COVID-19 Vacation Rentals / Hospitality Industry Update March 28, 2020 – How to handle Unemployment
March 28, 2020 Updates on COVID-19 / Corona Virus updates for the Vacation Rentals / Hospitality from Micah Berg Founder & CEO of real https://realjoy.com/ https://www.thevru.com/ and Justin Jones Founder and CEO of https://imegonline.com/ In this update we we talk about how to hand unemployment. You can get FREE access to https://www.thevru.com/ by using discount code covid19 at checkout.
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Justin Jones 0:06
So here we are. Another update. This is for March 28 2020, on the coven vacation rules update, Justin Jones here with internet marketing expert group and Micah Berg with real joy and also the founder of vacation rental university. And we’re going to talk about unemployment and some best practices and some of the information that came through today from the bill that was signed and those kind of things. So Micah, what kind of date do you have on the unemployment side of things? Yeah. So obviously, as you talk to clients and I talked to, you know, my peer group and competitors, one of the things is like, in our industry, the biggest expense we have is payroll. And so if anything is gonna put us out of business, it’s payroll. And so this video is timely because the only way out of that which, which we’ve seen like by the bigger guy,
Micah Berg 1:00
You know, the cost says and style for it. And, you know, there’s there’s some huge companies out there that are publicly laying people off saunder. And, you know, as many as they can, I’m neither here to here neither to agree or disagree with how they’re doing that that’s none of my business. But we’re seeing that it’s everybody from the mom and pop with four or five employees and a few contractors all the way up to the people with thousands and thousands of employees and contractors. I’m somewhere in the middle have 850 units, a little over 100 employees full time employees and I don’t know, 1000 contractors give or take, you know, what part of the season it is plus the owner, so, but, you know, paying attention to what’s coming out from your state and the feds about unemployment is huge. Basically, the way to conceptualize this or to think about this is the government’s about to pay your payroll for the next four months.
Now you may not have any revenue, and if those people aren’t working, you can’t really run your business. So it’s not an exact science, but you don’t have to feel bad about laying people off. And I think that’s what you know people are wrestling with that I’m hearing is if you’re not fully familiar with unemployment and how to get it, and maybe you’re thinking in the old way, and you don’t have a PEO company, or an employee leasing company, or, you know, you maybe just don’t have experience and so you just feel the emotion and again, you got to do these things kind of unemotionally and so, don’t feel bad have now have conversations and be honest and we’ll get into some what I would consider rules before you lay anybody off in this scenario, but be unemotional about it. Don’t be afraid to lay people off and you know, we’ll get into what the benefits of doing so are here in a sec. But, you know, Justin, what are your What are your clients talking to you about like, what is what is the overall feel about
Justin Jones 3:00
layoffs in this situation? Um, some have laid off, some haven’t. Some have had completely shut down lay everyone off. Some have laid off a few. Um, the big thing I’ve asked everybody, how did you do it because I kind of want to get feedback of how smooth it went. And the one thing that seems to be a common theme is that the employees weren’t surprised. Kind of meaning that it wasn’t just like, everything’s going good. And then they come in and said, oh, by the way, today’s your last day, you know, see it 90 days or whatever the timeframe was, that it was, Hey, this is what we’re doing. They made it part of conversation. One of the things I know that you all did that was huge. And I think executed on the best was one I don’t think your employees were particularly surprised, alright, that’s a big thing, communicate with them through the process. But then you all were like, send them in a way with a packet and keeping them updated even though they’re not there. Hey, here’s some ways for you to defer some stuff. Here’s some ways for you to make money. Here’s some all kinds of ways for you to save money. Call this person call that person, you know if you’re if you’re if you’re capable.
Companies, this person called this do that, giving them like an instruction manual of because nobody likes to be laid off. And typically people don’t like to lay people off. Everybody’s emotional. So when they leave, they go, like, here’s a set of instructions to be successful when you leave here as possible. Yeah, I think communicating through them through that. So the one thing is don’t make it a surprise.
Micah Berg 4:21
And then to help them along the way, and even communicate with them, while they’re laid off, giving them opportunities and ideas and ways to do because things are changing so fast right now. Yeah, once you as an employer, maybe don’t realize your employees truly depend on you in more ways than you can imagine. So not only are you their paycheck, but you’re their leader. The example you set as an employer often affects their personal lives, but they get so wrapped up working for you, especially in the vacation rental space that the majority of their life revolves around the schedule that they adhere to for you. And that sounds weird sometimes. Because as business owners
We’re used to this being our lives. But truly, most of our employees feel that way too. I mean, they really feel like this is their life. And so the reason we did it that way, we clearly communicated we kind of set timelines of like hey, and we did it early. We started talking early. And so if you haven’t started talking, start talking to them now but hey, here’s like kind of how this is going to look. Here’s what our booking trends look like. Here’s what our plans are with the people that remain. All these are personal decisions. You know, we had to keep some staff some most of them are all of them took pay cuts down to a nominal level. And I want to get into some of the unemployment benefits here in a minute to compare those but you know, just tell them what you can do what you can afford and why. And then like Justin said, give them access like take 10 minutes and go figure out either like we have a PEO that will walk them through the unemployment process which is an employee leasing company or outsourced payroll.
They’ll help, they’ll have a packet, they’ll have stuff that you can do but take five minutes, either get it from that source or compile it yourself, show them what website to go to show them kind of a little bit a screenshot of the process and how easy it is. help them figure that process out. So they don’t leave and waste four days. I mean, they need to do it the minute they leave your office or even, you know, if you’re friendly with them from their office, I mean, they’re laid off, but do you care if they use the computer, you know, and sit in the office to figure this out? So two things I’d like to add I don’t know if this applies everywhere, but I know it’s applied in a lot of areas is that if you’re signed up as an employer digitally, they get their unemployment faster. Yes. So maybe call your unemployment office and say hey, what what do I need to do to make sure that they get unemployment as fast as possible? It was the difference in some of our markets of four weeks to two weeks. Wow. Yeah. Um, the second thing is that if your bat you know baton around like God, I want to get rid of my people. I think we can make it if there’s any
Justin Jones 7:00
doubt, I think that you as a business owner, and the employee would rather say, let me go for 60 days, so I can come back to a job. But if you keep them everybody for 60 days, maybe we all go under, yeah. And then there’s nothing to come back to well, and we’ll get into what the Fed just released today, or yesterday was approved on Friday and what that means, but there’s probably zero reason even gamble. I mean, truly, like, if you’re unsure or even if you’re sure you’re going to make it, it’s just going to hurt, who probably gonna go ahead and let them go based on what we’ll share here in a minute. So and then, one thing I want to add, you know, you’ve walked them out the door, you’ve you’ve helped them, you know, with that process, keep communicating with them afterwards, either let them continue to have access to their employee emails because they’re just layoffs or furloughs. Like you’re gonna bring them back, right. And so keep communicating with them. Tell them what’s going on in the company. Tell them the prognosis and how things are going
Micah Berg 8:00
And just keep that line of communication open. You don’t want them getting out there and then being alone and then maybe assuming that you forgot about them and thinking they don’t work for you or something. I’m, I know it sounds crazy because we’re talking like a few weeks to a month or two. But people are emotional and they think you’ll forget about them, and then they’ll not have any sense of security and maybe they’ve started applying in other places or something. And so, you know, just be really careful about that communicate with him. For sure. Alright, so I was Justin was busy. So he made me do this, but I got to go read all the boring crap about the unemployment bill. And so I want to cover some highlights. So some things that have changed.
Its this is from the Fed down. So let’s start at the state level state level has been mandated to waive the one week waiting period on benefits as well as waive the requirement to look for employment while you’re on an on unemployment benefits. So it’s really easy. They’ve also
expanded Who? Who it applies to to everybody. So, contractors? I believe gig economy workers, ie self employed people can get it. Yeah. 1099 can get it, everybody. So yeah, it’s kind of wild every literally everybody. I mean, I could go through the list but furloughed employees, nonprofit employees, contract employees self employed people full time employee, part time employee like everybody can apply for this and likely get approved and there’s no waiting period and you don’t have to be looking for work. So you get your max, some states are adjusting the max benefit. So Florida’s 275 per week. I don’t know if that’ll go up that might get circumvented by the Fed. And so what the Fed did besides mandate those things and speed it up is obviously the stimulus where they’re going to send what was it 1200 dollars per person up to
That cap of $75,000 per year, then it phases out and then an additional $500 per kid based on your last year’s tax returns, so 2018, not 2019. So 2018 tax return. So you’ll know if they
Justin Jones 10:14
go ahead, they disclose what the cutoff is on income 99,000 per individual. Gotcha. And then if it’s a couple, you know, double that or whatever, and it phases down, it doesn’t just cut off, I mean, at that point at zero, but it has phased down from there phased out.
Micah Berg 10:30
So you get the stimulus check. I think the first one’s going in the next few weeks like first couple weeks of April or mid April. The second one’s going out sometime mid to late May. And then your tax return deadlines have been pushed off to July 15. Officially, and then there’s probably going to be some waivers, what you need to pay or like if you owe money that you can push that out maybe even through like the end of the year without having to pay any is that is that
Justin Jones 11:00
July 15, to pay or to file the file. Oh, that so they moved the filing date to? Yes. Okay, because that was in question before they may move the pay date. So currently pay and file July 15. Okay, the first step was file, go and file April 15 and pay July 15. Now it’s all July 15. And then the payment date may have pushed out. Now unemployment benefits. This is where this gets wild and wonky. And Justin, I want you to kind of comment because you got a neat incentives based brain but the Fed is on top of the $275 a week for Florida. You know, Connecticut’s much higher than that like in the high fours California obviously. So these numbers vary by state but just the Fed $600 per week in unemployment benefits guaranteed for four months which is $15 an hour. So I’m, you know, vacation rental industry. 15 bucks an hour is kind of like the high average for a lot of our employees.
Micah Berg 12:00
You know, some make more that have been around longer, but 15 bucks an hour, you add on just Florida is like $22 an hour that people 188. Yeah, that people are getting paid, while not employed, guaranteed don’t have to look for work, don’t have to wait for four months. Now, they’re also going to release. There’s not a lot of detail on this that I have, because it’s complicated. But obviously when you get laid off your health insurance benefits stop. So like real joy offers health insurance, all of our employees. Well, that can’t go on past May, or you know, I can’t afford it. And so the government has a health insurance that they can roll on to that will be very cheap for them. And so you’ll want to look into that. So, you know, that’s kind of the details. That’s why I’m saying Don’t be unemotional some of your employees about to get a 30% pay increase, working for the government sitting on their couch
Justin Jones 12:56
watching this. How do you get them to come back?
Micah Berg 12:58
Well, and that’s kind of what I wanted to like. Talk about for the next few minutes. You know, that’s basically all the facts. But those are some risks I’m worried about. And some things I don’t know, which maybe we need to call an attorney and do another follow up on this. But like, can they volunteer? I mean, what are the laws around? If they don’t want to work for you? Can they come show up and do some things like that?
Justin Jones 13:22
Yeah, but I mean, if I’m making $15 an hour, I can sit at home for 22.
Micah Berg 13:27
So I’m saying for four months,
Justin Jones 13:28
the only risk is is if that’s only good for four months, you replace me and I don’t have you know, now I gotta go find a whole nother job.
Micah Berg 13:36
Yeah. So yeah, when you know, the employers are in a tough spot, because who am I going to replace them with everybody I know on every company everywhere is going to be making the same Now obviously, at the end of that four months, they’re going to come crawling back and then you got you know, some decisions to make. So hopefully, people do the right thing with the right heart but
Justin Jones 13:55
four months is sounds like too though, that to the degree that you’re company has benefits outside of payroll is the higher propensity of people coming back because, yeah, I can make 22. But now I got to pay for my health insurance. Well, that’s out. Yeah. So now I got to pay for that. So it’s not a really a net $7 increase.
Micah Berg 14:13
Yeah, yeah, yeah. Yeah, perhaps, you know, I don’t know, it does create kind of a perverse incentive for employers and employees. I mean, that is for four months or four months starting, I think as soon as they apply. So, you know, I don’t know what that looks like. Maybe you’ve got people on staff for another couple weeks, and then they apply so they go longer or something that, you know, it’s just kind of interesting, but, you know, at the end of the day, I think a lot of states are feeling that this could land like New York man, you know, it could last there for a very long time. And so vacation rental managers in New York could have a very long road. parts of California. Southern Florida is is pretty bad. Northern Florida is not so much. So, you know, there could be some issues there where it doesn’t recover as quick. So maybe four months might end up being too short for many areas. I’m still, if you watched our initial video a few days ago, I still think you know, by June 1, we’ve we’ve locked down and things are fine and people who are sick are staying home and everybody else kind of gets back to business but you don’t know. So I guess to wrap that up, the moral of the story is, feel free at this point, literally, if you aren’t sure you can pay or just don’t want to risk your cash flows and all those sort of things. I mean, have the conversations with your employees, tell them what’s up, show them where to apply, help them out, stay in communication with them and let them get unemployment benefits and save yourself the payroll because God knows you can’t afford it anywhere. I don’t know anywhere in the United States after like, the next week that’s gonna have enough occupancy in Vacation Rentals or hotels to pay their employees. I just don’t And if you pay them for, I mean, just a month. It’s so ridiculous with no revenue, the impact that has your profitability. I mean, that’s, and that’s sad reality, like even my big company, and we’re profitable and all this stuff like, it doesn’t take long at a couple hundred thousand dollars a week to blow you up. I mean, it just doesn’t. And so you need those cash flows to pay your payroll. So this is purely a business decision. Hopefully nobody’s up in arms and if they are, they’re about to get a pay raise by Uncle Sam and, you know, I guess that’s why I’ve been paying taxes and I guess it’s okay. I don’t know.
Justin Jones 16:36
That’s a tough one. It’s changing so fast.
Micah Berg 16:38
Yeah, it’s changing like crazy. So yeah, anything to add for wrap this one up. That’s it. All right. So take care of that you guys, protect your businesses. More importantly, stay safe out there. And, you know, hopefully we rebound from this thing. We’ll see you again tomorrow with another update. We’ll cover a couple things through the week. And I look forward to helping you navigate this as as we also do so be safe out there. We’ll talk to you tomorrow.