By Alex Shipman, Coast Law Group LLP
Published on April 7, 2020

On March 13, 2020, a national emergency was declared in the US in the wake of the 2019 novel coronavirus disease (COVID-19) pandemic. On March 18, 2020, the US Congress passed the Families First Coronavirus Response Act (the “FFCRA”) which President Trump signed into law. The law became effective on April 1, 2020 and is set to expire on December 31, 2020.

On March 27, 2020, the US Congress passed the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”), which became effective immediately. These major pieces of legislation were intended to provide economic relief to individuals and businesses facing economic hardship due to the pandemic.

These new laws create important implications for employers while they face financial challenges due to COVID-19. Below is a brief overview of relevant employment information individuals and businesses should be aware of in the ongoing pandemic crisis.

I. The Families First Coronavirus Response Act (“FFCRA”)

The FFCRA applies to private employers with fewer than 500 employees and certain public employers. Two provisions of the FFCRA are directly relevant to employees and paid leave related to COVID-19 concerns:

(1) Emergency expansion of the Family Medical Leave Act (FMLA); and

(2) The new federal paid sick leave law.

*Note that the FFCRA allows the Secretary of Labor to issue regulations excluding healthcare providers and emergency responders from the definition of employees who are allowed to take paid sick leave and family leave under the FFCRA, and to exempt small businesses with fewer than 50 employees if the required leave would jeopardize the viability of such businesses.

Family and Medical Leave and Sick Leave Entitlement Under the FFCRA

Following is a summary of the leave provisions set forth by the Department of Labor (“DOL”).

On or after April 1, 2020, employees are entitled to job-protected leave under the FFCRA if the employee:

1.          Is subject to a Federal, State, or local quarantine or isolation order related to COVID-19;

2.         Has been advised by a health care provider to self-quarantine related to COVID-19;

3.         Is experiencing COVID-19 symptoms and is seeking a medical diagnosis;

4.         Is caring for an individual subject to an order described in (1) or self-quarantine as described in (2);

5.         Is caring for his or her child whose school or place of care is closed (or childcare provider is unavailable) due to COVID-19 related reasons; or

6.         Is experiencing any other substantially similar condition specified by the U.S. Department of Health and Human Services.

Duration of Leave

For reasons (1)-(4) and (6): A full-time employee is eligible for up to 80 hours of leave, and a part-time employee is eligible for the number of hours of leave that the employee works on average over a two-week period.

For reason (5): A full-time employee is eligible for up to 12 weeks of leave at 40 hours a week, and a part-time employee is eligible for leave for the number of hours that the employee is normally scheduled to work over that period.

Pay During Leave

For leave reasons (1), (2), or (3): employees taking leave shall be paid at either their regular rate or the applicable minimum wage, whichever is higher, up to $511 per day and $5,110 in the aggregate (over a 2-week period).

For leave reasons (4) or (6): employees taking leave shall be paid at 2/3 their regular rate or 2/3 the applicable minimum wage, whichever is higher, up to $200 per day and $2,000 in the aggregate (over a 2-week period).

For leave reason (5): employees taking leave shall be paid at 2/3 their regular rate or 2/3 the applicable minimum wage, whichever is higher, up to $200 per day and $12,000 in the aggregate (over a 12-week period—two weeks of paid sick leave followed by up to 10 weeks of paid expanded family and medical leave).

Tax Credits

Covered employers, as described above, qualify for dollar-for-dollar reimbursement through tax credits for all qualifying wages paid under the FFCRA. Qualifying wages are those paid to an employee who takes leave under the Act for a qualifying reason, up to the appropriate per diem and aggregate payment caps. Applicable tax credits also extend to amounts paid or incurred to maintain health insurance coverage.

Layoffs and Furloughs

The FFCRA does not address whether a business must provide this leave to an employee who is being laid off due to financial reasons resulting from COVID-19, but the DOL has recently published clarifications regarding employees who are laid off or put on furlough on or after April 1st: https://www.dol.gov/agencies/whd/pandemic/ffcra-questions

Furthermore, as employers are preparing for the FFCRA’s impact on their businesses, the U.S. Department of Labor (DOL) issued three documents to help employers and employees understand how the FFCRA will take effect: a fact sheet for employers, a fact sheet for employees and a FAQ.

II. The Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”)

The CARES Act provides various forms of economic assistance to employers to address the effects of the pandemic.  This assistance is subject to certain conditions and restrictions.

Of particular importance for small to mid-sized businesses is the Paycheck Protection Program within the Small Business Administration, which provides emergency loans (“Paycheck Protection loans”) through June 30, 2020 to most employers with fewer than 500 employees who were in operation on February 15, 2020 and who paid employees or contractors. For purposes of determining whether a business has fewer than 500 employees, the CARES Act includes individuals employed on a full-time, part-time, or other basis. Certain employers in the lodging and restaurant industries with over 500 employees may also access Paycheck Protection loans.

The maximum amount of the Paycheck Protection loans is the lesser of:

•    2.5 times the average monthly payments the employer made for “payroll costs” during the year prior to the loan disbursement, plus certain outstanding loan amounts; or

•    $10,000,000.

“Payroll costs” are broadly defined to include: salary, wages, commissions, and similar compensation (not exceeding $100,000 annualized per employee); payment of cash tips or their equivalent; payment for vacation, parental, family, medical, and sick leave; allowance for dismissal or separation; payment required for group healthcare benefits, including premiums; payment of retirement benefits; payment of state or local tax assessed on compensation to employees; and payments of compensation to or income of a sole proprietor or independent contractor.

Paycheck Protection loans may be used to cover substantially the same payroll costs described above. The loans may not be used to fund compensation for individuals above a cap of $100,000 per year, as prorated for the covered period, or qualifying paid sick leave or paid family leave under the FFCRA. Paid leave under the FFCRA is subject to separate tax credits (described above).

These loans are eligible for loan forgiveness of up to 100 percent of the principal for qualifying uses. However, the amount eligible for forgiveness will be reduced if the applicant fails to meet certain conditions. Accordingly, businesses considering applying for loans under this provision should give careful consideration to the timing of their application and the varying qualifications.

Importantly, if your business is considering layoffs or furloughs or have already conducted furloughs or layoffs and you are interested in a Paycheck Protection Loan, we recommend you consult with a financial or legal expert immediately.

III. Additional Considerations

The NLRA

As employers heed guidance from health organizations and directives from government agencies concerning COVID-19, they should be mindful that their efforts and employees’ responses do not violate the National Labor Relations Act (NLRA). The NLRA was enacted by Congress in 1935 to protect and define the rights of employees and employers alike.

While the National Labor Relations Board (NLRB) has traditionally focused on regulating union elections and collective bargaining activity, it also ensures that nonunion employees may engage in concerted activity for mutual aid or protection and be free from interference, restraint, or coercion. As such, employees may act together to improve their work conditions. The NLRA website includes examples, such as “participating in a concerted refusal to work in unsafe conditions.” Employers must keep in mind that employees are protected from discipline or discharge for engaging in defined protected activities.

OSHA

Health and safety in the workplace are regulated by the federal Occupational Safety and Health Act (“OSH Act”) and the Occupational Safety and Health Administration (“OSHA”). The OSH Act imposes legal obligations through industry-specific safety standards and the general duty clause, which requires all employers to maintain a workplace free of any recognized hazards that may cause death or serious injury to their employees.

OSHA recently published Guidance on Preparing Workplaces for COVID-19, outlining steps employers can take to help protect their workforce: https://www.osha.gov/Publications/OSHA3990.pdf

Note that this guidance is not a standard or regulation and does not create new legal obligations. It does, however, contain recommendations as well as descriptions of mandatory safety and health standards.

Disability Discrimination

Potential issues may arise under FEHA (the Fair Employment and Housing Act) and the ADA (Americans with Disabilities Act) if an employee requests time off to care for a family member with a medical condition or disability who is at greater risk for contracting COVID-19.

FEHA creates a cause of action for association disability discrimination. Generally, the law makes it unlawful for an employer to discriminate against a person in terms, conditions, or privileges of employment because of the physical disability of any person. FEHA’s definition of a “physical disability” includes an association with a physically disabled person.

Layoffs and Furloughs

As a result of the financial impacts associated with COVID-19, many employers are considering layoffs and furloughs. Certain employers are subject to California’s Worker Adjustment and Restraining Notification Act (“WARN Act”), which requires employers to provide employees at least 60 days’ notice before a mass layoff (50 or more employees in 30 days), plant closure or major relocation. California’s WARN Act only applies to California employers who have employed at least 75 employees in the past 12 months. Violations of the WARN act can result in back pay and benefits for those laid-off employees who did not receive the requisite notice. Despite the side effects of Levitra, the pills worked well. They worked well, but it is unlikely that someone will want to have sex having a lot of side effects. https://laserexpertsinc.com/levitra20online/. After 2 hours the effects are gone, the effect remains. I will not advise or dissuade you from buying, it is better to decide for yourself.

On March 4, 2020, Governor Newsom signed an executive order temporarily eliminating the 60- day notice requirement for those businesses that have been affected by COVID-19. Instead, businesses are only required to provide as much notice as possible. Note that businesses must still provide a compliant notice to employees and explain the basis for the layoffs and lessening of the notification period. Such notices must also include the following statement: “If you have lost your job or been laid off temporarily, you may be eligible for Unemployment Insurance (UI). More information on UI and other resources available for workers is available at labor.ca.gov/coronavirus2019.”

If your business is considering layoffs or furloughs, we recommend you consult with a legal expert.

If you are an individual or business affected by the COVID-19 pandemic, we urge you to schedule a consultation or consult with your existing CLG Attorney regarding updates that may not be reflected above. For further information, contact your CLG attorney or Alex Shipman at [email protected].

This article provides an overview of a specific developing situation. It is not intended to be, and should not be construed as, legal advice for any particular factual situation.