Employer’s Guide to Handling COVID-19
In this webinar we’ll provide guidance for employers including:
- What to do when an employee receives a diagnosis of COVID-19
- What protective measures you should take
- How to handle potential lay-offs or reductions
- New emergency paid FMLA leave and paid sick leave requirements
- What HIPAA and healthcare requirements you’re responsible for
- What to consider with employee leave
Below is a transcript of the webinar.
Amanda: Hi. We'd like to welcome you all to today's webinar, Employer's Guide to Handling COVID-19. Today, we're going to be discussing all of the questions that employers have on what to do and what not to do, and how to protect their employees and their business throughout this pandemic.
So today, we have Henry Rinder who will be moderating the panel. Henry is a Licensed Certified Public Accountant in New York and New Jersey with more than 30 years of public accounting experience. We also have Ted Dudek, who is the President and Managing Member of Smolin, who's also a Licensed Certified Public Accountant in New Jersey, and has more than 35 years of experience in public accounting. And we also have with us today, Luke Breslin from Jackson Lewis. Luke is an Associate in the Berkeley Heights and Monmouth County New Jersey offices, and his practice focuses on representing employers in workplace small matters.
Henry Rinder: Thank you, Amanda. Thank you very much. I'm going to cut right to the program because, as we all know, this is only 30 minutes and time is precious. And we got excellent co-panelists, Ted and Luke, who have been dealing with the issues we're about to discuss for the last two weeks on a daily basis. So, there is a lot of information that we can decipher from this presentation and from the panelists.
Our agenda will include basically issues involving employment under the current circumstances. And the employment, obviously issues that come up, is termination of employees, layoffs, furloughs, family medical leave, and similar types of issues and concerns. And when we deal with it, obviously we rely on somebody like Luke for consultation because these are complex legal areas that from the perspective of an employer, we need to get legal advice in making decisions in this area.
I will turn over to Luke to describe the furlough versus reduction of force and maybe Emergency family Leave Act as well.
Luke Breslin: My name is Luke Breslin. As Amanda said, I'm an Attorney at Jackson Lewis in New Jersey. And as you might imagine, given that we're an employment law firm representing management side employers, we've been very deep into the COVID-19 related issues and the employment of employees and how the new laws that have been passed both on the federal and state levels are affecting employers on a daily basis.
So as Henry indicated, just by way of background here, there's some concepts that we'll be discussing today that many of you may or may not have come into or had to address in the last few weeks. But generally, many employers these days are left with no options but to reduce their staff at this time, given the lack of business and the lack of work for many folks in light of many of the say at home orders and other government directives that are affecting companies' abilities to continue to operate at either a reduced capacity or no capacity at all.
So generally, a reduction of force is a long term layoff and break in employment with some general or specific intent to reinstate. A furlough, conversely is a short term layoff with technically no break in employment with a definitive, but estimated return to work expectation. During the period of furlough, an employee continues to be an employee of the company and they are likely entitled to health insurance. I should mention that if you intend to furlough any employees, be sure to review your summary plan documents to ensure that that furlough does not affect employees' eligibility for benefits.
So, those are the general concepts that we'll be discussing throughout the presentation today, so keep those in mind. And again, as indicated by Amanda, we're happy to answer any questions you might have that we're not able to get to today.
So, moving on to the next slide. As many of you likely are aware, back in, this is probably the middle of March now, the US government signed or President Trump signed the Families First Coronavirus Response Act. And the two primary provisions of that are an Emergency Family Medical Leave Act portion and an Emergency Paid Sick Leave Portion of that Act. These are benefits that are in addition to any company-provided benefits and related to specific reasons that employees need leave resulting from the Coronavirus.
So first, with the Emergency Family Medical Leave, as I'm sure many of you are familiar with the regular Family Medical Leave Act, which provides up to 12 weeks of leave for employees if they're of qualifying reasons. Under this, the EFMLA provides up to 12 weeks of leave to be used if an employee cannot work because the employee, he or she has to care for a child because the schools are closed or the childcare provider is on available during this time. So just to understand, the EFMLA leave time only relates to caring. There's only one reason they can use it: it's for caring for children whose schools are closed or the childcare providers not available.
So, the first two weeks of the EFMLA are unpaid, but weeks three through 12 are paid at two thirds of the employee's regular rate of pay. There's a cap of $200 a day and $10,000 in the aggregate. During the first two weeks that are unpaid under the EFMLA, the employee may elect to use any accrued vacation, personal time under existing company policy or the Emergency Paid Sick Leave time that we'll touch on in a minute. As I mentioned, this is in addition to existing leave provided by the company. The company cannot force an employee to use the accrued paid time during the first two week period. And that would be an option for the employee. And as I mentioned, it does not diminish the right to leave under state law. So here in New Jersey, we have the Earned Sick Leave Law. This is in addition to that. So, keep that in mind. So, if we can move on to the next slide.
So as I mentioned, the other aspect of the FFCRA, the Family First Coronavirus Response Act is the Emergency Paid Sick Leave. And I should say, let me backup, that the FFCRA applies to companies with 500 or less employees. So if you have more than 500 employees, this likely does not apply to you. There are certain tests used to calculate whether two related entities should be counted together. So keep that in mind that if you do have various related entities, there are tests to use to determine whether or not you're subject to the requirements of the FFCRA.
So, back to the Emergency Paid Sick Leave portion of the FFCRA. Again, this is for all employees who have a covered employer with 500 or less employees. And there's no durational requirement prior to taking the leave. So with respect to the EFMLA, in order to be eligible, the employee must have been employed for 30 days prior to the needed leave. Under who under the EPSLA, an employee, if they started last week, they'd be entitled to the time under this aspect of FFCRA.
And the paid sick leave under this is up to 80 hours of paid sick time for full time employees, in addition to any paid sick leave already provided. And this is paid sick leave at the employee's regular rate with some restrictions, which I'll touch on in a minute. So, we can move on.
So, under the EPSL leave, these are the various reasons that employees can use the time or can take leave. And obviously, they all relate to Coronavirus. Various reasons are for the employee's own illness, if they are inflicted with COVID-19 or asked to quarantine because they're suspected to have it, they can take the leave but they can also take leave if they're caring for an individual who needs to quarantine isolate or self quarantine under a government order, which the regulations that have been released do clarify that it's a self quarantine under government order does include the state home orders like in New Jersey. And they clarified that if you are subject to a stay at home order, you will not be entitled to leave if you can still tele-work and do work. But for the order, you can't go to work, that's when an employee would be entitled to leave if they're subject to that type of order. But if they can do work, they will not be entitled to the leave.
And as I mentioned, reason five, which is on the second column, the top bullet, can be used for, employees can take leave under the FMLA, which I first touched on, as well as the EPSL. So if this applies to them, they can get leave under the FMLA and EPSLA as well. But all other reasons for this leave only apply to this first two weeks, the up to 80 hours of paid sick leave.
So, that is the Family First Coronavirus Response Act. There's a lot more information. We just don't have the time today to go into super detail on it. But again, we're happy to answer any additional questions you have, but keep in mind that if you're 500 employees or less, you'd be subject to these requirements and employees would be eligible to take this leave to the extent they qualify. Moving on?
Henry Rinder: Teddy, I know you had many questions for Luke as we were entertaining different options for Smolin. So, could you address some of those key questions that we had to counsel on?
Ted Dudek: Sure, Henry. Thank you. Luke, so perhaps as an employer, you can define for me the treatment of a salaried employee versus an hourly employee with both when you have a reduction in force and with furloughs.
Luke Breslin: Yeah, absolutely. So a common question we've been getting is, number one, can you furlough employees?The answer would be yes. And that's if you're exempt or non-exempt, meaning salaried or paid hourly, you certainly can lay them off or furlough them. You can also reduce their hours to the extent they're an hourly non-exempt employee. And you can also reduce the salary of any exempt employee. So, I think we have a couple slides on these points a little bit further on if we want to move to them so the attendees can see the specific language and I can explain that in a little bit more detail. I think it's the next one. Yeah.
So as I mentioned, the question, can I require non-exempt employees to work for the same hours for less wages? Yes, you can reduce our hourly rate. That's no problem so long as you comply with minimum wage requirements in your respective state and any kind of collective bargaining employment contract requirements. So, take into account any additional requirements you may be subject to in addition to standard minimum wage requirements, but you can certainly reduce their hourly rate.
You can also reduce the number of hours they're expected to work. So, some employees working 40 hours a week, and you only have enough work for them for 20 hours a week, you can certainly reduce them to that 20 hours and you just pay them for the hours actually worked. There's no need to pay them any additional monies. So long as you're compliant with unemployment, you just pay the non-exempt employees for the hours they'd be actually spent working.
One thing to keep in mind if you do change an employee's rate of pay, and this applies to exempt and non-exempt employees in New Jersey, the Department of Labor suggests, it says requires on this slide, it's really just a suggestion and guidance, their expectation that you provide at least one pay period notice. So, keep that in mind if you are planning for a reduction in salary or a reduction in hours or rate of pay, I should say.
So as to non-exempt employees, can you require them to tele-work? Yes, you can require them to work at home as well. Just keep in mind that you need to have strict compliance with payment for all hours that they actually work. So, you have to have timekeeping measures in place. A tele-work policy is a good idea in practice. I know practically speaking, now it's difficult with lack of time and planning, but something to keep in mind as well. And if we could just go to the next slide.
So as I mentioned for exempt employees, yes, can you reduce their pay as well? And the answer to that is yes. For salaried employees, it's a little bit more tricky. Number one, you can reduce their salary, but you need to make sure that you're paying them at least 684 a week. And if you don't pay them 684 a week, then you would be losing the exemption to the salaried or exempt employee where they wouldn't be subject to overtime requirements. So make sure that if you've reduced the salary of an exempt employee, it stays above 684 per week. If you do reduce salary or furlough an exempt employee, you need to pay them for the entire week, regardless of how much they worked. So, if an employee works on Monday and you decide to furlough them, you need to pay them for that entire week, subject to certain exceptions, but generally that is the rule. But the next week when they don't perform any work, you don't have to pay them. So, in order to maintain the exemption on the salary basis test, you've got to pay an exempt employee for the entire weekly pay if they perform any work.
Changes in pay must be prospective. They should not do that very frequently because it could create issues with the exemption as well and the overtime requirements. Another option with respect to exempt employees, if you understand obviously, business needs are much less these days for many companies. So an option is to convert a non-exempt employee, or excuse me, it should say exempt to non-exempt. That's probably not a recommended approach, but understand it is an option. If you do that, we wouldn't recommend you do it more than once or maybe twice in a year, but it's really not the best approach. The better approach for exempt employees will be to reduce their salary. But practically speaking, you shouldn't make any express promises about reductions in hours as well because for exempt employees, salary is not directly correlated with number of hours worked, at least under the law. So, we understand that many salaried employees who just are subject to a reduction in pay would probably work less hours, but just be careful in communicating that to them. Don't expressly promise they're going to only work X number of hours during this time period.
Henry Rinder: I think the issue I see that perhaps you could sort of highlight for the audience, the exempt definition versus non-exempt definition so everybody understands?
Luke Breslin: Yep. So an exempt employee... So, let's just back up. So obviously, if you're a non-exempt employee, you're paid on an hourly basis and you're entitled to pay for each hour that you work up to 40 hours. And once you reach 40 hours, you're entitled to one and half times your regular rate for each hour of work. So, that's a non-exempt employee. Typically, non-exempt employees, they're not going to be the president of the company. There may be more entry level positions oftentimes, but obviously not. That's not a standard rule, but it's just something to keep in mind.
And then for exempt employees, exempt employees are not subject to overtime requirements. So, exempt employees are expected to work as many hours as is necessary, and they'll get the same salary for every week throughout that year, subject to certain exceptions. In order to qualify as an exempt employee, there are certain requirements. Number one, you have to get paid to salary basis 684 a week, but then there's certain qualifiers. There's five exemptions for it to be an exempt employee. There's an administrative exemption hire, there's a sales exemption. So, there's various exemptions to keep in mind, but you need to satisfy the test, a duties test. So, the employees would need to perform certain higher level duties and sometimes have higher degrees or education to satisfy the exemption. So, that's basically the difference between exempt and non exempt employees.
Ted Dudek: I have a question, Luke. What would be the difference between a salary reduction and a furlough?
Luke Breslin: So a furlough, as I mentioned at the outset, is a furlough is essentially a temporary layoff. So, the employee is not going to be performing any work. And in fact, they're not permitted to perform any work and they shouldn't be answering emails, answering text messages at all. So, they're not working. Technically, they're still an employee of the company, but they're not working. Another word would be a temporary layoff.
And a reduction in hours or reduction in salary is too just that. So the employee, who's an hourly employee, non-exempt employee, he works 40 hours a week or 35 hours a week right now business is half of what it was. So, you put them at, now they're working 20 hours a week. And for a salary, same thing: if someone is making $100,000 and business doesn't allow for you to continue to pay that, you can reduce it by whatever percentage you like, whatever makes sense for your business. So, you can reduce it by 50% and that person getting paid $50,000 for that temporary period of time. Once the business needs allow for you to return them to full pay, you would. And then, you'd make a communication to them that, "This is a temporary reduction for a period of time and as business needs allow, we will return you to your regular hours for regular salary." So, that's the difference between those two concepts.
Ted Dudek: So, is it safe to assume that if you reduce the pay, you should not tie that to hours worked?
Luke Breslin: Yes.
Ted Dudek: If you're a salaried person.
Luke Breslin: Yes. If you're an exempt employee and you reduce someone's salary, say by 50%, that shouldn't be directly tied to a reduction in their working hours either. I understand practically speaking, that's probably going to happen because business needs don't require them to work at a 100% capacity. But just in terms of the FLSA, the Fair Labor Standards Act and these exemptions, in order to ensure that they maintain these exemptions and you won't be required to pay them overtime, you're paid a salary and you need to work as much as necessary. So, you shouldn't tie salary directly to number of hours worked. I understand that it practically speaking has that implication oftentimes, but just be careful of any communications. Don't directly tie reduction in salary to reduction in days worked or hours worked.
Henry Rinder: Luke, we hear from clients that some employees who basically are stay at home right now, are asking to be basically laid off so they can collect unemployment because they think that unemployment benefits right now might be higher than what the company is paying them. Is that true that some employees could actually get higher amount of unemployment than wages?
Luke Breslin: Yeah, it could. And we'll go to slide, I'm not sure what it is, but the unemployment benefits, I think it'll be helpful for the audience.
So as many of you are likely aware, a couple of weeks ago, President Trump signed the CARES Act. It's called the Coronavirus... the words are escaping me at this moment, but we call it the CARES Act. And there's four separate sections in the CARES Act, but one of them relates to unemployment benefits and emergency unemployment benefits that are provided under the Act. And that piece of it allows for employees, to the extent they're eligible for unemployment benefits in their respective state, be entitled to an additional $600. So if an employee is entitled to $1 of unemployment benefits, only $1, they'd be entitled to this $600. So, they just need to qualify for unemployment benefits in their respective state and then they're entitled to the $600 benefit at the federal level. This $600 benefit is per week. It's going to be running through July 13th, I believe is the exact date. And like I said, employees who would qualify for unemployment in their respective states would be entitled to that.
There's also another piece of the CARES Act that extends unemployment for 13 weeks. So in New Jersey, employees can get up to 26 weeks of unemployment. Now, that's going to be 39 weeks with the additional 13 weeks.
So just quickly on New Jersey employment, under New Jersey traditional unemployment, and the weekly benefit rate is capped based upon minimum wage. The maximum weekly benefit rate in New Jersey for 2020 is 713. And you arrive at the weekly benefit rate by taking 60% of average weekly earned during a base year up to the maximum. So, you just calculate employees weekly pay, times that by 60%. And typically again, it's a little bit more complicated than that, but that would be your weekly benefit rate. And then that would be a max of 713.
There's also partial unemployment. That's if an employee's salary or hours are reduced by 50%, that employee may be eligible for partial unemployment. Again, you use the same calculation, and you deduct the payments are actually getting paid and then 50% of pay or 50% of hours from the calculation. Again, these are all subject to a caveat that the decisions are all made by unemployment in their respective state. So, there's certain eligibility issues that can arise, but these are the general framework and rules for unemployment. And if you could just go to the next slide, the audience can see an example of, of, to Henry's question about making more.
Yes, this is an example. It's $24 a week working 40 hours. That's 960 a week. They can earn 576 as their weekly benefit rate plus the $600. So, they're making $1,176 on unemployment as opposed to 960 when they were actually working. As I said, there's eligibility issues that could arise. And again, it's all determined by the state's unemployment offices, but there's also a credit for employees with certain dependents that can add to your weekly benefit rate as well.
So, that's an overview about unemployment and the new CARES Act and the rich benefits it provides.
Ted Dudek: Luke, I have a question. If someone is collecting unemployment benefits, as the employer, am I still obligated to cover them in our health care?
Luke Breslin: So, that would depend. If an employee is laid off, completely, that would be a qualifying event under the RSA and then you would need to provide them a COBRA notice and they wouldn't be eligible for the plan. To the extent you decide to furlough an employee, a temporary layoff, like I said earlier, they're still technically an employee of the company and subject to the language of your summary plan description and they may be entitled to continue to receive benefits as a qualifying employee. Sometimes, there's limits so we can furlough somebody for a period of 60 days and they can still be an active employee under the plan, at which time they would be ineligible and then COBRA notices would be required to be sent out.
To the extent that you reduce hours or salary, they may be entitled or eligible for health coverage as well. Again, it's governed by the summary plan description. If a qualifying employee must work 30 hours under your plan, and they're reduced to 20 hours, they may not be eligible. I will say, a lot of states are waiving those requirements, so definitely consult with your state to see what they're doing as to benefits, because many insurers are adjusting their plans so then to account for these situations and allow employees to stay on coverage during a furlough or reduction in force or a reduction in pay or reduction in hours.
Amanda: We had a bunch of questions come through and some of these questions were more related to, what happens if someone it gets COVID? So, related to, if someone does get it, who are they responsible for telling and how much can they say?
Luke Breslin: Okay. Yeah, this is obviously a common question that's been coming up. And our general advice and counsel on positive cases are coordinate with your local Department of Health. Notify the Department of Health that somebody has tested positive. You should immediately remove that person from the work site, from the office or other place of business. Then at that point, work with the local Department of Health to determine the source of the infection or the employee's exposure. To the extent that employee came in close contact with other employees, you likely should notify those employees that they may have come in close contact with a positive case, but there are confidentiality obligations. Do not disclose the positive test employee's name to the other employees. That would run afoul with the Americans With Disabilities Act. There is some guidance that you can provide more information to local health authorities, but that would be also subject to the confidentiality obligation. So it's really, you provide as little information as is necessary to address the situation.
So, you remove the employee from the workforce. You coordinate with local health. You notify any other employees who may have come in close contact subject to confidentiality obligations. It's recommended you disinfect the entire office, maybe shut down for a while, bring in a third party agency to clean the entire building. To the extent you have concerns that it was widespread in the office or place of business, other employees may be required to, if they came in close contact with them, you might in certain circumstances require them to self-quarantine for a period of 14 days. Certainly, the employee who was positive is going to be subject to those quarantine obligations. And then, there's return to work protocols that need to be followed in terms of clearing certain employees to return to work, whether or not they were tested positive, or they were just suspected of being positive tests. So, there are certain return to work obligations you should keep in mind.
Henry Rinder: Luke and Teddy, we are coming to a conclusion of the webinar. I wanted to thank you both for joining us today. This is a very interesting and hot topic under the circumstances. Amanda, thank you for hosting it. And I wanted to thank our listeners and viewers for attending this webinar. Thank you. Have a good day.