During this time of uncertainty, employers and employees are seeking answers to questions relating to the Coronavirus (COVID-19), related shut downs of businesses, and how these issues impact employee wages.Below are some of the most common questions and answers based upon currently known information, including information about the pending Families First Coronavirus Response Act which has been signed into law.
This review is preliminary and subject to change as the law appears to be evolving on this topic. Employers or employees who wish to have definite answers on specific questions applicable to them should seek employment counsel.
Does an employer have to pay employees or provide medical benefits for workers during a shut-down for Coronavirus?
Currently, under applicable law, employers only have to pay non-exempt (hourly) employees for the time they work. As such, they would not have to be paid unless they have accrued paid time off which they can take. If an exempt (salary) employee works at all during the week (even remote work), the exempt employee has to be paid for the full week. If employees are eligible under the Family Medical Leave Act (FMLA) (applicable to employers with 50 or more employees), the employees would obtain up to 12 weeks protected unpaid leave. Employers are required to provide eligible employees with medical benefits during an FMLA period. Employees may become eligible if the employee is seriously ill due to COVID-19 or to care for a dependent child who is sick.
Generally, though, employers would not be required to pay employees or provide benefits if the employer furloughs or lays off employees due to COVID-19 unless there is a contractual obligation that requires otherwise. This currently provides some incentive for employers to lay off or furlough employees during the COVID-19 crises. To counter this, Congress recently passed the Families First Coronavirus Response Act (Families First). The Families First law takes effect on April 2, 2020. The law will provide (1) emergency paid sick leave and (2) expanded Family Medical leave as described below:
Paid emergency sick leave to employees working for a business with fewer than 500 employees. Eligible employees would be able to take up to 80 hours of paid leave of a COVID-19 qualifying reason. The qualifying reasons are as follows:
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 seeking a medical diagnosis
The employee is caring for an individual who is either (1) subject to a Federal, State, or local quarantine or isolation order related to COVID-19 or (2) has been advised by a health care provider to self-quarantine due to concerns related to COVID-19;
The employee is caring for a son or daughter of such employee if the school or place of care of the son or daughter has been closed, or the child care provider of such son or daughter is unavailable, due to COVID-19 precautions;
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.The amount of paid leave is capped at either $200 or $511 per day depending on the qualifying reason. Essentially, if an employee needs emergency sick leave for his or her own sickness, the cap is the higher $511 per day; if the leave is due to caring for someone else, the cap is $200 per day.
An expansion of FMLA to allow for up to 12 weeks of leave of absence for an employee to care for child if the child is unable to go to school or other care. The employee would receive 2/3 of salary or up to a cap of $200 per day ($10,000 total cap). The first 10 days of this leave can be unpaid leave, although the employee can take their paid time off during this period.
For both of the above, a refundable tax credit to employers for the employer portion of Social Security taxes to offset this temporary increase in benefits. The proposed changes are significant as the FMLA only currently provides for unpaid leave and only applies to employers with 50 or more employees where the employee has worked greater than 1250 hours in the prior year. The new proposed law significantly expands paid time off during the Coronavirus crises. While there are potential exemptions for certain small employers, the pending legislation provides a significant benefit to employees and an important incentive to employers to keep employees employed during the expected shut-down.
Can an employee file for unemployment compensation due to a temporary shut-down resulting from Coronavirus?
Yes, in Pennsylvania. The Commonwealth of Pennsylvania Department of Labor (DOL) has clearly answered this question affirmatively and provided a number of circumstances when the unemployment would be granted for a Coronavirus Shut-Down such as a business temporary lay-off or furlough. The Coronavirus page to the DOL webpage can be accessed here. Please note that eligibility is determined exclusively by the Commonwealth of Pennsylvania.
The DOL has stated the following are instances where an employee can seek and obtain unemployment compensation for Coronavirus disease (COVID-19):
● The employer has temporarily closed their business because of COVID-19; ● The employee’s hours have been reduced because of COVID-19; ● The employee has been instructed not to report to work for fear of contracting or spreading COVID-19; ● The employee has been instructed to self-isolate or quarantine; ● The employee lives and/or works in a county under government recommended mitigation efforts; or ● The employer has permanently gone out of business due to COVID-19.
The waiting week in Pennsylvania has been suspended so employees who qualify under one of the above criteria can obtain unemployment benefits immediately.
What if the employee already has Paid Time Off in the form of vacation or sick time – does the employee have to use that time off first?
It depends. Once the law goes into effect, an employer cannot require an employee to exhaust his or her accrued paid time off before the employee takes emergency sick leave. But, prior to April 2, the assumption is that employers may make employees use paid time off first if they are out-of work.
Will Employers Lay Off Employees During this Time of Crises?
The short answer is yes. Business-savvy employers are having discussions on how to cut costs (and employee jobs) as this post is being written and updated. If businesses are not operating as normal, businesses will have to make hard decisions to cut costs. One way to cut costs is to cut employee jobs. There are of course considerations of employee morale and ethical considerations about laying off employees to cut business losses, at least in the near-term. Many employers are balancing those considerations with the likely recessionary headwinds resulting from work stoppages. While it seems likely that many employees will be laid off, the hope is that it will be temporary or not to a significant degree. Indeed, a number of employers are considering “temporary layoffs” which may strike the aforementioned balance.
Congress is hoping that the new law both gives employees paid time off to get through the hiatus and, at the same time, sufficiently incentivizes companies with tax breaks in order to avoid a more catastrophic result of massive layoffs of employees of small or mid-size companies that will be hit hard by the COVID-19 shutdowns.
Will Employees Have a Claims If the Employer Decides to Terminate Employees?
It depends. A violation of the new law governing leaves might give rise to a claim under the Fair Labor Standards Act once it goes into effect (as of April 2, 2020). The new law expressly prohibits discrimination against those who use this law or complain about a violation of this law. Some small employers may be able to seek exemptions from these prohibitions and it obviously does not apply to larger employers until it is further amended (which seems likely).
There are other legal considerations and potential claims. If an employee is sick and “regarded as” disabled by the employer, the employee may have eligibility for an accommodation under the Americans with Disabilities Act (ADA). While the ADA ordinarily does not apply to short-term illnesses such as COVID-19, these are extraordinary times and employers should be cautious. To be sure, there are various issues with ADA accommodations so employers should carefully review the law with counsel if the employer plans to terminate employees who appear to be afflicted with the Coronavirus. Employees likewise should consult with counsel if they are terminated to consider whether they have claims under the ADA or FMLA.
What Other Laws May Come Into Play?
The DOL has also stated that employees who become sick with the COVID-19 at work may be eligible for worker’s compensation benefits under the Pennsylvania Worker’s Compensation Act.
Also, the Occupational Health Safety Act (OSHA) has a general duty clause which prohibits workplace conditions which subject an employee to death or serious bodily injury. COVID-19 clearly does both so employers should come up with practices and guidelines to comply with the general duty clause and lessen the potential injury to employees.