Covid-19 Updates to our Clients from CEO Sandra Dickerson

The following are the daily updates being sent to our clients regarding the Covid-19 pandemic, with information regarding the HR implications for business owners and leaders.  If we can help your business or you have questions, please give us a call as we are open for business and working to meet the HR needs of our clients.

NOTE:  Our firms are not a law firm and our staff does not provide legal advice. To the extent  this information reflects suggestions or advice concerning human resources, payroll or other matters, be advised that it is the responsibility of the employer/client to ensure all relevant facts have been communicated to our staff,  and to seek legal advice when recommended or necessary.

UPDATE FOR 4/2/2020

This is a reminder that as of yesterday, the expanded family leave (EFMLA) and paid sick leave provided under the FFCRA is effective.

We are starting to see some clients attempting to avoid these obligations.  It is important to note that the DOL has indicated an intent to enforce the FFCRA. There is an initial temporary period of non-enforcement through April 17thas long as the employer acted reasonably and in good faith to comply.  “Good faith” will exist when violations are remedied and the employee is made as whole as practicable, the violation was not willful, and the DOL is provided a written commitment from the employer to comply in the future with the FFCRA.    After April 17th, the DOL will initiate full enforcement.  It’s important to note also that the DOL FAQ’s for the FFCRA, found here https://www.dol.gov/agencies/whd/pandemic/ffcra-questions, contain many references for how to file complaints for violations.  Keep in mind that your employees can find these FAQ’s easily when they look online for information on these new paid leaves.

So, a few reminders…

If you have an employee who either cannot work or must reduce work hours for loss of child care or additional school closures, contact your HR team so we can coordinate the new EFMLA.

If an employee provides any information regarding needing to be off work for any of these reasons, also contact your HR team:

  1. Subject to a federal, state or local quarantine or isolation order related to COVID-19;
  2. advised by a health care provider to self-quarantine due to COVID-19 concerns;
  3. experiencing COVID-19 symptoms and seeking medical diagnosis;
  4. caring for an individual subject to a federal, state or local quarantine or isolation order or advised by a health care provider to self-quarantine due to COVID-19 concerns;
  5. caring for the employee’s child if the child’s school or place of care is closed or the child’s care provider is unavailable due to public health emergency; or
  6. 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.

We have developed a special form for our HR team to use to assess these situations and identify whether a leave exists and, if so, how that leave is to be paid since not all of them are paid at 100%.

Yesterday we also received the new tax form 7200 (https://www.irs.gov/pub/irs-pdf/f7200.pdf)  to be used to receive advance payment of employer credits needed when payroll offsets are not sufficient to cover the payroll costs associated with these paid leaves.  As a reminder, these leaves are to be 100% offset to the employer via payroll taxes.    For clients we process payroll and tax payments for in our PrismHR software, we anticipate completing much of the form on your behalf, for you to sign.  PrismHR and our tax management software vendor are completing work to coordinate the payroll tax offsets and provide reports needed.

UPDATE for 3/31/2020

The Bay Area issued a new shelter order this afternoon, which you can read here:  https://www.sfdph.org/dph/alerts/files/HealthOfficerOrder-C19-07b-ShelterInPlace-03312020.pdf, and a summary is below.

We encourage our clients to review this order and anticipate similar orders imposed as other areas of the state experience increases in COVID-19 or the Governor decides to make them statewide.   You need to anticipate further reductions in “essential” business operations,  and be prepared if that would apply to your business.

San Francisco’s order for people to stay safe at home was updated and broadened on March 31, 2020 in coordination with other Bay Area counties. This was necessary to help slow the spread of the virus and save lives. Our collective effort has so far been beneficial, but more is needed to prevent hospitals from being inundated. The main changes that take effect at midnight on March 31, 2020:

  • Social distancing requirements are mandatory.
  • Use of playgrounds, outdoor gym equipment, picnic areas, and barbecue areas is prohibited.
  • Use of shared recreational facilities like golf courses, tennis courts, basketball courts, and climbing walls is prohibited.
  • Sports or activities that include the use of shared equipment, like frisbee, basketball, or soccer, may only be engaged in by members of the same household.
  • Businesses that supply products needed for people to work from home are no longer essential businesses under the Order and must cease storefront sales to the public. Minimum basic operations and delivery directly to residences or businesses may continue.
  • Essential businesses like grocery stores, banks, and pharmacies can remain open but must stop running the parts of their operations that are not essential. Employees who can work from home must do so.
  • Essential businesses must put in place formal rules, a social distancing protocol, to ensure proper sanitation and to ensure that people stay a safe distance away from each other.
  • Most construction must stop. There are exceptions for projects to help keep people safe and housed. Those include health care projects directly related to addressing the pandemic, construction to house the homeless, affordable housing, and multi-unit or mixed-use developments containing at least 10% income-restricted units. Social distancing requirements apply. Information on construction projects during the coronavirus outbreak will be updated as it is available.

UPDATE FOR 3/30/2020

This Update contains a lot of information, so our apologies for the length!   However, it important information, so please be sure to review it fully.  As we anticipated, we have moved this week from assisting clients with layoff or staff reduction decisions to addressing employees who are testing positive and/or being told they need to self-quarantine.   In addition, we are preparing for questions regarding the expanded FMLA and sick leave benefits that are effective this Wednesday, April 1st.

CORONAVIRUS AID, RELIEF AND ECONOMIC SECURITY ACT (CARES Act)

The President recently signed legislation that includes important provisions to help you keep your employees on the payroll during the COVID-19 crisis. These benefits are potentially available to all employers and, in some cases, the federal government will cover many of the costs of continuing to pay your employees for a period of time.

However, these new programs are complicated and there are important choices to make in deciding how to best utilize them.  The attached chart outlines each of these.    You Can’t Choose All of These.   Each of these new alternatives provide very generous tax subsidies to assist employers but, you’ll still need to make choices.  And these are different than the SBA Emergency Loan Fund.

It is critical that you carefully evaluate your eligibility for and the benefits of each of these options, since the amount of assistance provided by the federal government could vary greatly depending on which path you choose. Right now, we don’t have all the details and are awaiting further guidance from the SBA and IRS.

As a reminder, YPP/HRYW is not a financial of tax advisor, so will not respond to questions about whether you should apply for this loan, the application process, etc.  If your business has been impacted by COVID-19, you should talk to your advisors immediately to evaluate this and prepare to apply.

For our full management clients where we are managing your payment of payroll taxes, you need to let us know if you select one of these options. 

FAMILIES FIRST CORONAVIRUS RESPONSE ACT (FFCRA)  EFFECTIVE APRIL 1, 2020

The DOL updated their FAQ’s on Friday, so be sure to review those here:  https://www.dol.gov/agencies/whd/pandemic/ffcra-questions.   It’s important for clients who are interested in the exemptions of these leaves to review questions 58 and 59.

We have prepared sample policies for the Sick Leave and Expanded FMLA and those are attached to this email.  Please add your company name to these and distribute to all employees.   On the PEFL document, please delete the section under Job Restoration about exemption if you have 25 or more employees.

If you did not already post the new posting notice we sent last week, please be sure that you also do that:   https://www.dol.gov/sites/dolgov/files/WHD/posters/FFCRA_Poster_WH1422_Non-Federal.pdf

The IRS provided a notice on Friday regarding the offsetting tax credits, but that has not addressed situations where the payroll tax offsets are not sufficient to cover the required leave payments.  We will continue to monitor this.

COMMON QUESTIONS

  1. An employee has tested positive for COVID-19.   What do we need to do?
    We’ve provided below the guidance on this question from the Fisher Phillips FAQ.  We recognize that the concept of quarantining all employees who may have been exposed is daunting, particularly for our clients that cannot move employees to remote work and/or where the scope essentially shuts down your business.  We are providing the best practices for this, as recommended by the CDC, and each client has to make their own assessment of how to address this for their business.UPDATED QUESTION & ANSWER (March 23, 2020)
    An employee of ours has tested positive for COVID-19. What should we do?
    You should send home all employees who worked closely with that employee for a 14-day period of time to ensure the infection does not spread. Before the employee departs, ask them to identify all individuals who worked in close proximity (three to six feet) with them in the previous 14 days to ensure you have a full list of those who should be sent home. When sending the employees home, do not identify by name the infected employee or you could risk a violation of confidentiality laws. If you work in a shared office building or area, you should inform building management so they can take whatever precautions they deem necessary.The CDC also provides the following recommendations for most non-healthcare businesses that have suspected or confirmed COVID-19 cases:

    • It is recommended to close off areas used by the ill persons and wait as long as practical before beginning cleaning and disinfection to minimize potential for exposure to respiratory droplets. Open outside doors and windows to increase air circulation in the area. If possible, wait up to 24 hours before beginning cleaning and disinfection.
    • Cleaning staff should clean and disinfect all areas (e.g., offices, bathrooms, and common areas) used by the ill persons, focusing especially on frequently touched surfaces.
    • To clean and disinfect:
      • If surfaces are dirty, they should be cleaned using a detergent or soap and water prior to disinfection (Note: “cleaning” will remove some germs, but “disinfection” is also necessary).
      • For disinfection, diluted household bleach solutions, alcohol solutions with at least 70% alcohol, and most common EPA-registered household disinfectants should be effective.
      • Diluted household bleach solutions can be used if appropriate for the surface. Follow manufacturer’s instructions for application and proper ventilation. Check to ensure the product is not past its expiration date. Never mix household bleach with ammonia or any other cleanser. Unexpired household bleach will be effective against coronaviruses when properly diluted.
      • Cleaning staff should wear disposable gloves and gowns for all tasks in the cleaning process, including handling trash.
      • Gloves and gowns should be compatible with the disinfectant products being used.
      • Additional PPE might be required based on the cleaning/disinfectant products being used and whether there is a risk of splash. Follow the manufacturer’s instructions regarding other protective measures recommended on the product labeling.
      • Gloves and gowns should be removed carefully to avoid contamination of the wearer and the surrounding area. Be sure to clean hands after removing gloves.
      • Employers should develop policies for worker protection and provide training to all cleaning staff on site prior to providing cleaning tasks. Training should include when to use PPE, what PPE is necessary, how to properly don (put on), use, and doff (take off) PPE, and how to properly dispose of PPE.
      • If you require gloves or masks or other PPE, prepare a simple half-page Job Safety Analysis (JSA): list the hazards and the PPE (gloves, masks, etc., as needed), and the person who drafts the JSA should sign and date it.
    • If employers are using cleaners other than household cleaners with more frequency than an employee would use at home, employers must also ensure workers are trained on the hazards of the cleaning chemicals used in the workplace and maintain a written program in accordance with OSHA’s Hazard Communication standard (29 CFR 1910.1200). Simply download the manufacturer’s Safety Data Sheet (SDS) and share with employees as needed, and make sure the cleaners used are on your list of workplace chemicals used as part of the Hazard Communication Program (which almost all employees maintain).
  2. An employee notifies you that a spouse or someone they live with is being quarantined because they may have been exposed to Covid-19 in their workplace and the employee believes they should quarantine too.  What do you need to do?
    Unfortunately there is no definitive answer to this question.  You need to have a discussion with the employee about why they believe they are unable to come to work but be aware that employers are being encouraged to be flexible in responding to employee’s concerns.  Since the employee’s spouse is not sick this situation does not appear to trigger normal leave obligations at this time.  The situation is fluid however and CDC or other health agency recommendations may address this issue directly at some point.
  3. What if an employee refuses to come to work because they are afraid of catching Covid-19?
    Fear alone is not a reason to refuse to come to work if the employee works for an essential business that is exempt from any applicable shelter in place order. However, please remember that if the employee is in a high risk group that has been advised/directed to isolate at home, and/or has other circumstances that qualify for paid sick leave, accommodation may be required.  Additionally, even with essential businesses, employees are supposed to be encouraged and permitted to work from home to the extent practicable.  Be mindful of avoiding the possibility of a retaliation claim in circumstances where an employee refuses to work because of a reasonable belief that doing so would place the employee in danger of death or serious injury.
  4. If I need to rehire an employee laid off in March, and she cannot accept rehire because of a lack of child care, is she eligible for the new expanded FMLA?
    No.  The DOL has determined that this new benefit is not retroactive, so employees laid off before April 1st are no longer in an active employment status and so not eligible.

UPDATE FOR 3/27/2020

Well, it’s Friday morning and so far the guidance from the IRS for FFCRA reimbursements promised this week has not been issued, and the expanded guidance from DOL has not either.  What we do know if that the expanded FMLA leave and sick pay are not retroactive.  We will keep watching for this as there are very important outstanding questions we need answers to before the expanded FMLA leave and sick pay become effective April 1st.

We received the following chart yesterday reflecting the impact so far on UI claims in California:

UI CLAIMS PROCESSED
Date Number of Claims
Week ending March 7, 2020 48,385
Week ending March 14, 2020 57,606
Week ending March 21, 2020* 186,809

*The EDD saw a 363% increase in UI claims processed over the same week a year earlier.

We have already been processing a large number of claims, but know that’s the tip of the iceberg. We have assigned one of our employees to handle all of those for the most efficiency.  She shared during our staff meeting this morning that she had a dream last night of trying to get in our front door and couldn’t because of a mountain of UI claims!

As we wait for the DOL and IRS guidance, we have many clients with employees who are working remotely, and we’re all finding our way with this new way of doing business.

This article from the Harvard Business Review addresses some of the issues we need to consider:

https://hbr.org/2020/03/a-guide-to-managing-your-newly-remote-workers.  If you have not already, it’s important to look for ways to connect with remote staff through the day, both to retain communication and collaboration, and to keep employees focused and productive.  For our employees, we do a daily staff meeting with Zoom, to give everyone a chance to connect, get our daily updates on all the COVID-19 activity, and report on their work progress to everyone.   I am also focusing on calling employees through the day instead of using email, just to improve our connection.

We also sent everyone this very good list on getting acclimated to effectively working from home by our ProVisors partner, and asked everyone to “reply all” with which numbers they were finding a challenge.  That engaged everyone, who were able to share their challenges and offer solutions.   I’d encourage you to use this also:

  1. Set up your workspace: Designate your work area to one room, preferably one with a door that can close for meetings and calls. Your at-home workspace should be comfortable and have all the assets you need to work efficiently.
  2. Keep your morning routine: Wake up at the same time every day and still get dressed for the office.
  3. Have clear boundaries: Pretend you’re not working from home. Colleagues know not to barge into your office when you’re in a meeting. Ask your family and friends to respect your work hours. These boundaries also apply to yourself. Don’t turn the TV on or get distracted with house chores when you wouldn’t normally be during work.
  4. Stick to a schedule: It sounds easy, but only work during work hours. For some, working from home means you can always be working, but that could result in job burnout. Take breaks and time for lunch, and stick to your work schedule.
  5. Check your Wi-Fi connection: If you need a better Wi-Fi connection for work, try to set up your workspace near your router or consider adding a Wi-Fi booster.
  6. Create a new work number: If you don’t have a separate phone for work-related calls, there are options like Google Voice which allow you to set up a new business phone number. Proper Wi-Fi or data reception is needed for this.
  7. Make a task list and track your progress: Manage your productivity by making a clear plan of everything you need to get done in a day.
  8. Stay connected: Check in with your colleagues and boss at the same frequency as when you’re in the office. If your team typically has a meeting at 10am on Mondays, keep the usual meeting time using video and audio conferencing on platforms like Zoom.
  9. Embrace the extra time: If your daily commute took up an extra hour in the morning, consider doing some yoga or brain-training games to help stimulate your mind. While you’re at it, enjoy making breakfast last a little longer.
  10. Celebrate your wins: It might not be easy at first to reach your usual productivity level. Keep a positive attitude and trust in your ability to get things done when they need to be done. You got to where you are for a reason.

If you have additional solutions you have found to be successful with your remote employees, please forward those to me and I’ll share in a future update.   

UPDATE for 3/26/2020

Employee Communication

Our HR team has prepared a communication for employees that includes reminders of the safety precautions they should be using to help prevent COVID-19.  In addition, for those employees in our PrismHR system, we have included instructions for employees to access their check stubs and other information they may need filing UI claims.  We normally end access to that system when employment ends, but we have changed our system so employees laid off during this time can continue to obtain their information directly.

A key part of that communication is to remind employees to review their beneficiary elections for final wages, life insurance and retirement plans. While we hope that among our thousands of worksite employees we do no lose anyone to COVID-19, the data so far indicates it’s statistically likely.  We have had some issues previously when employees have passed away, that we hope to avoid with this reminder.

For example, in California, an employees final wages cannot simply be paid directly to a spouse or domestic partner, unless we have a specific authorization for the employee to do so.  We obtain that with our Beneficiary Designation form.

We have also had situations where an employee who died did not update their 401k or life insurance beneficiary from a former or deceased spouse, generating conflict among beneficiaries.  The 401k and Life insurance providers will follow the law regarding those issues, which can greatly delay receipt of those funds.  In another situation, the employee designated a trust for his beneficiary, but had never completed the trust – again seriously delaying receipt.

We will issue this directly to all employees we have in our PrismHR system, and our HR team will coordinate with our other clients the most efficient delivery method, removing the section on PrismHR.  Please let us know at hr@ypp.com if you would prefer us to send that to you to forward to employees.

Coronavirus Aid, Relief, and Economic Security Act (the CARES Act)

As you likely know, the Senate passed their version of the CARES Act last night.   This is NOT final, as it still needs to pass the House and be signed by the President.   This is a voluminous bill, but the section of most importance to our clients is the new SBA loan program it creates.

We are providing below a good summary of that section of the Act for you review.  As a reminder, YPP/HRYW is not a financial of tax advisor, so cannot respond to questions about whether you should apply for this loan, the application process, etc.  If your business has been impacted by COVID-19, you should talk to your advisors immediately to evaluate this and prepare to apply.

System Enhancements, and Economic Stabilization

Title I—Keeping American Workers Paid and Employed Act

The CARES Act amends the Small Business Act (SBA) to create a new Business Loan Program category (hereinafter, the “program”). For the period from February 15, 2020 to June 30, 2020 (covered period), the law allows the Small Business Administration (Administration) to provide 100% federally-backed loans up to a maximum amount to eligible businesses to help pay operational costs like payroll, rent, health benefits, insurance premiums, utilities, etc. Subject to certain conditions, loan amounts are forgivable (see more detailed discussion on loan forgiveness below).

GENERAL LOAN TERMS AND PROGRAM OPERATIONS

The SBA allows the Administrator to provide loans directly or in cooperation with the private sector through agreements to participate on an immediate or deferred (guaranteed) basis. Lenders authorized to make loans under the SBA’s current Business Loan Program are automatically approved to make and approve loans under this new program, and they may opt to participate in the program under the terms and conditions established by the Department of Treasury (Treasury). Additionally, the Treasury Secretary may extend such authority to additional private sector lenders under criteria established by Treasury (including, for instance, allowing additional lenders to originate loans).

The Administrator may guarantee covered loans under this program on the same terms, conditions, and processes as a loan made under the SBA’s current Business Loan Program. No collateral or personal guarantee is permitted to be required for a loan. The interest rate on loans under the program is not to exceed four percent. There will be no subsidy recoupment fee associated with the loans and no prepayment penalty for any payments made. Additionally, the Administrator has no recourse against any individual, shareholder, member, or partner of an eligible loan recipient for non-payment, unless the individual uses the loan proceeds for unauthorized purposes (see discussion below of permitted uses).

A loan made under the SBA’s Disaster Loan Program on or after January 31, 2020, may be refinanced as part of a covered loan under this new program as soon as these new loans are made available. The CARES Act specifically allows SBA Disaster Loan recipients with economic injury disaster loans made since January 31, 2020 for purposes other than the permitted loan uses under this program to receive assistance under this program.

Unlike prior drafts of the CARES Act, the final version contains a “Sense of the Senate” that the Administrator should issue guidance to lenders and agents to ensure that processing and disbursement of covered loans prioritizes:

  • Small business concerns;
  • Entities in underserved and rural markets (including veteran communities);
  • Small business concerns owned by socially and economically disadvantaged individuals;
  • Women; and
  • Businesses in operation for less than two years.

ELIGIBLE LOAN RECIPIENTS

In addition to “small business concerns” as currently defined under the SBA, eligible businesses for the new program include any business concern, nonprofit organization, veterans’ organization, or Tribal business if it employs not more than the greater of—

  • 500 employees (includes full-time, part-time, and those employed on other bases); or
  • If applicable, the size standard in number of employees established by the Administration for the industry in which the entity operates.

There is a special eligibility rule for businesses in the hospitality and dining industries. For businesses with more than one physical location, if it employs 500 or fewer employees per location and is assigned to the “accommodation and food services” sector (Sector 72) under the North American Industry Classification System (NAICS), the business is eligible to receive a loan.

SBA regulations on entity affiliations (under 13 CFR 121.103) are waived for the covered period for business concerns, non-profits, and veterans’ organizations for:

  • Businesses in Sector 72 under the NAICS with 500 or fewer employees;
  • Franchise businesses with SBA franchisor identifier codes; and
  • Any business that receives financial assistance from a company licensed under section 301 of the Small Business Investment Act.

Sole proprietors, independent contractors, and eligible self-employed individuals (as defined in Congress’s last COVID-19 bill, the Families First Coronavirus Response Act (Families First Act)) are eligible for loan recipients, subject to some documentation requirements to substantiate eligibility.

Loan Maximum, Borrower Eligibility Requirements, and Permissible Uses

The maximum loan amount (capped at $10 million) is the lesser of:

(A)

  • 2.5 times average total monthly payroll costs incurred in the one-year period before the loan is made (or for seasonal employers the average monthly payroll costs for the 12 weeks beginning on February 15, 2019, or from March 1, 2019 to June 30, 2019);
  • PLUS the outstanding amount of a loan made under the SBA’s Disaster Loan Program between January 31, 2020 and the date on which such loan may be refinanced as part of this new program;

OR

(B) Upon request, for businesses that were not in existence during the period from February 15, 2019 to June 30, 2019 –

  • 2.5 times the average total monthly payroll payments from January 1, 2020 to February 29, 2020;
  • PLUS the outstanding amount of a loan made under the SBA’s Disaster Loan Program between January 31, 2020 and the date on which such loan may be refinanced as part of this new program;

OR

(C) $10 million.

There are very few borrower requirements to obtain a loan under the new program. Those requirements include a good-faith certification that:

  • The loan is needed to continue operations during the COVID-19 emergency;
  • Funds will be used to retain workers and maintain payroll or make mortgage, lease, and utility payments;
  • The applicant does not have any other application pending under this program for the same purpose; and
  • From February 15, 2020 until December 31, 2020, the applicant has not received duplicative amounts under this program.

Businesses may, in addition to uses already allowed under the SBA’s Business Loan Program, use the loans for:

  • Payroll costs:

o    Includes: compensation to employees, such as salary, wage, commissions, cash, etc.; paid leave; severance payments; payment for group health benefits, including insurance premiums; retirement benefits; state and local payroll taxes; and compensation to sole proprietors or independent contractors (including commission-based compensation) up to $100,000 in 1 year, prorated for the covered period;

o    Excludes: individual employee compensation above $100,000 per year, prorated for the covered period; certain federal taxes; compensation to employees whose principal place of residence is outside of the US; and sick and family leave wages for which credit is allowed under the Families First Act;

  • Group health care benefits during periods of paid sick, medical, or family leave, and insurance premiums;
  • Salaries, commissions, or similar compensations;
  • Payments of interest on mortgage obligations;
  • Rent/lease agreement payments;
  • Utilities; and
  • Interest on any other debt obligations incurred before the covered period.

In evaluating eligibility of borrowers, a lender must consider whether the borrower was operating on February 15, 2020 and had employees or independent contractors for whom the borrower paid.

LOAN FORGIVENESS AND PAYMENT DEFERRAL RELIEF

Regarding loan payment deferral rights, the CARES Act provides that businesses that were operating on February 15, 2020 and that have a pending or approved loan application under this program are presumed to qualify for complete payment deferment relief (for principal, interest, and fees) for six months to one year. Lenders are required to provide such relief during the covered period (if secondary market investors decline to approve a lender’s deferral request, the Administration must purchase the loan). The Administrator has 30 days from enactment of the CARES Act to provide guidance to lenders on this process.

The program loans qualify for the CARES Act’s broader loan forgiveness provisions in Section 1106. Specifically, indebtedness is forgiven (and excluded from gross income) in an amount (not to exceed the principal amount of the loan) equal to the following costs incurred and payments made during the covered period:

  • Payroll costs;
  • Interest payments on mortgages;
  • Rent; and
  • Utility payments.

Forgiveness amounts will be reduced for any employee cuts or reductions in wages.

The reduction formula for fewer employees is:

  1. The maximum available forgiveness under the rules described above multiplied by:
  2. Average number of full-time equivalent employees (FTEEs) per month – calculated by the average number of FTEEs for each pay period falling within a month – during the covered period divided by:

Either (at election of the borrower) –

  • Average number of FTEEs per month employed from February 15, 2019 to June 30, 2019; or
  • Average number of FTEEs per month employed from January 1, 2020 until February 29, 2020;

Or, for seasonal employers –

  • Average number of FTEEs per month employed from February 15, 2019 until June 30, 2019.

Note that this formula will be used to reduce forgiveness amounts, but cannot be used to increase them.

For reductions in wages, the forgiveness reduction is a straight reduction by the amount of any reduction in total salary or wages of any employee during the covered period that is in excess of 25% of the employee’s salary/wages during the employee’s most recent full quarter of employment before the covered period. “Employee” is limited, for purposes of this subparagraph only, to any employee who did not receive during any single pay period during 2019 a salary or wages at an annualized rate of pay over $100,000.

There is relief from these forgiveness reduction penalties for employers who rehire employees or make up for wage reductions by June 30, 2020. Specifically, in the following circumstances, the forgiveness reduction rules above will not apply to an employer between February 15, 2020 and 30 days following enactment of the CARES Act –

  • The employer reduces the number of FTEEs in this period and, not later than June 30, 2020, the employer has eliminated the reduction in FTEEs; or
  • There is a salary reduction, as compared to February 15, 2020, during this period for one or more employees and that reduction is eliminated by June 30, 2020 (it is unclear whether this is also intended to be limited to employees who made under $100,000 in 2019).

The CARES Act clarifies that employers with tipped employees (as described in the Fair Labor Standards Act) may receive forgiveness for additional wages paid to those employees. Also, emergency advances received under the expanded SBA Disaster Loan Program discussed below will be excluded from forgiveness amounts.

Within 90 days of determining the ultimate forgiveness amount, the Administrator must remit payment plus interest accrued through the date of payment to the lender. Authorized lenders and secondary market participants (at the discretion of the Administrator) may report expected forgiveness amounts, up to 100% of principal, on program loans or on pools of such loans. The Administrator must purchase the expected forgiveness amounts in such reports within 15 days.

There are some required processes to apply for loan forgiveness. Borrowers seeking forgiveness of amounts must submit to their lender –

  • Documentation verifying FTEE on payroll and their pay rates;
  • Documentation on covered costs/payments (e.g., documents verifying mortgage, rent, and utility payments);
  • Certification from a business representative that the documentation is true and correct and that forgiveness amounts requested were used to retain employees and make other forgiveness-eligible payments; and
  • Any other documentation the Administrator may require.

Lenders who rely on documentation and accompanying certifications are held harmless from SBA enforcement actions and penalties relating to the loan forgiveness.

Forgiveness amounts that would otherwise be includible in gross income, for federal income tax purposes, are excluded.

The Administrator has 30 days following enactment of the CARES Act to issue regulations on these forgiveness provisions.

ADDITIONAL PROVISIONS

The CARES Act also:

  • Waives certain fees that would otherwise apply under the SBA, as well as the usual requirement that a small business concern be unable to obtain credit elsewhere;
  • Provides that loan balances following any forgiveness reductions will continue to be guaranteed by the Administration in accordance with this program;
  • Establishes a maximum maturity date for loans under the program from the date the borrower applies for loan forgiveness;
  • Stipulates that loans under the program are eligible to be sold in the secondary market consistent with rules under the current SBA Business Loan Program;
  • Mandates a zero percent risk-weight of these loans for purposes of banking regulators’ risk-based capital requirements;
  • For banks that modify the loans in a troubled debt restructuring related to COVID-19 on or after March 13, 2020, provides temporary relief from FASB’s troubled debt restructuring disclosure requirements;
  • For participating lenders, sets forth compensation (based on loan balance at time of disbursement) of:

o    Five percent for loans of $350,000 or less;

o    Three percent for loans above $350,000 and less than $2 million; and

o    One percent for loans $2 million and above;

  • Prohibits agents helping applicants apply for loans under the program from receiving a fee in excess of limits established by the Administrator;
  • From February 15, 2020 until June 30, 2020, increases authorized commitments for SBA Business Loans, including those under this new program, to $349 billion (and takes those commitments out of the usual Business Loan Program Account); and
  • Increases the loan limit for the SBA’s Express Loan Program to $1 million (from $350,000) with a prospective repeal date of January 1, 2021.

EXPANSION OF SBA DISASTER LOAN PROGRAM

In addition to expansion of the SBA’s Business Loan Program described above, the CARES Act expands the SBA’s Disaster Loan Program. The covered period for this section is January 31, 2020-December 31, 2020. In addition to current eligible entities, the following may receive SBA disaster loans:

  • A business with 500 or fewer employees;
  • Sole proprietorships, with or without employees, and independent contractors;
  • Cooperatives with 500 or fewer employees;
  • ESOPs with 500 or fewer employees; and
  • Tribal small business concerns.

The CARES Act makes the following additional changes to the SBA Disaster Loan program during the covered period for loans made in response to COVID-19:

  • Waives rules related to personal guarantees on advances and loans of $200,000 or less for all applicants;
  • Waives the “1 year in business prior to the disaster” requirement (except the business must have been in operation on January 31, 2020);
  • Waives the requirement that an applicant be unable to find credit elsewhere; and
  • Allows lenders to approve applicants based solely on credit scores (no tax return submission required) or “alternative appropriate methods to determine an applicant’s ability to repay.”

Entities applying for loans under the Disaster Loan Program in response to COVID-19 may, during the covered period, request an emergency advance from the Administrator of up to $10,000, which does not have to be repaid, even if the loan application is later denied. The Administrator is charged with verifying an applicant’s eligibility by accepting a “self-certification.” Advances are to be awarded within three days of an application.

Advances may be used for purposes already authorized under the SBA Disaster Loan Program, including:

  • Providing sick leave to employees unable to work due to direct effect of COVID-19;
  • Maintaining payroll during business disruptions during slow-downs;
  • Meeting increased supply chain costs;
  • Making rent or mortgage payments; and
  • Repaying debts that cannot be paid due to lost revenue.

If an entity that receives an emergency advance transfers into, or is approved for, a loan under the SBA Business Loan Program (described in the section above), the advance amount will be reduced from any payroll cost forgiveness amounts.

The CARES Act would deem all states and their subdivisions to have sufficient economic damage to small business concerns to qualify for assistance under this loan program (rather than the current state declaration and certification approach).

LOAN PAYMENT SUBSIDIES FOR CERTAIN LOANS

This section covers loans –

  • Guaranteed by the Small Business Administrator under:

o    The SBA Business Loan Program (including the Community Advantage Pilot Program, but excluding the new payroll loan program established under Section 1102); or

o    Title V of the Small Business Investment Act; or

  • Made by an intermediary to a small business concern using loans or grants received under the SBA’s Microloan Program.

With respect to these loans, it is the Sense of the Congress that the Administration, in addition to the SBA relief already provided under the CARES Act, “should encourage lenders to provide payment deferments, when appropriate, and to extend the maturity of covered loans, so as to avoid balloon payments or any requirement for increases in debt payments resulting from deferments provided by lenders” during the COVID-19-declared emergency.

Additionally, for these loans, the Administrator must pay (and relieve the borrower of any obligation to pay) the principal, interest, and any associated fees owed in a regular servicing status:

  • For loans made before this bill is enacted not on deferment, for the six-month period beginning with the next payment due;
  • For loans made before this bill is enacted that are on deferment, for the six-month period beginning with the next payment due after deferment; and
  • For loans made within six months of enactment of this bill, for six months after the first payment is due.

The CARES Act also instructs the Administrator to work with the Federal Deposit Insurance Corporation (FDIC), the Office of the Comptroller of Currency, and state banking regulators to:

  • Not require lenders to increase their reserves based on payments received from the Administrator under this section;
  • Waive statutory limits on maximum loan maturities for certain covered loans; and
  • Extend lender site visit requirements to account for volume increases, travel restrictions, etc., during the COVID-19 emergency to –

o    Not more than 60 days (which may be extended at the Administrator’s discretion) following the occurrence of an adverse event (other than payment default) that sends a loan into liquidation; and

o    Not more than 90 days after a payment default.

Emergency Rulemaking Authority for Small Business Administration

The Administrator is directed to issue regulations to carry out all of the CARES Act Title I provisions described above within 15 days of enactment of the law and waives the notice requirements under the Administrative Procedures Act for such rulemakings.

UPDATE FOR 3/25/2020

DOL ISSUES FFCRA GUIDANCE

 This morning the Department of Labor issued their FAQ for the Families First Coronavirus Response Act (FFRCA).  You can review that here:  https://www.dol.gov/agencies/whd/pandemic/ffcra-questions.  The DOL has set the effective as April 1st (instead of April 2nd) and clarified that the expanded leave and sick pay benefits provided are NOT retroactive.  Our HR team will be reviewing all leaves and other pending employee situations to determine who may be eligible on April 1st for either of these benefits.

Here is an example of how these two benefits may coordinate:

An employee’s child care provider has informed her that she is now sick and can no longer provide day care services.  The employee is not able to find other alternatives, and since the children are toddlers, remote work is not feasible.     This employee would be eligible for the expanded FMLA, which will provide leave for up to 12 weeks.  The first two weeks (10 days) are unpaid under the leave, and weeks 3-12 are paid at 2/3rd’s the employees regular rate of pay.  For those first 10 days, the employee is eligible for the paid sick leave (up to 80 hours).

Remember that these wages paid are offset against all employer payroll tax liability, with any excess reimbursed by the IRS.  We are still waiting for the IRS’ procedures.

The DOL also issued the new mandatory posting notice:

https://www.dol.gov/sites/dolgov/files/WHD/posters/FFCRA_Poster_WH1422_Non-Federal.pdf

Please post this with your other employment posting notices immediately. If you have employees working remotely, you should send to them as well to ensure the information is received.

COMMON QUESTIONS:

  1. We have learned that an employee was exposed to someone who has tested positive for COVID-19.  Can we let other employees know this employee is being quarantined and may have exposed them?

No, you cannot disclose the employees condition.  While we appreciate that makes it challenging in this COVID-19 environment, you need to identify others who may be affected and perhaps need to be quarantined without disclosing this employees private medical information.   The employee may choose to do that, but you cannot require it or do it yourself.

This is an excerpt from Fisher Phillips employment law firm on Covid 19 and privacy https://www.fisherphillips.com/faqs#L7 that we have recommended numerous times.

Does the COVID-19 coronavirus emergency trump HIPAA privacy rules?

No, the government recently sent a stern reminder to all employers, especially those involved in providing healthcare, that they must still comply with the protections contained in the Health Insurance Portability and Accountability Act (HIPAA) Privacy Rule during the COVID-19 coronavirus outbreak. The Office for Civil Rights of the U.S. Department of Health and Human Services (HHS) issued a reminder after the WHO declared a global health emergency. In fact, the Rule includes provisions that are directly applicable to the current circumstances.

This is from DFEH:

https://www.dfeh.ca.gov/wp-content/uploads/sites/32/2020/03/DFEH-Employment-Information-on-COVID-19-FAQ_ENG.pdf

  1. An employee who has been sick has provided a Dr’s note to return to work but said he still has a fever and sore throat.  Do we have to return him to work?

Given the current risk to other employees, it is acceptable to tell this employee he needs to stay home until he no longer has symptoms.   The EEOC has confirmed that you can advise employees to go home, and that will not be considered disability-related if the symptoms present are similar to COVID-19 or the flu.

UPDATE FOR 3/24/2020

Some new common questions:

  1. An employee has said he’s sick, with a sore throat and fever.  What can or should I do?
    1. You can require this employee to stay home, and not return to work until they can provide a Dr’s note that they do not have COVID-19 or have self-quarantined for 14 days.  You cannot simply require a Dr’s note;  you need to give the options to the employee instead.  You have the ability to try to prevent other employees from exposure.
  2. An Employee can’t come to work because they need to care for an elderly family member who has not been diagnosed with COVID-19.
    1. According to the DLSE, employees in this situation can use paid sick leave provided under California’s mandatory sick leave regulation.  The federal legislation for additional paid sick leave that is effective April 2nd may also apply to this situation (we are still waiting for that guidance to be issued).

We are receiving a lot of questions each day, some quite convoluted in terms of applicable leave laws, accrual payments and other issues.   We are providing the best advice possible, based on the information available.  It is important to understand that this may change as the legislature and agencies continue passing new legislation or issuing new policies. 

 I9 FLEXIBILITY

Per our update yesterday, DHS has allowed flexibility in viewing I9 documents during the COVID-19 situation.  Since they are requiring a policy to effect that, we have prepared a sample Telecommuting policy that includes the applicable onboard procedure for the I9.  If you are hiring and need that, please contact your HR team.

UNEMPLOYMENT CLAIMS

We are getting feedback from employees that EDD’s website for filing claims https://www.edd.ca.gov/claims.htm is not fully customized for COVID-19.   Employees should respond to claim filing questions with the best possible responses, recognizing that while there are questions about availability for work, the requirement to be seeking work has been waived for COVID-19 related claims.

If our HR team manage UI and SDI claims for you, please be sure that you forward all new claims to us so we can respond to those timely.   For many clients, we receive those claims directly.  If you receive those instead, please scan both sides of the claim and email hr@ypp.com.   Please do not mail these, as that delays the process and we want to reply to these as quickly as possible.  In addition, I don’t want our staff handing outside material for safety purposes.  We have designated one staff person with primary responsibility to respond to claims to help expedite them.

DOT TESTING

For DOT-covered clients, the U.S. Department of Transportation issued guidance yesterday on drug and alcohol testing during COVID-19. It recognizes and addresses multiple issues, including unavailability of testing services and employee health concerns reporting for a test.   For example, we received a notice this morning that some testing services have reduced or stopped drug screen collections.  Please review the guidance for application to your company:  https://www.transportation.gov/odapc/compliance-with-dot-drug-and-alcohol-testing-regulations

RETIREMENT PLANS

Our ERISA attorney issued guidance yesterday regarding the impact of staff reductions on retirement plans, inserted below.  For clients participating in our MEP plan, the 20% is calculated across all participating employers, so I will be reviewing this during this week, and I have questions pending with our Administrator regarding this.  For clients with their own plan, you will need to evaluate this with your plan administrator if you reach the 20% threshold.

The issue is this: the IRS established in Revenue Ruling 2007-43 that when employer action – including as a result of an economic downturn – results in 20% or more of the plan population being terminated from employment, then a presumption arises that everyone affected must be fully vested in their employer contributions under the plan. This is called a “partial plan termination.”

This is relevant only if the retirement plan has employer contributions, such as matching or profit sharing contributions, that are subject to a vesting schedule. Safe harbor contributions are always 100% vested as are employee salary deferrals.

The way the employer determines the 20% threshold is as follows:

  • Start with the number of participants on the first day of the plan year which will also be the number of participants on the last day of the prior plan year, on Form 5500. For 401(k) plans you look at who is “eligible” to make salary deferrals not just those who actually make salary deferrals or otherwise have a plan account.  (IRS Q&A with ABA from May 2004, Q&A 40).
  • Add new participants (eligibles) added during the plan year in progress.
  • Take that total number, and divide by the number of participants (eligibles) experiencing employer-initiated termination of employment.
  • In all cases, count both vested and nonvested participants (eligibles).

If you are at 20% or more you have a presumed partial termination. Certain facts can rebut this presumption such as very high normal turnover but this message is meant to address reductions in force related to COVID-19 which are employer-initiated due to outside forces and thus the presumption would likely not be rebuttable.

If you meet or exceed 20% then all persons directly terminated by the employer during the year must be fully vested in their employer contributions. The IRS also recommends you fully vest collaterally-affected employees such as those who leave voluntarily, as often those voluntary departures are triggered by concern over the company’s future in light of the involuntary terminations. Even if the reduction in plan population is under 20%, a potential partial plan termination may have occurred depending on all of the facts and circumstances.

UPDATE FOR 3/23/2020

We are continuing this week to assist clients with furloughs and layoffs, and we remind you to work with our HR team for those to ensure they are done as well as possible in this environment.

We have been getting some common questions:

  1. Can I require employees who are sick to stay home?
    Yes, you can require sick employees to stay home, or send them home if they come to work sick, without violating the ADA.   For these employees, we have to pay sick leave, including the new federally mandated sick leave once that is effective.
  2. My business meets the critical infrastructure criteria to remain operating.  I have an employee (or multiple) who have said they do not want to report to work.  What can I do?
    First, we need to ensure that we know the reason(s) why an employee does not want to report for work.   If the employee is immuno-compromised, is caring for someone ill with COVID-19 or other qualifying reasons, we need to determine if he or she qualifies for applicable sick, disability, unemployment or leave laws.  If none of those apply and the employee just doesn’t want to come to work, most likely due to fears of COVID-19, you can tell them that there is work available and you need them to report.  If they really do not want to, let them know that if they prefer not to work they can stay home, but that will be treated as voluntary and we do not believe they will be eligible for unemployment benefits.
  3. We have requested some of our employees to work remotely to minimize the number of people in the office and ensure safe social distancing.  Can an employee refuse to work remotely?
    We do not believe an employee can make their own determination where they perform their work, as employers are obligated to provide a safe working environment.  Remember, however, that for remote work you need to ensure employees have the equipment and tools needed to perform remote work, and you need to reimburse expenses like phones, etc.

Some additional updates for today:

DHS has recognized the challenges of verifying I9 documents with COVID-19 and have provided interim guidance.  Employers observing social distancing measures, including remote work, will not be required to view the documents in the direct presence of employees.   The new rules can be reviewed at https://www.ice.gov/news/releases/dhs-announces-flexibility-requirements-related-form-i-9-compliance. Note this important part of that release:  Employers who avail themselves of this option must provide written documentation of their remote onboarding and telework policy for each employee. This burden rests solely with the employers.  If you plan to hire and use the temporary I9 procedures, please contact our HR team for assistance preparing this required policy.

Federal guidance is beginning to be issued for the employer reimbursements under the Families First Coronavirus Response Act (FFCRA).  In a release last Friday, promises to make prompt payments to businesses whose SSA tax is not sufficient to cover the cost of qualified sick and child care leave, and they are to provide details on an expedited procedure this week.  You can review the release here:  https://www.irs.gov/newsroom/treasury-irs-and-labor-announce-plan-to-implement-coronavirus-related-paid-leave-for-workers-and-tax-credits-for-small-and-midsize-businesses-to-swiftly-recover-the-cost-of-providing-coronavirus.

On March 18th, Insurance Commissioner Ricardo Lara issued a notice – http://www.insurance.ca.gov/0400-news/0100-press-releases/2020/upload/nr030-BillingGracePeriodNotice03182020.pdf – requesting insurance carriers to provide insureds with at least a 60-day grace period.  The current grace period for health insurance plans is 30 days.  We will be contacting all brokers we work with on behalf of clients this week to identify all carriers who are complying with this request.

The second stimulus package failed a vote this afternoon, so we need to continue to monitor that to determine any additional relief that may be available.   If you have not already, you should review this legislation, as well as the SBA emergency legislation from last week, with your CPA to determine if either of these would be suitable for your business.

UPDATE FOR 3/20/2020

As of 5 pm last night, Governor Newson issued a “Stay at Home” order for the State of California.   To review the Order:    https://files.constantcontact.com/aaa12914101/5b1c137e-3662-4c31-91ff-069dc8a0d731.pdf.

The order identifies broadly those activities that are deemed necessary to maintain “continuity of operations of the federal critical infrastructure sectors” identified by the Cybersecurity & Infrastructure Security Agency (“CISA”), found here: https://www.cisa.gov/sites/default/files/publications/CISA-Guidance-on-Essential-Critical-Infrastructure-Workers-1-20-508c.pdf (Thank you to Debi at Titan Manufacturing for finding this.  Our group efforts in this will help all of us!)

You may want to look to your local area cities information for guidance, assuming those would comply.   For example, San Luis Obispo County’s page provides detailed lists:  https://www.emergencyslo.org/en/shelter-at-home-order.aspx

I found some news articles that stated while the Order was effective last night, businesses would be allowed today to do what was needed to complete operations.

If you have not already initiated your company’s plans for COVID-19, you need to do that today.

Some considerations include:

1)      If your business can operate, do you anticipate being able to do so sufficiently enough that you can retain all existing employees?   Some of our clients in businesses allowed to operate where shelter in place orders already exist have still seen reductions in revenue.

2)      For employees who will be able to work remotely, they should leave work today with any supplies, work materials, etc. that they may need to work from home.  If you have not already setup remote desktop or other secure connections to your server, that should be a priority for your IT staff today.

3)      You may have employees you want and are able to keep working, either at the business location (if allowed) or at home, but you will not be able to retain their current salary or wage.  It is appropriate to reduce those prospectively (never retroactively).  Some considerations for this include:

  1. Do you expect a reduction of responsibilities during the shelter in place period?
  2. How critical is an employee to your ability to maintain some operations and help achieve the return of revenue when the Order is released?
  3. Does the employee’s current wage or salary mean they will be financially harmed with the unemployment maximum benefit of $430 per week?
  4. For exempt employees, if you reduce their salary below the minimum exempt level, you will need to move them to an hourly status since they will no longer be exempt.

4)      For those employees you cannot retain, you need to either:

Furlough:  A furlough involves reducing the hours and/or days of the week that an employee may work.   As some employment attorneys are recommending this can be applicable under shelter in place orders, this is our recommended option for clients,  Employees should be informed   the lack of work is considered temporary because of a quarantine order or out of a precaution for the safety of employees and customers/clients that causes a suspension of operations.

Layoff:  A layoff normally means you have laid off the employee so they are no longer working, with an expectation of calling them back to work when feasible.    In these situations, employees should be paid their final wages and accrued vacation/PTO.   The other option we identified in prior update regarding returning  not triggering that payment requirement if returning within the same period will not be feasible given the “indefinite” period of the Order.

For employees you intend to layoff instead of furlough, you must coordinate that as early as possible today with your Payroll Specialist for final checks.

5)      Evaluate health insurance.  From an earlier update:

Many clients have been asking about the ability to continue health insurance benefits when employees are laid off for the shelter in place orders.

We recommend you do continue coverage at least through April where financially feasible.  If we terminate coverage as of the end of March, employees could get caught between the termination of regular coverage and the enrollment with the carrier of COBRA.  We have been told there is not an issue doing this.

If this is not feasible, we need to know that when you work with us for layoffs so we can process the coverage terminations and COBRA vendor notifications (if we manage that for you), and you should let employees know their coverage will end.

All employees who will not have work or reduced hours should be directed to file for unemployment insurance online (EDD’s offices closed onsite services earlier this week):  https://www.edd.ca.gov/claims.htm.  Employees should also receive the required UI pamphlet and separation notice, obtained from us if needed.

Your YPP and HRYW staff will be working today to assist you as needed for this transition.  Going forward, our own business is authorized and our staff will work remotely or from the office as needed to ensure your payroll and HR needs are taken care of.

UPDATE FOR 3/19/2020

Last night the President signed the Families First Coronavirus Response Act (FFCRA).  Per my prior updates, the link to review that is here: https://www.fisherphillips.com/resources-alerts-congress-finalizes-covid-19-coronavirus-response-act.

There are some key questions that there are no answers to yet, including:

  • The Act is effective April 1st but is there any application of it to employees who are already off work for family leave or sick leave reasons that meet the FFCRA? 
  • Where employer social security tax credits are not sufficient to cover the employers cost of providing the new leaves, what is the process to recover that excess amount and how long will that take?
  • What will the process be for employers with less than 50 employees to seek exemption and how long is that process expected to take?  While that is pending, are smaller employers expected to pay the benefits?
  • If employers with fewer than 50 employees receive the exemption will there be alternative provisions made to cover those employees?

The new posting notice relating to paid leave is to be issued by the Secretary of Labor within seven days of enactment, so we will be monitoring the release of that and forward copies to add to your postings.

The Secretary is also empowered to issue regulations to exclude health care providers and emergency responders, to exempt employers with fewer than 50 employees, and as necessary to harmonize the paid leave provisions with the expanded FMLA and with Division G of the Families First legislation (addressing employer tax credits).  As these are issued, we’ll share that information.

Health Insurance:

Many clients have been asking about the ability to continue health insurance benefits when employees are laid off for the shelter in place orders.  

We recommend you do continue coverage at least through April where financially feasible.  If we terminate coverage as of the end of March, employees could get caught between the termination of regular coverage and the enrollment with the carrier of COBRA.  We have been told there is not an issue doing this.

If this is not feasible, we need to know that when you work with us for layoffs so we can process the coverage terminations and COBRA vendor notifications (if we manage that for you), and you should let employees know their coverage will end.

UPDATE FOR 3/18/2020

Additional counties have now issued shelter in place orders, and we should expect more will do so through this week.

First, we strongly recommend that you review the actual order applicable to your county, rather than news articles.  San Francisco’s, for example, identified many more businesses that are allowed to continue operating, either as essential services or essential businesses.  While we all think our business is “essential”, the county administrators developing those order are defining those for us.  For each county so far, we have been able to find the actual order for review.

As you prepare your business to potentially be shut down, if you have not already identified remote work and other alternatives, you should do that immediately.   As I conveyed in prior updates the YPP and HRYW staff are all setup to work remotely so we can ensure payroll and other needs are taken care of.  Note that at least in San Francisco’s order, we can actually have payroll related staff continue to work in the office if needed since ensuring payment of wages to employees was deemed to be “essential”.

For those employees you cannot provide remote work for, there is some debate among employment law professionals as to whether this situation would qualify to not have to issue final pay and vacation/PTO accruals on the last day of work.   Given the additional financial burden of paying those immediately when revenue will be negatively impacted, that is an approach you may want to consider even though we have not yet seen any clear guidance from the DLSE.  What is important is that you make is clear to employees that the lack of work is considered temporary because of a quarantine order or out of a precaution for the safety of employees and customers/clients that causes a suspension of operations.

If at some point you determine you will not be able to return an employee to work, we will need to treat that as a formal layoff and ensure final wages and accrued vacation/PTO are paid.

At the federal level, the House has passed H.R. 6201, the “Families First Coronavirus Response Act.”  This has not yet passed the Senate, so it not effective yet.  We are continuing to monitor this daily to be able to provide updates as soon as possible.

Below is information for a webinar for later today to review the SBA’s disaster assistance plan:

CAMEO, in coordination with the U.S. SMALL BUSINESS ADMINISTRATION’S OFFICE OF DISASTER ASSISTANCE, will be holding a call on Wednesday, March 18th at 4:00PM to explain the SBA disaster loan application process and answer questions from small business support organizations.

We’ll cover:

  • What the program is
  • How it works and how to apply
  • Common missteps or misunderstandings that impact business owner applicants

Join the Webinar at 4:00PM March 18th

(CALL-IN INFORMATION: DIAL US: +1 669 900 6833 WEBINAR ID: 956 176 760)

UPDATE FOR 3/16/2020

This afternoon bay area counties issued shelter in place through April 7th.  All businesses are to close except for “essential” services, that include grocery stores, pharmacies, restaurants (for deliveries only) and hardware stores.  Most workers are ordered to stay home, with exceptions including health care workers; police, fire and other emergency responders; and utility providers such as electricians, plumbers, and sanitation workers.

We should expect this to expand to other counties, and very likely statewide, very soon.  If you have not already made a plan for your business, you should do that immediately.

Your YPP and HRYW team are all setup to be able to work remotely from home.  Our Pleasanton office staff will be doing that as of tomorrow to comply with the bay area mandate.  Our Santa Maria staff will do that as soon as required.  Our staff have all recognized how important it is to remain available to help our clients and worksite employees through these challenges.   You can continue to email our staff at their usual YPP or HRYW email and call their same extensions.  Phones will be forwarded to personal phones, and any voice mails left on office email already go to employees as a digital file in their email.

To help us with the large scope of work this is causing, we have assigned different staff key areas to monitor changing regulations or guidance.  As we have more information available, for example regarding the federally proposed paid sick and family leave, we will let you know.

Common questions today are regarding health insurance.  We have been told that Anthem is having a national policy discussion today to determine if they will extend grace periods for premium payments and/or provide special rules for employees on furlough or layoff so clients can continue to provide coverage, if desired.  There is nothing confirmed for that yet, but our recommendation is that if you do want to extend employees coverage during at least April, make sure to let our staff know that when addressing furloughs or layoffs so we know to keep insurance active.

UPDATE FOR 3/15/2020

This afternoon, Governor Newsom conducted a press release in which he ordered bars, nightclubs, wineries and brew pubs to close.  In addition, he asked seniors aged 65 or older to self-isolate.    Restaurants have not been required to close but are required to cut their occupancy by ½.  You can read the transcript of the press conference here:  https://www.rev.com/blog/transcripts/california-governor-gavin-newsom-coronavirus-press-conference-announces-closure-of-bars-across-state

Regarding the self-isolation:

“We recognize that social isolation for millions of Californians is anxiety-inducing,” he said. But, “we need to meet this moment head on, and lean in and own this moment … and take actions we think are commensurate with the need to protect the most vulnerable Californians.”

The governor stopped short of issuing an edict, but said he expects businesses and citizens to follow his directions. “I am confident these guidelines will be well received and will be appropriately enforced. If it is not being (done), we will do what we need to do.”

“I have all the expectations in the world the guidelines will be followed on this.”

While it appears the self-isolation for older employees does not appear to mandatory, we strongly recommend that all employees 65 and over be allowed that option.   That can be addressed in a number of ways:  remote work, leave of absence (the new federal leave program guidelines are pending but should be available very soon), or potential layoff.  However, the layoff option should only by applied if you are conducting layoffs generally and in a way that is not discriminating against your older employees.

We encourage you to evaluate the option of remote work wherever feasible to reduce the impact on your business and employees.  However, we also understand that for many clients, that is just not an option.  In addition, some clients are already seeing an economic impact of COVID-19, that will cause a revenue reduction.  That means that you may have to evaluate furloughs or layoffs:

Furlough:  A furlough involves reducing the hours and/or days of the week that an employee may work.   Please keep in mind that any pay reductions have to be prospective, never retroactive.  Employees can reduce work of a non-exempt employee as needed.  For exempt staff, if the reduced salary falls below the state mandated requirement, you will need to convert them to hourly and they will be eligible for overtime and rest and meal periods.

Layoff:  A layoff normally means you have laid off the employee so they are no longer working, with an expectation of calling them back to work when feasible.

There are two applicable layoff laws we have to review for applicability to clients:

Federal WARN: The Worker Adjustment and Retraining Notification Act (WARN)  requires employers with 100 or more employees (generally not counting those who have worked less than six months in the last 12 months and those who work an average of less than 20 hours a week) to provide at least 60 calendar days advance written notice of a plant closing and mass layoff affecting 50 or more employees at a single site of employment. WARN makes certain exceptions to the requirements when layoffs occur due to unforeseeable business circumstances, faltering companies, and natural disasters.

California WARN:  Employers covered under California WARN Act are those with 75 or more full-time or part-time employees. As under federal WARN, employees must have been employed for at least six of the 12 months preceding the date of required notice to be counted.  A plant closing, layoff or relocation of 50 or more employees within a 30-day period, regardless of percentage of workforce, requires notice. Relocation is defined as a move to a different location more than 100 miles away.

In that situation, please remember this section from an earlier update:

PAYMENT OF WAGES:  For a layoff, you must also consider the timing of payment of wages and vacation/PTO accrual.  If you are laying off employees without a specific return date, those employees must be paid wages and accrual at the time of the layoff.  If you can identify a specific return date, the employees can be paid on their next regular pay date.

For laid off employees, EDD is waiving the normal 7 day waiting period for unemployment benefits, as well as disability benefits.   Per an earlier update:   EDD has provided a guide for employees, identify eligibility for disability insurance, unemployment insurance and paid family leave because of the coronavirus:  https://edd.ca.gov/about_edd/coronavirus-2019/faqs.htm

FEDERAL PENDING LEGISLATION:   The house passed legislation Friday that would mandate two weeks of paid sick leave and expanding Family Medical Leave. Note this has not yet passed, so information is not yet final.    We cannot answer yet questions regarding the application of this.

UPDATE FOR 3/13/2020

Today’s most important update is that many school districts announced school closures today.  For example, this afternoon SLO, Santa Barbara and Ventura counties have announced closures starting next week.  We are continuing to monitor state and federal legislation to identify if any emergency regulations will provide for benefits to these employees for lost wages.  Because of this, the information below is subject to change and you should contact us before making any decisions.

The school closures will impact all employees with school age children, so what do you need to know:

Clients with 25 or more employees:

California’s School Activities Leave provides that:

Workers at locations with at least 25 employees must be allowed to take up to 40 hours off each year—up to eight hours per month—for school- or daycare-related activities. This type of leave can be used for a broad range of activities, including to:

  • Find or enroll a child in a school or licensed daycare program.
  • Attend a child’s a play, awards ceremony, sporting event, graduation or other activity.
  • Address emergencies during which a child can’t stay in school or daycare—such as a fire, natural disaster or problem at school. The eight-hour monthly cap doesn’t apply to emergencies.

School closures fall under this leave.  This means that employees who need to be off work to care for children must be allowed to use accrued sick, vacation and/or PTO in most circumstances.

Note that this does not preclude you from offering remote work to these employees.  For employees who do not have sufficient accruals and/or who prefer to not have to use that for this situation, remote work may be a good alternative if your company can accommodate that.

Any time off that exceeds 40 hours or the employees total accrual balance can be unpaid.

Clients with under 25 employees:

The California School Activities Leave does not apply, so you are not obligated to allow employees to use accrued vacation/PTO unless your policy allows for that use. It is up to the employer if they want to allow such usage due to extenuating circumstances. However, employees must be allowed to use accrued sick leave, as this situation is covered by that law.

As above, if you have the ability to allow these employees to work remotely, you can offer that.

We have just learned as drafting this memo that at the federal level they have agreed to provide paid leave for workers, expand food aid and support widespread testing for the illness at no cost to patients.

YPP and HR Your Way:

Our own employees have been offered the ability to work remotely via our secure connections as needed to help ensure our client and worksite employees are taken care of.    For our employees with children, they have the opportunity to bring them to the office during the school closure, to help ease the added challenges on parents those closures will cause.  We’re actually looking forward to that!

UPDATE FOR 3/12/2020

As you have most certainly heard, some employers have either voluntarily asked employees to work from home or are now being required to close their businesses.  We are getting a lot of questions regarding the employment issues this raises, so this guidance is to help address those.

ISSUE UPDATE

Last week we sent you an overview of coronavirus employment related issues from a well-respected employment law firm.  This document is being updated as the situation changes or new issues arise, so we encourage you to check this regularly.  The link for the updated information is https://www.fisherphillips.com/resources-alerts-comprehensive-faqs-for-employers-on-the-covid#L3.

In addition, the Labor Commissioner has provided an FAQ related to payment of wages and sick leave:  https://www.dir.ca.gov/dlse/2019-Novel-Coronavirus.htm.

REMOTE WORK

If you can accommodate remote work, attached is a sample policy.   While you do not, in these unusual circumstances need to formalize that, the sample does provide some of the areas to address.  This includes:

  1. What security issues does remote work create, and how can you address those?  For example, does software that employees need to access have sufficient security?  Does your IT person need to establish a remote desktop connection, so employees are logging in and accessing systems through that?
  2. How will you track employees’ work from home?  It is appropriate to address with employees your expectations of tracking their time, and if they are not working, they are expected to clock out. If you are using an electronic timekeeping system, does it have the capability for employees to log in remotely?
  3. Should you schedule a daily – or more frequent – check in calls with either individuals or teams, so you can keep everyone on track?   This can be setup via Zoom or other web meeting tools.
  4. What process should be implemented to make sure employees get input from other staff when needed.  It’s easy when in the office to simply get together for this, but more challenging remotely.

Remember that California requires reimbursement of all work-related expenses, so for use of cell phones, computers, internet access, etc., you have to identify how you will reimburse those.   For these, you can provide a stipend that reasonably covers those expenses, but keep in mind that if an employee believes that is not sufficient, you need to review that and see if additional reimbursement is needed.

REMOTE WORK NOT FEASIBLE

If your business is one that cannot provide remote work – whether due to the nature of the work, lack of sufficient systems security, or other reasons – you may have to consider laying off employees.  If that appears imminent, please coordinate that with our HR team so we can help ensure this is done as smoothly as possible. We are monitoring pending legislation that may ease unemployment for this type of affected employee.

There are also federal and state laws that may apply to some layoffs, so we must ensure any layoff complies with those.  Unfortunately, so far we have not seen anything that is waiving those laws for the coronavirus situation.

PAYMENT OF WAGES:  For a layoff, you must also consider the timing of payment of wages and vacation/PTO accrual.  If you are laying off employees without a specific return date, those employees must be paid wages and accrual at the time of the layoff.  If you can identify a specific return date, the employees can be paid on their next regular paydate.

ACCOMMODATING MEDICAL CONDITIONS

An additional issue for consideration is those employees who have any of the underlying medical conditions that are most at risk from the coronavirus (older adults and those with serious chronic conditions, including heart disease, diabetes and lung disease).  For these employees, we may need to evaluate ADA accommodations, so it is important is an employee raises this concern that you contact your HR team.  Note, however, that we do not believe a reasonable accommodation under the ADA would be allowing an employee to work remotely when there are legitimate business reasons for not allowing that.

EDD BENEFITS

EDD has provided a guide for employees, identify eligibility for disability insurance, unemployment insurance and paid family leave because of the coronavirus:  https://edd.ca.gov/about_edd/coronavirus-2019/faqs.htm

WORKERS COMPENSATION

We have heard some speculation that employees contracting coronavirus may be able to claims workers’ compensation.  In most situations, a community spread illness would not be covered.  However, for some clients, particularly those in health care and/or first responders, the nature of work might create a coverage liability with these employees are exposed as a direct consequence of their work.  While it’s important to ensure all employees are practicing hand washing and other recommended precautions, there is a heightened importance with employees who may be directly interacting with those ill as part of their job.

Information regarding this issue is changing rapidly, and we will continue to provide updates for the employment context as we have them.  In the meantime, please let us know specific questions. 

UPDATE FOR 3/6/2020

As you are surely aware, the Coronavirus has caused a lot of questions and concerns.  To help with this, we have links to two documents:

  1. An employer FAQ from a well respected national employment law firm, that provides the best overview of the employment related issues on this topic we have found; and
  2. A sample memo for employees

Please review the FAQ and if you are considering sending employees home or other decisions that impact employees, please talk to your HR team first so we can help ensure you don’t violate any applicable regulations.   We strongly recommend that you initiate internal discussions to determine how your company will handle employee absences, including potentially quarantine situations.  Some clients will have the ability to let employees work from home, so you should review that now and ensure computer issues, like remote access, have been setup.

If you have a business slow down as a result of this, please be sure that you coordinate that with your HR team, as there are applicable layoff laws that have to be evaluated and complied with.  There is currently no waiver of those requirements for this virus.

Since every client will have their own way of addressing this with employees, we have provided a memo that addresses the precautions employees should take.  You can distribute that to employees and/or add any particular company specific instructions or plans you want to convey.

Leave a Reply

Your email address will not be published. Required fields are marked *