We know you have been bombarded with information from your bankers, insurance and benefits brokers, payroll, and other vendors. We hope this simplified FAQ of the most common questions we are getting at WorkWise Law, PC, will assist you in responding to your employees’ concerns.
QUESTION 1(a): I am a business with less than 50 employees; does the Families First Coronavirus Response Act (“FFCRA”) paid leave provisions apply to me?
ANSWER: Yes, although there may be some relief available if providing the child-care related paid sick leave and expanded family and medical leave at your business would jeopardize the viability of your business going forward. An authorized officer of your company must document the following criteria set forth by the Department of Labor (“DOL”) to apply for an exemption. Here are the criteria:
- The provision of paid sick leave or expanded family and medical leave would result in the small business’s expenses and financial obligations exceeding available business revenues and cause the small business to cease operating at a minimal capacity;
- The absence of the employee or employees requesting paid sick leave or expanded family and medical leave would entail a substantial risk to the financial health or operational capabilities of the small business because of their specialized skills, knowledge of the business, or responsibilities; or
- There are not sufficient workers who are able, willing, and qualified, and who will be available at the time and place needed, to perform the labor or services provided by the employee or employees requesting paid sick leave or expanded family and medical leave, and these labor or services are needed for the small business to operate at a minimal capacity.
QUESTION 1(b): What if I am a healthcare provider? I heard that healthcare providers may be exempt from the paid provisions of the FFCRA as well.
ANSWER: Yes, health care providers as defined herein are exempted. The DOL defines a health care providers as, “anyone employed at a doctor’s office, hospital, health care center, clinic, post-secondary educational institution offering health care instruction, medical school, local health department or agency, nursing facility, retirement facility, nursing home, home health care provider, any facility that performs laboratory or medical testing, pharmacy, or any similar institution, employer, or entity. This includes any permanent or temporary institution, facility, location, or site where medical services are provided that are similar to such institutions.
This definition includes any individual employed by an entity that contracts with any of the above institutions, employers, or entities institutions to provide services or to maintain the operation of the facility. This also includes anyone employed by any entity that provides medical services, produces medical products, or is otherwise involved in the making of COVID-19 related medical equipment, tests, drugs, vaccines, diagnostic vehicles, or treatments. This also includes any individual that the highest official of a state or territory, including the District of Columbia, determines is a health care provider necessary for that state’s or territory’s or the District of Columbia’s response to COVID-19.”
QUESTION 1(c): Does the exemption for businesses under 50 people and health care providers apply to the 80 hours of paid sick leave for reasons other than child-care related leave?
ANSWER: No. Even if you are an exempt employer as described above, you must still pay the additional 80 hours of paid sick leave if your employee:
1.is subject to a state, local or federal quarantine**;
- has been advised by a health care provider to self-quarantine;
- is experiencing symptoms of COVID-19 and seeking a medical diagnosis;
- is providing care for an individual subject to a federal, state or local quarantine, or isolation; or
- is dealing with a “substantially similar condition.”
**The DOL recently updated its guidelines to clarify that quarantine or isolation orders include a broad range of governmental orders, including orders that advise some or all citizens to shelter in place, stay at home, quarantine, or otherwise restrict their own mobility.
QUESTION 1(d): What is the rate of pay for the 80 hours of paid sick leave?
ANSWER: The FFCRA provides the following coverage to eligible employees at the following rates:
- Two weeks (up to 80 hours) of paid sick leave at the employee’s regular rate of pay where the employee is unable to work because the employee is quarantined (pursuant to Federal, State, or local government order or advice of a health care provider), and/or experiencing COVID-19 symptoms and seeking a medical diagnosis. Sick leave benefits for any of these reasons are capped at a maximum of $511 per day, or $5,110 total over the entire paid sick leave period; or
- Two weeks (up to 80 hours) of paid sick leaveat two-thirds the employee’s regular rate of pay because the employee is unable to work because of a bona fide need to care for an individual subject to quarantine (pursuant to Federal, State, or local government order or advice of a health care provider), or care for a child (under 18 years of age) whose school or child care provider is closed or unavailable for reasons related to COVID-19, and/or the employee is experiencing a “substantially similar” condition. Under these circumstances, the employee is subject to a maximum of $200 per day, or $2,000 over the entire two-week period.
QUESTION 2: If I am subject to an exemption under the FFCRA, how do I apply?
ANSWER: As of April 6, 2020, you do not need to send the above-described documentation to the DOL. The DOL has not yet specified how businesses will apply for this exemption. We are expecting further guidance from the DOL with regard to how this information should be submitted, the directive right now is simply to “document” your reasons.
QUESTION 3: Should I furlough or layoff my employees if my business is closed or there is not enough work to keep everyone busy?
ANSWER: If your ability to stay open has ceased because you are a non-essential business and your employees cannot work remotely; or you do not have adequate work for your employees to do, there is very little difference between a furlough and a temporary layoff. Both of these options require youto pay employees their final wages, including any accrued but unused vacation time, on the day you announce the furlough/layoff and to provide them with their “For Your Benefit” pamphlet from the EDD and Notice of Change in Relationship forms. See:https://www.edd.ca.gov/pdf_pub_ctr/de2320.pdf and https://www.edd.ca.gov/payroll_taxes/pdf/NoticetoEmployeeastoChangeinRelationship.pdf.
If you furlough an employee, they are technically still your employee and able to maintain benefits. However, even for temporarily laid off employees, health insurance carriers in California have extended the period of time that employees can remain covered without having to be moved to COBRA. The length of coverage varies from provider to provider. Therefore, we recommend that you call your health insurance broker to find out how long you can extend coverage for employees subject to a layoff.
Temporarily laid off employees and those who are furloughed (with no work at all) are not entitled to the paid sick leave and extended family leave benefits provided in the FFCRA.
QUESTION 4: Instead of a furlough or lay off, can I reduce my employees’hours and/or wages during this time?
ANSWER: Yes, with exceptions. At-will non-exempt (i.e. hourly) employees can have their pay or hours reduced at any time.
If you reduce an employee’s hours, you do not need to pay them final wages, including accrued vacation time, but you do need to provide them with the EDD’s “For Your Benefit” pamphlet (see above) so they can apply for partial unemployment to assist with the wages they have lost.
You must also provide these employees with the EDD’s Form 2063. This is an ongoing obligation that you will need to fill out every week of earnings. It must be given to the employee within 5 days after payroll is run for that week. Your employee will then have 28 days to submit it to the EDD.See the form and instructions here: https://www.edd.ca.gov/pdf_pub_ctr/de2063.pdf and https://www.edd.ca.gov/pdf_pub_ctr/de4209.pdf
Employees who have had a reduction in hours/pay may utilize their accrued sick leave, vacation or PTO benefits to make up the difference in their wages.
Reduction of an exempt employee’s salary is permissible in certain circumstances but requires a more nuanced analysis. If you are considering this option for your staff, please contact us.
QUESTION 5: We are an essential business, but my employees do not want to report to work because they are fearful of contracting COVID-19. If they stay home, do I have to pay them?
ANSWER: No, if you are an essential business that has taken all precautions to create a safe work environment, in compliance with local/state and federal guidelines and your workers are refusing to come to work because they are concerned that they will contract the coronavirus, you do not have to pay them sick leave, under either the FFCRA or your usual sick leave policy. This analysis changes if they present you with documentation from a health care provider that they need reasonable accommodation for an underlying disability or health condition.
We recommend that you do not terminate employees who express concerns to you for their own well-being or the well-being of their family members. This is a tremendously difficult time for everyone, as we navigate the daily barrage of health information and data about how the disease spreads. You can offer to place your concerned employees on an unpaid leave of absence. The EDD has also stated that they may be eligible for unemployment benefits. The criteria of how the EDD will determine benefits for these employees has not yet been made clear.
QUESTION 6: What documentation can I require of my employees who want to use the 80 hours of paid sick leave or the expanded family and medical leave coverage?
ANSWER: If the reason for seeking paid sick leave or expanded family and medical leave coverage under the FFCRA is because the employee has to take care of a child whose school or child-care is closed, you may ask for:the name of the child; name of the school or child care provider that has become closed or is unavailable; and a statement that no other suitable person is able to care for the child during the period of sick leave or expanded family and medical leave.
If the employee is seeking paid sick leave because of a non-child care related qualifying leave, employers must obtain appropriate documentation, such as the employee’s name qualifying reason for requesting the leave, a statement that the employee is unable to work (including telework) and the dates for which leave is requested.
Additionally, employers should obtain documentation, such as the source of any quarantine or isolation order, or the name of the health care provider who has advised [an employee] to self-quarantine. In order to obtain tax credits for providing the paid leave and expanded family and medical leave, employers should consult their tax consultants about the IRS’ documentation requirements.
QUESTION 7: I have heard that there may be loan forgiveness for payroll, rent and interest on my mortgage and utilities through the Coronavirus Aid, Relief, and Economic Security (“CARES ACT”)Payroll Protection Plan. How do I apply for that?
ANSWER: You can apply for the Payroll Protection Plan (“PPP’) through your business bank, if they are an SBA approved lender. Applications were disseminated by the banks, beginning on Friday, April 3, 2020.
QUESTION 8: If I already laid off or reduced the salaries of my employees, will I not receive payroll loan forgiveness?
ANSWER: Reductions in employment or wages that occur during the period of February 15, 2020 and ending 30 days after the enactment of the CARES Act (thus, April 26, 2020) shall not reduce the amount of loan forgiveness IF by June 30, 2020 the borrower eliminates the reduction in employees or reduction in wages. In simple terms, if you have laid off/furloughed employees up until April 26, 2020, you may receive loan forgiveness for 8 weeks of payroll costs at the February 15, 2020 level, so long as you have re-hired the employees and/or raised the salaries back to pre-furlough/layoff levels by June 30, 2020. If you are faced with having to reduce the number of employees returning to work on June 30, 2020, the amount of the loan that can be forgiven will simply be reduced proportionately.
QUESTION 9: Can I use this time of reduced work to clean house of my poor-performers?
ANSWER: Some employers have seen this strange time as an opportunity to terminate their difficult, poor-performing employees…but BEWARE! For one thing, plaintiffs’attorneys are hungry to bring cases against companies in the name of “championing workers’ rights.” While you have every right to layoff and furlough employees due to an economic downturn, if you do not rehire these employees when government assistance comes through or the economic wheels start to turn again, these employees are going to make the argument that they were not re-hired because they are “[insert protected class]” here (i.e. over 40, bi-sexual, a minority, disabled.) It is unlikely that an employee will admit the reason they were not re-hired is performance based.
Continue to follow your company policies with regard to progressive discipline and avoid any retaliatory acts towards employees for exercising their rights to take protected leave. You may need to bring even the difficult, poor-performing employees back after this pandemic clears, and to spend more time documenting their performance issues before you can safely terminate, or at least reduce your risk for a lawsuit.
QUESTION 10: What items do I have to pay for if my employee is working from home (tele-work)?
ANSWER: If your employee is unable to work at the office/business facility due to a stay-at-home ordinance, the business is responsible for any expense that is reasonably incurred on the company’s behalf. Cell phone and internet usage must be reimbursed at a “reasonable percentage” of the employee’s bill. We recommend that you communicate to the employees, what equipment/supplies the company will provide and what items must be requested in advance of the employee purchasing it and seeking reimbursement.