Martha Zackin

COVID-19 Challenges: A Q&A for Employers [UPDATED]

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By Bello Welsh LLP

Organizations are facing unprecedented challenges as the result of COVID-19.  The virus’s impact on the workplace is significant and implicates a host of issues under employment law.  Additionally, on March 18, 2020, the federal government passed a new law, the Families First Coronavirus Response Act (FFCRA), that imposes new obligations on employers.

Bello Welsh has previously published the following resources: Key Considerations for Employers Amid the COVID-19 Pandemic and Families First Coronavirus Response Act Signed into Law (FFCRA Summary), which provides a summary of the relevant provisions of the FFCRA.  This Q&A document is intended to supplement those resources and answer additional questions that may arise.  This document has been updated to reflect changes to the FFCRA enacted by the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) as well some portions of the interpretive guidance issued by the Department of Labor, including its Families First Coronavirus Response Act: Questions and Answers (DOL Q&A), which itself continues to be updated frequently.  We note that the guidance published as of March 29, 2020 may not have incorporated amendments implemented through the CARES Act.

 Question 1:  We may be forced to furlough, temporarily lay off, or permanently terminate employees as the result of economic conditions caused by COVID-19. Are we required to give advance notice or severance pay for terminations, or to pay employees on furlough or temporary layoff?

Answer 1:  Generally, no, with a few caveats.  First, if the action is a layoff or plant closing covered by the federal WARN Act or similar state or local law, advance notice (and in New Jersey severance) may be required. (See Question 9 below.)  Second, if your workforce is unionized, the applicable collective bargaining agreements may impose contractual obligations. (See Question 11 below.) Third, employment agreements with executives and other employees may contain notice or severance requirements, particularly in connection with permanent terminations.

[New:]  While severance and ongoing wage or benefit payment may not be required, many states require payment of final pay, including accrued unused vacation, at or shortly after the time of an employer-initiated termination.  A “temporary layoff” or even a “furlough” may be considered a termination requiring such payout.  (See Question 20 below.)  Accordingly, employers are advised to carefully weigh the risks of deciding not to pay final pay at the time of a furlough or temporary layoff, and to consider alternatives to mitigate risk.

Question 2:  The FFCRA gives employees new sick pay and paid leave entitlements. Who pays for these, employers or the government?

Answer 2 [Updated]:  Employers must “front” the money by paying employees directly, but the amounts will be subsidized by the government in the form of a tax credit or reimbursement, specifically a credit against quarterly payroll tax payments (including withheld federal income taxes, the employee share of Social Security and Medicare taxes, and the employer share of Social Security and Medicare taxes with respect to all employees).  If the payroll tax payments are not large enough to cover the credit, employers will be issued a refund.  See our alert, FFCRA Summary, the DOL Q&A (nos. 15, 32-34), and this news release relating to expected joint IRS/Treasury/DOL Regulations  for details.

Question 3:  The FFCRA expands the reasons why employees can take leave under the Family and Medical Leave Act (FMLA). Do we need to worry about this if our organization is too small to be covered by the FMLA or if the employee doesn’t meet typical FMLA eligibility requirements?

Answer 3:  Yes.  The FFCRA has greatly expanded the scope of employers and employees covered by the new leave requirement.  Note, however, that large employers with 500 or more employees are not covered by the public health emergency leave or sick pay requirements of the FFCRA.  See our alert, FFCRA Summary, and the DOL Q&A (nos. 2-3), for details.

Question 4:  Do we have to affirmatively notify employees of the new public health emergency leave and sick pay requirements of the FFCRA?

Answer 4 [Updated]:  Yes. The FFCRA requires employers to post notice of the new leave requirements in a conspicuous location in the workplace where notices are customarily posted.  The DOL has now published model posters[1] (in English and Spanish) for this purpose.[2]  (Although the original text of the FFCRA only required notice to be posted for the new sick leave, and not the new public health emergency leave under the FMLA (E-FMLA), the DOL poster includes information on both.)  Since many offices are closed and many employees are working from home, employers may email the notice to employees and post it on the organization’s intranet, if one exists, in addition to physical posting, or may directly mail the notice to employees. See the DOL Posting Q&A for additional details on the posting requirement.

Question 5:  We already provide paid sick time to employees under company policy and state and local laws. Do we have to provide additional sick time under the FFCRA?

Answer 5:  Yes.  The new emergency paid sick time obligation is in addition to any paid sick time or other paid time off provided under employer policy, collective bargaining agreement, or other federal, state, or local law.

Question 6:  Are employees who are on temporary layoff or furlough eligible to receive public health emergency leave pay (E-FMLA) or sick pay, assuming they otherwise meet the eligibility requirements?

Answer 6 [Updated]:  No, the new paid leave/sick time is not required for employees who were put on temporary layoff or furlough before requesting any emergency leave or sick time.   The new leave and pay entitlements are intended to protect those employees who are unable to work when an employer needs them, not employees on layoff.  See the DOL Q&A (nos. 26-28), for details.

Question 7:  We were considering a reduction-in-force to deal with economic conditions, and now we are especially concerned with the cash flow issues the new paid public health emergency leave and paid sick leave may cause for our organization. Would it violate the law for us to have a reduction-in-force earlier to avoid potential paid leave/sick time obligations under the FFCRA?

Answer 7:  It is not clear whether the non-retaliation and related provisions in the FMLA and FFCRA would be construed to prohibit a layoff motivated by a variety of economic reasons, one of which may be the specter of potential cash flow problems caused by new FFCRA obligations.  As such, it is risky to rely on the avoidance of FFCRA obligations as a reason for having or accelerating layoffs.  Organizations also should not select specific individuals for layoff based on the likelihood that they will utilize the new paid public health emergency leave or paid sick time as doing so could violate anti-discrimination laws in addition to the FFCRA and FMLA.

 Question 8:  If we conduct a reduction-in-force for economic reasons, are we allowed to include those employees who are on public health emergency leave under the FMLA/FFCRA, or are they guaranteed reinstatement to their jobs?

Answer 8 [Updated]:  The answer is not clear.  Under existing FMLA regulations, if an employer can show that “an employee would not otherwise have been employed at the time reinstatement is requested” as the result of a reduction-in-force, then there is no reinstatement obligation.  See 29 C.F.R. §825.216(a).  However, the FFCRA contains an explicit exemption from reinstatement for small employers (with fewer than 25 employees) if the job no longer exists due to changed economic or other operating conditions that are caused by a public health emergency and impact employment, and certain other conditions are met.  While this explicit exception for small employers could be read to mean that no such exception is available for larger employers, which would contradict existing FMLA regulations, the DOL’s guidance attempts to reconcile this apparent contradiction by stating that the conditions available for employers under 25 are in addition to existing FMLA standards.  See the DOL Q&A (no. 43), for details.   Regardless, it is advisable to consult with legal counsel if this situation arises.

As under the existing FMLA, it is clear that an individual may not be selected for termination, in whole or part, because the individual used or requested public health emergency leave or paid sick time under the FFCRA.  Also, it should be noted that employees may not be subject to discrimination or retaliation if they filed any type of complaint or proceeding relating to the new laws, or have testified or intend to testify in any such proceeding.   That does not mean that such individuals cannot be terminated, but it instructs that employment actions taken with respect to such individuals should be based on business purposes which in turn should be clearly documented.

[New:] Note that the DOL has now made clear that if a workplace is closed, either for economic reasons or because of business shut-downs ordered by state or local governments, the employer only needs to pay for the amount of sick/E-FMLA time taken by eligible employees before the closure.  See the DOL Q&A (no. 25; see also nos. 23-24, 27), for details.  In addition, the DOL has provided guidance on how to calculate the amount of sick/E-FMLA pay that is available to employees when the employer implements schedule reductions.  See the DOL Q&A (no. 28), for details.

Question 9:  How do I know if the federal WARN Act or similar state laws apply to our anticipated layoff or reduction-in-force?

Answer 9:  The WARN Act is a very complicated statute, and legal counsel should be consulted if there is a possibility the law may be implicated.  The WARN Act applies to employers with 100 or more employees (excluding some part-time and recently-hired employees) or who have 100 or more employees (including all part-time and recently-hired employees) who work at least 4,000 hours per week, exclusive of overtime.[3]   In general, if your organization is anticipating a temporary layoff, reduction-in-force, reduction in hours, or closing of a particular facility or operation that impacts the employment of 50 or more individuals, a more detailed WARN Act analysis is advised.

Massachusetts does not have a state analogue to the federal WARN Act.  However, various other states, including but not limited to California, Illinois, New Jersey, and New York, have statutes similar to the federal WARN Act, and many apply to smaller employers and personnel actions impacting smaller numbers of employees.

Question 10:  Does the WARN Act allow any flexibility in situations like this, where economic conditions are changing rapidly and unpredictably?

Answer 10:  Yes.  The federal WARN Act contemplates situations where the need for layoff was unforeseeable and it is hard to predict how long layoffs or reductions in hours may last.  Even in such situations, however, WARN imposes very specific obligations on employers, and there are significant consequences for non-compliance.   If it is possible that the WARN Act may apply to your employment action, legal counsel can help guide you through the WARN Act’s requirements and assist you in taking advantage of any flexibility available under the law.  Note that state law requirements may differ from those in the federal WARN Act.

Question 11:  Part of my organization’s workforce is unionized. Do we have special obligations with respect to any anticipated layoffs, closures, or reductions in hours?

Answer 11:  Yes.  You must review your collective bargaining agreement for specific provisions regarding seniority, layoff, recall, notice provisions and possibly other matters.  Unions are sending out letters to employers reflecting that they expect employers to follow these provisions regardless of the crisis.  There may also be an obligation to bargain about the impacts of layoffs.  Experienced labor counsel can assist with reviewing relevant collective bargaining agreements and obligations before taking action.

Question 12:  We are worried that some of our employees, specifically older individuals and those who have shared they have certain underlying health conditions, may be especially vulnerable to COVID-19, and we would like to help prevent them from being exposed. Can we offer these employees the opportunity to work from home without allowing other employees in similar positions to do so?

Answer 12:  The best practice in this circumstance is to invite employees with particular concern about COVID-19 due to risk factors to raise the issue and to deal with concerns raised by employees on a case-by-case basis.  However, if you wish to affirmatively reach out to employees in high-risk categories, be sure not to compromise the privacy of an employee’s medical information or make assumptions about an employee’s medical status beyond what the employee has disclosed to you.  There is always the possibility, though, that the employees you affirmatively reach out to and/or those who may be in high-risk categories that you do not allow to work from home might contend that your actions were based on improper consideration of protected characteristics, such as age, disability or pregnancy.

For those employees who are required to work on-site, employers should take the steps recommended by federal, state, and local public health authorities to reduce transmission of COVID-19.

Question 13:  Our organization generally does not allow certain employees to work from home, even as an accommodation of a disability, because we have determined that being in the office/worksite is an essential function of certain jobs. If we allow employees to work from home as the result of the public health emergency, are we compromising our ability to argue later that being at work is essential?

Answer 13:         Do not let the impact on future disability accommodations drive your decisions about allowing work from home during the public health crisis.  However, if you are concerned about future impact, be clear in all communications to employees that working from home is being allowed due to the extraordinary public health emergency even though many important aspects of people’s jobs cannot be performed remotely.

Question 14:  Can we check the temperatures of all employees before allowing them to come in to work? 

Answer 14:  Yes.  Now that COVID-19 has been declared a pandemic, guidance from the Equal Employment Opportunity Commission (EEOC) allows temperature checks for all employees.  However, there are numerous practical considerations that should be resolved before undertaking this measure, including whether there is an employee who is trained to do the checks, has reliable equipment and can be safe in doing so; whether employee privacy can be protected in the case of a positive result; and whether a contingency plan exists to deal with excluded employees.  It is also possible that state laws may diverge from the EEOC guidance, though that seems unlikely under the circumstances.

Question 15:  Can I and should I tell other employees if we learn that someone with COVID-19 symptoms or a positive test was present at work, and should I exclude those other employees from the workplace for 14 days? 

Answer 15:         Many employers are choosing to notify “Tier 1” (direct) contacts of an employee who has tested positive for COVID-19 or was in close contact with someone who tested positive, and we believe that approach is permissible and potentially could be viewed as required under the Occupational Health and Safety Act (OSHA) in some circumstances.  Given the current lack of availability of testing, making such notifications where the employee has symptoms but has not had a test may also be prudent.  However, going further to second-level contacts (those in contact with Tier 1 employees) may not make sense absent additional information indicating risk of exposure.  In making the notifications, employers should be careful to protect the privacy of the affected employee to the extent practical and must avoid seeking disability-related information from employees being notified.  Temporary exclusion of employees who have tested positive or who have symptoms consistent with COVID-19 infection is both permissible and prudent.  Employers should always follow the guidance of federal, state, and local public health authorities with respect to notifications.

Question 16:  Can I require all employees returning from travel or other leave to fill out a questionnaire confirming that they are not a risk to the workforce? 

Answer 16:   Maybe, depending on the questions asked.  Generalized questions that do not elicit disability-related or other confidential information are permissible.  These could include asking the employee to confirm such things as that s/he is free of fever or other known COVID-19 symptoms, has not been in contact with a positive or presumed positive individual, and is not under an order or recommendation of quarantine.

Question 17:  If an employee develops COVID-19, am I required to record the illness or report it to the Occupational Safety and Health Administration (OSHA)? 

Answer 17:  Maybe.  Generally, an illness is recordable if the illness is contracted as a result of the employee performing their work-related duties, and if it requires medical treatment beyond first aid or days away from work.  Although common colds and the flu are excluded from the obligation to record work-related illness, COVID-19 is not excluded.  Accordingly, a confirmed case of COVID-19 is a recordable illness if a worker is infected as a result of performing their work-related duties, provided it requires medical treatment or days away from work (which is likely, unless the employee is asymptomatic and already working remotely).  Moreover, if an employee who contracts COVID-19 at work later requires in-patient hospitalization, you must report the in-patient hospitalization to OSHA.

Of course, it may be difficult or impossible to know whether an employee’s infection actually resulted from their performance of work-related duties.  That said, best practice would be to assume that if an employee develops COVID-19 after having had known contact with another employee who has a confirmed case of COVID-19, the incident should be recorded or reported, as applicable.

Question 18:  Our organization is covered by the FFCRA. We have reduced a number of employees to part-time in response to the current situation, with some working only one day per week.  Will those employees still be eligible for the paid public health emergency FMLA leave and paid sick time under the FFCRA, and if so, how much?

Answer 18 [Updated]:  Yes, based on their scheduled hours.  There is no minimum hours threshold to receive paid public health emergency FMLA leave or paid sick time under the FFCRA.  The amount of paid sick time granted to part-time employees (defined as those working less than 40 hours per week) is not the full 80 hours, but rather the average number of hours the employee works over a two-week period.  For public health emergency FMLA leave, pay is pro-rated based on the number of hours the employee would otherwise be regularly scheduled to work.  If an employer has implemented a schedule reduction, and an affected employee is unable to work the new schedule due to sick time or E-FMLA qualifying reasons, they must be given leave based on the new schedule – the paid time off may not be used for the hours the employee is no longer scheduled to work.  See the DOL Q&A (no. 28), for details.

If an employee does not have a regular schedule, the amount of E-FMLA leave pay is calculated based on the average number of daily hours over the six months preceding leave (or, for newer employees, the reasonable expectation of the employee at the time of hiring of the average number of hours that the employee would be normally scheduled to work).

Note that employees must have been employed for at least 30 days to be eligible for the E-FMLA.  The CARES Act has amended the FFCRA to allow for coverage of employees who were terminated on or after March 1, 2020 and are reinstated if they worked 30 out of the 60 calendar days before the layoff. CARES Act § 3605.

Question 19:  We have employees currently on furlough. If an employee is called in to work for a few days during the furlough period, does the employee become eligible to receive E-FMLA leave and paid sick time under the FFCRA?

Answer 19 [Updated]:  Yes.  However, the amount of pay would be pro-rated as described in Question 18.

Question 20:  We are temporarily laying off employees. We don’t know how long the layoff will last, but we expect the employees will come back to work in the future.  Do we need to pay out employees’ accrued, unused vacation at the start of the layoff?

Answer 20 [Updated]:  State laws regarding the payout of accrued vacation vary, so be sure to check the law in all states where you are conducting temporary layoffs.

In Massachusetts, accrued vacation is considered a wage, and state law requires that “any employee discharged from . . . employment shall be paid in full on the day of his discharge.”  M.G.L. c. 149, § 148.  While this language could support the position that accrued vacation need not be paid in connection with a temporary layoff, as opposed to a permanent termination, the Massachusetts Attorney General’s Office very recently released COVID-19-related guidance to the contrary.  This guidance states that “when an employee is temporarily laid off, they have a right to be paid all of their earned wages, including all accrued vacation pay, on that same day.”  The Attorney General’s Office has indicated it will not take enforcement action for untimely payment of vacation pay if an employee being temporarily laid off voluntarily agrees to save accrued vacation for later use.  However, the Attorney General’s Office notes that it does not have control of private litigation, and employees who agree to defer vacation payment now would technically still have the legal right to sue later.

Based on the Attorney General’s Office guidance, the conservative approach is to either pay employees accrued, unused vacation upon layoff (including temporary layoff) or allow the individual to voluntarily defer the payout, especially since Massachusetts wage laws provide automatic triple damages and attorneys’ fees for violations.

Question 21:  Can employees use paid sick time under the FFCRA if we cannot provide them any work hours due to a government-ordered closure of non-essential businesses or a “stay-at-home” order?

Answer 21:  The answer is not clear.  Paid sick time under the FFCRA may be used if “[t]he employee is subject to a Federal, State, or local quarantine or isolation order related to COVID-19.”  The term “isolation order” could be read broadly to refer to stay-at-home orders and government-ordered business closures, or narrowly to refer to an isolation order specific to a particular individual, for example related to that individual’s actual or potential exposure to the virus.  We will monitor for guidance on this point.

Question 22:  Can our organization continue to provide medical and dental insurance to employees who are on furlough or temporary layoff?

Answer 22:   Yes, as long as you follow the requirements of your insurance plans or the provisions of COBRA, as explained below.  As a first step, you should check your insurance plans, as most contain a requirement that employees work a minimum number of weekly hours to be eligible for coverage.  Insurance plans may also limit coverage for individuals who have been laid off, even temporarily.  If your furloughed or laid off employees do not meet the technical eligibility requirements of the plans, you can request an exception from your insurer to maintain active coverage.  We understand that insurers are being flexible in granting exceptions to eligibility requirements due to the unusual circumstances caused by the pandemic.

If your insurer does not allow you to maintain regular coverage for furloughed or laid off employees, then the COBRA law provides an alternative method to continue such coverage.  COBRA notices should be issued to each affected individual, who will need to elect COBRA to continue coverage.  Employees are typically permitted to elect COBRA for up to 18 months, far longer than expected layoffs.  While individuals generally pay the full premium for COBRA coverage, employers may choose to pay some or all of the premium instead.  If you do so, be sure to clearly communicate to employees any time limits or other restrictions on the premium payments the organization is willing to provide.

Note that small employers not covered by COBRA may be subject to state laws concerning continuation of health coverage, such as the Massachusetts mini-COBRA law.

Question 22:  [New] Can employees take either sick leave or E-FMLA intermittently?

Answer 23:   In some situations, yes.  Specifically, current DOL guidance distinguishes between (1) sick time taken for reasons other than to care for a child whose school or childcare has closed or is unavailable for COVID-19 reasons and (2) either sick time or E-FMLA taken to care for a child whose school or childcare has closed or is unavailable for COVID-19 reasons.  The former must be taken in full-day increments and continuously while the need exists, unless the employee is teleworking, in which case the time may be taken intermittently if agreed to by the employer, in any agreed increment.  The latter may be taken intermittently if agreed to by the employer regardless of whether the employee is working at his or her regular place of employment or teleworking, again in any increment agreed by the parties.  Finally, any sick time or E-FMLA that is not exhausted may be taken at a future time before December 31, 2020 (but additional paid leave is not available if an employee exhausts their leave and later experiences a new situation which otherwise would have been eligible for leave).  See the DOL Q&A (nos. 21-22), for details.

[1] These links are for the private employer posters; federal employer posters are also available at the DOL’s COVID-19 site.

[2] We note that it appears the posters are still being updated, so employers may wish to check the linked page for the most updated version immediately before posting.

[3] The WARN Act does not identify a single point in time at which employer size is to be measured in all circumstances.  If your organization is near the threshold size or has exceeded it in the recent past, it is advisable to do a deeper dive on whether the law may apply.

Martha Zackin

COVID-19: Families First Coronavirus Response Act Signed Into Law [UPDATED]

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On March 18, 2020, President Trump signed the Families First Coronavirus Response Act (the “Act”), which aims to address the impact of the COVID-19 pandemic by, among other things, providing a limited period of paid sick leave for employees affected by COVID-19 and expanding the Family and Medical Leave Act (“FMLA”) for a public health emergency.  The paid sick leave and Emergency FMLA expansion (“E-FMLA”) provisions of this new law apply to employers with fewer than 500 employees.  For employers with more than 500 employees, the new law does not impact or change existing legal obligations under the FMLA or other federal employment laws, which remain as is.

Employers will be required to “front” the money for the leave required by the Act by paying employees directly, but the amounts will be subsidized by the federal government in the form of a tax credit or reimbursement.  The Act will become effective on April 1, 2020, and will remain in effect until December 31, 2020.  This alert summarizes the key provisions of the Act for employers.  A summary in chart form, prepared by the House Ways and Means Committee, can be found here.  This document has been updated to reflect changes to the FFCRA enacted by the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) as well some portions of the interpretive guidance issued by the Department of Labor, including its Families First Coronavirus Response Act: Questions and Answers (DOL Q&A), which itself continues to be updated frequently.  We note that the guidance published as of March 29, 2020 may not have incorporated amendments implemented through the CARES Act.

PAID SICK LEAVE [updated]

The Act requires private employers with fewer than 500 employees to provide paid sick time to any employee, regardless of tenure, who is unable to work for any of the following reasons:

  • The employee is subject to a federal, state or local quarantine or isolation order related to COVID-19;
  • The employee has been advised by a health care provider to self-quarantine due to concerns related to COVID-19;
  • The employee is experiencing symptoms of COVID-19 and is seeking a medical diagnosis;
  • The employee is caring for an individual who is subject to a quarantine or isolation order or has been advised by a health care provider to self-quarantine (note that this is not limited to just family members);
  • The employee is caring for a child because the child’s school or place of care is closed or the child’s care provider is unavailable due to a public health emergency; or
  • 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.

However, employers of healthcare providers or emergency responders may elect not to provide paid sick leave to those employees.  In addition, the Secretary of Labor has the authority to exempt businesses with fewer than 50 employees from providing leave for reason 5 if the required leave would jeopardize the viability of the business.  Small business may claim this exemption “if an authorized officer of the business has determined that:” (1) providing the paid 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;” (2) the absence of the employee(s) requesting paid 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 (3) “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 … leave, and these labor or services are needed for the small business to operate at a minimal capacity.”  The DOL will provide information on how this will be implemented; for now, employers seeking to use this exemption are advised to record the reasons why they qualify.  See the DOL Q&A (nos. 4, 58-59), for details.

Duration of Leave [updated]

Full-time employees may take up to 80 hours of paid sick time, while part-time employees (defined by the DOL guidance as those normally scheduled to work fewer than 40 hours per week) are entitled to the average number of hours worked over a two-week period.  Part-time employees who work variable hours must be paid based on the number of hours they worked over the preceding six-month period or, if an employee has been employed less than six months prior to taking leave, based on the employee’s reasonable expectation at the time of hire.  This paid sick time may not be carried over from year to year, the employer is not required to provide further sick leave under the Act once the employee returns to work if all the available leave has been used, and unused time need not be paid out at termination.  An employer also cannot require an employee to find a replacement before taking paid sick time.  The paid sick time to which employees are entitled under the Act is in addition to all other sick time or PTO provided to employees under the employer’s policy or other applicable laws (such as the Massachusetts paid sick time law).  Paid sick time for reasons 1-4 and 6 may only be taken intermittently if the employee teleworks and the employer agrees; paid sick time for reason 5 may be taken intermittently regardless of whether the employee works on site or teleworks, but again employer agreement is required.  In addition, the paid sick time is available only for time the employee is otherwise scheduled to work.  See our alert, COVID-19 Challenges: A Q&A For Employers (nos. 18 and 23) and the DOL Q&A (nos. 28, 20-22, 49), for details.

Rate of Pay

Employees who take leave for self-care (reasons 1-3 above) must be compensated at the higher of (1) the employee’s regular rate of pay, (2) the federal minimum wage, or (3) the local minimum wage.  Employees who take leave to care for others or for a substantially similar condition (reasons 4-6 above) must be compensated at two-thirds of their regular rate of pay.

However, the paid sick leave amounts are capped at $511 per day for 10 days ($5,110 total) for employees who take leave for self-care, and at $200 per day for 10 days ($2,000 total) for employees who take leave to care for others or for a substantially similar condition.

Employer Tax Credits [updated]

The Act provides for certain tax credits to ease the financial burden on employers.  Employers are entitled to a refundable tax credit equal to 100% of the paid sick leave wages paid to employees in each calendar quarter in accordance with the Act (up to the caps described above).  The amount of the credit is increased by the amount of nontaxable group health plan expenses paid by the employer that are properly allocable to the qualified sick leave for which the credit is allowed.  The tax credit is allowed against payroll tax payments (including withheld federal income taxes, the employee share of Social Security and Medicare taxes, and the employer share of Social Security and Medicare taxes with respect to all employees).  If the payments are not large enough to cover the credit, employers will be issued a refund.

Notice [updated]

Employers must post model posters[1] (in English and Spanish) concerning the paid sick leave provisions of the Act.[2]

Non-Compliance/Anti-Retaliation [updated]

Employers are prohibited from discriminating against an employee who takes paid sick leave under the Act or has filed any complaint, instituted or caused to be instituted any proceeding under the Act, or has testified or is about to testify in any such proceeding.  Employers that terminate an employee for such discriminatory reasons, or who fail to provide paid sick time under the Act, will be considered in violation of the Fair Labor Standards Act and will be subject to its penalties, including payment of back pay, liquidated damages and attorneys’ fees.

EMERGENCY FMLA EXPANSION [updated]

The Act also substantially expands FMLA leave (“Emergency FMLA” or “E-FMLA”).  The Act provides for up to 12 weeks of Emergency FMLA leave to any eligible employee who is unable to work (or telework) in order to care for a child who is under 18 because the child’s school or place of care is closed or the child’s childcare provider is unavailable due to the public health emergency.  Leave may be taken intermittently regardless of whether the employee works on site or teleworks, but only with employer agreement.  All employers with fewer than 500 employees are required to provide E-FMLA leave.  However, the Secretary of Labor has the authority to exempt employers of healthcare providers and emergency responders, and to exempt businesses with fewer than 50 employees if the required leave would jeopardize the viability of the business.  The criteria for exemption for small businesses are the same as described for sick leave taken for reason 5.  See the DOL Q&A (nos. 4, 58-59), for details.

Eligible Employees [updated]

Any employee is eligible for E-FMLA leave if the employee has worked for the employer for at least 30 days prior to taking leave; employees who were terminated after March 1, 2020 and rehired qualify if they worked 30 of the last 60 calendar days prior to the layoff.

Rate of Pay [updated]

The first 10 days of E-FMLA leave may be unpaid.  During the unpaid period, an employee may elect (and an employer may require an employee) to substitute any accrued vacation, personal, or medical or sick leave for unpaid leave.  Employees could also elect to use paid sick time under the Act to cover the first 10 days.  After the 10-day period, the employer must pay full-time employees at two-thirds the employee’s regular rate for the number of hours the employee would otherwise be normally scheduled.  Employees who work variable schedules must be paid based on the number of hours they worked over the preceding six-month period or, if an employee has been employed less than six months prior to taking leave, based on the employee’s reasonable expectation at the time of hire.  The Act limits paid FMLA leave to $200 per day and $10,000 total per employee (equivalent to 10 weeks of E-FMLA payments).

Employer Tax Credits [updated]

As with paid sick leave, employers may claim a refundable tax credit equal to 100% of the payments made to employees for E-FMLA leave in each calendar quarter, up to the caps described above.  Similarly, the amount of the credit is increased by the amount of nontaxable group health plan expenses paid by the employer that are properly allocable to the qualified E-FMLA leave for which the credit is allowed.  These tax credits are allowed against payroll tax payments (including withheld federal income taxes, the employee share of Social Security and Medicare taxes, and the employer share of Social Security and Medicare taxes with respect to all employees), and employers will receive a refund if the payments are not large enough to cover the credit.  However, employers are not allowed to take the credit with respect to any wages for which the general business credit for FMLA leave is allowed.

Job Restoration [updated]

Employers are subject to the standard FMLA obligation to return any employee who has taken leave to the same or equivalent position upon return to work.  The only changes under Act are: (1) employers with fewer than 25 employees are excluded from the requirement to return the employee to the same or an equivalent position if the position no longer exists when an employee seeks to return from Emergency FMLA leave because of an economic downturn or other conditions caused by a public health emergency, and (2) an excluded employer must attempt to contact the employee if an equivalent position becomes available in the next year.  While this explicit exception for small employers could be read to mean that no such exception is available for employers with more than 25 employees, this would contradict existing FMLA regulations (which appear to be incorporated into the Act) providing that there is no reinstatement obligation if an employer can show that “an employee would not otherwise been employed at the time reinstatement is requested” as the result of a reduction-in-force.  29 C.F.R. § 825.216(a).  The current DOL guidance may be seeking to reconcile this apparent contradiction by stating that this new provision is in addition to the existing FMLA standards.  See the DOL Q&A (nos. 43), for details.

Notice [updated]

While the Act does not explicitly require employers to provide notice of the E-FMLA provisions, these are covered in DOL’s model posters (in English and Spanish), which are required to be posted for compliance with the paid sick leave provisions of the Act.

NEXT STEPS FOR EMPLOYERS

Employers with fewer than 500 employees should take steps immediately to prepare to comply with the provisions of the Act.  Employers will also be required to provide notice to their employees in the form approved by the Secretary of Labor.  In addition to the federal Act, several states have proposed legislation to enact or expand their own paid sick leave or family and medical leave laws to address COVID-19 issues.  These state laws may impose additional requirements beyond the requirements of the federal Act.  Though Massachusetts has not yet enacted legislation to expand paid sick leave or family and medical leave, the legislature has taken several measures to address the needs of employees and businesses in the Commonwealth, including loosening restrictions on unemployment claims and working with banks and other stakeholders to ease financial pressures on businesses.  We will continue to monitor legal developments related to COVID-19 and provide updates as new laws applicable to employers are enacted.

[1] These links are for the private employer posters; federal employer posters are also available at the DOL’s COVID-19 site.

[2] We note that it appears the posters are still being updated, so employers may wish to check the linked page for the most updated version immediately before posting.

Martha Zackin

COVID-19: Employer Leave Requirements and Tax Provisions

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The House Ways and Means Committee has published an overview of employer leave requirements and tax credit provisions under the Families First Coronavirus Response Act.  You can access that chart here.

Martha Zackin

COVID-19: Massachusetts Announces Economic Aid for Small Businesses

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MA has announced some economic aid for small business affected by the COVID-19 pandemic (press release: https://www.mass.gov/news/baker-polito-administration-announces-10-million-small-business-recovery-loan-fund)

Key provisions:

  • loans up to $75,000 per business ($10 million total fund)
  • for Massachusetts-based businesses with under 50 full- and part-time employees (including nonprofits)
  • loans immediately available; no payments due for 6 months; 30-months of principal and interest payments and no prepayment penalties
  • administered by Massachusetts Growth Capital Corporation – applications at https://www.empoweringsmallbusiness.org/

 

Martha Zackin

Administrative Law Judge Recommends Dismissal of Department of Labor’s Pay Discrimination Claims Against Federal Contractor

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By Justin L. Engel

Following a two-week trial, Bello Welsh has secured a major victory for a federal contractor in an enforcement action alleging gender-based pay discrimination brought by the Department of Labor’s Office of Federal Contract Compliance Programs (“OFCCP”) under Executive Order 11246.  The case, OFCCP v. Analogic Corporation, No. 2017-OFC-00001, is the first and only OFCCP case in the United States claiming gender pay discrimination to go to trial, and the decision is likely to have significant implications for OFCCP’s dealings with federal contractors going forward.

The origins of the case date back to an OFCCP compliance review that began in December 2011.  Over two years later, in January 2014, OFCCP issued a Notice of Violation claiming that the contractor violated the federal Executive Order by paying females in two specific positions less than males in those same positions.  A trial was held before Administrative Law Judge Colleen A. Geraghty in October 2017, and briefs were submitted in February 2018.

On March 22, 2019, Judge Geraghty issued a 43-page decision recommending that OFCCP’s pay discrimination claims be dismissed, rejecting the theory of discrimination presented by OFCCP’s expert, and finding instead that the contractor’s expert demonstrated that there was no such discrimination.  In so ruling, Judge Geraghty held that OFCCP failed to prove a pattern and practice case of pay discrimination under either a disparate impact or disparate treatment analysis.

Judge Geraghty specifically found OFCCP’s disparate impact claim to be deficient because OFCCP never identified a specific policy or practice that caused the alleged pay disparity.  Further, the statistical evidence offered by OFCCP’s expert to demonstrate a pay disparity was effectively refuted by the statistical evidence presented by the contractor’s expert.

Judge Geraghty also found OFCCP’s disparate treatment claim to be deficient because, again, OFCCP’s statistical evidence was rebutted by the contractor’s more persuasive statistical evidence.  Judge Geraghty further determined that OFCCP had failed to present “anecdotal evidence” – that is, specific instances – of intentional discrimination, while the contractor offered substantial evidence that it did not discriminate against women.

A final decision in the case will be issued by the Department of Labor’s Administrative Review Board.

The import of this case is substantial, as it is likely to impact the types of statistical and other evidence that will be deemed sufficient to support a pattern and practice claim of pay discrimination, be it based on gender or any other protected status.

Bello Welsh will be providing a more detailed discussion of the decision and its potential implications in the coming weeks.

Martha Zackin

Massachusetts Raises Minimum Wage and Establishes Paid Family and Medical Leave

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By Jennifer Belli and Justin Engel

In June 2018, Massachusetts passed a law that will gradually raise the state minimum wage to $15.00 per hour and establish a paid family and medical leave program for employees in the state.  The Massachusetts Department of Family and Medical Leave, a newly established state agency created to administer the leave program, recently issued FAQs for employers and employees, available here.  The requirements of the new law, as clarified by the FAQs, are explained below. Read more →

Martha Zackin

Massachusetts Equal Pay Act: An Overview of the Attorney General Guidance

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By Martha J. Zackin

On March 1, 2018, the Massachusetts Attorney General’s Office published guidance on the amendments to the Massachusetts Equal Pay Act (MEPA), as described below.

By way of background, the amendments, signed into law in 2016 and effective July 1, 2018, seeks to ensure that men and women are paid equal wages for comparable work. In sum, MEPA broadens the definition of comparable work, describes the limited circumstances in which variations in pay may be permissible, and prohibits employers from restricting discussions of wages or from seeking salary history from applicants.  Importantly, MEPA provides employers with an affirmative defense against pay disparities if they have completed a good faith self-evaluation of its pay practices and can show that they have made reasonable progress towards remedying pay differentials.

The Guidance, titled “An Act to Establish Pay Equity: Overview and Frequently Asked Questions,” seek to provide employers with clarification around key issues including: Read more →

Martha Zackin

Overtime Update: Will the Texas Decision Invalidating the DOL Overtime Rule Survive and What Should Employers Do Now?

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By Kenneth M. Bello

Now that a federal judge has issued a preliminary injunction staying implementation of the new DOL regulations revising salary thresholds for determining application of the white collar minimum wage and overtime pay exemptions, otherwise slated to go into effect on December 1st, what happens next, and how quickly will that occur?  Here are the possibilities.

  • An interlocutory appeal to the 5th Circuit Court of Appeals. How that comes out is anyone’s guess, but the case is vulnerable in its analysis, as detailed below.
  • Congressional Action that renders the decision academic. On September 28, 2016, the House of Representatives passed H.R. 6094, titled Regulatory Relief for Small Business, Schools, and Nonprofits Act.  The bill would have changed the effective date of the revised overtime regulations from December 1, 2016 until June 1, 2017.  With a Republican majority in both the House and Senate, there is a very real possibility that some form of law will be filed and passed in 2017.  The question of course is what will that bill look like – for examples, will it exempt “small business”, and will it change the minimum salary amounts and/or remove automatic indexing?

Read more →

Martha Zackin

EEOC Issues Resource Document on Leave of Absences under the ADA

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On May 9, the U.S. Equal Employment Opportunity Commission issued a new Resource Document that advocates the use employer-provided leaves of absence as accommodation for an employee’s disability.  According to the press release announcing the publication of the document, titled Employer-Provided Leave and the Americans with Disabilities Act, this new resource attempts to address the “troubling trend” that is the “prevalence of employer policies that deny or unlawfully restrict the use of leave as a reasonable accommodation.” Claiming that the Resource Document creates no new agency policy, the EEOC describes the document as simply “one in a series of EEOC Resource Documents” that “consolidates existing guidance on ADA and leave into one place.”

The Resource Document covers six main topics, giving specific examples for each. These topics, and one example provided for each, are:

  1. Equal Access to Leave Under an Employer’s Leave Policy. Here, the EEOC simply asserts that “employees with disabilities must be provided with access to leave on the same basis as all other similarly-situated employees.” Given that this has been the law of the land for many years, it is likely that the EEOC included this statement in its Resource Document to demonstrate that it is not creating new agency policy, but simply consolidating existing guidance into one place.

Example: An employer permits employees to use paid annual leave for any purpose and does not require that they explain how they intend to use it. An employee with a disability requests one day of annual leave and mentions to her supervisor that she is using it to have repairs made to her wheelchair. Even though he has never denied other employees annual leave based on their reason for using it, the supervisor responds, “That’s what sick leave is for,” and requires her to designate the time off as sick leave. This violates the ADA, since the employer has denied the employee’s use of annual leave due to her disability.

  1. Granting Leave as a Reasonable Accommodation. The EEOC describes its policy as requiring employers “to change the way things are customarily done” (emphasis in the original). To that end, an employer must consider providing unpaid leave to an employee with a disability as a reasonable accommodation, when the employer does not offer leave as an employee benefit, when the employee is not eligible for leave under the employer’s policy, or when the employee has exhausted his or her available leave. The practical effect of this principle is to extend FMLA leave, or to provide FMLA leave to employees who are not eligible for such leave.

Example: An employer’s leave policy does not cover employees until they have worked for six months. An employee who has worked for only three months requires four weeks of leave for treatment for a disability. Although the employee is ineligible for leave under the employer’s leave policy, the employer must provide unpaid leave as a reasonable accommodation unless it can show that providing the unpaid leave would cause undue hardship.

  1. Leave and the Interactive Process Generally. According to the Resource Document, “[w]hen an employee requests leave, or additional leave, for a medical condition, the employer must treat the request as one for a reasonable accommodation under the ADA” (emphasis added). If the request for leave cannot be addressed under an employer’s existing leave program, the FMLA or similar state or local law, or the state workers’ compensation program, the employer must engage in the “interactive process,” to obtain relevant information to determine whether the employee has a condition that is a disability under the ADA, and to determine the feasibility of providing the leave as a reasonable accommodation.

Example: An employee with a disability is granted three months of leave by an employer. Near the end of the three month leave, the employee requests an additional 30 days of leave. In this situation, the employer can request information from the employee or the employee’s health care provider about the need for the 30 additional days and the likelihood that the employee will be able to return to work, with or without reasonable accommodation, if the extension is granted.

  1. Maximum Leave Policies. Many employers have maximum leave policies that provide for automatic or administrative termination for all employees who exceed the maximum amount of leave. The Resource Document makes clear that although such policies are not per se unlawful, employers must consider modifying maximum leave policies to grant leave beyond the maximum allowed as a reasonable accommodation for disability-related absences. In other words, employers must make a case-by-case assessment of an employee’s situation and need for leave before terminating the employee in accordance with a maximum leave policy.

Example: An employer is not covered by the FMLA, and its leave policy specifies that an employee is entitled to only four days of unscheduled leave per year. An employee with a disability informs her employer that her disability may cause periodic unplanned absences and that those absences might exceed four days a year. The employee has requested a reasonable accommodation, and the employer should engage with the employee in an interactive process to determine if her disability requires intermittent absences, the likely frequency of the unplanned absences, and if granting an exception to the unplanned absence policy would cause undue hardship.

  1. Return to Work and Reasonable Accommodation (Including Reassignment). The EEOC unequivocally states that an employer “will violate the ADA if it requires an employee with a disability to have no medical restrictions” before returning to work. In other words, a “100% healed or recovered” policy is unlawful if the employee can perform the essential functions of the job with or without reasonable accommodation. The EEOC also takes the position that if an employee cannot perform the essential functions of his or her job even with a reasonable accommodation, the employer must place the employee in a vacant position for which he or she is qualified without requiring the employee to compete with other applicants for the position.

Example: An employee with a disability requests and is granted two months of medical leave for her disability. Three days after returning to work she requests as reasonable accommodations for her disability an ergonomic chair, adjusted lighting in her office, and a part-time schedule for eight days. In response, the company requires the employee to continue on leave and informs her that she cannot return to work until she is able to work full-time with no restrictions or accommodations. The employer may not prohibit the employee from returning to work solely because she needs reasonable accommodations (though the employer may deny the requested accommodations if they cause an undue hardship). If the employee requires reasonable accommodations to enable her to perform the essential functions of her job and the accommodations requested (or effective alternatives) do not cause an undue hardship, the employer’s requirement violates the ADA.

  1. Undue Hardship. The EEOC reiterates that employers are not required to provide reasonable accommodation if to do so would cause “undue hardship.” Importantly, the EEOC clearly states that “indefinite leave – meaning that an employee cannot say whether or when she will be able to return to work at all – will constitute an undue hardship.” Otherwise, however, the EEOC offers no further clarity to what constitutes “undue hardship” beyond what has already been provided in previous guidance. As always, factors to be considered include the amount and/or length of leave required, the frequency of leave, the predictability of intermittent leave, and the impact on the employer’s operations and its ability to serve customers and clients in a timely manner.

Example: An employee has exhausted both his FMLA leave and the additional eight weeks of leave available under the employer’s leave program, but requires another four weeks of leave due to his disability. In determining whether an undue hardship exists, the employer may consider the impact of the 20 weeks of leave already granted and the additional impact on the employer’s operations in granting four more weeks of leave.

The concept of leave as a reasonable accommodation is not new. For many years, the Equal Employment Opportunity Commission has taken the position that a leave of absence is a form of reasonable accommodation under the Americans with Disabilities act if necessitated by an employee’s disability, including leave that exceeds a company’s normal leave allowance. Nevertheless, and despite the fact that the EEOC claims that the document creates no new agency policy, employers are on notice that the EEOC will scrutinize all refusals to grant an employee a leave of absence as a reasonable accommodation. Beware.

Martha Zackin

Defend Trade Secrets Act Signed Into Law

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President Obama signed the “Defend Trade Secrets Act of 2016” into law on May 11th.  The Act amends the Economic Espionage Act of 1996 to provide a federal private right of action for trade secret misappropriation and theft.  Remedies include actual damages, injunctive relief, and exemplary damages and attorneys’ fees for willful and malicious misappropriation. The Act does not preempt state law, meaning that plaintiffs will now have the option of proceeding under either state or federal law when faced with a threat to trade secrets.

The Act also provides immunity for certain disclosures made to government officials or attorneys.  Specifically, the Act provides that an individual may not be held criminally or civilly liable under any federal or state trade secret law for the disclosure of a trade secret that is made: (1) in confidence to a government official or an attorney, solely for the purpose of reporting or investigating a suspected violation of law; or (2) in a complaint or other filing in a lawsuit or other proceeding, if such filing is made under seal.  Likewise, an employee who files a retaliation lawsuit for reporting a suspected violation of law may disclose the trade secret to his or her attorney and may use the trade secret information in a court proceeding if the individual files any document containing trade secret information under seal and does not disclose the trade secret except pursuant to court order.

Importantly, effective May 11, 2016, the Act requires employers to provide notice of this immunity in any contract or agreement with an employee that governs the use of trade secrets or other confidential information.  Employers who fail to provide the required notification cannot recover attorneys’ fees or exemplary damages under the Act.  The notice of immunity can be done in one of two ways.  One way is to incorporate fully the notice of immunity into confidentiality agreements.  The second way is to put the notice of immunity in the company’s policy for reporting a suspected violation of law, and then to cross-reference that policy in confidentiality agreements.  For simplicity, we recommend that employers reproduce the statutory language in the notice of immunity.