Maybe. There are two separate sections of the FFCRA: (a) extra paid sick leave; and (b) and extra paid family care leave.
Both the extra paid sick leave (80 hours) and the extra paid family care leave (10 weeks) provisions of the FFCRA apply to private employers with fewer than 500 employees, except that employers may exclude “Health Care Providers” and “Emergency Responders.” We do not yet have specific definitions of “Health Care Providers” and “Emergency Responders” from the DOL, but we expect to have them before April 1st.
Small businesses with fewer than 50 employees may qualify for exemption from the requirement to provide extra paid sick leave and extra paid family care leave (10 weeks) due to school closings or child care unavailability if the company can demonstrate that doing so would actually “jeopardize the viability of the business as a going concern.” The exemption does not apply to extra paid sick leave for any of the other enumerated reasons. We do not yet know exactly what this exemption means, but it is foreseeable that if an employer refuses to provide a qualified employee the extra paid sick leave and extra paid family care leave due to school closings or child care unavailability, and that employee later files a claim with the Department of Labor or a lawsuit, the employer would have to prove that paying the extra benefits (which would later be reimbursed through tax credits) would have jeopardized the viability of the business as a going concern.
Since the California Governor has issued a “Stay At Home Order,” do we have to pay every employee 80 hours of extra Paid Sick Leave under the FFCRA, which applies to individuals who are “subject to a federal, state, or local quarantine or isolation order related to COVID-19”?
No. Californians are only subject to a broad “Stay At Home Order” that applies to the general public. The Order is not “a federal, state, or local quarantine or isolation order related to COVID- 19.” Per the CDC, isolation and quarantine orders protect the public by preventing exposure to people who have, or who may have, a contagious disease:
Isolation: Separates sick people with a contagious disease from people who are not sick.
Quarantine: Separates and restricts the movement of people who were exposed to a contagious disease to see if they become sick.
The Governor’s Stay At Home Order is not an isolation order or a quarantine order. Healthy Californians are still permitted to work at essential jobs, go to the store, take a walk, and engage in other essential activities that will necessarily result in them coming into contact with others. The Stay At Home Order is not a quarantine or isolation order.
Do we have to pay 80 hours of extra Paid Sick Leave to every employee who submits a request?
No. There are two narrowly-defined categories of extra Paid Sick Leave under the FFCRA:
Eligible employees will be entitled to up to 10 days (80 hours) of extra Paid Sick Leave at the employee’s full regular pay rate if and only if they qualify under one of the following specifically-defined conditions:
- 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 is seeking a medical diagnosis.
Employees are entitled to up to 10 days (80 hours) of extra paid sick leave at 2/3 the employee’s regular pay rate if and only if they qualify under one of the following specifically- defined conditions:
- The employee is caring for an individual who is subject to a federal, state or local quarantine or isolation order related to COVID-19, or for an individual who has been advised by health care provider to self-quarantine due to concerns related to COVID-19 (note: this provision extends beyond family members);
- The employee is caring for a child of employee if the school or place of care has been closed or the child’s child care provider is unavailable due to COVID-19 precautions; or
- The employee is experiencing any other substantially similar condition specified by the Secretary of Health and Human Services in consultation with the Secretary of Treasury and the Secretary of Labor.
These reasons are narrowly defined, and will not apply to all employees. Therefore, employers do not have to pay 80 hours of extra Paid Sick Leave to every employee who submits a request.
Some of our employees need extra pay now. We are willing to pay them the extra 80 hours now, as long as we will get the tax credit later. Should we go ahead and pay these extra hours now, even though the new Act takes effect on April 1st?
No. Tax credits will not be provided for payments prior to April 1st.
Can we require employees to use their accrued PTO, vacation and sick leave benefits at the beginning of the furlough?
Yes, as to PTO and vacation benefits. But we encourage employers to offer employees the option of requesting a cash-out some or all of their accrued PTO or vacation benefits, either immediately or at any time during the furlough. Employees have so little control over any of this – this is one way that employers can allow them to have some control over their own financial decisions.
No, as to sick leave. It is always the employee’s option whether to use their paid sick leave benefits for time off for sick leave reasons. The employer may not ever require employees to use their paid sick leave benefits. In addition, this furlough situation does not qualify as a “sick leave purpose” under current California law, as explained below.
Can furloughed employees use their accrued PTO, vacation and sick leave benefits, even if they apply for unemployment?
As noted above, we suggest that employers offer employees the option of requesting a cash-out of some or all of their accrued PTO or vacation benefits, either immediately or at any time during the furlough.
It is unclear whether or not payment of these benefits will delay the employee’s eligibility for unemployment insurance benefits. With that said, the unemployment application asks the employee if they are receiving income from any other source, and offers options including “Vacation” and “Other.” We recommend that employees check the “Other” box and then, in the explanation section, write in “Cash out of accrued vacation pay.” Hopefully, this will avoid a delay of unemployment benefits due to an employee taking “paid vacation time,” which NO ONE is taking right now!
With respect to regular paid sick leave benefits, at this point, furloughs and office closures do not qualify as legally-permissible reasons to use regular paid sick leave benefits. Hopefully, the California Legislature and Labor Board will catch up with this current crisis situation and make the necessary changes to allow payment of regular sick leave benefits for this purpose.
If we let employees use their regular paid sick leave hours for furlough time off, what would be the potential penalty?
Arguably, such use might effectively convert the employer’s sick leave plan to a vacation plan, which could have financial ramifications adverse to the employer into the future.
Can I reduce or pro-rate the hours and salaries of my exempt employees by 50%?
Assuming that the employees are lawfully classified as exempt, employers are not supposed to reduce salaries based on the hours worked. You may, however, reduce salaries as a “cost saving measure during these challenging times,” or for similar reasons, without reference to how many hours an exempt employee will work. Of course, be sure to pay at least the minimum base salary required for exempt status classification. For employers with 25 or fewer employees, the minimum required base salary is currently $960 per week or $4,160 per month. For employers with more than 25 employees, the minimum required base salary is currently $1,040 per week or $4,507 per month.
One of my employees is paid a salary and I’m going to discuss making her hourly during this time so I can pay her for part time. Once this crisis passes, can I switch her back?
First, it is important to know whether the salaried employee is lawfully classified as “exempt” salaried. This status is not just a matter of choice, but rather, is based on legally- defined criteria. If there is a chance that the employee is not lawfully classified as exempt, you may want to review the options and issues with legal counsel, and refrain from making any promises or representations about switching the employee back to salary-based pay in the future.
Assuming that the employee is properly classified as exempt salaried, it should be fine to temporarily convert her to non-exempt hourly. Remember, all of the rules applicable to non- exempt employees will apply to that individual during this period, including accurate time records, overtime pay, meal periods, rest breaks, and compliant wage statements that show the total hours worked during the pay period, and the applicable hourly rates of pay (e.g., straight time, overtime, etc.).
If a healthcare provider that provides essential care has a patient that needs to be seen for emergency treatment, and the office schedules an employee to come in to assist, but that employee does not want to come in, is there any recourse?
Probably not, unless the reason is frivolous. If the employee does not want to come in because they are uncomfortable assisting with the treatment or for some other similar reason, there is likely no recourse. And during this time of increased stress and anxiety, we recommend against trying to require or force anyone to report for work who expresses any concerns about doing so.
If we lay off employees due to the lack of work during the crisis, are we under any obligation to rehire them later? What if we only choose to rehire some of them if there is not enough work to hire all back? We are thinking of furloughing some and laying some off.
The primary risk is a claim of discrimination based on a protected category – for example, “I was selected for lay-off rather than furlough, and I was not rehired, because I was pregnant (or 59 years old or Muslim or Chinese Gay or Disabled, etc.). In addition, disgruntled employees may start looking for reasons to file a claim, such as wage and hour violations or other, completely unrelated reasons.
I have an employee with a family member who has been going through chemo. My employee is not needed to take care of her, but he doesn’t want to come into work and take the chance of getting sick and bringing it home to her. We are okay with allowing him to not work. What is our obligation to pay him? Are we obligated to pay him under the FFCRA?
The reason described does not fall under any of the FFCRA provisions for additional pay. The employee may qualify for unemployment insurance benefits due to the current public health crisis, and he certainly should apply. If he was caring for the family member, and the family member’s health care provider would certify that he needed to be home to care for the family member, that would make him eligible for California Paid Family Leave, which he could apply for through the EDD. Otherwise, he should apply for unemployment and see if it will be approved.
Are we required to provide written notice of furlough to employees?
Employers should, for a variety of reasons, provide written notice of the furlough status. Doing so avoids miscommunications and misunderstandings. In addition, it may give employees some additional comfort that the furlough is not a termination of employment, in case they begin to wonder or question their status as time goes on.
Will employers be penalized for unemployment claims with increased employer contribution requirements?
We don’t know whether there will be some accommodation or consideration given based on the current situation. While we would hope so, we can also understand that there will have to be some means of paying for the huge drain on the system. Some of that may come from the federal government, but some of it may come from increased employer contributions. With that said, although we understand that any increase in costs will be difficult, we encourage employers not to make decisions about whether or not to encourage employees to apply for unemployment insurance benefits on this basis.
Are we required to provide FFCRA payments, or other benefits, to Independent Contractors?
Hopefully, Independent Contractors are employees of their own, “independent” business, and issue W-2 payroll to themselves through that business. If so, they should apply for unemployment and any other benefits through their own business entity.
Because Independent Contractors are not “employees” of the business to which they provide their independent services, they generally are not eligible for unemployment or other benefits through that entity.
The federal stimulus package may provide unemployment or other benefits to Independent Contractors.
Individuals who are, or who may be, misclassified as Independent Contractors may start looking to the business entity to which they provide their independent services for benefits and/or additional compensation, which companies will have to consider on a case by case basis. For many reasons, misclassification of Independent Contractors is always a significant risk.
Our attorneys remain available to respond to your particular questions or concerns.
This bulletin is provided as a service to our clients and other friends to highlight current developments in the law. It is not intended to provide a legal opinion or specific legal advice. Should issues arise involving these, or other legal matters, please contact this office to speak directly with an attorney. We look forward to working with you.
This Document was Created by Scott & Whitehead. We are sharing it for informational Purposes
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ADP Podcast on FAQ Covid Questions
IRS Tax Notice
Stimulus Package FAQ