COVID-19 CONSIDERATIONS FOR EMPLOYERS

Published on: May 13, 2020

Over the course of the past several weeks (if not months), employers have been grappling with how to address and respond to the seemingly endless amount of challenges and conflicts that have arisen out of the COVID-19 pandemic. While many private employers are optimistic that they will be soon able to re-open their doors, going forward, business operations (and life in general) will presumably be markedly different to what it was even a few short months ago, and employers should be mindful and aware of the various issues that they are likely to face as we all inch forward towards the “new normal.”

Layoffs and Furloughs.

In light of the unprecedented impact that the COVID-19 pandemic has had, and continues to have on both our nation’s and the world’s economy, there has been an overwhelming number of employee layoffs, force reductions, and furloughs, and while many people use such terms interchangeably, they in fact have very different and distinct meanings.

Layoffs are typically used to reduce a business’ overall operating expenses and oftentimes involve a permanent separation of employment, whereas, a reduction in force occurs when a person is laid off from their job because their position has been permanently eliminated, which may be the result of redundancies, re-structuring, a change in the business operations, or the like.

Although layoffs and reductions in force may happen without notice, any employer (regardless of whether or not it may be a public or private company, or a profit or not-for-profit business), that employs one-hundred (100) or more full-time employees, is subject to the Adjustment Notification and Retraining Act (“WARN Act”). Under the WARN Act covered employers are required to provide written notice to their employees at least sixty (60) days in advance of covered plant closings (i.e., in the case of a facility closure or where an employer discontinues the use of an operating unit, permanently or temporarily, and affecting at least fifty (50) full-time workers at a single site of employment) and mass layoffs (i.e., layoffs of five-hundred (500) or more full-time workers within a (30) day period at a single place of employment, or two (2) layoffs of anywhere between fifty (50) and four hundred and ninety-nine (499) workers (excluding part-time workers), which constitute thirty-three percent (33%) or more of the employer’s total active workforce (excluding part-time workers) at a single place of employment. There are certain exceptions to the notice requirement under the Warn Act, such as in the case of an “unforeseeable business circumstances,” although it remains to be seen whether layoffs resulting from the COVID-19 pandemic would qualify for purposes thereof, and in any case, a defense raised on such grounds, would likely be largely fact dependent, and take into consideration the resulting impact (if any) on similarly situated employers in the relevant industry.

A furlough is considered to be a temporary leave of absence from work or a reduction in any employee’s hours for a limited period of time, following which, the employee is expected to return to work or be restored to their full work schedule, however may be appliable.  Employers may consider furloughing their employees in response to a business or economic slowdown, or where they do not have enough cash on hand to meet payroll, Furloughed employees often retain some or all of their benefits during the furlough period, which may include without limitation, pre-existing health and life insurance benefits, and employer-sponsored retirement plan. If the furlough arises out of the COVID-19 pandemic, employees may be eligible for unemployment benefits, and the Massachusetts Department of Unemployment Assistance (“DUA”) has recently adopted “Emergency Regulations,” designating employees that have been furloughed due to the COVID-19 pandemic, as being on “stand by.” The Emergency Regulations currently contemplate that employees may be on “stand by” status for four (4) weeks, although employers may request that an employee’s “stand by” status be extended for up to eight (8) weeks, and such status may extended even further by the DUA, acting within its sole discretion.

Reductions in Employee Compensation.

Under the Federal Fair Labor Standards Act (FLSA), employees must be paid one and one half (1 ½) times their regular rate of pay for any time worked in excess of forty (40) hours during  a given work week, unless the employee falls under an exemption, such as oftentimes the case with respect to individuals employed in administrative, executive and professional type roles. Unlike non-exempt employees whom are paid for the time actually worked, exempt employees are paid a predetermined and fixed salary (of at least six hundred and eighty-four ($684.00) dollars per week) regardless of the number of hours worked.

Understandably, many employers which are currently experiencing a business slowdown due to the COVID-19 pandemic have reduced the total number of hours that each non-exempt employee is assigned to work each week, which also correlates to a reduction in the employer’s overall payroll costs, and which may ultimately help to stave off employee layoffs.

However, there is no practical purpose served by reducing the number of hours that an exempt employee is assigned to work, as they are to be paid a salary irrespective of the amount of time actually worked. Instead, during a business or economic slowdown, employers may act to reduce an exempt employee’s salary, provided that the proposed decrease is directly related to the employer’s long-term goals and objectives of keeping the business open and afloat, and so long as the salary decrease does not fluctuate or change from week to week.

Working Remotely.

Although many people are now working remotely in response to state mandated closures, the opportunity to telework may not be feasible in all circumstances, and it is largely dependent upon the respective job duties of each individual employee, the operational and business needs of the employer, the data and technological security measures already in place; the technological capabilities of the employer’s existing software and equipment, and the employee’s ability to access the same in order to undertake and carry out their essential job duties and functions, the employer’s expectation for employee productivity, and the feasibility of maintaining accurate record keeping, especially as it relates to tracking the hours worked by non-exempt employees, because unlike exempt salaried employees, non-exempt employees are entitled to be compensated for the actual time worked. Consequently, non-exempt employees working remotely should submit weekly timesheets or hourly reports reflecting the actual time worked, and absent a contrary policy stating otherwise, non-exempt employees should also be advised that they should not work any additional hours beyond those assigned, unless they are authorized in advance to do so.

Once the current public health emergency ends, and the stay at home and shut down orders have been lifted, employers may restrict and otherwise limiting their employees from working remotely (assuming that the employer does not have a contrary policy in place, and there has not been superseding order or regulation issued in the interim), although employers are encouraged to evaluate requests by their employees to continue to telework on a case by case basis, in light of all attendant facts and circumstances, for the reasons outlined below.

Requests for Reasonable Accommodations.

In the event that a disabled employee requests an accommodation, i.e., to work remotely or otherwise, the employer is entitled to understand the relationship between the employee’s disability and the requested accommodation, and to engage in an interactive dialogue with the employee with respect to the same, to evaluate whether other alternative accommodations may exist to allow the employee to perform the essential functions and duties assigned to their position.

Although the situation continues to evolve, COVID-19 is not presently considered to be a disability in and of itself. Notwithstanding the same, the Centers for Disease Control (“CDC”) has identified a number of pre-existing medical conditions, including without limitation, chronic lung disease and heart conditions that put certain individuals at a higher risk for developing severe symptoms if infected with COVID-19, and an employee may ask for an accommodation in consideration thereof, and in such a case, the employer may ask that the employee verify their disability and heightened risk exposure for purposes of evaluating the feasibility and suitability of possible accommodations, including without limitation, working remotely. Regardless of the foregoing, employers do not have an obligation to grant an accommodation to an employee who lives in the same household as someone who, due to their disability, is at greater risk of severe illness from COVID-19, as the employee may only seek a reasonable accommodation related to their own disability, and not related to anyone else’s (although there may be other relief available to the employee as described below) .

Throughout these uncertain times, employers should be mindful of the fact that it may prove incredibly difficult, if not impossible, for an employee to immediately provide their employer with a letter from their treating physician or some other form of written documentation to verify their disability and in support their requested accommodation, and therefore, employers should be flexible and reasonable when considering any requests for accommodations made during the COVID-19 crisis.

Further, when faced with an exigent accommodation request (i.e., in the case of an employee’s request to continue to work remotely due to their heightened risk for becoming seriously ill if they contract COVID-19, as noted above), employers may consider granting the requested accommodation on a temporary or contingent basis, pending the employer’s receipt of any necessary documentation and information that may be required in order for the employer to meaningfully evaluate and consider the requested accommodation having been made, and to make a determination in regards thereto, although employers are discouraged from demanding that an employee provide them with proof that they have tested positive for COVID-19 for purposes thereof.

Moreover, while it may be true that employers are not required to eliminate the essential functions and duties assigned to a particular position in response to an employee’s request for an accommodation, from a practical perspective, when practical and appropriate, employers ought to consider temporarily suspending certain job duties and functions while the pandemic continues to persist, and to then act to restore the same once the current health crisis is over.

Restricting Employee Access to the Workplace.

While we all continue to battle the COVID-19 pandemic, employers may ask their employees if they are experiencing symptoms of the pandemic virus, and any employees who becomes ill at work with symptoms associated with the virus should be directed to leave. Further, the Massachusetts Attorney General has indicated that employers may also instruct employees not to come into work if they have had “close contact” with an individual diagnosed with COVID-19, meaning that the employee lives within same household as a person who has tested positive for COVID-19, is caring for a person who has tested positive for COVID-19, or they have been within six (6) feet of a person who has tested positive for COVID-19 for fifteen (15) minutes or more, or the employee has had direct contact with someone who as tested positive for COVID-19 (i.e., by sharing utensils, being coughed on, etc.) while that person was symptomatic.

Regardless of the scenario, employers are required under the ADA to maintain and preserve the confidentiality of any information related to an employee’s illness, and the disclosure of such information should only be communicated to a person or limited number of persons(s) (dependent on the size of the workforce) that have been designated by the employer to receive the same. The individual or individual(s) having been so designated by the employer may speak with the infected employee in order to identify any other individuals that may have come into contact with the infected employee in an effort to mitigate and prevent the spread of further disease. Additionally, and in furtherance of the aforementioned objectives, employers may also notify their workforce that an individual or individuals (whichever the case may be) has (or have) tested positive for COVID-19, provided that the identity of the infected person or persons is not disclosed or is readily determinable.

Families First Coronavirus Response Act.

The Families First Coronavirus Response Act (“FFCRA”) went into effect on April 1, 2020, and is applicable to all businesses with less than five hundred (500) employees.

The FFCRA is essentially made up of two (2) main parts, with the first part being the Emergency Paid Sick Leave Act (“EPSLA”), which requires all covered employers to provide their employees with up to two (2) weeks of paid sick leave at one hundred (100%) percent of their base rate of pay, up to five hundred and eleven dollars ($511.00) per day. The term “employee,” as used in the EPSLA is intended to refer to any person that satisfies the criteria of an “employee” as defined under the Fair Labor Standards Act (“FLSA”) (and which includes virtually all private sector employees, regardless of whether they are full-time,  part-time, temporary, or permanent). Although the EPSLA does not provide for paid leave if an employee is unable to work or telework solely because of a workplace closure, employees may be eligible for paid leave under the EPSLA if they cannot work because they have contracted COVID-19, if they are seeking treatment for symptoms of COVID-19, if they under a quarantine order, or in the event that they have otherwise been directed by health care provider to self-isolate. Employees may also take leave under the EPSLA, if they are caring for someone subject to a quarantine order, or if their child’s school or daycare has closed and the employee must stay home to care for the child, but under circumstances, the employee is only entitled to be paid at two-thirds (2/3) of their regular base rate of pay, and which may not exceed two hundred dollars ($200.00) per day.

The second part of the FFCRA, is known as the Emergency Family and Medical Leave Expansion Act (“EFMLA”), and provides that an eligible employee, whom at the time of leave has been employed for thirty (30) days or more, may be entitled to receive an additional ten (10) weeks of paid leave beyond the initial two (2) week period provided for under the EPSLA, and referenced above, in the event that the employee requires additional time off because their child’s school or daycare remains closed because of COVID-19. Employees taking leave under the EFMLA are to be paid at a rate of no less than two-thirds (2/3) of their regular base rate of pay, up to two-hundred dollars ($200.00) per day.

Covered employers may qualify for dollar-for-dollar reimbursement through tax credits for all “qualifying wages” paid under the FFCRA, meaning those wages paid to an employee who takes leave under the FFCRA for a qualifying reason, up to the appropriate per diem and aggregate payment caps referenced above, i.e., the sick leave credit available for any employee is limited to five hundred and eleven dollars ($511.00) per day up to a maximum of ten (10) days if the employee is taking sick leave to care for themselves and two hundred dollars ($200.00) per day for a maximum of ten (10) days if the employee is taking sick leave to care for a family member or child when the child’s school or daycare is closed. The qualified family leave wages per employee for which a credit may be claimed for a quarter cannot exceed two hundred dollars ($200.00) per day and ten thousand dollars ($10,000.00) in the aggregate, and the amount of credits also cannot exceed the employer’s Social Security and Medicare tax liability for the quarter, but the employer may claim a refund. Additionally, among the applicable tax credits that covered employers may avail themselves to, are the amounts paid or incurred to maintain health insurance coverage. Moreover, through a recent notice, the IRS has stated that eligible employers may claim the aforementioned credits for wages paid for the period beginning on April 1, 2020, and ending on December 31, 2020, and that eligible employers who pay qualified sick leave wages or qualified family leave wages will be able to retain an amount of the payroll taxes equal to the amount of such wages paid rather than deposit them with the IRS, and among the payroll taxes that employers can retain are: withheld federal income taxes, the employee share of Social Security and Medicare taxes, and the employer share of Social Security and Medicare taxes.  If the retained payroll taxes are insufficient to cover the cost of qualified sick and family leave paid, employers will be able to file a form to request for an accelerated payment from the IRS, which is expected to take approximately two (2) weeks to process.

Employers are prohibited from retaliating against, or terminating any employee who exercises their rights under the FFRCA, and from withholding any paid sick leave that an eligible employee may be entitled to thereunder, and employers may be exposed to serious sanctions and penalties should they fail to comply with the terms and provisions set forth therein.

While the FFRCA does not preclude employers from continuing with pre-planned staff reductions or layoffs, employers should exercise caution, and carefully weigh all other options before so proceeding, taking into account the various factors and considerations which are set forth herein.

General Recommendations.

Based on the foregoing, employers should take the opportunity in advance of re-opening, to carefully review their existing policies and procedures in order to confirm that they are reflective of the most up to date public health recommendations aimed at preventing the further spread of COVID-19, and to promote a safe and healthy working environment, and also to ensure that they are consistent with all applicable state and federal laws and regulations. Additionally, employers are reminded that even after stay at home and shut down orders have been lifted, many employees are still likely to be anxious about returning to the work place. Therefore, whenever it may be reasonably practical and economically feasible, employers should consider adopting flexible policies, particularly as they relate to sick leave and working remotely, in order to meet the anticipated needs, and concerns of their workforce as we all ease into our new reality.

Please contact Jen Barnett at jbarnett@meeb.com, should you have any questions or comments about the contents of this article.