies across the US are laying off workers or severely cutting hours as the coronavirus pandemic cripples business.
- Some companies are cutting workers' hours down to "zero hour schedules" instead of laying them off.
- Some of these zero hour schedule workers say their employers told them they're not eligible for unemployment benefits - but experts say that's not true.
- The only requirement for unemployment benefits is that a worker has zero earnings in the prior week and the employer didn't offer any hours, according to Andrew Stettner, a senior fellow at The Century Foundation.
- "The question isn't whether you're employed, it's whether you're working," Stettner said.
- Visit Business Insider's homepage for more stories.
Companies across the US are laying off workers as entire industries are crippled because of the coronavirus pandemic, from airlines to restaurants.
Restaurants and hospitality companies have been particularly hard-hit. Many are starting to lay off droves of workers as establishments see a plunge in business or are forced to close because of government mandates. Even Michelin-starred restaurants like Per Se in New York City have laid off the majority of their hourly workers, two former employees told Business Insider. Marriott, the world's largest hotel company, is starting to furlough tens of thousands of workers across the country, The Wall Street Journal reported. The Economic Policy Institute (EPI) estimates that 3 million total jobs could be lost by the summer due to the pandemic. And the rate of people applying for unemployment benefits has already spiked to a two-year high.
While some restaurants, like Per Se, are encouraging their laid-off workers to apply for unemployment benefits, according to those who spoke to Business Insider, others are reportedly putting their employees on "zero hour schedules" and telling them they're not eligible to collect unemployment benefits.
"I was told I wouldn't be able to receive unemployment by a general manager due to not being technically 'laid off' but just on a zero hour schedule until further notice," Bryce Flaugher, an Applebee's server in Huntington, West Virginia told Business Insider on Wednesday.
Applebee's has had to reduce hours for most of its employees, Keith Vedral, the vice president of operations at Neighborhood Hospitality, Inc., an Applebee's franchisee, told Business Insider. The company has given workers information on filing for any available unemployment or low earnings benefits and "encourages all team members to take advantage of the benefits that are offered to them through the state," he said.
But even workers who are on zero hour schedules or who are furloughed are eligible for unemployment benefits, according to Andrew Stettner, a senior fellow at The Century Foundation.
"The only requirement for unemployment benefits is [that] you had zero earnings in the prior week and your employer didn't offer you any hours," Stettner told Business Insider. "The question isn't whether you're employed, it's whether you're working."
What is a 'zero hour schedule'?
Reducing workers' hours to zero but still keeping them on as employees can be a way for restaurants and other companies to cope with an economic downtown, according to Heidi Shierholz, a senior economist and policy director at EPI.
"If you can keep people on for when your demand for your goods and services ramps back up, then you don't have to go through hiring and retraining," Shierholz told Business Insider.
Hiring even low-wage workers can be a major expense for employers, so it's in a company's best interest to keep workers around while not having to pay them during a time when business is low, she said.
"It's not good for the worker, obviously," Shierholz said.
While cutting employees' hours to zero is one tactic businesses are using, other companies will put employees on furlough, which is mandatory unpaid leave that a business may implement as a cost-saving measure when it doesn't want to lay off staff but is unable to keep paying them.
A line cook who was laid off this week from Per Se, a fine dining restaurant in Manhattan, and who didn't wish to be named because of the restaurant's privacy policy, told Business Insider that many New York City restaurants are severely cutting employees' hours instead of laying them off.
"They just tell them, there's no work," the line cook said. "Come back in two or three weeks or whatever. Or we're calling you back. But in my case, we're a little bit more fortunate ... The best thing to happen is to get unemployment paperwork."
Your employer says you can't file for unemployment? Apply anyway
If a worker is not being offered any hours and the employer says they're not eligible for unemployment benefits, the employee is being given incorrect information and should apply anyway, according to Stettner.
"Once you have zero earnings in a prior week and you're not working this week, you're not employed by the definition of unemployment insurance," Stettner said.
The same goes for employees who have furlough status. When it comes to applying for unemployment benefits, workers are not considered to be employed if they are not earning wages, according to Stettner.
In a time where virtually the entire restaurant industry is grinding to a halt, one of the baseline requirements for unemployment benefits may seem like a roadblock: that the applicant must be searching for a job.
But applicants can still make an effort to search for work even if the likelihood of getting hired appears to be nonexistent, according to Stettner. Each state has its own requirements for what counts as looking for a job, but applicants should make whatever effort their state requires, he says, whether that's searching for job listing or posting your resume to an online database.
Stettner added that workers whose hours were reduced but not cut completely can also file for unemployment benefits.
"You say you're partially employed," he said. "Usually there's a question about whether your hours were cut ... You just tell them how much you're working and they'll calculate you."
The rate of this partial unemployment coverage varies by state to state, but every state has some kind of partial coverage for reduced hours, Michele Evermore, a senior policy analyst for social insurance at the National Employment Law Project, told The New York Times.
A 'culture' of challenging unemployment claims
Stettner said it's a "culture" for employers to challenge unemployment claims because their workers filing for unemployment costs them money.
"[The employer] is charged for part of the benefits," Stettner said. "So their taxes will go up if they have unemployment claims."
But this amount is relatively small, according to Stettner. The average amount an employer has to pay for an unemployment insurance claimant in the US is $277 per year, according to US Department of Labor data.
Shierholz of EPI urges people to apply for unemployment benefits as soon as they're laid off or have their hours cut.
The Department of Labor lists all 50 states' unemployment insurances offices with phone numbers and links to informational websites.
"Just apply. Don't wait," Shierholz said. "There's no reason to wait a week because you can start getting those benefits as soon as possible ... At a time like this, this is what those benefits are there for. People should not hesitate to apply."
Are you a restaurant or hotel employee who's recently been laid off or put on a zero hour work schedule? Have an industry story to share? Email this reporter at kwarren@businessinsider.com.
My brother got laid off yesterday from Marriott.
He applied for unemployment; they called to check his employment status.
Marriott HR says he's NOT laid off but on a ZERO hour schedule. So he can't qualify for unemployment NOR does he have health insurance.
- thot leedurr (@DocDre) March 17, 2020My GM said we won't be able to file for unemployment because we're not technically "laid off", but under a "zero hour schedule" 🙃
- Shooter McGavin (@BryceFlaugherr) March 18, 2020