The A to Z of COVID-19 Employment Law

The COVID-19 (aka the coronavirus) pandemic has presented us with times that are strange and even unsettling. Employers face difficult issues--trying to honor employee rights, trying to keep up with changes in the law, trying to do what is right, and just trying to keep the business afloat. We at Naman Howell Smith & Lee, PLLC want to help employers navigate the legal uncertainties created by COVID-19.

On March 18, 2020, President Trump signed the Families First Coronavirus Response Act (FFCRA) in to law, which became effective April 1. The Act has significant impact on employers with fewer than 500 employees (along with anti-discrimination and anti-retaliation provisions):

New FMLA provisions

• Employees that have been employed for at least 30 days are entitled to a total of 12 weeks of leave effective April 1, 2020, through December 31, 2020 if needed to care for the employee’s child (who is under 18 years of age) if the child’s school or childcare provider is closed or unavailable due to COVID-19 issues.

• The first 10 days of leave may consist of unpaid leave, but an employee may substitute any accrued paid leave for unpaid leave. An employer must thereafter provide paid leave of at least two-thirds of the employee’s regular rate of pay for the remainder of the leave period, subject to a $200/day cap and a $10,000 cap over the entirety of the FMLA leave period, but only if the leave is taken for this new qualifying reason.

• In limited circumstance, employers with fewer than 25 employees may be exempted from the FMLA provisions relating to restoration of the employee following leave.

Paid Sick Leave

The FFCRA also contains the Emergency Paid Sick Leave Act, which requires private employers with fewer than 500 employees to provide for an employee’s immediate use 80 hours of paid sick leave for full-time employees (for part-time employees, an amount equal to the average number of hours worked over a 2-week period).

An employee may take emergency paid sick leave if the employee is unable to work or telework for one of the following reasons:

The poster for the new leave rights can be found here:

https://www.dol.gov/sites/dolgov/files/WHD/posters/FFCRA_Poster_WH1422_Non-Federal.pdf

Exemptions Available for Businesses with Less Than 50 Employees

The Secretary of Labor has the authority to adopt regulations to exempt some small businesses (fewer than 50 employees) from compliance with these parts of the FFCRA. The guidelines from the Department of Labor as of the date of this post state that if providing the child care-related sick leave and expanded family medical leave “would jeopardize the viability of a business as a going concern,” businesses with fewer than 50 workers should “document why your business with fewer than 50 employees meets the criteria set forth by the Department.

Under its rule-making authority, the DOL released 29 CFR 826 clarifying paid leave under the FFCRA. In particular, 826.40 explains that a small employer is exempt from the requirement to provide such leave when:

• such leave would cause the small employer’s expenses and financial obligations to exceed available business revenue and cause the small employer to cease operating at a minimal capacity;

• the absence of the employee or employees requesting such leave would pose a substantial risk to the financial health or operational capacity of the small employer because of their specialized skills, knowledge of the business, or responsibilities; or

• the small employer cannot find enough other workers who are able, willing, and qualified, and who will be available at the time and place needed, to perform the labor or services the employee or employees requesting leave provide, and these labor or services are needed for the small employer to operate at a minimal capacity.

For these reasons, the employer may deny paid sick leave or expanded family and medical leave only to those otherwise eligible employees whose absence would cause the small employer’s expenses and financial obligations to exceed available business revenue, pose a substantial risk, or prevent the small employer from operating at minimum capacity, respectively.

The rule goes on to explain that if a small employer decides to deny paid sick leave or expanded family and medical leave to an employee or employees whose child’s school or place of care is closed, or whose child care provider is unavailable, the small employer must document the facts and circumstances that meet the criteria set forth in the rule to justify such denial. The employer should not send such material or documentation to the Department, but rather should retain such records for its own files.

https://www.dol.gov/agencies/whd/ffcra

Additional Guidance from the DOL

The DOL has also issued additional guidance through the FFCRA Q&A (see link below) relating to whether employees who have been laid off, furloughed or had their hours reduced would be eligible for leave under FFCRA. The DOL clarified that such employees are not eligible for paid sick leave or expanded family and medical leave under FFCRA, irrespective of whether the layoff occurred before or after April 1, 2020. Rather, they must turn to unemployment assistance (which has been substantially increased under the CARES Act, signed into law Friday afternoon).

The DOL also clarified when leave under the FFCRA could be taken on an intermittent basis. The DOL guidance provides that employers may agree to allow employees who are working remotely to take FFCRA paid leave intermittently while teleworking if the employee is unable to telework during his or her normal work schedule due to one of the qualifying reasons in the Emergency Paid Sick Leave Act. In that situation, the employer may agree to allow such intermittent leave in any increment. If an employee is working at their usual worksite, FFCRA leave can only be taken intermittently for reasons related to loss of childcare or school closure, provided that the employer agrees.

Tax Credits and Other Financial Relief

A number of measures have been taken to try to help employers offset the costs of these new paid leave obligations, and the effects of COVID-19 on the business generally. Under the FFCRA, covered employers (i.e., private employers with fewer than 500 employees) may qualify for refundable payroll tax credits. Information from the Department of Labor on these credits can be found here. https://www.dol.gov/newsroom/releases/osec/osec20200320, and information from the Internal Revenue Service can be found here. https://www.irs.gov/newsroom/treasury-irs-and-labor-announce-plan-to-implement-coronavirus-related-paid-leave-for-workers-and-tax-credits-for-small-and-midsize-businesses-to-swiftly-recover-the-cost-of-providing-coronavirus.

The CARES act provides the Paycheck Protection Program with potentially forgivable loans for payroll costs, mortgage/rent costs and utilities, among other expenses. The SBA has provided guidance to help small businesses with the financial burdens they face in dealing with COVID-19. See https://www.sba.gov/page/coronavirus-covid-19-small-business-guidance-loan-resources. Step-by-step guidance for eligibility and other details regarding this program can be found at this helpful link from the U.S. Chamber of Commerce:

https://www.uschamber.com/sites/default/files/023595_comm_corona_virus_smallbiz_loan_final.pdf

Here is a link to the SBA application, to be taken to any eligible lender:

https://www.sba.gov/document/sba-form--paycheck-protection-program-borrower-application-form

An employer that carries business interruption insurance coverage should contact its insurer and follow the steps set out in its policy to explore whether making a claim based on the effects of the coronavirus is appropriate.

Issues Under Existing Law

Aside from the difficult issues employers face adapting to the FFCRA, employers also face complex issues under laws that predated the pandemic. Employers subject to the Family Medical Leave Act (FMLA) will still need to process requests for leave that are not covered by the FFCRA in accordance with the FFCRA.

Leave requests and the consideration of layoffs and reassignments to deal with the reduction in work available during the pandemic also pose issues under the Title VII of the Civil Rights Act, which prohibits discrimination on the basis of sex. Employers must take care not to indulge the stereotype associating women with primary childcare responsibility in making decisions on whether and who to choose when conducting layoffs and other steps to address reduced workload.

The Occupational Health and Safety Act and general common law principles require and employer to provide employees a safe work place. Employers face a difficult balancing act when weighing the need to continue operations, including to keep employees working, while at the same time protecting employees from exposure to the virus. Employers should consult their workplace safety and illness policies, update them as needed, and update employees on relevant company policies and appropriate measures to take. The Centers for Disease Control (CDC) has provided guidance on precautions to take against COVID-19. https://www.cdc.gov/coronavirus/2019-ncov/index.html. Employers should also take the time to remind employees of benefits that might be available to them under company policy. For example, many health insurance programs offer a telemedicine option, through which a patient can consult a health care provider through phone or an app. Employers might also consider remote or work from home options.

In seeking to protect employees and clients, employers subject to the Americans with Disabilities Act (ADA) face complicated judgment calls. The ADA limits an employer’s ability to ask applicants and employees about medical issues or to require medical examinations. The virus could cause a condition, or exacerbate a preexisting condition, that qualifies as a disability. In that event, the employer would need to engage in the interactive process to evaluate whether a reasonable accommodation could be provided. Further, a person with a disability cannot be excluded from work for health or safety reasons unless the employee poses a “direct threat” to others. Employers face a thorny analysis while trying on the one hand to comply with the ADA while on the other gathering information on the health of employees to make sure those who have been exposed to or have contracted COVID-19 or that are displaying symptoms of the virus do not endanger others. The Equal Employment Opportunity Commission (EEOC) has issued guidance for employers on the ADA issues, and steps that can be taken to assess an employee’s condition in relation to COVID-19 here:

https://www.eeoc.gov/eeoc/newsroom/wysk/wysk_ada_rehabilitaion_act_coronavirus.cfm.

In the unfortunate event that pre-virus levels of employment cannot be sustained through the pandemic, there are laws that an employer must consider. The Worker Adjustment and Retraining Notification Act (WARN) protects workers, their families, and communities by requiring employers with 100 or more employees (generally not counting those who have worked less than six months in the last 12 months and those who work an average of less than 20 hours a week) to provide at least 60 calendar days advance written notice of a plant closing and mass layoff affecting 50 or more employees at a single site of employment. WARN makes certain exceptions to the requirements when layoffs occur due to unforeseeable business circumstances, faltering companies, and natural disasters. Whether, and to what extent, issues presented by the virus will fall into these exceptions is yet to be seen.

Some employers might choose to implement reduced shifts or hours (furloughs), or a temporary layoff, rather than permanent employment terminations. The WARN Act is triggered when there are 50 or more countable “employment losses.” This phrase does not include temporary layoffs of less than 6 months. The WARN Act might, but does not necessarily, apply to furloughs. Under Texas unemployment law, a reduction in hours, as well as a layoff, can qualify an employee for benefits. Employers should consider whether a furlough or temporary layoff is appropriate, and the date of return for a temporary layoff, as these issues can affect what an employee must do to qualify for benefits.

An employer’s approach to these issues can also implicate the Fair Labor Standards Act (FLSA). Reducing the shifts or hours for non-exempt hourly employees can reduce labor costs, but exempt salaried employees paid on a salary basis involved in a furlough might nevertheless be entitled to their full weekly salary.

Other Resources

The SBA loan program and other measures designed to help employers are also designed to help employees. For example, keeping your employees employed may be a condition of receiving an SBA loan.

To help keep workers employed, the Texas Workforce Commission has created a shared work program, which provides for partial unemployment benefits. Information on the program can be found here: https://www.twc.texas.gov/businesses/shared-work

In the event that an employer needs to conduct a large number of layoffs, the TWC offers a mass claims program. This program streamlines the process for handling a large number of claims related to a temporary or permanent layoff. Information on the program is available here: https://www.twc.texas.gov/businesses/mass-claims-unemployment-benefits

Further Assistance

You will almost certainly have questions as to try to apply the FFCRA and other law to the issues created by COVID-19. Do local shelter-in-place orders qualify under the new leave provisions? Is my business allowed to continue to operate under local stay-at-home orders? How do I calculate the rate of paid leave for a commissioned employee? What steps can I take if I suspect that an employee coming to the office has COVID-19?

The Department of Labor and other government agencies are releasing guidance regularly. An employer fact sheet can be found here: https://www.dol.gov/agencies/whd/pandemic/ffcra-employer-paid-leave. A frequently asked question and answer page can be found here: https://www.dol.gov/agencies/whd/pandemic/ffcra-questions

Beyond the information in this article and the resources linked in it, the attorneys at Naman Howell are focused on the legal issues created by COVID-19 so that you can focus on keeping your business going in these uncertain times. If you have questions on employment related matters, please call or email Joe Rivera [(254)-755-4129, jrivera@nhsl.com)] or Brad Dowell [(817) 509-2062, bdowell@nhsl.com] and they will be glad to help.

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