We are quickly approaching 1 year since the COVID-19 pandemic shut down many parts of our economy. When businesses were forced to adapt to the pandemic, many chose to lay-off or furlough employees as a cost-saving move. At the time, it seemed like the obvious way to help weather the storm for companies that didn't have the demand for their products or services or who couldn't safely operate their business with social-distancing and other measures designed to protect their employees. Now, as our economy continues to open up and companies rebound and grow, a common question facing many companies is should they rehire ex-employees?

Should You Rehire Ex-Employees?

This week, the Wall Street Journal had a good article examining the trends of rehiring ex-employees and whether it is the right move. If your business is considering bringing back ex-employees, it's a good article to read while you consider what your next step should be. The case to rehire seems pretty straightforward:

  • Decreases recruiting and onboarding costs;
  • Rehired employees perform better based on their manager's view;
  • They can easily reintegrate into the business social ecosystem;
  • Feels like a safe move; and
  • They may have gained new skills in the interim when they were gone.

Just considering the positives, it would seem like an easy answer to rehire an ex-employee.

Do They Actually Perform Better?

It was interesting to note that rehired employees don't necessarily perform better than a new hire. Compounding that factor for a business is also that rehired employees tend to be more expensive than new employees. According to the WSJ, rehired employees earn an average of $10,000 annually versus employees who actually stayed at the business during the pandemic.

There was also an interesting factor that COVID brings to the table that may not have been present in the past. In the post-COVID world, rehired employees may actually feel betrayed and harbor resentment towards their former employer for letting them go when they needed a job most during the pandemic. Attempting to screen out for this attitude can be particularly tricky when choosing to rehire an ex-employee.

Conclusions from the WSJ

Catherine Shea offers two thoughts based on the research she conducted and reviewed:

  1. "First, in comparing the performance of rehires to that of existing employees, there were no performance differences between workers who left voluntarily and those who left involuntarily."
  2. "Second, a competing argument is that a rehired employee's potential as a happy but average performer is questionable in post-Covid times."

Based on her thoughts, she concluded that a "fresh start may be just what both organizations and employees need to move forward in a post-Covid world."

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Next Steps

If you're working to get your business to grow and rebound as we emerge from the pandemic and need to consider whether rehiring former employees is the right choice for you and your business, let's schedule a Legal Strategy Session to discuss where you are in the process and how an attorney can help you move forward.

Andrew Ayers
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I work with business and estate planning clients to craft legal solutions to protect their legacies.
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