The team at Dodson Parker Behm & Capparella, PC shares updates and thoughts on developments in the law.

Addressing COVID-19: What Employers Need to Know

April 10, 2020

The COVID-19 pandemic has placed employers in the difficult position of trying to navigate financial losses while addressing employee matters and health concerns.  This fact sheet is intended to provide some critical information that employers need to know during this uncertain time, including highlights of the federal legislation enacted in recent weeks in response to the COVID-19 pandemic.

While not an exhaustive list, key concerns that employers should keep in mind during this time include:

Below, we’ll address each of these topics. Or, you can click on the topic above to be sent directly to that content. 

 

The new paid leave laws are complex, and they must be applied alongside other leave laws.
Here are some basics.

The Families First Coronavirus Response Act (FFCRA) covers employers with 500 or fewer employees and applies from April 1, 2020 to December 31, 2020.  In determining the number of employees, regulations indicate that employers should include the following in their count: full-time and part-time employees, employees on leave, temporary employees who are jointly employed by the employer and another employer, and day laborers supplied by a temporary placement agency.  Employees who have been furloughed do not count, nor do independent contractors.

Employers with fewer than 50 employees may seek a waiver from the Department of Labor if complying with the leave provisions of the FFCRA would place the viability of the business at risk.

There are two components to this new law that affect employee leave taken in connection with COVID-19.  This leave exists in addition to other rights to leave granted by statute or employer policy. As with other statutes regarding leave entitlement, employers are prohibited from taking any adverse action against an employee for taking leave under FCCRA.

  • Emergency Paid Sick Leave Act

This section of FFCRA provides that employers provide paid sick leave for full- and part-time employees unable to work or telework because they are experiencing symptoms of COVID-19 or are required or advised to self-quarantine and also those who are unable to work who are unable to work or telework because they must care for another individual who is quarantined or because of school or child care closures.

Full-time employees are entitled to 80 hours of paid sick time.

Part-time employees are entitled to paid sick time for the average number of hours the part-time employee works during a two-week period.  If the part-time employee’s hours vary, a six-month average of their work can be used to determine their average hours.

Note: the rate of pay depends on the circumstances of the leave the employee takes.

  • Employers must pay employees their regular rate of pay (capped at $511 per day and $5,110 in the aggregate) for an employee who takes leave because that employee experiences symptoms of COVID-19 or is required or advised to self-quarantine. 
  • Employers must pay employees 2/3 of their regular rate of pay (capped at $200 per day and $2,000 in the aggregate) if the employee takes leave to care for another individual.

Employers must post a conspicuous notice of employees’ rights under this law.  A copy of this poster is available here. Employees are not required to give advance notice of their intention to take leave under this law, and an Employer can only require notice of an Employee’s intent to take the leave after they take their first day of leave.

  • Emergency Family and Medical Leave Expansion Act

This section of FFCRA provides a temporary expansion of the FMLA such that employers of fewer than 500 workers must provide up to 12 weeks paid leave for an employee who cannot work or telework because the school or child-care provider of that employee’s child is closed as a result of a public-health emergency. 

Note: Employees are eligible for this leave if they have been employed for at least 30 days.

How Pay Is Structured

  • Employers are not required to pay employees for the first 10 days of such emergency leave. Note: during those first 10 days of leave, however, an employee is permitted to use any paid vacation or sick leave accrued under the employer’s leave policy.
  • After the first 10 days of leave, employers must pay at least 2/3 of an employee’s regular pay for the number of hours per week the employee normally works (capped at $200 per day and $10,000 in the aggregate).

After the leave has ended, employers are generally required to restore an employee’s former position unless the employer (1) has fewer than 25 workers and (2) has made reasonable efforts to retain the employee’s position, but such position no longer exists due to economic conditions caused by such public health emergency.

An employer may require notice of leave only after the first day of leave, and no advance notice is required where the leave is for health reasons.  Employees are required to give notice of their intent to take leave for childcare related reasons where the need to take such leave is foreseeable, but an employer cannot deny their leave if they fail to provide advance notice.

For both acts, employees are required to give the following information to employers when requesting leave: (1) the employee’s name;  (2) the date(s) for which leave is requested;  (3) the COVID-19 qualifying reason for leave; and (4) a statement representing that the employee is unable to work or telework because of the COVID-19 qualifying reason. Employees may be required to give more information, such as whether a shelter in place order was given. Employers are required to keep this documentation from employees for up to four years.

It is important for employers to consider how the various types of leave available to employees interact with each other, including leave under the Emergency Paid Sick Leave Act, leave under the Emergency Family and Medical Leave Expansion Act, and leave (such as PTO, vacation, or sick days) already in place under the employer’s leave policies. At certain times when exercising leave under one of these new statutory provisions, an employee may elect to take paid leave that is otherwise offered by the employer, and the employer may even require the employee to take such paid leave.

Keep scrolling to read more about what employers should know about COVID-19’s impact on employment law, or click here to see a list of all topics on this page.

Tax Credits to Assist with Paid Leave Requirements

FFCRA provides that employers subject to these leave laws are entitled to fully-refundable tax credits to cover the cost of the leave required to be paid for the periods of time during which employees are unable to work.

  • For the Emergency Paid Sick Leave Act, employers have a credit against payroll taxes for 100% of the employer-paid qualified sick leave wages paid each calendar quarter, subject to specified limitation. The amount of sick leave wages taken into account for purposes of the credit may not exceed $200 for any employee and the aggregate number of days taken into account is limited to 10.
  • For the Emergency Family and Medical Leave Expansion Act, employers have a 100% payroll tax credit for qualified family leave wages paid for each calendar quarter. The amount of qualified family leave wages that may be taken into account for each employee is limited to $200 per day and $10,000 for all calendar quarters.

Furthermore, this tax credit also includes the employer’s share of Medicare tax imposed on those wages and its cost of maintaining health insurance coverage for the employee during the family leave period (qualified health plan expenses).  The employer is not subject to the employer portion of social security tax imposed on those wages paid during the leave.

Employee Retention Tax Credits

Employers that either suspend their business operations or receive 50% or less gross receipts in a quarter of 2020 compared to the same quarter of 2019 due to the COVID-19 outbreak are eligible for the Employee Retention Tax Credit.

The tax credit is equal to half of the qualified wages paid to employees after March 12, 2020 and before January 1, 2021, to a maximum of a $5,000 credit per employee.

The qualified wages are determined based on how many employees the employer has. If the employer has over 100 employees, qualified wages are the wages paid to employees not providing services because the business has suspended operations or a substantial decline in gross receipts. If the employer has fewer than 100 employees, qualified wages are any wages paid to employees.

The credit is put against the employer portion of social security taxes, but is fully refundable, so if the amount of the credit is larger than the amount owed in social security taxes, employers will be refunded by the IRS. For more information regarding employer tax credits, see this page on the IRS website.

Keep scrolling to read more about what employers should know about COVID-19’s impact on employment law, or click here to see a list of all topics on this page.

Requirements for Furloughs

Many employers are implementing furloughs to save labor costs during this time.  There are a few important considerations to keep in mind if implementing a furlough ore reduction in force. In addition to obligations that new federal lending programs (like the Paycheck Protection Act) might have, it is important to keep in mind that other laws may be implicated when you are making staffing changes in response to financial distress.

FLSA Considerations

Under the Fair Labor Standards Act (FLSA) employees are classified as either exempt or non-exempt with respect to whether they are covered by the FLSA. Nonexempt employees are paid for each hour worked, so nonexempt employees who are furloughed are simply paid for fewer hours worked.  Furloughs operate differently with exempt employees, as furloughs carry the risk of turning exempt employees into non-exempt employees who then must be paid for hours worked and for overtime hours.

Any furlough should be structured in such a way to ensure that preserves the exemption for an exempt employee.  Specifically, any furlough of exempt employees should be implemented in full-week increments.  Also, if an exempt employee is furloughed for a week or weeks at a time, it is vital that the employee perform no work during those weeks.

Health Benefits

A termination, furlough, or reduction in hours below full-time is usually a qualifying event triggering COBRA obligations.  Many employers would like to continue to provide health insurance benefits to furloughed workers. Since health insurance plans generally apply only for full-time employees, however, an employer may need to work with its health insurance carrier to amend plan language to change eligibility terms or minimum hour requirements in order to continue coverage for furloughed employees.

Other Laws and Requirements

Remember that any time employers are considering implementing reductions in force or reductions of pay, it is important to make sure that obligations with respect to WARN acts and Unemployment laws are considered. Employers who sponsor foreign workers for a green card or nonimmigrant visa status may have additional obligations to notify the United States Citizenship and Immigration Services (USCIS) or Department of Labor in the event of a furlough. Information on the federal WARN Act is available here, and information on Tennessee’s WARN Act can be found here. For more information on Unemployment, keep reading, or click here.

Keep scrolling to read more about what employers should know about COVID-19’s impact on employment law, or click here to see a list of all topics on this page.

Implications for Retirement Plans and Health Benefits

The Coronavirus Aid, Relief, and Economic Security Act (CARES Act) authorizes employees to make withdrawals or loans to themselves from their retirement and tax-qualified plans.  There are varying conditions based on the type of plan at issue.  These new rules are optional for the employer, but employers should be aware of them, as employees may seek to take advantage of this relief. As always, rules regarding the taxation of retirement plans are complex and can have far-reaching consequences. Any steps that either an employer or employee takes should be made in conjunction with the advice of a tax professional. 

Many employers are making efforts to continue to provide health insurance benefits to furloughed workers.  Most health insurance plans generally apply only for full-time employees, however. Therefore, an employer may need to work with its health insurance carrier to amend plan language to change eligibility terms or minimum hour requirements in order to continue coverage for furloughed employees.

Keep scrolling to read more about what employers should know about COVID-19’s impact on employment law, or click here to see a list of all topics on this page.

Unemployment

Changes have been made to unemployment laws at the federal level that will have various effects for each state. 

Employees who are terminated for reasons that are not their fault or who have experienced a temporary lay-off are eligible for unemployment compensation benefits.  Unemployment benefits are now also available to individuals who must self-quarantine at the direction of a medical provider or health authority.  Usually under Tennessee law, eligible claimants can receive up to $275 per week in unemployment compensation, depending on their typical average wages. The recently-enacted CARES Act makes changes to the benefit amount adding an additional $600 per week in benefits to all unemployment recipients.  The CARES Act also increases the length of time a person may be eligible to receive unemployment benefits, providing an additional 13 weeks of benefits. 

Employers who are terminating or furloughing several employees at a time are encouraged to report the mass claim on behalf of their employees. Information on how to make a mass claim, or mass partial claim in the event of a furlough, is available on the Tennessee Department of Labor and Workforce Development website here.  By filing a mass claim, employers expedite the process for their employees to receive benefits and do not have to respond to individual claims filed individually by employees.  Employers who expect to reopen and hope to continue employing their employees after a furlough, but who do not know an exact return date, should list a return to work date sixteen weeks from the layoff date.

The CARES Act gave authority to the states to extend unemployment eligibility to independent contractors and other workers who would be typically ineligible for unemployment benefits.  Tennessee has indicated that it intends to extend unemployment benefits to self-employed workers and independent contractors. As of yet, however, the Tennessee Department of Labor and Workforce Development, which administers unemployment compensation, is still in the process of obtaining federal moneys that will allow it to implement these benefits. The Tennessee Department of Labor and Workforce has more information here

Keep scrolling to read more about what employers should know about COVID-19’s impact on employment law, or click here to see a list of all topics on this page.

Employee Privacy Rights

Employers must take care to preserve their employees’ rights to privacy in matters of personal healthcare while also taking due care for the health and safety of other employees. 

In this public health crisis, some employers may wonder about the privacy rights of their employees.  The EEOC has issued guidance to assist on this issue available here.  Employers are permitted to inquire whether employees are experiencing symptoms of the coronavirus and may even check an employee’s temperature.  If an employee reveals that she has a COVID-19 diagnosis or is awaiting a diagnosis, then employers should be mindful that, under the Americans with Disabilities Act, the employer should not reveal the identity of that employee to other employees. But, the employer should take necessary precautions to warn other employees about potential exposure.  Any medical information received by an employer should be kept in a file separate from that employee’s personnel file.

Keep scrolling to read more about what employers should know about COVID-19’s impact on employment law, or click here to see a list of all topics on this page.

Immigration Matters and I-9 Forms

Employers who are sponsors of visas may have particular obligations during layoffs. New laws also have temporarily relaxed paperwork requirements for new hires. 

Due to the adoption of social distancing protocols, the Department of Homeland Security is permitting some flexibility in the examination of identification documents for the purposes of completing the Employment Eligibility Verification (Form I-9).  Until this change sunsets on May 19, 2020 (unless it is later extended), employers will not be required to review a new employee’s identity and employment authorization documents in the employee’s physical presence.  Rather, employers should inspect the Section 2 documents remotely (e.g., over video link, fax or email, etc.) and obtain, inspect, and retain copies of the documents, within three business days for purposes of completing Section 2 of the Form I-9.  For detailed information as to how to complete the Form I-9, please see this page from the ICE website. 

Also, employers that sponsor foreign workers for a green card or nonimmigrant visa status may have additional obligations to notify the United States Citizenship and Immigration Services (USCIS) or Department of Labor in the event of a furlough. More information on furloughs can be found above. Or, click here to see a list of all topics on this page.

This information was prepared by the Employment Law Team at Dodson Parker Behm & Capparella, PC. Learn more about our practice here.

 

 


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