Labor Shortages During Coronavirus

Stifel analysts lowered earnings estimates for restaurant companies on Wednesday on expectations the coronavirus that causes the illness COVID-19 will create labor shortages and impact opening hours as it continues to spread across the U.S., reported MarketWatch (March 12).

“Within the hotspot areas, we have heard staffing has become an issue as employees want to avoid risking exposure, causing restaurants to alter their hours of operation,” Stifel analysts led by Chris O’Cull wrote in a note to clients.

Many restaurants are changing sick leave policies. For example, Darden Restaurants is now offering paid sick leave for all hourly workers, reported CNBC (March 10). The company said it was working on the policy for a while but sped up the process due to the coronavirus outbreak. Employees will now accrue one hour of sick leave for every 30 worked. The pay rate will be based on the worker’s 13-week average.

Starbucks Corp. is expanding emergency pay for staff affected by the coronavirus in the U.S. stores, reported Bloomberg (March 11). The “catastrophe pay” will be available to employees, regardless of whether they are showing symptoms, for up to 14 days. Starbucks will also offer “additional pay replacement” for as much as 26 weeks to employees unable to return to work after that period.

McDonald’s is also offering employees of corporate-owned U.S. restaurants two weeks of pay in the event of a quarantine, reported Bloomberg (March 10). “As we proactively monitor the impact of the coronavirus, we are continuously evaluating our policies to provide flexibility and reasonable accommodations,” McDonald’s said in an e-mailed statement.

Walmart instituted its own new emergency leave policy. The company is waiving its attendance occurrence policy and absences due to a mandated quarantine will not be counted against attendance. Employees with a confirmed case of the virus will receive up to two weeks of pay, with pay replacement plans to be provided for up to 26 weeks.

Meanwhile, Amazon is committing $5 million to provide cash grants to small businesses near its Seattle headquarters amid expectations the businesses will struggle due to Amazon asking its employees to work from home, reported St. Louis Post-Dispatch (March 10). The funds will be made available to businesses with fewer than 50 employees or less than $7 million in annual revenue and that serve the public, rely on foot traffic, and have a physical presence.

“These businesses support tens of thousands of local jobs that are a critical part of the Seattle and Puget Sound economy,” said Amazon VP of global real estate and facilities John Schoettler.