Author: Scott Horton

Scott has been practicing Labor & Employment law in New York for almost 20 years. He has represented over 400 employers and authored 100s of articles and presentations and wrote the book New York Management Law: The Practical Guide to Employment Law for Business Owners and Managers. Nothing on this blog can be considered legal advice. If you want legal advice, you need to retain an attorney.

April 29, 2020

Preparing for the Post-Pandemic Workplace (Webinar Recap)

On April 29, 2020, Julie Bastian and I presented a complimentary webinar called “Preparing for the Post-Pandemic Workplace”. For those who couldn’t attend the live webinar, we’re happy to make it available for you to watch at your convenience.

In the webinar, we discuss:

Government Reopening Plans
(Still) Working from Home
Health & Safety Issues
Medical Screening
USERRA Compliance
Overtime Exemptions
Productivity vs. Liability

The United States is starting to gradually “reopen” following coronavirus shutdowns. In this webinar, we caution that we have not yet reached the “new normal”. But businesses still must begin planning how they will return to work when allowed to do so.

We don’t anticipate a straightforward, consistent approach for any organization. Many questions remain unanswered. But it is time to start answering them and preparing to evolve as the answers change.

Don’t have time to watch the whole webinar right now? Click here to download the slides from the webinar.

Why You Should Watch “Preparing for the Post-Pandemic Workplace”

When and how your business can reopen depends on many factors. These include where your facilities are located and what industry you’re in.

Will you screen employees coming in to work? Should you change work schedules to enhance social distancing? Might the government require you to take such actions?

Even if your business hasn’t closed or is already open, conditions continue to change. Make sure you have a plan in place to adjust when new directives come down.

Looking ahead, it will be critical for employers to maintain good employee relations to stay ahead in these tumultuous times. This webinar offers suggestions on how to pursue that goal and avoid costly litigation.

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April 16, 2020

Enhanced Unemployment Offers Employers A New Option During Coronavirus Pandemic

Here’s a little secret. Most employment lawyers historically didn’t have to pay much attention to unemployment laws before COVID-19 came along. Employees would leave jobs and either get unemployment benefits or not, for various reasons. But new enhanced unemployment benefits under the federal Coronavirus Aid, Relief, and Economic Security (“CARES”) Act have suddenly created many new legal complexities surrounding the unemployment system. Solely in the vein of making a horrible situation slightly better, the CARES Act has produced some new approaches to layoffs and work reduction that might pose unique benefits to both workers and their employees.

Another secret. Here are the main takehomes from all the words below:

People on unemployment get an extra $600/week until the end of July 2020.
The extra money doesn’t come at the expense of employers.
New York’s Shared Work Program is a much more attractive option than it ever has been before.

If any of these points seem interesting, please keep reading.

New York State Unemployment

Even before the CARES Act came along, unemployment has long been a fairly complicated system. But most of that complication came in the back end. It involved the details of calculating who has worked enough to receive unemployment benefits, how much they earn, and how much each employer has to pay to enable workers to receive these benefits. Luckily, the government usually handles most of that complexity–in essence, they send workers checks and send employers the bill to cover the benefits.

Although the federal government plays a role in unemployment, it’s usually in the background. Processing unemployment claims and providing compensation to workers out of a job usually falls to the states. Thus, most employers in New York, for example, make regular contributions to the state unemployment insurance system. These contributions vary depending on how many workers receive benefits credited to a particular company’s account. In other words, companies with more employees (usually former employees) who receive benefits typically contribute more to the system. (Many non-profit organizations have the option of essentially being self-insured for unemployment. If they choose to do so, these organizations can refrain from paying unemployment “taxes” and instead reimburse the State directly for the amount of any benefits received by their employees.)

New York workers who become eligible for unemployment must first file a claim with the State. Then they have to re-certify on a weekly basis. The re-certification process serves to confirm that an individual is still out of work, but is available to work and actively looking for a new job. As long as that remains true, a claimant can normally continue to receive unemployment benefits for up to 26 weeks out of a year. To keep things simple, the amount of benefits is usually equal to half of what the person made while working, up to a max of $504 per week.

CARES Act Enhanced Unemployment

Among its numerous stimulus measures, the CARES Act includes many provisions that create temporary enhanced unemployment benefits. This article isn’t going to address all of them in detail. For example, the CARES Act enables self-employed individuals to receive unemployment benefits more easily than they normally could. It also allows workers to receive unemployment beyond the standard 26 weeks in some situations. These and other enhanced unemployment benefits may be relevant to your business or its employees. But, for now, we’re going to primarily focus on other aspects of the CARES Act unemployment enhancements that will likely have a broader and more immediate impact on how companies choose to manage their workforce during the coronavirus crises.

$600 “Federal Pandemic Unemployment Compensation”

Perhaps the most publicized aspect of the CARES Act unemployment measures gives virtually anyone receiving unemployment benefits an additional $600 per week. This extra benefit only lasts until July 31, 2020 (technically, the week of unemployment ending before that date). But it’s still a huge expansion of standard unemployment benefits.

Remember, the NYS max unemployment benefit is normally $504 per week. That’s what someone who normally makes $1,008 or more per week would get. Now they’ll receive $1,104. Yes, even if they made less than before!

The U.S. Department of Labor has issued guidance clarifying that people receiving unemployment will get the $600 extra per week as long as they normally qualify for at least $1 of state unemployment benefits. So, for example, someone who only made $400 per week when working could now get $800 on unemployment ($200 state unemployment benefits plus the $600 federal addition).

Employees will even receive the $600 bump if they’re only receiving partial unemployment benefits. In New York, workers whose pay is cut resulting in them working less than four days in a week and earning under $504 may qualify for partial unemployment. Though usually only a small benefit of a couple hundred dollars, the extra $600, plus whatever they’re still earning from working on a reduced schedule, will often result in such employees earning way more than they regularly would.

Though they might rather be working as normal, this enhancement is at least a meaningful upgrade for individuals on unemployment.

There’s also good news for employers (beyond the peace of mind in knowing their out-of-work employees are getting more money). The federal government is paying for this extra $600/week. Under existing New York law, this means it won’t count against employers’ unemployment experience rating. But that’s only the extra $600. The standard NYS portion will still be charged to the employer as normal.

Federal Funding of Shared Work Program

New York has had a “Shared Work Program” for decades. This program allows employers to establish a plan for reducing employee hours and compensation that will also enable workers to receive some unemployment to supplement the lower wages.

Employers must apply to the State for approval under this program. To qualify, a Shared Work Plan must:

Reduce work hours and corresponding wages 20–60%
Apply only to employees who normally work no more than 40 hours per week
Not reduce or eliminate fringe benefits (unless also doing so for the entire workforce)
Cover a period of up to 53 weeks
Replace a layoff of an equal percentage of employees

For more, read New York’s Shared Work Program Provides a Layoff Alternative

Some companies with seasonal fluctuations in their business routinely use this program. The primary benefit for employers is that they keep their workforce intact and in touch with the company. Another feature of the program is that employees don’t have to look for alternative work despite receiving partial unemployment benefits. The idea is for them to continue working for their current employer.

Usually, the State charges the employer’s account for the unemployment benefits employees receive under the Shared Work Program. However, the CARES Act creates full federal funding for the program through the end of 2020. This funding makes the program very attractive for employers who have less work to be done, need to save money, and don’t want to lose their employees during the COVID-19 crisis.

Note: The CARES Act does not provide federal reimbursement for Shared Work benefits paid to temporary, seasonal, or intermittent employees even though such workers can participate in a Shared Work plan under New York law.

Putting It All Together

To show the value of these enhanced unemployment provisions, let’s look at an example.

Company X

Suppose a company with 50 employees has 10 management employees who still need to and are able to work full-time right now. The other 40 are hourly employees who all make $20 per hour (not realistic, but it keeps the math simple). These employees all normally work a 40-hour week. The company qualifies as an essential business, so it can continue to operate. But customer demand is down, and management wants to keep employees safe through social distancing and remote work as much as possible. Consequently, there is much less work for these 40 employees to perform.

Let’s say the company decides it only has about 800 hours of work per week for the hourly employees. That’s half of the standard 1600 hours (40 employees x 40 hours/week). It could lay off 20 of the employees and let the other 20 work full-time, or it could let everyone work 20 hours instead of 40. Assume the company expects business to pick up later this year and will again need 40 hourly employees.

If the company either lays off half of the employees or reduces everyone’s hours, the affected employees can apply for unemployment. They will all get the $600/week enhanced unemployment benefit. The employer won’t have to pay for that. But it will have to pay for the standard NYS benefits the employee will also receive. That is, those benefits will affect the company’s unemployment insurance experience rating and the UI taxes it pays.

Shared Work Program Option

But, under the Shared Work Program, the federal government will pay all of the unemployment with no charge to the employer. Here’s what that would look like:

Each of the 40 employees will work 20 hours
Employee benefits remain intact
The company pays each worker $400/week (20 hours x $20/hour)
Each employee receives $200 in standard NYS unemployment for up to 26 weeks (subject to some individual circumstances)
Each employee also receives $600/week in enhanced unemployment until the end of July 2020

Through July, each employee will “earn” a total of $1,200 per week for working only 20 hours! That’s $60/hour, or triple their regular hourly rate!

At the same time, the company is still only paying $20/hour and saving $200/week per employee, or $8,000 for the 40 employees.

Can Your Company Take Advantage of This Situation?

The scenario above is just one hypothetical example. The math will vary for each company looking at options to reduce labor costs during the COVID-19 pandemic. But the Shared Work Program does offer flexibility. An employer can divide up its workforce in various ways to include/exclude different employees. You can modify the hour/compensation reduction between 20 and 60% to suit your business needs.

There may also be some logistical hassles. You do have to apply for and receive approval to participate in a Shared Work Program. But it seems New York is encouraging employers to take advantage of this option and may be able to process applications reasonably quickly.

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April 4, 2020

U.S. DOL Issues Temporary COVID-19 Leave Regulations

On April 1, 2020, the U.S. Department of Labor put out “temporary regulations” interpreting two federal employee leave laws that took effect on that date. Both laws are part of the Families First Coronavirus Recovery Act (FFCRA). The Emergency Paid Sick Leave Act grants many employees up to two weeks of paid leave related to COVID-19. The Emergency Family and Medical Leave Expansion Act allows FMLA leave, with partial pay, to care for a child whose school closed due to the coronavirus crisis. Despite the “temporary label,” it does not appear the DOL intends to issue “permanent” COVID-19 leave regulations. These rules are effective immediately and will remain in effect only until December 31, 2020, when these leave laws expire.

The hastily drafted emergency legislation has created unfortunate complexity in applying these new COVID-19 leave laws. Through its temporary regulations, the U.S. DOL repeatedly emphasizes the goal of interpreting the two separate leave laws “to ensure consistency”. To do this, the DOL has, in some cases, literally ignored the actual words Congress used in the laws themselves. It has also “relaxed” some existing FLSA regulations that might otherwise seem to guide the application of these new laws.

For the basic requirements of these laws, read Congress: Some Employers Must Give Paid COVID-19 Leave.

Covered Employers

The laws generally apply to private companies with under 500 employees working in the United States and all government entities.

How Many Employees Do We Have?

The temporary COVID-19 leave regulations provide some explanation of how to count employees to determine coverage.

Companies should look at their employee count as of the date any employee would begin paid sick leave or expanded FMLA leave under the FFCRA. Accordingly, coverage can change from day to day. For example, businesses that lay off employees for economic reasons during the coronavirus crisis could fall below 500 employees, and then remaining employees would become eligible to take these leaves. Indeed, the regulations explain that employees on furlough or temporary layoff do not count in determining coverage.

On the other hand, employees on “any kind of leave” do count toward the 500-employee threshold. Unfortunately, the regulations don’t further distinguish “leave” from “furlough”. Most likely, any employee being paid is on leave and counts. But what about employees receiving severance or other separation pay? Or employees on unpaid leave as a disability accommodation?

The DOL relies on existing regulatory guidance under the FLSA and FMLA to evaluate whether separate entities are “joint employers” or could constitute an “integrated employer.”

Small Business Exemption

Companies with fewer than 50 employees can elect an exemption from the FFCRA leave requirements by concluding that one or more of the following conditions applies:

the leave requested 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 requesting leave would entail a substantial risk to the financial health or operational capabilities of the 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 requested leave, and these labor or services are needed for the small business to operate at a minimal capacity.

Employers who adopt this exemption can only deny leave to otherwise eligible employees whose leave would specifically contribute to the corresponding condition above. The small employer must specifically document the denial of leave for each employee who requests it.

Exempt Employees

Otherwise-covered employers may choose not to provide leave under the FFCRA to health care providers or emergency responders. The COVID-19 leave regulations interpret these exemptions broadly, but the DOL encourages employers to allow such employees leave as “judiciously” as possible.

Health Care Providers

The DOL defines health care provider for this purpose as “anyone employed at”:

any doctor’s office,
hospital,
health care center,
clinic,
post-secondary 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, or
any similar institution, employer, or entity.

The exemption applies to any permanent or temporary site “where medical services are provided that are similar to such institutions.”

It also includes:

any individual employed by an entity that contracts with any of these institutions described above to provide services or to maintain the operation of the facility where that individual’s services;
anyone employed by an 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; and
any individual that the highest official of a State or territory, including D.C., determines is a health care provider necessary for that State or territory’s response to COVID-19.

Emergency Responders

The DOL intentionally interpreted “emergency responder” broadly “to complement–and not detract from–the work being done on the front lines to treat COVID-19 patients, prevent the spread of COVID-19, and simultaneously keep Americans safe and with access to essential services.”

Based on various existing regulatory definitions, “emergency responders” include employees who are “necessary for the provision of transport, care, healthcare, comfort and nutrition of such patients, or others needed for the response to COVID-19.”

The COVID-19 leave regulations specify that this includes (but is not necessarily limited to):

military or national guard,
law enforcement officers,
correctional institution personnel,
firefighters,
emergency medical services personnel,
physicians,
nurses,
public health personnel,
emergency medical technicians,
paramedics,
emergency management personnel,
911 operators,
child welfare workers and service providers,
public works personnel; and
persons with skills or training in operating specialized equipment or other skills needed to provide aid in a declared emergency.

It also includes:

individuals who work for such facilities employing these individuals and whose work is necessary to maintain the operation of the facility; and
any individual that the highest official of a State or territory, including D.C., determines is an emergency responder necessary for that State or territory’s response to COVID-19.

Additional Clarifications

If an employer chooses not to treat an employee as exempt, then the employee is subject to all the other leave parameters. That includes the employer’s ability to receive a corresponding tax credit.

The regulations emphasize that the law only gives individuals a right to two weeks of leave under the Emergency Paid Sick Leave Act. This is a per-employee entitlement, not a per-employer one. Thus, an employee who has used two weeks of paid sick leave for one employer can’t take it again for another job, such as with a subsequent employer. However, the regulations don’t explain how separate employers would effectively monitor that scenario.

School Closings

Both paid sick leave and expanded FMLA may be available to employees whose children are home due to school closing or child care unavailability. However, the DOL recognizes limits on this leave condition.

To qualify on this basis, the employee must actually care for the child(ren) while off of work. Moreover, the employee would not be eligible if another suitable individual is available to care for the child(ren).

The DOL interprets the FFCRA to allow such leave, where applicable, to care not only for children under 18 years old. Employees could also take the leave to care for children older than 18 who are incapable of self-care because of a mental disability. The adult child’s school or usual place of care would still have to be unavailable due to COVID-19.

Amount of Leave and Compensation

The DOL acknowledges ambiguity in the use of mixed references to days and weeks in these leave laws. Generally, its COVID-19 leave regulations interpret references to 10 days to mean two weeks. Congress apparently used 10 days on the simple assumption of full-time employees working 5 days per week. But the DOL recognizes that many other work schedules exist. Thus, specifically, the unpaid portion of expanded FMLA runs for two weeks rather than just 10 workdays.

The regulations also seek to simplify the calculation of the normal hours worked and “regular rate” for determining how much pay employees receive while on these leaves. Typically, employers should look to the past 6 months before leave to calculate these. However, for employees who have worked less than 6 months, the FFCRA states that employers should use the employee’s “reasonable expectation” at the time of hiring of the number of hours they would receive per week to determine the number of hours a part-time employee receives in leave. The DOL interprets this to mean either an express agreement between the employer and employee or, if none, the average number of hours the employee has worked per week since the beginning of employment.

Once the employer determines which weeks to use in calculating the employee’s regular rate of pay, they must take the weighted average of compensation for those weeks. You do this by dividing the total compensation for the time period by the total number of hours worked during the period.

Remember that no employee is eligible to receive more than $511 per day for sick leave due to the employee’s medical condition or more than $200 per day for other qualifying circumstances under the FFCRA.

Quarantine or Isolation Orders

The DOL takes a broad view of quarantine or isolation orders in determining who may take paid sick leave. The regulations interpret this to include “quarantine, isolation, containment, shelter-in-place, or stay-at-home orders issued by any Federal, State, or local government authority that cause the Employee to be unable to work even though his or her Employer has work that the Employee could perform but for the order.”

Generally, an employee under such an order could not take the leave if they are still able to work, either onsite or remotely. However, if a governmental authority has advised individuals in specific categories (e.g., certain age ranges or medical conditions) not to go into work, then an employee in such a category who cannot work from home would qualify for leave.

The DOL also clarifies that employees cannot take paid sick leave if the employer does not have work for the employee. Thus, if the quarantine or isolation order causes the employer to cease operations, even temporarily, the employee cannot take leave, but may instead be able to apply for unemployment benefits.

Teleworking

Employees who can telework are not entitled to paid sick leave or expanded FMLA leave under the FFCRA.

The regulations define “telework” to mean “work the Employer permits or allows an Employee to perform while the Employee is at home or at a location other than the Employee’s normal workplace.”

An employee is able to telework if:

their employer has work for them;
their employer permits the employee to work from the employee’s location; AND
there are no extenuating circumstances (such as serious COVID-10 symptoms) that prevent the employee from performing the available work.

The DOL notes that existing FLSA regulations include “continuous workday” guidelines with respect to paying minimum wage and overtime. Typically, the DOL would consider all time between the performance of the first and last principal activities in a day to be time worked. However, the agency expressly relaxes that requirement for employees working sporadic at-home schedules for COVID-19 related reasons.

Intermittent Leave

The temporary COVID-19 leave regulations declare that intermittent leave is only available under FFCRA if both the employee and employer agree to it. They must also agree to the time increments for any intermittent leave.

Moreover, unless the employee is teleworking, intermittent leave is only permissible when the employee is using it to care for a child whose school is closed or care provider is unavailable. The DOL expresses concern that allowing intermittent leave for other circumstances under the paid sick leave law would pose too much of a risk of spreading COVID-19 to other employees.

Overall FMLA Leave

The regulations confirm that expanded FMLA leave due to children being home because of COVID-19 is still subject to the annual total of 12 weeks of FMLA leave for any purpose (except military servicemember caregiver leave, which may allow additional unpaid leave). Thus, an employee who has already used any FMLA leave within the applicable 12-month period set by the employer will not get a full 12 weeks of COVID-19 FMLA leave. Conversely, an employee who uses COVID-19 FMLA leave will have less leave, if any, available for the traditional FMLA circumstances.

The regulations also indicate that an employee may only take a maximum of 12 weeks of FMLA leave because of their child’s school closing or child care being unavailable. This clarification could be important, as an employer’s standard 12-month FMLA leave period could start over during 2020. Then, an employee might be able to take additional FMLA for other qualifying reasons, but no more than 12 weeks of the new leave under the FFCRA between April 1 and December 31, 2020.

Notices

Employee Rights Poster

The FFCRA requires employers to post an employee rights notice in conspicuous places in the workplace. The regulations allow that employers can meet this requirement by posting the notice electronically on an employee information website or by emailing it to them. However, the regulations do not specify that employers must do so even where employees can’t currently access the worksite.

The regulations specify that even a small company that finds it is exempt from providing leave must satisfy this posting requirement.

FMLA Forms

The DOL is not requiring employers to satisfy the regular FMLA notification requirements regarding the expanded FMLA leave under FFCRA. Employers accustomed to providing the FMLA paperwork, including notices of eligibility, rights and responsibilities, and written designations, may continue to do so for this new form of leave. But they do not have to (unless an employee may also qualify for another type of FMLA leave).

Employee Notice of Need for Leave

Employees do not have to notify their employer before beginning leave under the FFCRA. Employers can require employees to follow reasonable notice procedures as soon as practicable after the first workday for which an employee needs paid sick leave. They can also require employees to comply with usual notice procedures and requirements. However, the regulations add that if the employee fails to give proper notice, the employer should notify the employee of failure and give them a chance to provide the appropriate documentation before denying the leave.

Documentation Supporting Leave Requests

Because employers will need documentation to support the FFCRA tax credits, employees must provide a signed statement containing the following information:

employee’s name;
date(s) for which leave is requested;
the COVID-19 qualifying reason for leave; and
a statement representing that the employee is unable to work or telework because of the COVID-19 qualifying reason.

The employee must also provide additional documentation corresponding to the nature of the qualifying reason. As applicable, this documentation could include the identity of the government entity or healthcare provider ordering a quarantine or the name of the child and their school that is closed. In the latter situation, the employee also must provide a statement that no other suitable person is available to care for the child during the requested leave.

Leave Before April 1, 2020

Employers cannot deduct time employees took off before April 1, 2020, from these new federal leave requirements. Nor can employees be required to use other employer-provided leave simultaneously with these leaves.

The DOL recognizes that some employers proactively put new leave policies in place before April 1, 2020, to help employees through this coronavirus emergency. The COVID-19 leave regulations permit these employers now to cancel such policies prospectively in light of the new federal requirements.

Leave After December 31, 2020

The temporary COVID-19 leave regulations confirm that no employee has a right to leave under the FFCRA after December 31, 2020. An ongoing leave that began before then will automatically end on that date.

Administration Costs

DOL estimates covered employers will spend over $550,000,000 familiarizing themselves with and preparing to apply these leaves to employees. Based on the assumptions the Department of Labor used in their calculations, the actual costs will probably be much higher. And this doesn’t even factor in the additional time and expense of processing leave requests from employees or lost productivity due to their absences.

Navigating the COVID-19 Leave Regulations

Many small businesses that are not already subject to the FMLA may find it particularly difficult to apply these new requirements. The law and regulations are complex and not necessarily intuitive. Even determining whether your company must comply could be a challenge.

Some questions and issues will seem to be straightforward, but may involve an unexpected wrinkle. And, unfortunately, there are significant built-in penalties for making mistakes in either direction–either granting leave too generously or denying it improperly. On the one hand, violating employees’ new rights could result in litigation or administrative fines. On the other hand, paid leave not covered by the law won’t earn a tax credit. Or, if one is taken, it may constitute a violation of tax laws.

Thus, it is critical to thoroughly understand the law and regulations, including corresponding tax provisions. Most employers should work with experienced employment lawyers and tax professionals to determine what they must do to apply these federal leave laws correctly and avoid costly penalties.

For regular updates on COVID-19 issues affecting employers and other employment law developments, follow HortonLaw on LinkedIn.