by Christopher Vrountas and Allison Ayer
The law is rapidly changing to meet the current reality as the coronavirus pandemic spreads. Both Congress and the governors of several states have begun to act and the situation is fluid. Businesses will need to keep up to date on the new rules and the new obligations for employers that may come with them. In addition, there are current laws that already provide some tools for businesses to respond to the spread of this infectious disease.
Here is a current list of what is changing now and also what already exists:
The Families First Coronavirus Response Act, HR 6201:
After several rounds of change and edits, this bill passed both houses of Congress and was passed March 19, 2020. It requires two different paid leave programs for employers with less than 500 employees. One is referred to as The Emergency Family and Medical Leave Expansion Act and the other is referred to as The Emergency Paid Sick Leave Act. Here is what they call for:
The Emergency Family Medical Leave Expansion Act:
Businesses with less than 500 employees will be required to offer FMLA leave benefits to all employees who have been on the payroll for at least 30 days. This leave can be used for quarantine or treatment, caring for sick or at-risk family members, or caring for children sent home because of school closures. The first two weeks can be unpaid. The following 10 weeks (should leave extend that long) will be paid at 2/3 the rate of that employee’s usual pay.
The bill also provides for some funding assistance. The government will provide covered employers a 100% tax credit for qualified family leave wages paid out by the employer for each calendar quarter, but this benefit will be capped at $200/day and $10,000 per calendar quarter. Small businesses, those with less than 50 employees, may be exempted by the U.S. Secretary of Labor.
The Emergency Paid Sick Leave Act:
Businesses with less than 500 employees will be required to offer full-time employees 10 days (i.e., 80 hours) paid sick leave to those who are quarantined or who seek a diagnosis or preventive care regarding COVID-19. For part-time workers, their paid sick benefit will amount to their average pay for two weeks. For those home to care for others at risk or with the virus, the pay during leave will be set at 2/3 their regular pay.
Like the FMLA Extension Act, this bill also provides for limited government funding. Employers will receive a 100% tax credit for all wages that are paid, but capped at $511/day and $7,156 for each employee in total.
Both these proposed programs are now proposed to expire by December 31, 2020. Whether that deadline will truly mark the end of the time of the coronavirus pandemic remains to be seen.
The Family Medical Leave Act (FMLA):
Without the above proposed changes, leave under the FMLA generally is not available to healthy people or for people who need to stay home to care for healthy people. Generally, employees are eligible for FMLA leave if they work for a covered employer and 1) have worked for their employer for at least 12 months, 2) have worked at least 1,250 hours over the prior 12 months, and 3) work at a location where at least 50 employees are employed by the employer within 75 miles. Leave is available for those who need time off to deal with their own “serious health condition” or to care for a family member who has one.
Obviously, those sick or infected with COVID-19 will have a “serious health condition”, but protected leave under the FMLA is not currently available unless it concerns such a condition. Whether an asymptomatic person who has been “exposed” to the virus or is otherwise “at risk” and therefore subject to “quarantine” is someone with a “serious health condition” remains to be seen as a matter of law. Arguably, someone who is not sick or infected cannot have a “serious health condition”. On the other hand, how could someone who presents a major health risk to others on account of prior exposure not in some sense have a “serious health condition”? No doubt, this may turn up in the courts for resolution.
In addition, an employer may require its employees returning from leave must to present certification from the employee’s health care provider that the employee is able to resume to work. This is called a “Fitness For Duty Certification” and it may be required only when the employer sets such requirement in a standard policy applicable to all similarly situated employees and only if the employer notifies the employee that such certification will be required when the employer tells the employee in writing that the leave has been designated as FMLA leave. That said, a fitness for duty certification may be very problematic during a pandemic when medical resources are already stretched thin. Flexibility and balance will be key in the time of coronavirus.
The Federal WARN Act:
Governors across the country are ordering wholesale shutdowns of restaurants and bars. What obligations if any arise to companies who must follow those orders under the WARN Act? Specifically, does compliance with these orders constitute either a “plant closure” or a “mass layoff”?
Generally, the WARN Act requires 60 days’ notice to employees and relevant government authorities in the event of an anticipated “plant shut-down” or “mass lay off”. This law was enacted to stabilize the impact of sudden job losses upon affected employees and the community at large. The notice requirement also serves to provide essentially a 60-day transition pay for employees from the time they learn that they will lose their jobs.
A “plant closing” is any shutdown of a single site of employment, or one or more facilities or operating units within a single site of employment, if the shutdown results in an employment loss at the single site of employment during any 30-day period for 50 or more employees excluding any part-time employees.
A “mass layoff” is a reduction in force that is not the result of a “plant closing” but nevertheless results in an actual employment loss at a single site of employment during any 30-day period at a level calculated under either of the following two methods:
1. the number of affected employees amount to at least 33 percent of the employees at a single site of employment, excluding part-time employees, and that number totals at least 50 employees, excluding part-time employees; or
2. the number of affected employees totals at least 500, excluding part-time employees.
One may ask, how could employers be responsible for providing a 60 day WARN notice when they have been ordered by the Governor to shut down with only 24 hours’ notice? The answer comes under the stated exceptions to the WARN requirements under the statute.
Specifically, the WARN Act does not require employers to give WARN Act notice under three exceptional circumstances: 1) the “faltering enterprise” exception, 2) the “unforeseen circumstances” exception, or 3) the “natural disaster” exception.
A declared “state of emergency” due to a global pandemic and an order from the Governor to shut down with 24 or 48 hours’ notice should likely constitute either “unforeseen circumstances” or a “natural disaster” or both. Accordingly, businesses who send employees home because of the government ordered shut-downs may well likely be exempted from WARN Act notice requirements.
The Age Discrimination in Employment Act (ADEA) / Title VII Concerns:
The selection of those to be laid off, obviously, must be done in a non-discriminatory manner. This may be simple for those who are forced to close wholesale entire restaurants and/or bars or other operations. But for those who must simply reduce office staff or other workers because of the decline in work resulting from the pandemic, care must be taken to ensure selection is based on legitimate and defensible business needs and not in any way affected by express or latent discriminatory bias. Check the numbers on those affected before making your decision. Consider whether the business reasons for your selection are strong enough to justify the impacts you seen in your analysis.
This analysis must be taken whenever the employer makes any kind of wholesale change in work conditions. For example, the employer may need to select workers to lay off, others to work from home, others for mere furlough, others for reduced hours or reduced pay going forward. For each action, the employer must be sure to avoid bias and, if at all possible, avoid even the appearance of bias as the appearance of bias could opportunistically be argued against you as evidence of bias, even where no bias exists.
The Americans with Disabilities Act (ADA):
For those businesses not shutdown, how can they manage their workplace and accommodate employees affected by the coronavirus and those who do not want to be affected? The ADA provides some guidance along these lines.
As an initial matter, you can deal with a worker exposed to the coronavirus essentially as though the worker is a person with a “disability”. This suggests you should exclude a such an employee from work when:
– you have objective evidence that the employee poses a direct threat (i.e., a significant risk of substantial harm); and
– you determine that there is no available reasonable accommodation (that would not pose an undue hardship upon the employer) to eliminate the direct threat.
Provide accommodations when you can. If you can manage a work from home situation with the affected worker, you should explore such an arrangement as a reasonable accommodation. If you cannot, you will likely need to discuss time off and an action plan with medical providers to plan for when and how such employee may return.
The Fair Labor Standards Act (FLSA):
The federal law regarding the payment of wages, minimum wage and overtime has been in place since the New Deal, but how does it apply to companies having to send people home or otherwise change work conditions entirely in the time of coronavirus?
For exempt workers, those sent home prior to the end of their pay week must nevertheless be paid for their entire pay week. That is the trade-off for having that worker exempt from overtime pay requirements. In light of that requirement, there is really no rush in sending those exempt workers home before the end of their pay period (unless they are experiencing symptoms of the virus), and if there is anything to do before they leave you may as well ask them to do it before their lay off begins.
But, there is a catch. Once the exempt worker is sent home, the employer cannot “suffer any work” from such workers. If an exempt worker works anymore than 15 minutes in any given pay period, the employer may be required to pay that exempt worker their entire salary for the week. Avoid this risk by telling your laid off exempt workers not to work at all. Deny them remote access to their work email accounts or to your office computer system or server. Have them return all work cell phones. If you send them home, then send them home.
For non-exempt workers, i.e., workers who are paid hourly or are otherwise covered by the overtime requirements of the FLSA, the calculation is simpler. They only get paid for time worked, and their pay stops immediately when sent home regardless if such occurs in the middle of the pay week. That said, however, employers should be vigilant not to allow any “volunteering” or “helping out” during any shutdown.
In short, workers who work must be paid. If you send people home with the intent of avoiding payment of wages, then you cannot allow them to continue to work for you in the meantime.
State Wage Acts:
Massachusetts law requires payment of all wages owed at termination, including but not limited to all earned but unused vacation time, on the date of discharge. If you lay people off indefinitely, you will need to make this termination day payout or risk violating the Wage Act.
New Hampshire requires termination payout within 72 hours of discharge, and requires payment of earned but unused vacation only if the employer’s vacation program provides for such payout. Many do, however, and so the termination payout, while 72 hours later than what is required in Massachusetts, could still amount to a substantial cash outflow.
One potential way to avoid this risk is to temporarily furlough employees. As the Governors of both Massachusetts and New Hampshire respectively have limited their shut down orders to April 6, 2020, respectively, a furlough of simply 19 days with the expectation of return after that short period of time, and a continuation of benefits during that same time, should not be construed as a “termination” and therefore should not trigger the termination day payout requirements. If the furlough continues, however, you may need to reconsider whether the time off has become an indefinite layoff requiring the termination pay off called for under the state Wage Act.
It has been reported that, to the extent there is ambiguity as to whether a separation constitutes a termination, state labor departments do not plan to prioritize enforcement in this area.
Up to now, a laid off worker could apply for unemployment and be eligible for benefits only after an initial one week waiting period. The Governor of Massachusetts has filed a bill waiving the one week waiting period so as to allow workers to be eligible immediately upon layoff. This waiver would expire 90 days after the termination of the state of emergency
In addition, the Executive Office of Labor and Workforce Development in Massachusetts is also expected to file emergency regulations to allow employees affected by the coronavirus to collect unemployment if their workplace shuts down with plans to reopen within four weeks. The following conditions would apply:
-Workers will need to keep in contact with their employer during the shutdown.
-Workers will need to be available to work their employer during the shutdown.
-Employers may ask for an extension to eight weeks, and workers will similarly remain eligible for the benefits during the extended period if granted. If necessary, DUA may extend these time periods for workers and employers.
Similarly, the Governor of New Hampshire issued an order waiving the one week waiting period for workers laid off on account of the coronavirus pandemic. While the state government may also add responsive regulations similar to Massachusetts, the Governor has also ordered that utilities, landlords and mortgage companies may not take action against consumers for nonpayment of bills as long as the state remains under its emergency declaration due to COVID-19. That means residents cannot be evicted or have their utilities cut off or have their property face foreclosure for failing to pay amounts owed during the current situation.
The Massachusetts Paid Sick Time Law:
Massachusetts requires employers to provide 40 hours of 40 hours of job-protected sick time per year to take care of themselves and certain family members who are sick or have a “condition” that requires home care or medical care or treatment. The leave may also be used to attend routine medical appointments or to deal with domestic violence situations at home.
Employers may require workers to earn such sick time, but the rate must be at least one hour of earned sick leave for every 30 hours worked.
Employers of 11 or more employees must provide sick leave on a paid basis. Employers with fewer employees must provide the protected leave, but need not pay those workers on leave.
Given these rules, the sick time provided under this law must be available for those infected by COVID-19 or caring for those infected. It is questionable, however, whether the law protects workers who are merely quarantined but are otherwise asymptomatic. Arguably, anyone who has been merely “exposed” and is now at risk of carrying the virus may have a “condition” requiring a form of “home care”, i.e., quarantine.
Massachusetts Paid Family Medical Leave Law (“PFML”):
The Massachusetts PFML was passed last year but will not go into effect until next year. Employers are nevertheless presently required to take withholdings from their employee’s paychecks to fund the benefits provided under the law. Although the benefits are not presently available or enforceable by employees now, the provisions of the PFML should be noted as we continue in the time of the coronavirus.
The PFML will be a required benefit for anyone who works in Massachusetts and who will be eligible under the law to take up to 26 weeks of paid leave for medical or family reasons. For now, PFML will be funded by a payroll tax of 0.75% of an employee’s eligible wages, to be paid collectively by the employee and the employer. The specific amount each may pay will vary depending on how much is being contributed by each party. For now, the maximum amount employers require employees to contribute from their wages will be is $0.38 per $100.00.
Depending on the type of leave, an employee may be allowed differing lengths of leave. PFML will provide Massachusetts workers with up to 12 weeks of job-protected, paid family leave, up to 20 weeks of job-protected, paid medical leave, or up 26 weeks of combined family and medical leave in a benefit year.
Meanwhile, as under the FMLA, employers will be required under the PFML law to maintain the employee’s health insurance at the same levels the employee had prior to going on leave. Upon their return to the workforce, employee who have taken leave must be allowed to return to their previous position, or a position of similar responsibility and compensation.
PFML benefits will become available on January 1, 2021. Paid family leave will available for workers to: 1) care for a sick family member, 2) bond with a newborn child, 3) bond with a child after adoption or foster care placement, 4) manage family affairs when a family member is on active duty in the armed forces. Paid medical leave will be allowed for employees to manage a personal serious injury or illness.
Thus, in many ways, the PFML leaves open the same loop holes for healthy yet quarantined people, and certain for laid off workers due to shutdowns without regard to their own medical conditions. Whether there may be tweaks in the law going forward in light of our current experience remains to be seen.
How Do We Respond?
Make an action plan. Develop a policy based on the plan. Study the components that make up the plan and the policy you will follow to implement it so that you know it will be based on solid footing.
While law is important, it is only the floor, not the ceiling, when considering the actions your business may need to take. Know your business, your employees, your customers, and the regulatory environment. Of course, call your counsel for extensive consultation and advice, as this article merely notes briefly some of the many issues you must consider. In the end, facing the reality head on with all the knowledge and resources available and planning ahead will be the best way to proceed.