Paid Sick Time and Leave Amid COVID-19

As COVID-19 rapidly changes the economic landscape throughout the country, businesses and individuals are facing new and evolving challenges. To address these challenges, federal and state governments are quickly drafting laws and regulations that may affect employers of all sizes.

On March 18, 2020, the federal government enacted the Families First Coronavirus Response Act (the Act), discussed in more detail below, which entitles some employees to paid sick time and leave for issues arising directly from the COVID-19 outbreak. On the same day, Governor Charlie Baker signed into law a bill that waives the usual one-week waiting period for unemployment insurance benefits, allowing Massachusetts employees affected by COVID-19 to collect benefits immediately. In addition, the Department of Unemployment Assistance is finalizing emergency regulations to address a sudden increase in unemployment benefits claims because of COVID-19.

Both federal and Massachusetts lawmakers are considering additional legislation to address COVID-19 and will likely continue to do so as new and unanticipated challenges present.

Davis Malm will provide updated e-alerts as these new laws and regulations are finalized.

Meanwhile, employers facing potential payroll changes or reductions in force should consider the options they already have regarding managing their workforce in a time of great uncertainty. Below are key strategies employers can use to address their changing workforce demands, and a summary of the important provisions of the Act, which goes into effect on April 1, 2020 (not April 2 as the legislation implied).

STRATEGIES FOR ADDRESSING CHANGING WORKFORCE DEMANDS

Foremost, employers do not have to pay non-exempt employees for time not worked, subject to potential exceptions based on the new federal legislation discussed below. This means businesses forced to temporarily close or scale back hours due to COVID-19 do not have to pay non-exempt employees for hours they may have been scheduled to work—only those that they do work. However, employers must pay exempt employees their full week’s salary if they perform any work during that workweek, including work from home. If an exempt employee does no work during a workweek, their employer need not pay them for that week.

Employers have options short of layoffs for dealing with financial and personnel struggles brought on by COVID-19:

Reduce hours: Employers may reduce the working hours of non-exempt employees, including moving full-time employees to part-time. Employers may also reduce hours for exempt employees (and reduce their salaries proportionally) but should remember that an exempt employee’s salary must remain above $684/week to maintain exempt status under the Fair Labor Standards Act.

In some cases, employees can bridge the financial gap created by the reduction in hours with unemployment benefits. Otherwise, eligible part-time employees whose gross weekly wages are less than their weekly benefit amount can apply for unemployment benefits. Any wages above one-third of the employee’s weekly benefit amount are deducted from the employee’s benefit payments. In addition, employers can choose to develop a WorkShare plan with the DUA to reduce hours by 10-60% for the entire company or specific departments or job categories. The affected employees will receive unemployment benefits for the remainder of their usual hours.

Reduce pay: Employers may also decrease pay rates prospectively for non-exempt employees, subject to Massachusetts’ $12.75/hour minimum wage, and for exempt employees who do not have an employment contract. Remember that an exempt employee could lose their exempt status if their salary falls below $684/week. This may be less of a concern if there is no likelihood that an exempt employee will work over 40 hours in a workweek during this period. Employers should give employees notice of impending pay decreases, in writing, so employees can plan.

Furlough: Employers also have the option of putting some or all employees on furlough, which is mandatory time off without pay. Furloughs can be a preferable alternative to layoffs, because the employer reduces its payroll expenses while keeping its workforce in place, and furloughed employees are still eligible to receive unemployment benefits.

Furloughs should always have a defined return-to-work date, to avoid being categorized as a termination. For exempt employees, the furlough should coincide with the beginning of a workweek, to avoid entitling exempt employees to a full week’s salary when they have only worked part of the workweek.

Employers who reduce wages or hours or furlough employees should perform an analysis to see if these changes have a disparate impact on a protected category of workers, which could lead to discrimination claims.

FAMILIES FIRST CORONAVIRUS RESPONSE ACT

The Act, which goes into effect on April 1, 2020, has two primary provisions relevant to employers: emergency paid sick time (PST) and emergency partially paid Family and Medical Leave (EFML). These provisions apply only to private employers with less than 500 employees and some public sector employers (covered employers). The Act gives the Secretary of Labor authority to exempt employers with fewer than 50 employees from PST and EFML requirements if those requirements would “jeopardize the viability of the business.”

Employers required to offer PST or EFML under the Act will be eligible for refundable tax credits. In addition, an employer may not require an employee to use other employer- provided paid leave before using the PST granted by the Act.

EMERGENCY PAID SICK TIME

The Act requires covered employers to provide 80 hours of PST to an employee unable to work or telework because:

1. the employee is subject to a federal, state, or local quarantine or isolation order related to COVID-19;
2. the employee has been advised by a health care provider to self-quarantine because of COVID-19;
3. the employee is experiencing symptoms of COVID-19 and is seeking a medical diagnosis;
4. the employee is caring for an individual subject or advised to quarantine or isolation;
5. the employee is caring for a son or daughter whose school or place of care is closed, or childcare provider is unavailable, due to COVID-19 precautions; or
6. the employee is experiencing substantially similar conditions as specified by the Secretary of Health and Human Services, in consultation with the Secretaries of Labor and Treasury.

PST used for reasons 1 – 3 above must be paid at 100% of the employee’s usual rate but is capped at $511/day and $5,110 in the aggregate. Covered reasons 4 – 6 above can be paid at two-thirds of the employee’s usual rate and is capped at $200/day and $2,000 in the aggregate. Employees are eligible for PST regardless of how long they have been on the payroll.

EMERGENCY FAMILY AND MEDICAL LEAVE

The Act requires covered employers provide up to 12 weeks of job protected EFML to an employee unable to work (or telework) because their minor child’s school or childcare service is closed due to a public health emergency. Only employees who have been on the payroll for 30 calendar days are eligible for EFML.

The first ten days of EFML is unpaid, though an employee may receive pay for PST during this ten-day period. Employers must pay eligible employees for the remaining ten weeks of EFML based on the number of hours the employee would otherwise be scheduled to work, and generally at two-thirds of the employee’s regular rate. However, the Act caps EFML at

$200/day and $10,000 in the aggregate for each eligible employee.

CONTACT

Please contact a member of our Employment Law Practice to discuss compliance with the new federal paid sick time and Family and Medical Leave requirements, or any other concerns relating to the impact of COVID-19.

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