Small business owners often say their employees are like family.
"I spend more time with these people than I do with my husband on many given days," says Katie Tyler, the founder and president of Tyler 2 Construction in Charlotte, N.C. "So it's a different relationship. It's a different commitment."
A year and a half ago, Tyler's business "family" included 35 employees, and her office was crowded. Her construction firm had $32 million in annual revenues. But in the spring of 2008, business dropped off dramatically.
To deal with the losses, Tyler pulled the plug on all discretionary spending. She temporarily stopped taking a salary herself. She cut employee pay by 10 percent. "And then we said, 'OK, it's still not enough,' " Tyler says.
A 'Temporary' Layoff
She started to lay off workers. But she used a strategy that makes the firing process a bit gentler. It's called "attached unemployment" — a kind of temporary layoff many companies are using these days. The company files weekly unemployment claims for the people it has laid off. That way, their benefit checks come faster and with less hassle.
About 2.5 percent of new unemployment insurance claims in October fell into this category. Traditionally, manufacturers have used attached unemployment, but now more and more small businesses are adopting it.
Tyler spends thousands of dollars a month to pay health insurance for her laid-off workers. "Of course, we'd be in a better financial position if we weren't paying that. But for me it's never been just about the money," she says.
Building Loyalty
One of Tyler 2's "attached employees" is Gerzon Lopez. He's been with the company for about four years. Since April, he's been on and off the payroll three times. At the moment, he's back, installing video projectors and screens in a client's office. He knows how precarious a job this is.
"After this job, I was told we bid on nine new jobs. If we didn't win any of those jobs, it would be layoff again," he says.
Tyler 2 specializes in interior construction, a niche that's in relatively good shape because companies need help downsizing their workspaces. But Tyler says competition is intense — builders who've never done this kind of work before are trying to get in on the business.
Tyler 2 has already cut three workers permanently, and six others have been out on "attached unemployment" at least once. She calls them weekly with updates, but few are seriously looking for other jobs.
"This is the job that I want, and I kind of felt like if I got another job then I'd lose this one," says Nick Willman, a Tyler 2 worker.
Even though he's not receiving a paycheck from Tyler, he says he's loyal to her because "she's been very loyal to me. She's been very upfront about everything. I know she's doing everything she can right now to keep everybody employed. I mean, I don't know what else to ask for."
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