What a crazy time is this? We sincerely hope you and yours are well. Things are changing so fast!
By now we hope you have had a chance to review our What You Need to Know Newsletter. If you missed it, here is a link. For those of you in San Diego, here is the latest order from our Mayor. If you want the order from any other California county (or help deciphering them), please let us know.
Today, Congress passed and the President signed into law the Families First Coronavirus Response Act ("the Act"). The Act will go into effect April 2, 2020. Separately, Governor Newsom issued an Executive Order offering some employers relief from certain obligations of the California WARN Act. A summary of the essentials of these changes is below.
There are two key elements to the Act for employers. First, the the Emergency Family and Medical Leave Expansion Act adds a reason for taking leave under the federal Family and Medical Leave Act ("FMLA") and provides for compensation during that covered leave. Second, the Emergency Paid Sick Leave Act provides for paid time off for certain COVID-19-related leaves. A summary of each is below.
Emergency Family and Medical Leave Expansion Act ("EFMLEA")
Covered Employers. EFMLEA applies to employers with fewer than 500 employees. The Secretary of Labor may exclude certain health care providers and emergency responders from the definition of employee, by allowing the employer of such health care providers and emergency responders to opt out, and may exempt businesses with fewer than 50 employees if the required leave would jeopardize the viability of their business as a going concern.
Covered Employees. EFMLEA applies to employees who have been employed at least 30 days as of the date they require leave.
Length of Leave. Up to 12 weeks.
Purpose of Leave. This leave is available to an eligible employee who is unable to work (or telework) due to a need for leave to care for the employee's child if due to a public health emergency:
- the child's school or care center has been closed; or
- the child's child care provider is unavailable.
Compensation for EFMLEA Leave. The first 10 days of leave of EFMLEA will be unpaid, but employees may choose to apply accrued vacation leave, personal leave, or sick leave. After 10 days, the employer must provide paid leave for the above purpose, up to the caps described below:
The employee must be paid at least two-thirds of the employee's regular rate of pay, multiplied by the number of hours the employee otherwise normally would be scheduled to work (there is a separate calculation for employees on a varying schedule), up to a maximum of $200 per day and $10,000 in the aggregate per employee.
Reinstatement Rights. The usual reinstatement rights (guaranteed in almost all circumstance the right to reinstatement to a same or equivalent position) do not apply to companies with fewer than 25 employees if:
- The employee takes leave under these new provisions;
- The position held by the employee when the leave commenced does not exist due to economic conditions or other changes in operating conditions of the employer that:
- affect employment; and
- are caused by a public health emergency during the leave;
- The employer makes reasonable efforts to restore the employee to an equivalent position (benefits, pay, and other terms and conditions of employment); and
- If these reasonable efforts fail, the employer makes reasonable efforts to contact the employee (for a period of one year from the earlier of (a) the date on which the qualifying need concludes; or (b) the date that is 12 weeks after the date the qualifying leave commenced) if an equivalent position becomes available.
Payroll Credit for Paid EFMLEA Leave
Employers are eligible for a credit against the payroll tax imposed by the relevant portions of the Internal Revenue Code for each calendar quarter, in an amount equal to 100 percent of the qualified family leave wages paid by the employer in the relevant quarter.
The amount of qualified family leave wages taken into account will not exceed $200 per days paid and, in the aggregate, $10,000 per employee. The amount of the above credit will be increased by the amount of an employer's qualified health plan expenses as are allocable to the qualified sick leave wages for which the credit is allowed. This means amounts paid by the employer to provide and maintain a group health plan, but only to the extent that such amounts are excluded from the gross income of employees under the Internal Revenue Code.
Emergency Paid Sick Leave Act.
Covered Employers. The Emergency Paid Sick Leave Act applies to private employers with fewer than 500 employees, and to public agencies (any other entity that is not a private entity or individual) that employs 1 or more employees. The Secretary of Labor may exclude certain health care providers and emergency responders from the definition of employee, by allowing the employer of such health care providers and emergency responders to opt out, and may exempt businesses with fewer than 50 employees if the required leave would jeopardize the viability of their business as a going concern.
Covered Employees. Employees are entitled to immediate use of this Emergency Paid Sick Leave ("EPSL") (for the purposes defined), regardless of how long the employee has been employed. These benefits are in addition to, and do not replace or diminish, any rights to which an employee is entitled under existing Company policy or state or local law.
Purpose of Leave. EPSL is available for any employee who is unable to work (or telework) because:
(1) The employee is subject to a Federal, State, or local quarantine or isolation order related to COVID-19;
(2) The employee has been advised by a health care provider to self-quarantine due to concerns related to COVID-19;
(3) The employee is experiencing symptoms of COVID-19 and seeking a medical diagnosis;
(4) The employee is caring for an individual who is subject to a quarantine order or has been advised by a health care provider to self-quarantine (note, this is not just family members!);
(5) The employee is caring for a child whose school or place of care has been closed, or the child care provider of that child is unavailable, due to COVID-19 precautions; or
(6) The employee is experiencing any other substantially similar condition specified by the Secretary of Health and Human Services in consultation with the Secretary of the Treasury and the Secretary of Labor.
Amount of Paid Sick Time Leave.
- Full-time employees are entitled to up to 80 hours of EPSL. Part-time employees are entitled to a number of EPSL hours equal to the number of hours that such employee works, on average, over a 2-week period.
- Paid sick time does not carry over to the next year.
Compensation for Sick Time.
If EPSL is taken for reasons (1) - (3) above, the employee must be paid at the employee's regular rate of pay for the number of hours the employee would otherwise be normally scheduled to work, up to a maximum of $511 per day and $5,110 in the aggregate.
If EPSL is taken for reasons (4) - (6) above, employees are eligible for two-thirds of their regular rate of pay for the number of hours they otherwise normally would be scheduled to work, up to a maximum of $200 per day or $2,000 in the aggregate.
The employee's compensation may not be less than the greater of the following:
- The employee's regular rate of pay under the FLSA;
- The applicable federal minimum wage;
- The applicable local or state minimum wage.
There are special calculations for employees with varying schedules.
- An employer may not require that the employee search for or find a replacement employee to cover the hours during which the employee is using paid sick time.
- An employee may first use EPSL before using other available paid time off, and an employer may not require that the employee use other available paid time off first.
- It is unlawful to discharge, discipline, or discriminate against any employee who takes EPSL and has filed any complaint or instituted or caused to be instituted any proceeding under or related to this Act (including a proceeding that seeks enforcement of this Act), or has testified or is about to testify in any such proceeding.
Reasonable Notice by the Employee. After the first workday (or portion thereof) an employee receives EPSL, an employer may require the employee to follow reasonable notice procedures in order to continue receiving such paid sick time.
Employer Notice. Employers are required to post and keep posted, in conspicuous places, a notice of these requirements (to be prepared or approved by the Secretary of Labor no later than 7 days after the date of enactment of this Act).
Payroll Credit for EPSL.
Employers are eligible for a credit against the tax imposed by the relevant portions of the Act for each calendar quarter an amount equal to 100 percent of the qualified sick leave wages paid by the employer in that calendar quarter.
The amount of qualified sick leave wages considered for payroll credit may not exceed $511/$200 (as described above) for any day for which the employee is paid qualified sick leave wages.
The amount of the above credit will be increased by the amount of an employer's qualified health plan expenses as are allocable to the qualified sick leave wages for which the credit is allowed. This means amounts paid by the employer to provide and maintain a group health plan, but only to the extent that such amounts are excluded from the gross income of employees under the Internal Revenue Code.
Modifications to the California WARN Act
Governor Gavin Newsom issued an emergency Executive Order, the result of which is that covered employers (if they employ/have employed within the prior 12 months at least 75 or more full or part-time workers (excluding hires within the preceding 6 months)) no longer are required to provide employees with 60 days' advance notice of a mass lay-off (layoff (or temporary furlough) of 50 or more employees within a 30-day period), relocation (removal of all or substantially all operations to a different location 100 miles or more away), or termination of operations (complete termination or substantial cessation of operations).
Instead, California employers only need to provide as much notice as is "practicable," and must include in that notice a statement explaining why there is less than 60 days' notice. The notice, along with all the traditional notice element requirements, must now include: "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."
For larger employers covered by the federal WARN Act, there already is an exemption from the 60-day notice requirement when an unforeseen business circumstance triggers a mass layoff or plant closure, and like the Executive Order notice must be provided as soon as practicable.
Some Bottom Line Basics. While we can't address every possible scenario, here are some key take-aways:
- If you and your employee are covered by EFMLEA, employees are eligible for leave to care for a child whose school or daycare is closed due to a public emergency. For the first 10 (otherwise unpaid) days, the employee may use EPSL, Company-provided PTO or vacation. San Diego employees may use available sick leave for school closures due to a public health emergency. After that, the employee is eligible for the EFMLEA benefits described above, up to the maximum compensation, and also may apply PTO or vacation. Leaves may be up to 12 weeks.
- Qualified employees may be eligible for both EPSL and also leave under FMLA/CFRA more generally (if you/the employee are covered) for the employee's own or a family member's serious health condition (including a diagnosis of COVID-19). In those cases, the employee may be eligible for EPSL, California Short Term Disability benefits ("SDI"), Family Temporary Disability Insurance/Paid Family Leave benefits ("FTDI/PFL") (for caring for a family member), and for PTO/sick leave. For illness contracted in the workplace, workers' compensation benefits also may be available.
- For leaves taken as a disability accommodation for a diagnosis of COVID-19 pursuant to the Americans with Disabilities Act ("ADA") or the Fair Employment and Housing Act ("FEHA"), all of the above benefits may be available, other than FTDI/PFL.
- Remember, the ADA/FEHA may also require that you provide other accommodation for an employee's certified disability (this could, for example, remote work opportunities) if that accommodation does not create undue hardship to the Company.
- At this point, whether you should close your business remains a county-by-county question, and where the county has not mandated closures it is a business-by-business decision. All indications are that social isolating is the most sound approach, and you certainly have the legal obligation to provide your employees with a safe place to work. It is not inconceivable that employees who contract COVID-19 at work may try to argue that the Company erred in keeping its doors open. For essential business operations, at the least stagger shifts or move desks to provide for social distancing. And of course sanitize the heck out of your office.
- If you decide to remain open, we recommend that every employee who is not otherwise entitled to leave under one of the above laws be given the option to self-quarantine or not report to work. If they make that election, they would use PTO or vacation, or take the time unpaid.
- If you elect to close your business due to the public health emergency, you are not required to allow employees to apply accrued California-mandated or Company-provided paid time off benefits, but we recommend that you allow at least the use of PTO or vacation.
- If you are able to provide remote work to some or all of your employees, this is a great compromise. (This is separate from the situation described above, where an employee has made the request to telecommute as a reasonable accommodation for a certified disability.) This should be determined on a case by case basis, based primarily on the position. We recommend you memorialize any temporary remote working opportunity carefully, and we have some specific language we recommend including for your protection (including a reminder of their meal and rest break rights, duty to track time carefully, and requirement to seek pre-approval for overtime), so please reach out if you are considering this option. Remember, you may be required to pay for items like cell phone service or internet for employees who work from home.
- If employees elect to self-quarantine, without a health care provider or government order to do so, you may decide to grant the time off, in which case you can require that the employee use accrued PTO or vacation. The employee is not eligible for either federal or state benefits or job protection.
- As a reminder, if in California a non-exempt (hourly) employee reports to work sick and is sent home (which you are allowed to do if you reasonably believe the employee poses a threat to the health and safety of the workplace), the employee must be compensated for at least 2 hours or no more than 4 hours of "reporting time pay," unless an exemption applies. For exempt employees, deductions from salary for absences of less than a full day for personal reasons or for sickness are not permitted, but sick time, vacation and PTO can be applied, consistent with your policies.
- Sadly, many of you are forced to consider layoffs and furloughs (be mindful of the federal and California WARN Act, if applicable). Others of you are converting exempt employees to hourly employees, reducing salaries and implementing partial workweeks, among other solutions. We can't identify every issue attendant to these decisions here, but are happy to help you scrutinize and memorialize these decisions.
- Remember: do not retaliate against an employee for using paid sick time or requesting time off under a protected leave.
- We won't restate all our prior suggestions and cautions here, but please revisit our prior newsletter for a refresher if you like.
This landscape is changing very quickly. Our hearts are with you in this difficult time, and we will do our best to keep you informed. We are here for you, let us know if we can help. Meanwhile, we are sending you our best wishes.