Sick Leave and Shut Downs: Coronavirus Advice for Employers
With the deluge of new information, misinformation, and government mandates about Covid19, it can feel like trying to drink from a firehose, and much is still unknown. But based on what we know at the moment, this article aims to offer some practical advice and answers to employers about what to do, and what may be to come.
What if My Employees are Sick?
Federal law: Beginning on April 2, through the end of the year, the federal government will be mandating new paid leave benefits. The Families First Coronavirus Response Act (“FFRCA”), passed last week, provides up to 80 hours (i.e., two weeks) of paid leave at an employee’s full regular rate of pay to those who are sick or under quarantine due to Coronavirus symptoms, and up to 2/3 the employee’s regular rate of pay if they need to care for someone under quarantine where the quarantine is pursuant to Federal, State, or local government order, or the advice of a health care provider, or to care for a child (under 18 years of age) whose school or child care provider is closed or unavailable for COVID-19 related reasons. The law also provides up to an additional 10 weeks of paid family leave at 2/3 the employee’s regular rate of pay to those who have been employed for at least 30 calendar days, and are unable to work due to a bona fide need to care for a child whose school or child care provider is closed or unavailable for reasons related to COVID-19.
The law applies to businesses with fewer than 500 employees, but businesses with fewer than 50 employees may be exempt from providing leave due to school closings or child care unavailability, if the leave requirements would “jeopardize the viability of the business as a going concern.”
Importantly, the law only applies to employees who cannot work at all, even remotely. And this law does not apply to anyone who simply does not want to work due to fear of Coronavirus; they must actually be sick, or caring for minor children.
The law also amended Family and Medical Leave Act (“FMLA”). Whereas before all 12 weeks of FMLA leave were unpaid, now only the first ten days may be. Thereafter, employees must receive at least 2/3 their regular rate of pay, not to exceed $200 per day, or $10,000 in the aggregate. Certain exceptions apply to businesses with fewer than 25 employees, and tax credits may be available.
New York state and City already provide some measure of paid sick leave to employees under certain circumstances, through New York Paid Family Leave (“PFL”) and New York City Earned Safe and Sick Time (“ESSTA”).
State law: PFL is an insurance benefit funded through payroll deductions that applies to full-time employees after they have worked 26 consecutive weeks for at least 20 hours per week, and to employees working less than 20 hours per week who have worked at least 175 days, which can be non-consecutive. Currently, employees can be paid 60% of their average weekly wage, capped at $840.70 per week, for a total of ten weeks. PFL applies to employees who are caring for a qualified family member with a serious health condition, including family members who live outside the state. Health insurance must continue during such leave. Usually, PFL does not cover the employee’s own illness, however, the State has recently passed legislation allowing employees to use PFL for their own serious medical condition due to Coronavirus.
City law: ESSTA is an accrued benefit that applies to part-time and full-time employees who have worked at least 80 hours. Employers with at least five employees must provide up to 40 hours of paid leave under the law at the employee’s regular hourly rate of pay. Employees accrue one hour for every 30 hours worked. Businesses with four or fewer employees must still provide unpaid leave. The law already allows employees to take leave if their employer or their child care is closed for a public health emergency (i.e., exactly the situation in which many people find themselves right now), as well as for their own illness, or that of a family member.
Intersection of the Laws: Thus, the effect of the new federal law on businesses in New York is that whereas the state PFL provides only 60% of the average weekly wage for ten weeks, FFCRA provides 100% pay for two weeks for the employee’s own illness. And whereas ESSTA provides New York City employees with 100% pay for a maximum of one week on an accrued basis, FFRCA mandates up to two weeks at 100% pay. Obviously, good record-keeping practices will be extremely important during this time. Employers are advised to keep track of who is unable to work at all, on what days, and for what reason, as well as to keep copies of any medical documentation.
Many businesses require employees to exhaust employer-provided paid time off (such as sick time or vacation time) before resorting to leave provided by statute. In addition, many businesses reduce an employee’s amount of statutorily-provided unpaid leave concurrently with an employee’s use of paid leave (such as that under short-term disability benefits). But given how early in the calendar year the Coronavirus crisis is upon us, the uncertainty about when it will be resolved, and whether additional closures or quarantine may be required in the future, businesses should consider allowing employees to retain as much paid and unpaid leave as possible. They might need it.
And while employees may elect to take employer-provided sick or vacation time in order to be paid in full, the employer is under no obligation to pay the employee more than 100% of what they would have earned if they had come to work, such as paying vacation time while the employee is also collecting payment for paid sick leave under the FFRCA.
What if I Have to Shut Down My Business?
Businesses that have been forced to shut down because they are deemed “non-essential” will doubtless have a hard time continuing to pay employees without any income stream. That is particularly true with respect to hourly, non-salaried employees who do not get paid if they are not working. Employers have a few options:
Remote Work: Some businesses may be able to operate with their employees working remotely. In such cases, it can be difficult to track employee time. Particularly for employees who are paid by the hour, employers should do their best to track employees’ time, lest the employees later claim entitlement to overtime. Employers should communicate their expectations in writing regarding whether employees will be required to work outside regular working hours, including by answering calls, participating in videoconferences, or responding to emails. Employers may ask their employees to “clock in” and “clock out” each day with an email or text message, and businesses should keep all of those records. Once normal operations have been restored, employers should print or otherwise save all such time records and include them in employees’ files, where they should be kept for six years, the statute of limitations under the New York Labor Law.
Furlough: There is no legal definition of a furlough, but this option falls somewhere between full employment and termination or layoff. Under this option, employees may be required to work fewer hours, or not at all, and will see their income reduced partially or entirely. The benefit to employees is that they are kept on payroll, to preserve their health care and other benefits. However, employers should be aware that their policy with their insurance company may require a certain number of hours worked per week in order to qualify for benefits. Employers should consult their policy for specifics, lest employees’ coverage be denied for lack of sufficient hours.
Layoff/Termination: Some employers may need to terminate employees altogether, at least temporarily. Doing so will likely result in employees losing health coverage and other benefits. Employers may choose to contribute to or cover the cost of COBRA in such circumstances. Employers should send out the so-called “five day letter,” which requires notice to terminated employees “of the exact date of such termination as well as the exact date of cancellation of employee benefits” no later than five days after the date of termination. With this letter, employers should also send a COBRA notification and notice regarding how to apply for unemployment benefits. Note that the state has waived the usual seven-day waiting period for workers to apply for unemployment.
What if I Have to Close Altogether?
The New York Worker Adjustment and Retraining (WARN) Act requires covered employers to give 90 days’ advanced warning to employees, union representatives, the Department of Labor, and local workforce development boards, before closing a business. The notice is required when businesses with 50 or more employees experience a closure affecting 25 or more workers, or when layoffs affect 25 or more full-time workers who comprise at least 1/3 of the workers at a given site, as well as to certain other situations. According to the DOL, “[T]he WARN Act already recognizes that businesses cannot predict sudden and unexpected circumstances beyond an employer’s control, such as government-mandated closures, the loss of your workforce due to school closings, or other specific circumstances due to the coronavirus pandemic.” Thus, the 90 day requirement has not been suspended, but the DOL has advised businesses that are forced to close to provide as much notice as possible and identify the circumstances that required the closure so the agency can determine whether an exception to the 90-day notice requirement applies.
Additional Help: While the federal government attempts to pass legislation to offer additional relief to businesses and their employees, New York State and City are also considering measures, such as waivers or grace periods for the payment of residential and commercial rent. MCB’s Labor & Employment Group will continue to provide updates on new developments. Contact Valerie K. Ferrier, Partner and head of the L&E Group, with any questions at email@example.com or (212) 916-0920
Martin Clearwater & Bell LLP is here to answer your employment questions.