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 6/1/2020

RETURN TO WORK BRINGS NEW CHALLENGES UNDER COVID

Many of our clients are beginning to bring employees back to work and we want to share a few of the new questions presenting challenges due to the lack of clear guidance with this abnormal COVID situation.  Our HR team has been spending considerable time to research these issues and ensure we are providing the best possible guidance.  That means we may not always be able to give you a quick answer, so we appreciate your patience as we diligently conduct the research needed.

My employee has been out due to childcare issues and used the 80 hours of federal sick leave and the 10 weeks of extended FMLA.  Schools are still closed and childcare isn’t available.  I need the employee back at work, so what do we do?

This is a question we anticipate will be asked often in the weeks and months ahead.  Summer childcare options will be limited as traditional summer programs either close or curtail operations.  Return to school in the fall may be very different too with staggered/reduced schedules and online learning.  Parents will be facing difficult challenges to meet their childcare needs.

California is considering legislation to expand paid leave for parents with Senate Bill 943 and Federal legislation may also be expanded. Employees with COVID related childcare issues who have exhausted leave may be entitled to collect unemployment benefits, with eligibility evaluated by EDD on a case by case basis.

There are no definitive solutions yet but employers need to have contingency plans to address the impact this may have on employee availability.  Flexibility and creativity will be important.  Telework, flexible scheduling, or part-time hours may all be options to consider for the foreseeable future.

Some of our employees or people they live with are in high risk categories.  Can’t we just tell them they have to stay home?

Even with the best of intentions this isn’t the right solution.  Excluding the employee from the workplace may result in unlawful discrimination claims.  Having an underlying medical condition does not mean that the employee cannot perform the essential functions of their job or that they pose a direct threat to the health and safety of themselves or others.

On the flip side, you may have an employee who is refusing to return to work because they are in a high risk category.  If that occurs, you need to treat it as an ADA accommodation issue and engage our HR team to assist with the process.  The EEOC is seeing ADA claims related to COVID already, and we don’t want you to get into that liability.

I told my employee they must provide a medical note or proof of a negative COVID test to return to work due to symptoms, exposure or just an abundance of caution.  Do I have to pay for it?

Possibly.  Employers normally must pay for any required medical exams for employees however there are still unanswered questions about this specific issue.  Our best guidance based on our own research and review with our employment law firm is that if you require an employee to get a COVID test, you could be responsible to pay for that.

The best approach is to tell an employee with symptoms that they need to 1) provide a doctors’ note to return to work, stating  they do not have COVID; or 2) provide verification of a negative COVID test; or 3) self-quarantine  for 14 days.  Employees should be directed to the County Health Department, where they can obtain a test at no cost.  Note also that insurance carriers have waived co-pays and out of pocket expenses for services related to COVID.

Employees who must take time off to seek a medical diagnosis are eligible for FFCRA sick leave.  If the employee must quarantine, they also would be eligible for the FFCRA federal sick leave for up to 80 hours, the cost of which is offset against your payroll taxes.

Some employees are trying to self-assess co-workers off the job activity and wanting to decide for themselves whether they will come to work and/or work remotely.  Do I have to allow this?

In most circumstances, No.  Unless employees provide a legitimate reason for not being able to work, such as a medical reason that triggers an accommodation, employees are not free to dictate your work policies regarding COVID-19.   We appreciate that employees are concerned about COVID, but business owners are too and have the right to identify how best to comply with current requirements for operating at this time.

There is a situation where employees may claim there is “threat of death or serious physical harm,” or “a reasonable expectation that toxic substances or other health hazards are present, and exposure to them will shorten life or cause substantial reduction in physical or mental efficiency.”  Requiring employees to work with patients in a medical setting without PPE at this time may rise to this threshold. Most work conditions in the United States, however, do not meet the elements required for an employee to refuse to work.

NOTE:  We are including the next question again since it continues to be an issue:

What if an employee travels or notifies you of plans to travel to another state or area while on vacation or otherwise on personal time.  Can an employer require them to quarantine or provide a note from their medical provider before allowing them to return to work?

The COVID-19 pandemic has given employers increased latitude to ask employees about their medical status however employees still have the right to engage in lawful behavior outside of work without interference.

Employers can inquire about travel but must ensure all employees are being asked to disclose travel information and that the information requested is consistent with business necessity to avoid discrimination claims.

You cannot prohibit employees from traveling to non-restricted areas when they are on personal time.  Employers can and should communicate with employees about CDC and OSHA recommendations and inform employees that travel may result in quarantine upon return.

If an employee has traveled to a CDC Warning Level 3 advisory country where the federal government is mandating a 14-day period of self-quarantine you can and should enforce that quarantine.  To date California has not issued any travel restrictions however several states require visitors to self-quarantine for 14 days if they enter the state.  (Update:  We have  been told that the Border Patrol is informing those entering the US from Mexico that they will be required to quarantine for 14 days).

Employers can deny vacation approvals however such denials must be based on a legitimate nondiscriminatory business related reason and all employees should be treated equally.  Such actions must not be based on the national origin or race of the employee.

Communication with employees is important to avoid conflict or misunderstandings. The COVID virus is now so widespread that even if you could control your employee’s travel destination there is no guarantee it would prevent exposure.  The best approach is to educate employees on recommended best practices and provide sources for travel information such as the CDC site advising on US travel guidelines  https://www.cdc.gov/coronavirus/2019-ncov/travelers/travel-in-the-us.html.

We urge you to contact your HR Manager/Generalist  if you are facing these or any other return-to-work challenges and questions. 

UPDATE for 5/27/2020

COMMON QUESTIONS

Our city (or county) is requiring that face coverings be used, including in our workplace.  If an employee says their doctor has told them they shouldn’t wear one, can we agree to that?

You need to review the specific Order applicable.  For example, Santa Barbara County’s order, effective at 5 pm May 26th, includes an exception where “…a medical professional has advised the individual that wearing a face covering may pose a risk to the person for health-related reasons….”.   So an employee in that situation would be allowed to not use a face covering.  However, you should ensure other safe practices, including social distancing, is maintained.  In addition, given the wording of Santa Barbara County’s order, we believe it is appropriate to request a Dr’s note, since the Order specifically states the exclusion applies where a medical professional has given the advice.

NOTE:  you should regularly review your city and county for any Orders issued that will apply to your business. 

Can I take employees’ temperatures before they start work?

Yes.  It’s important to note that while the EEOC has confirmed that during the COVID-19 pandemic employers can take temperatures, taking the temperature is considered a medical exam.  For that reason, we have advised clients they should not keep a log or records of each employees’ temperature.   Temperature per the CDC is 100.4 or higher.

If you are going to initiate temperature checks, you should inform employees so they know what to expect.  That should include notice that temperatures will be taken before employees are allowed to enter the workplace and that if they have a fever they will not be allowed to work that day.  We also recommend your policy state that employees should take their temperature before reporting to work, and call in if they have a fever (and remember that sick leave may be applicable).

While you should not log employees’ actual temperature, it is appropriate to have a checklist to show all employees who were checked before they entered the workplace, so you have documentation of complying with the policy.

If I send an employee home for a temperature, do I need to pay them?

Maybe.  California’s DLSE requires employees be paid “show up pay” – pay of ½ their scheduled hours – when they report to work and you do not have work for them.  The issue with temperature checks is that you do have work, but the employee has a temperature at a level the CDC has identified as a possible symptom of COVID.   The DLSE has been significantly silent during this COVID situation, not updating their website or providing additional information since an initial COVID page was added.  That page has FAQ’s that discuss show up pay, but they have issued nothing that addresses the current situation where it is being recommended, or even required, that employers check temperatures on arrival and employees need to be prohibited from working.   We have contacted our local Assemblyman’s office regarding this issue, since the DLSE is also not responding to questions.   So for now, there is a risk of waiting time penalties if show up pay is not paid.

What if an employee travels or notifies you of plans to travel to another state or area while on vacation or otherwise on personal time.  Can an employer require them to quarantine or provide a note from their medical provider before allowing them to return to work?

The Covid 19 pandemic has given employers increased latitude to ask employees about their medical status however employees still have the right to engage in lawful behavior outside of work without interference.

Employers can inquire about travel but must ensure all employees are being asked to disclose travel information and that the information requested is consistent with business necessity to avoid discrimination claims.

You cannot prohibit employees from traveling to nonrestricted areas when they are on personal time.  Employers can and should communicate with employees about CDC and OSHA recommendations and inform employees that travel may result in quarantine upon return.

If an employee has traveled to a CDC Warning Level 3 advisory country where the federal government is mandating a 14-day period of self-quarantine you can and should enforce that quarantine.  To date California has not issued any travel restrictions however several states require visitors to self-quarantine for 14 days if they enter the state.

Employers can deny vacation approvals however such denials must be based on a legitimate nondiscriminatory business related reason and all employees should be treated equally.  Such actions must not be based on the national origin or race of the employee.

Communication with employees is important to avoid conflict or misunderstandings. The Covid virus is now so widespread that even if you could control your employee’s travel destination there is no guarantee it would prevent exposure.  The best approach is to educate employees on recommended best practices and provide sources for travel information such as the CDC site advising on US travel guidelines  https://www.cdc.gov/coronavirus/2019-ncov/travelers/travel-in-the-us.html

It is important to contact your HR Manager prior to making employee quarantine decisions or sensitive medical inquiries.  Guidance and the legal landscape changes quickly and our team is monitoring the HR implications constantly to provide the best possible advice to clients.

UPDATE for 5/20/2020

PPP – SBA RELEASES FORGIVENESS APPLICATION

Last Friday, the SBA released the application, with a loan forgiveness calculation form, to apply for PPP loan forgiveness.  You can find that here:  https://home.treasury.gov/system/files/136/3245-0407-SBA-Form-3508-PPP-Forgiveness-Application.pdf

A few key things to note:

  1. They have provided an “Alternative Payroll Covered Period”, which allows some employers to start the 8 week calculation at the start of a pay period instead of the loan disbursement date;
  2. They have now provided the standard to determine FTE count.  Note they are using a 40 hour workweek and the option of a .5 equivalency for part-time employees, where all previous recommendations (and what we then used for our own worksheet) was using the standard calculation set by the ACA.
  3. The worksheet provides a section to address those employees who refuse rehire and reductions from forgiveness;
  4. And it includes the required deduction for any EIDL advance you may have received.

You should review this in detail with your CPA or financial advisor assisting you with projecting your loan forgiveness to determine any changes in your forgiveness calculations this additional guidance creates.

SBA APPLICATION OVERVIEW

Our Staff Accountant, Paulina Krahmer, did the excellent work of preparing the PPP Forgiveness Worksheet we provided to clients previously.  We’ve had a lot of feedback that it was very helpful for clients trying to project their forgiveness and make appropriate planning decisions.  Now that the SBA has issued the formal Forgiveness Application (see our Update from May 18th), she has reviewed the SBA changes and provided the following overview.   As always, we  direct you to your CPA or financial advisor to help you complete the SBA’s new application.

Items that have been clarified/changed:

  • Coverage Period: If your payroll is bi-weekly or more frequent, you can select an alternate coverage period that begins on the first day of your next pay period.  You’re also able to include not only compensation paid during the coverage period but also compensation earned which would be paid on the next regular pay date following the end of the coverage period.  This means clients will need to calculate the “earned” portion that may be applicable to their forgiveness period.
  • FTEs: There are two ways to calculate FTEs during the coverage period.  Depending on the average hours worked, one may be slightly more favorable than the other.  If you have a lot of PT employees who work less than 20 hours a week, the easier calculation may be more favorable.  You also get to add EEs who refused to returned to work, were fired for cause or voluntarily resigned or reduced their hours.  And there is a Safe Harbor to avoid any reduction by restoring your FTE count by June 30th to what it was on February 15th.  Or there’s an extra rule, where if your FTE count on the last day of the Coverage Period is greater than your FTE count on Jan 1, 2020, then there is no reduction.  So A LOT more to calculate.
  • Wage Reduction rules: When comparing the 8 week coverage period salary to the Q1’20 salary we are now comparing averages so the 25% reduction rule is more fair.  And even if the Wage Reduction applies for an employee who earned on average less than 25% during the 8 week period than in Q1’20, there is a Safe Harbor option where you can then compare average pay as of February 15th to average pay between February 15th and April 26th.   And if the latter is greater, then a reduction won’t apply.  But if even if a reduction still applies, if you restore average pay by June 30th to what it was on February 15th then you can still avoid the reduction.  So it is A LOT of calculations.
  • FTE and Wage reductions are taken from total eligible cost, not from the eligible forgiveness amount up to the loan amount.

Still need clarity for:

For our clients with payroll in our PrismHR system, PrismHR finalizing new reporting to provide the payroll data needed for your forgiveness applications.  For clients with other software, you will need to determine if your software vendor will be able to provide reporting, or if your accounting team will need to prepare that from regular payroll reports.

ADDITIONAL SMALL BUSINESS LOAN RESOURCE

For those clients that are ineligible for SBA’s EIDL and PPP, our client California Coastal Rural Development Corporation (Cal Coastal) is 1 of 7 corporations that contracts with IBank to administer a disaster relief loan guarantee program, where Cal Coastal can guarantee a loan to a Lender (usually a bank or a credit union).  They a special program for $50,000 loans and less with streamlined applications, but they can go up to $1.0 Million on their loan guarantee.  They also specialize in lines of credit as well and these can be for non-profits (501c3), agricultural producers/farmers, or small businesses.  Attached is an information sheet regarding the IBank loan program.  For information on their loan options, email Erich_Kortz@calcoastal.org.

POSITIONING YOUR BUSINESS TO THRIVE

Our friends at Collaboration Business Consulting have been conducting excellent webinars on stabilizing your business and setting it up to thrive.  You can see those here:  http://collaboration-llc.com/resources/.

UPDATE for 5/14/2020

PPP – TREASURE CLARIFICATION ON GOOD FAITH REVIEW

The Treasury has updated their FAQ’s for the PPP loans to address the concerns of whether companies receiving loans under $2 million will be subject to scrutiny of their good faith certification of business necessity on the PPP loan application.  Question 46 is now added, including this:

“…SBA, in consultation with the Department of the Treasury, has determined that the following safe harbor will apply to SBA’s review of PPP loans with respect to this issue: Any borrower that, together with its affiliates,20 received PPP loans with an original principal amount of less than $2 million will be deemed to have made the required certification concerning the necessity of the loan request in good faith”

You can review the full FAQ’s here:  https://home.treasury.gov/system/files/136/Paycheck-Protection-Program-Frequently-Asked-Questions.pdf.

RE-OPENING

As California works on re-opening, it’s important to evaluate your own business and do the work needed now to prepare your own Plan.  The state has provided industry specific guidance and checklists here:  https://covid19.ca.gov/industry-guidance/.

As you develop your company’s plan, keep in mind that PPE you require employees to use (whether by choice or required for your industry) need to be provided by the company.   That includes face coverings or masks, so you need to evaluate your specific industry and, if either of these are needed, identify as well the appropriate level of mask.  N95 masks are not needed for every business, and “face coverings” are masks.  .   See this for an explanation of the difference:   https://www.jacksonlewis.com/sites/default/files/docs/colden_041720_respiratory_protection.pdf.  While face coverings are not technically PPE, if you require them to be worn, you do need to provide them.  

COVID-19 RELATED STRESS

We are talking to many clients whose employees are experiencing a high level of stress at this time.  Many people are concerned about COVID-19 and the potential impact on their family of anyone getting it, and about whether continuing to work is increasing their risk of infection.  In addition, many businesses continuing to operate are experiencing higher levels of work as companies have either laid off coworkers or – for those most fortunate in this environment – seeing increases in sales or services.

It is important to recognize these pressures on your employees and attempt to address them.  If the concerns are related to safety, engage your employees so they understand the safety measure you are taking and identify, if feasible, additional things you may be able to do to alleviate concerns.  For example, do you need to assign staff to help sanitize areas during the workday, so employees see that being done more frequently?  Should you require anyone interacting with your staff to wear a face covering and/or gloves?  This raises a number of issues, including client or customer reaction, that has to be evaluated as well.

Remember also that many of your employees who are working are dealing with COVID-19 related issues outside the workplace.  Your employee may have a spouse who has been laid off, or children out of school that they are juggling care for with a spouse.

If you are seeing these issues with your employees, please talk with your HR Manager/Generalist so we can help identify strategies with you.

COMMON QUESTIONS

As clients are rehiring employees and preparing to reopen their businesses if closed and/or having employees working remotely, we’ve had lots of questions related to that.  We have included a few today and will address others in the next Updates.

When I contacted a laid off employee about returning, she told me she cannot return to work since she has no childcare and/or her children’s school is closed.  What are my obligations in this situation?

If an employee is offered rehire and cannot return for this reason, contact your HR team so we can evaluate whether the federal EFMLA is applicable.  In most situations, an employee who cannot return to an offered rehire position will be eligible for that expanded leave.  Remember that while you have to pay the employee for that leave period, your payroll expenses are offset against payroll taxes.

Do I have to have rehired employees complete new employment paperwork?

Employees who were laid off do not have to complete new paperwork, since their layoff was temporary.  Of most importance is the I9, and a temporary lay off is considered a situation that constitutes continuing employment, and employers are not required to reverify the I9.   You do need to notify your HR/payroll team of all rehires so those can be reactivated in payroll software before payroll needs to be processed.

When will my rehired employees be able to be enrolled back on insurance benefits?    

If employees were not maintained on benefits during the temporary layoff, most insurance carriers are reinstating employees with no waiting periods.  However, it is important to note that we are seeing delays in carriers processing those reinstatements which could impact employees medical services.   Employees may need to pay for services during that time and file a claim for reimbursement, or see if their medical provider will agree to delay billing or reprocess it once coverage has been reinstated.

UPDATE for 5/8/2020

PPP – SBA UPDATES FAQ’S

The SBA has continued to add updates to its FAQ’s for the PPP.  This week several new questions/answers were issued, including this (emphasis added):

  1. Question: FAQ #31 reminded borrowers to review carefully the required certification on the Borrower Application Form that“[c]urrent economic uncertainty makes this loan request necessary to support the ongoing operations of the Applicant.”SBA guidance and regulations provide that any borrower who applied for a PPP loan prior to April 24, 2020 and repays the loan in full by May 7, 2020 will be deemed by SBA to have made the required certification in good faith. Is it possible for a borrower to obtain an extension of the May 7, 2020 repayment date?

Answer: SBA is extending the repayment date for this safe harbor to May 14, 2020. Borrowers do not need to apply for this extension. This extension will be promptly implemented through a revision to the SBA’s interim final rule providing the safe harbor. SBA intends to provide additional guidance on how it will review the certification prior to May 14, 2020.

If you have any concerns about application of this to your company, you should review that with your CPA and lender.

You can find all of the SBA’s FAQ’s here:  https://home.treasury.gov/system/files/136/Paycheck-Protection-Program-Frequently-Asked-Questions.pdf

WORKERS COMPENSATION

Wednesday, despite strong opposition from business groups, Governor Newsome issued an order that will ensure workers’ compensation coverage for any employee who contracts COVID-19.

The order directs insurance carriers to approve workers compensation claims for COVID-19 with a presumption that the employee caught the coronavirus at work. Those eligible will have the rebuttable presumption if they tested positive for COVID-19 or were diagnosed with COVID-19 and confirmed by a positive test within 14 days of performing a labor or service at a place of work after the stay at home order was issued on March 19, 2020. The presumption will stay in place for 60 days after issuance of the executive order.

Employers can rebut the claim under “strict criteria,” Newsom said, but the presumption puts the burden on them to prove that the worker became infected someplace else.    You can read the order here:  https://www.gov.ca.gov/wp-content/uploads/2020/05/5.6.20-EO-N-62-20-text.pdf.

If you have employees who indicate exposure to COVID outside the workplace, such as through another family member, it will be important to report that information when filing a workers’ compensation claim so the carrier can evaluate whether there is sufficient information to challenge the presumption.

The long term impact of this order could be that employers will see increases to experience ratings, which affect the cost of premiums (but see below).  Experience rating is based on a 3 year period of payroll and losses, meaning COVID related claims can have a significant negative impact.  An argument by business groups opposing the order is that this is effectively shifting a substantial part of the public cost of COVID-19 to employers.

On April 14th, the WCIRB’s Classification & Rating committee met to review several COVID related issues, voting unanimously for a special regulatory filing to enact those.  This is waiting for the Insurance Commissioner to approve, and includes:

  • Exclude COVID-19 claims from the experience rating:   Claims arising directly from a diagnosis of COVID-19 with an accident date on or after Dec. 1, 2019, would be excluded from the experience rating calculations of individual employers. Since the occurrence or non-occurrence of COVID-19 workers’ comp claims incurred by an employer is unlikely to be a strong predictor of that employer’s future workers’ compensation claim costs, the inclusion of such claims in an experience modification calculation would not meet the intended goal of experience rating.
  • Exclude payments to employees who continue to be paid while not working:   Payments made to employees who are continuing to be paid while not engaged in any work activities would be excluded from reportable payroll. This exclusion would apply while California’s statewide stay-at-home order is in place and for up to 30 days thereafter if the employee continues not to work. Excluding this payroll recognizes the extraordinary circumstances resulting from the stay-at-home order and the fact that employees not engaged in work activities have virtually no work-related exposure.

NOTE:  All hours that your employees are being paid but not working should be separately identified for payroll purposes so those wages can be efficiently excluded from premium calculation and final audit if this is approved.  If we are processing your payroll, you need to identify hours paid but not worked when you submit payroll to your Payroll Specialist. 

  • Allow assignment of classification 8810 for temporary change in duties:   The temporary assignment of Classification 8810, clerical office employees, would be allowed for employees whose job duties meet the definition of a clerical office employee. This provision would apply while California’s statewide stay-at-home order is in place and for up to 60 days thereafter if the employee continues to meet the definition of a clerical office employee, but does not apply to the payroll of employees whose payroll is otherwise assignable to a standard classification that specifically includes clerical office employees.

NOTE:  In case this is approved, you should maintain records to identify hours that your employees are working clerical office duties instead of their regular classification.   If we are processing your payroll, you need to let your Payroll Specialist know if you believe the 8810 classification applies to any hours, as we will need to separate those wages from the regular class code. 

We will continue to monitor the Insurance Commissioner for any decision.

UPDATE for 5/4/2020

STAGE 2 REOPENING

Governor Newsom announced a move to Stage 2 reopening late this week.  It will be gradual and will only apply to certain industries, including bookstores, clothing shops, florists and sporting goods stores, which can resume operations with curbside pickup.  Offices, seated dining at restaurants and shopping malls are not included.

However, these activities are still prohibited under the Bay Area’s updated shelter-in-place order, and Newsom said the region “has the right” to enforce its stricter order that allows for the return of outdoor businesses and activities, but not retail.

The governor’s plan also expands decision-making at the local level, allowing some communities to move further ahead into the second phase of the order and open more businesses at their own pace instead of adhering to a uniform policy across the state. But if counties want to do more, they must first meet certain requirements for hospital beds, testing kits and the ability to track infected individuals and trace their contacts, Newsom said.

But see this for the CDC’s newest projections:  https://www.yahoo.com/news/as-states-push-ahead-with-reopening-cdc-warns-coronavirus-cases-and-deaths-are-set-to-soar-182250157.html

PPP and FORGIVENESS

There is a lot of concern and confusion regarding conflicting information issued about forgiveness of the PPP.  As reviewed in last Friday’s update, we need to have clarity as to when a company will be required to demonstrate their need for the PPP loan, including liquidity.  For example, one older client expressed concern whether she is going to lose forgiveness if she didn’t draw on her personal retirement funds before using the loan.   In addition, last Thursdays notice by the Treasury that any business expenses used for forgiveness will not be deductible has put many businesses in the position of trying to decide whether to use the funds as intended and rehire employees or not.

I spoke with a federal legislators’ staff today and understand that the federal legislators do recognize that some of the SBA and Treasury guidance being issued is not consistent with the legislative intent of the CARES Act.  As I emphasized, however, no business owner can make appropriate decisions for their business until this is clarified, so it imperative that be done quickly.

Also, some clients have been asking if our payroll/accounting team can prepare their forgiveness worksheet for them.  We are not assuming this responsibility, since this includes projections of your payroll and requires overall business assessments.  This needs to be done with your CPA or financial advisor.  If you need assistance identifying payroll reports to use, we are happy to assist you with that.

PPP and REHIRES

As we have addressed in previous updates, we have been very concerned that the FPUC – the federal $600 per week UI supplement – will make it difficult for businesses to rehire employees to meet their PPP payroll requirement for forgiveness.

On May 3rd, the SBA updated its’ PPP FAQ’s to address the issue of rehires (emphasis is added):

  1. Question: Will a borrower’s PPP loan forgiveness amount (pursuant to section 1106 of the CARES Act and SBA’s implementing rules and guidance) be reduced if the borrower laid off an employee, offered to rehire the same employee, but the employee declined the offer?

Answer: No. As an exercise of the Administrator’s and the Secretary’s authority under Section 1106(d)(6) of the CARES Act to prescribe regulations granting de minimis exemptions from the Act’s limits on loan forgiveness, SBA and Treasury intend to issue an interim final rule excluding laid-off employees whom the borrower offered to rehire (for the same salary/wages and same number of hours) from the CARES Act’s loan forgiveness reduction calculation. The interim final rule will specify that, to qualify for this exception, the borrower must have made a good faith, written offer of rehire, and the employee’s rejection of that offer must be documented by the borrower. Employees and employers should be aware that employees who reject offers of re-employment may forfeit eligibility for continued unemployment compensation.

Our HR team has prepared a written offer Notice template that can be used to document offers of rehire.  We continue to recommend that you call employees first, as that is a faster and more efficient way to initiate the rehire.  However, where employees don’t respond (either don’t answer your call or respond to a message), the written Notice should be prepared.  That written Notice also informs employees that refusal to return to work may make them ineligible for UI benefits as of the scheduled return date.  A copy of this Notice template is attached.  If you issue this to employees, please send us a copy if we maintain your personnel files and/or are handling your UI claims.  

Note that we have included a place for the employee to identify a reason why they are refusing the rehire Notice.  When a reason is provided, that should be reviewed with your HR team to determine whether there is a legitimate reason for the employee’s refusal, including triggering obligations to allow them to remain off work.  Examples include symptoms of COVID-19, child care limitations, etc. Where none of those exceptions exist, we have also prepared a template for our HR team to use to notify EDD that the employee should no longer be eligible for benefits.

UPDATE for 5/1/2020

PPP  – NEW IRS NOTICE

Yesterday the IRS has issued guidance stating taxpayers may not deduct expenses that were paid by Paycheck Protection Program loans, if the payment of the expenses results in loan forgiveness under the program. (IRS Notice 2020-32) Loan forgiveness is available under the program for the following expenses paid and incurred during the eight weeks after the borrower receives their funds:

  • Payroll costs;
  • Mortgage interest;
  • Rent; and
  • Utilities.

Under the Internal Revenue Code, taxpayers are precluded from claiming deductions paid with exempt income. Because PPP loan forgiveness is excludable from taxable income under the CARES Act, taxpayers may not claim deductions for these expenses.

You can read the notice here:  www.irs.gov/pub/irs-drop/n-20-32.pdf

We encourage you to contact your federal legislative representatives regarding this, as well as reviewing it quickly with your CPA or financial advisor.

PPP – MORE IMPORTANT NEWS

As you may have seen from various news sources, there has been developing concern about companies that may have obtained PPP funding that were not intended to.   This week one insurance carrier for CPA’s send a notice to their policyholders with instructions to send this to their clients:

http://links.mkt.cpa.camico.com/servlet/MailView?ms=MjMxOTA1MTQS1&r=MTA2MzU2MTMyNgS2&j=MTcyMTM2MjYyOQS2&mt=1&rt=0

It includes the following:

On April 23rd, the Small Business Administration (“SBA”) updated its Frequently Asked Questions Document to add FAQ 31. The new FAQ provides much-needed clarity regarding program qualifications specific to businesses with access to other sources of liquidity to support their ongoing operations. Any business that received a PPP loan prior to the issuance of this new guidance and who now believes that they do NOT demonstrate the necessity for the loan, can repay the loan in full by May 7, 2020. Any business that does so, will be deemed by the SBA to have made the required good faith certification on their PPP loan application.

You should also read this:  https://www.fisherphillips.com/resources-alerts-government-doubles-down-on-warning-to-employers

As with all of our recommendations for the PPP, you should review this with your CPA or financial advisor to ensure you will be able to meet any requirements of the PPP loan.

UNEMPLOYMENT CLAIMS – IMPORTANT!!

With the large volume of layoffs we assisted clients with during March and April, we have been surprised to receive very few claim notices from EDD to date.  Over the last few days, some clients have forwarded claim notices to us for completion, for notices issued at the end of March.

It is important that claims are forwarded to us on receipt if our HR team is handling the response and management of the claim.  Remember that employers are supposed to respond to claims within 10 days of the notice date – not the date the notice is received.  Failing to respond timely may delay benefits to  your laid off employees.  If the termination reason was one where we would want to challenge UI benefits, including for gross misconduct or a voluntary quit, the opportunity to challenge that is lost for failure to timely respond.

If your office is closed or you have few staff in the office, it is important to ensure someone is monitoring the mail and processing these claims – either directly or by sending them to us – quickly.

REHIRES

If you are rehiring employees, either as business increases or to meet your PPP forgiveness requirements, please let your HR team know who you have rehired.  We streamlined our layoff process initially to make rehiring employees managed in PrismHR more efficient, but we also need to coordinate insurance coverage.  Some of our clients have been in the midst of open enrollment periods during the layoff period, and we may need to reopen the OE for rehires.  Our Benefits team will coordinate that with you if needed.

UPDATE FOR 4/28/2020

MONITORING PPP LOAN FORGIVENESS

From lots of client emails and calls, it is clear the SBA was reviewing and preparing approvals for the large backlog of applications from the first round of funding, as many were notified yesterday and today of that approval.  Since I have had numerous clients asking about their PPP loan and the forgiveness criteria, I am resending the section below from yesterdays update.  I cannot stress enough the importance of reviewing this immediately with your financial expert to ensure you maximize your forgiveness.    If you anticipate moving a paydate to fit within your 8 week payroll period, you need to coordinate that with your Payroll Specialist soon.

For a good review of some of the issues with the PPP, see this:  https://www.forbes.com/sites/anthonynitti/2020/04/15/ten-things-we-need-to-know-about-paycheck-protection-program-loan-forgiveness/

For our clients who obtain a PPP loan, or are hoping to receive funding for the second round, it is important to monitor your progress towards forgiveness of that loan.  You have an 8 week period for the date you are funded to meet the requirements for forgiveness, and it is not quite as easy as it might seem to ensure you meet that.  For example, we have found for our own loan that we will need to adjust a paydate to have a payroll included.

We have prepared a worksheet, attached, to assist our clients with doing these projections and monitoring your progress.   Note, however, that this is prepared based on what we understand the current requirements to be, and those are subject to change by the SBA and/or your lender.  So you need to ensure you review this with your CPA or financial advisor, and your lender.

If we identify additional information that changes our worksheet, we will update that and send in a future Update.

 COMMON QUESTIONS

I am pregnant and afraid to return to the workplace when the stay at home order is lifted because I am afraid the virus could harm my baby.  Can my employer make me return to the workplace?

We have had multiple employees ask about this issue.  Employees whose physicians advise them to self-quarantine may still be eligible for 80 hours of federal paid sick leave if they have not used it yet.  They would be eligible based on reason 2 in the Emergency Paid Sick Leave Act:

  1. advised by a health care provider to self-quarantine due to COVID-19 concerns;

Also, if the employee’s medical provider certifies the employee must remain in quarantine the employee may also qualify for California state disability or unemployment insurance.

If the employee’s medical provider is not certifying a need to continue quarantine then you will need to review options with the employee.

One option is to allow the employee to work from home if that is feasible.  Employers are encouraged to continue being flexible as employees transition back to work.

If working from home is not feasible and the pregnant employee still does not feel safe returning to the workplace it is important that you seek professional HR/legal advice before making any employment decisions as there are OSHA and National Labor Relations Act issues to be evaluated:

Can an employee refuse to come to work because of fear of infection?

Employees are only entitled to refuse to work if they believe they are in imminent danger. Section 13(a) of the Occupational Safety and Health Act (OSH Act) defines “imminent danger” to include “any conditions or practices in any place of employment which are such that a danger exists which can reasonably be expected to cause death or serious physical harm immediately or before the imminence of such danger can be eliminated through the enforcement procedures otherwise provided by this Act.” OSHA discusses imminent danger as where there is “threat of death or serious physical harm,” or “a reasonable expectation that toxic substances or other health hazards are present, and exposure to them will shorten life or cause substantial reduction in physical or mental efficiency.”

The threat must be immediate or imminent, which means that an employee must believe that death or serious physical harm could occur within a short time, for example, before OSHA could investigate the problem. Requiring travel to China or to work with patients in a medical setting without personal protective equipment at this time may rise to this threshold.  Most work conditions in the United States, however, do not meet the elements required for an employee to refuse to work. Once again, this guidance is general, and employers must determine when this unusual state exists in your workplace before determining whether it is permissible for employees to refuse to work.

In addition, Section 7 of the National Labor Relations Act (NLRA) extends broad-based statutory protection to those employees (in union and non-union settings alike) to engage in “protected concerted activity for mutual aid or protection.” Such activity has been defined to include circumstances in which two or more employees act together to improve their employment terms and conditions, although it has been extended to individual action expressly undertaken on behalf of co-workers.

On its own website, the National Labor Relations Board (NLRB) offers a number of examples, including, “talking with one or more employees about working conditions,” “participating in a concerted refusal to work in unsafe conditions,” and “joining with co-workers to talk to the media about problems in your workplace.” Employees are generally protected against discipline or discharge for engaging in such activity.

UPDATE FOR 4/27/2020

MONITORING PPP LOAN FORGIVENESS

For our clients who obtain a PPP loan, or are hoping to receive funding for the second round, it is important to monitor your progress towards forgiveness of that loan.  You have an 8 week period for the date you are funded to meet the requirements for forgiveness, and it is not quite as easy as it might seem to ensure you meet that.  For example, we have found for our own loan that we will need to adjust a paydate to have a payroll included.

We have prepared a worksheet, attached, to assist our clients with doing these projections and monitoring your progress.   Note, however, that this is prepared based on what we understand the current requirements to be, and those are subject to change by the SBA and/or your lender.  So you need to ensure you review this with your CPA or financial advisor, and your lender.

If we identify additional information that changes our worksheet, we will update that and send in a future Update.

PREPARING FOR REOPENING

As the discussions about reopening increase, the CDC issued guidance last week for employers.   That is summarized here:   https://www.fisherphillips.com/resources-alerts-5-steps-to-reopen-your-workplace-according.  Note, however, that the link to the CDC website no longer works, as guidance for some reason appears to be deleted from the CDC.   The outline is very reasonable, so we are still including in our Update.

Of course, once you reopen you have the potential of employees in the workplace testing positive for COVID-19.  Fisher Phillips has provided a good 4 step overview of how to handle confirmed COVID-19 cases when you reopen your business:  https://www.fisherphillips.com/resources-alerts-4-step-plan-for-handling-confirmed-covid.

UPDATE FOR 4/24/2020

NEW PPP FUNDING APPROVED

As I am sure you have heard, the new round of PPP funding has been passed and includes additional funding for the EIDL loans.  If you do not already have an application pending, you need to do that immediately to have any hope of being funded in this round.

In addition, the Treasury has issued FAQ’s  regarding who may qualify for PPP (and excluding public companies):  https://home.treasury.gov/system/files/136/Paycheck-Protection-Program-Frequently-Asked-Questions.pdf

 UNEMPLOYMENT FOR INDEPENDENT CONTRACTORS

The Governor has announced that the date Independent Contractors and Self-Employed individuals can start applying for UI benefits is April 28th.  We continue to be concerned about IC’s application process, since as of earlier this week the EDD website was still directing IC’s through their misclassification claim process.   If you have IC’s, you need to keep in mind the potential for those claims to eventually trigger EDD audits to evaluate whether those are legitimate IC’s, particularly in light of AB5.

EDD’s information on is:

If you are self-employed, an independent contractor, or gig worker and are unable to work or have had your hours reduced due to COVID-19, you may be eligible for Unemployment Insurance (UI) benefits under a few different scenarios:

  • You chose to contribute to UI Elective Coverage and paid the required contributions to be considered potentially eligible for benefits.
  • Your past employer made contributions on your behalf over the past 5 to 18 months.
  • You may have been misclassified as an independent contractor instead of an employee.

You may be eligible for Pandemic Unemployment Assistance if you are not eligible to receive regular state UI benefits. The EDD will begin accepting applications for this new, federally funded program on Tuesday, April 28.

When filing for your UI claim, you will be asked for your last employer.

  • If you own your business or are self-employed, you should list yourself as your last employer.
  • If you are an independent contractor, you should list yourself as your last employer.
  • If you believe you are misclassified as an independent contractor instead of an employee, you should list the business you contract with as your last employer. Be sure to include:
    • The employer name, phone number, and address.
    • Type of work performed.
    • Dates worked.
    • Your gross wages and how you were paid (such as hourly or weekly).
  • If you are a gig worker, you should list your gig employer as your last employee

 ANOTHER STATE FUND SUPPORT GRANT

Last week an update provided information regarding State Fund’s Essential Business Support Fund.  That information and application is found here:    https://www.statefundca.com/Home/StaticIndex?id=https://content.statefundca.com//news/EssentialBusinessFund.asp&utm_source=All+Policy+Holders&utm_campaign=b48ee7e9b3-EMAIL_CAMPAIGN_2020_04_20_10_32&utm_medium=email&utm_term=0_f00d0b3be3-b48ee7e9b3-199694563&mc_cid=b48ee7e9b3&mc_eid=b80197b43e, and those applications can be submitted now.

State Fund announced this week that they are now doubling the Essential Business Support Fund, to $50M.  In addition, they have created a new fund for non-essential businesses. This separate fund, Returning California to Work, will provide grants to qualified policyholders to help defray the costs of safety-related expenses, planned or already incurred, related to protecting their workforces from COVID-19. Individual grants can total up to $10,000 or two times the policyholder’s premium, whichever is less.  Applications for the Returning California to Work Fund will be made available at StateFundCA.com after statewide stay-at-home restrictions are lifted.

If your workers’ compensation policy is with State Fund, you should evaluate whether either fund will assist you with offsetting the costs of ensuring a workplace safe from COVID-19.

RETURNING TO THE WORKPLACE

As some are pushing for businesses to re-open, there are safety issues that need to be addressed, as well as logistical issues for workplaces where social distancing isn’t really feasible, employees whose childrens’ schools remain closed, etc.  This is a good article for an overview of those considerations:  https://www.npr.org/2020/04/24/840397136/the-office-as-we-knew-it-isnt-coming-back-anytime-soon-maybe-it-s-changed-foreve

UPDATE FOR 4/22/2019

NEW PAYROLL FUNDING SERVICE

For our clients for whom we process payroll via PrismHR, we have partnered with Payroll Funding for access to funding that may be needed to meet payroll.   If you are interested in this, please contact our Payroll Manager, Amy Madden (amy@ypp.com or amy@hryourway.com), and we are happy to make the introduction to assist with your cash flow needs.

FFCRA INITIAL LAWSUITS

The first lawsuits are already being filed alleging employers violated employees’ rights to paid sick or expanded FMLA.   You can read a good summary here:  https://www.fisherphillips.com/resources-alerts-what-employers-can-learn-from-the-first

As we have stated in previous Updates, it is important to contact your HR team to review requests for leave under the FFCRA.  In addition to ensure those leave rights are properly provided, existing laws, including the ADA, must also be reviewed.

PAYCHECK PROTECTION PROGRAM

We are getting a lot of questions regarding how to ensure forgiveness of PPP loans received.  You need to review this with your accountant or CPA to ensure you meet the requirements and have the accounting records that will be needed for forgiveness.

The following is provided as general guidance, and the information is subject to change by the SBA and your lender.

The funds from the PPP can be used for the following purposes:

  • Payroll—salary, wage, vacation, parental, family, medical, or sick leave, health benefits
  • Mortgage interest—as long as the mortgage was signed before February 15, 2020
  • Rent—as long as the lease agreement was in effect before February 15, 2020
  • Utilities—as long as service began before February 15, 2020

All expenses that fall under those categories are eligible for forgiveness. The following conditions will also apply:

  1. Eight weeks of coverage
    Eligible expenses are those that are incurred over eight weeks, starting from the day the first payment was made by your lender. This is not necessarily the date on which you signed your loan agreement.

Depending on your payroll schedule, you may want to adjust the timing of your payroll date to accommodate as many payroll cycles as possible.

For example, if your PPP loan gets deposited in your bank account on April 15, you could only use the funds on expenses incurred during the eight weeks following April 15.

  • The 75/25 rule
    At least 75% of your loan must be used for payroll costs. Payments to independent contractors cannot be included in the payroll costs.
  1. Staffing requirements
    You must maintain the number of employees on your payroll.

Here is the calculation you can use to determine if you’ve met this requirement:

First, determine the average number of full-time equivalent employees you had for:

  • The 8-week period following your initial loan disbursement, (A)
  • February 15, 2019 to June 30, 2019, (B1)
  • and January 1, 2020 to February 29, 2020. (B2)
    Take A and divide that by B1. Do the same with B2. Take the largest number you obtain. If you’re a seasonal employer, you must divide by B1.
  • If you get a number equal to or larger than 1, you successfully maintained your headcount and meet this requirement.
  • If you get a number smaller than 1, you did not maintain your headcount and your forgivable expenses will be reduced proportionately.
  1. Pay requirements
    You must maintain at least 75% of total salary.

This requirement will be individually assessed for every employee that did not receive more than $100,000 in annualized pay in 2019.

If the employee’s pay over the 8 weeks is less than 75% of the pay they received during the most recent quarter in which they were employed, the eligible amount for forgiveness will be reduced by the difference between their current pay and 75% of the original pay.

  1. Rehiring grace period
    You can rehire any staff that were laid off or put on furlough and reinstate any pay that was decreased by more than 25% to meet the requirements for forgiveness. You have until June 30th to do so.

After the eight weeks: applying for loan forgiveness

Applications for loan forgiveness will be processed by your lender. They’ll provide you with instructions on where to apply

After you submit your application for forgiveness, your lender is required by law to provide you with a response within 60 days.

Recordkeeping and required documents for forgiveness

These are the required documents you will need to collect to provide with your PPP forgiveness application. Your lender may have additional requirements.

  • Documents verifying the number of full-time equivalent employees on payroll and their pay rates, for the periods used to verify you met the staffing and pay requirements:
  • Payroll reports from your payroll provider
  • Payroll tax filings (Form 941)
  • Income, payroll, and unemployment insurance filings from your state
  • Documents verifying any retirement and health insurance contributions
    • Documents verifying your eligible interest, rent, and utility payments (canceled checks, payment receipts, account statements)If you’re a sole proprietor, you can have eight weeks of the loan forgiven as a replacement for lost profit. But you’ll need to provide documentation for the remaining two weeks worth of cash flow, proving you spent it on mortgage interest, rent, lease, and utility payments.Good recordkeeping and bookkeeping will be critical for getting your loan forgiven—you’ll need to keep track of eligible expenses and their accompanying documentation over the eight weeks. Your lender will likely require these documents in digital format, so take the time to scan any paper documents and keep backups of your digital records.

UPDATE for 4/20/2020

CHAMBER FOUNDATION GRANTS OPEN TODAY

The US Chamber of Commerce Foundation is providing $5,000 grants to help employers with 3-20 employee cover business expenses due to COVID-19, and the online application process starts today.   Businesses must be within zip codes that are identified “economically vulnerable”.      You can check your zip code, obtain additional information and apply here:   https://savesmallbusiness.com/?fbclid=IwAR2mntF3FZiv1SLHnDwgCvgFzwebQvfDe5nuuDyz9hllEqznZB3lm1NpHCg.

COMMON QUESTIONS

  1. I have reduced hours for some of my employees.   Will they receive UI benefits?This will depend on their earnings after the reduced hours.  Where employees’ reduction is not sufficient, they will not receive UI benefits.  Per the EDD:
    Under the provisions of the Unemployment Insurance Code, a person must be “unemployed” to be eligible for unemployment insurance benefits. The definition of “unemployed” for benefit eligibility purposes, is contained in Section 1252 of the Code which, in part, provides as follows:” (a) An individual is ‘unemployed’ in any week in which he or she meets any of the following conditions:
    (1) Any week during which he or she performs no services and with respect to which no wages are payable to him or her.
    (2) Any week of less than full-time work, if the wages payable to him or her with respect to the week, when reduced by twenty-five dollars ($25) or 25 percent of the wages payable, whichever is greater, do not equal or exceed his or her weekly benefit amount . . .Employees can calculate their estimated weekly UI benefits here:  https://www.edd.ca.gov/unemployment/ui-calculator.htm
  1.            Some of my employees are receiving nominal amount of California UI Benefits.  Do they also receive the federal UI subsidy prorated?Yes.  The Federal Pandemic Unemployment Compensation (FPUC) program provides $600 per week though July 31, 2020 for any employee receiving UI benefits, including those receiving partial benefits.

PAYCHECK PROTECTION PROGRAM

As initial information is being released on the PPP loan program, it’s appearing that many businesses who were not adversely affected by COVID-19 were loan recipients, while many businesses who needed the PPP to survive did not:  https://www.reuters.com/article/us-health-coronavirus-usa-lending-analys/main-street-bailout-rewards-u-s-restaurant-chains-firms-in-rural-states-idUSKBN21Z3FL

Federal legislators are working on a new round of funding and will hopefully address this issue.  If you were not funded, it is important that you talk with your lender now to identify how you can ensure a higher priority of processing.

UPDATE FOR 4/17/2020

STATE FUND OPENS $25M GRANT PORTAL

If you have a policy with State Fund, they have provided a $25million fund to help essential businesses defray the cost of safety-related expenses, planned or already incurred, related to protecting employees from COVID-19.  Grants of up to $10,000 can be applied for, applications are processed on a first in first out basis.  Once $25million has been reached, the grants will cease.

The application portal just opened this morning:  https://www.statefundca.com/Home/StaticIndex?id=https://content.statefundca.com//news/EssentialBusinessFund.asp

Here is a link to the qualifications, rules and requirements for this grant: https://www.statefundca.com/Home/StaticIndex?id=https://content.statefundca.com//news/EssentialBusinessFundRequirements.asp

If you have a policy with State Fund and are operating as an essential business, you should review this quickly and submit your application since it is expected these grants will go quickly. 

 PAYROLL PROTECTION PROGRAM LOANS

If you received a PPP loan, you need to start evaluating how you are going to utilize those funds if you plan to seek forgiveness of the loan. The SBA currently provides this guidance:

The loan will be fully forgiven if the funds are used for payroll costs, interest on mortgages, rent, and utilities (due to likely high subscription, at least 75% of the forgiven amount must have been used for payroll). …

Forgiveness is based on the employer maintaining or quickly rehiring employees and maintaining salary levels.  Forgiveness will be reduced if full-time headcount declines, or if salaries and wages decrease.

It’s important to continue monitoring this for any further requirements issued by the SBA.

If you did not obtain a PPP loan and wanted to, you should continue to work with your lender to ensure you application is ready to submit if additional PPP loan funds are made available.

One of the challenges clients have been anticipating for rehiring employees is that some employees may refuse to return to work while they receive the additional federal UI benefit of $600.  That is paid in addition to their California benefit.   Clients need to remind employees that refusing a call to return to work will mean that they are no longer eligible for UI benefits.   If the employee while on layoff has become ill, they may be able to move to disability benefits, but UI would not continue.  Your HR team has developed a form letter we will complete and send to EDD to notify them when an employee refuses to return to work.

PLANNING FOR REOPENING

As we have been saying, all businesses need to prepare now for the process of staged reopening which will include some Federal guidance and State requirements.  In addition, business owners and leaders need to consider specifics for your business, the safety of your employees and clients, and limiting your potential liability.  Here is an excerpt from an article we found in the Mercury News regarding the comparison between what we currently know about the Federal and State approaches to phased reopening (https://www.mercurynews.com/2020/04/16/coronavirus-how-trumps-plan-for-reopening-america-compares-with-californias/):

Q Newsom’s plan called for businesses, schools, and child care facilities to continue to support physical distancing as they reopen, and he laid out a stark picture of life in California as restrictions are eased. Restaurants might have half as many tables, food servers in masks and gloves, disposable menus, temperature checks of diners at the door. Schools might have staggered schedules with continued online learning at home. Businesses would continue to maintain distancing. Does the president’s plan have anything like that?

A The White House plan includes for all phases recommendations to continue hygiene practices, hand-washing, avoiding touching your face, frequent disinfection and wearing of face masks in public, particularly for public transit. Employers would continue with temperature checks and not letting sick workers into the workplace.

The first phase of the reopening calls for maintaining remote “telework” where possible, minimizing non-essential travel, closing common areas at work. Schools, day care and camps would remain closed. Visits to elder care facilities would remain banned and more vulnerable older and sicker people would be advised to consider maintaining the stay-home restrictions.

However, it would allow gatherings of up to 10 people. Restaurants, movie theaters, places of worship and sporting venues could open with “strict physical distancing protocols.” Bars would stay closed but gyms could reopen with appropriate physical distancing and sanitation.

Q What do the next phases of the White House plan allow?

The second phase would kick in after satisfying a second two-weeks of the “gating criteria” with no evidence of a rebound in cases. Schools, day-cares and camps could reopen. The elderly and medically vulnerable would be advised to remain under shelter-in-place, but gatherings of up to 50 people would be allowed, with appropriate physical distancing. Non-essential travel could resume.

But telework would be encouraged where possible and common areas at workplaces would remain closed. Theaters, places of worship, sporting arenas could reopen with “moderate” distancing measures. Elective surgeries could resume, and bars could reopen with “diminished standing-room occupancy.”

Q So what’s the third phase?

A After a third two-week period of meeting the gating criteria, the third phase calls for unrestricted staffing of workplaces and allowing the vulnerable and elderly to resume public interactions with appropriate physical distancing and sanitation measures. Visits to elder care facilities could resume with hygiene measures in place.

UPDATE for 4/14/2020

I had the opportunity to provide some HR advice to members of the Santa Maria Valley Chamber of Commerce this week.  You can view that interview here:  https://www.youtube.com/watch?v=nXzIucgVyrk.

COMMON QUESTIONS

  1. I did not initially close my worksite when the shelter orders were enacted, but I just did so as business has declined.  Can my employees receive the new federal paid sick leave?No.  Once the worksite is closed and no work is available either onsite or remote for employees, they cannot be paid the EPSL.   That leave is only applicable when employers are able to provide work.
  2.   We are an essential business with essential infrastructure workers..  How should we respond when an essential infrastructure employee may have a confirmed or suspected Covid 19 exposure?CDC has published guidance for model OSHA compliance:
    https://www.cdc.gov/coronavirus/2019-ncov/community/critical-workers/implementing-safety-practices.htmlA summary of guidance for an asymptomatic essential infrastructure employee with known or suspected exposure:
  • Pre-Screen: Employers should measure the employee’s temperature and assess symptoms prior to them starting work. Ideally, temperature checks should happen before the individual enters the facility.
  • Regular Monitoring: As long as the employee doesn’t have a temperature or symptoms, they should self-monitor under the supervision of their employer’s occupational health program.
  • Wear a Mask: The employee should wear a face mask at all times while in the workplace for 14 days after last exposure. Employers can issue facemasks or can approve employees’ supplied cloth face coverings in the event of shortages.
  • Social Distance: The employee should maintain 6 feet and practice social distancing as work duties permit in the workplace.
  • Disinfect and Clean work spaces: Clean and disinfect all areas such as offices, bathrooms, common areas, shared electronic equipment routinely.
  • I have heard I can take a payroll tax credit for my employee wage costs.  Is that correct?Yes, the CARES Act does provide an option for companies to take an Employee Retention Tax Credit.  This is applicable for companies that either had their operations fully or partially suspended under COVID-19 orders OR had a decline of 50% in gross receipts compared to the same prior year quarter.  However, you cannot take this tax credit if you receive the Paycheck Protection Program loan.  So you need to work with your accountant to evaluate these and determine which is better for you. 

WORKERS COMPENSATION

Yesterday California’s Insurance Commissioner ordered insurance companies to refund insurance premiums paid for at least March and April – with the possibility of extension to May – for six lines of insurance:  private passenger automobile, commercial automobile, workers’ compensation, commercial multi-peril, commercial liability, medical malpractice, and any other insurance line where the risk of loss has fallen substantially as a result of the COVID-19 pandemic.  This is applicable to “all adversely impacted California policyholders”.   You can read the full release here:  http://www.insurance.ca.gov/0400-news/0100-press-releases/2020/release038-2020.cfm and here:  http://www.insurance.ca.gov/0250-insurers/0300-insurers/0200-bulletins/bulletin-notices-commiss-opinion/upload/Bulletin_2020-3_re_covid-19_premium_reductions-2.pdf.

We have already contacted some of the workers’ compensation brokers we work with on behalf of clients to get details as to how this will be implemented, and will let clients know as we have that information.  For the other areas of insurance, you should contact your broker directly.

We are also monitoring for a decision from the WCIRB regarding relief for other areas of workers’ compensation.  The WCIRB is conducting a hearing on those issues on April 15th, so we will provide that in a future update.

STRATEGIC PLANNING

In case you missed it among the screaming headlines that the US leads the world in COVID-19 confirmed cases and deaths, the dialogue is beginning to change regarding reopening the economy.  States are forming regional working groups to discuss how to safely and quickly get at least some businesses back open and some employees back to work.  With the peak of the pandemic in the US expected to hit this week or next in various regions of the country, government and business leaders are looking ahead.  For your business, you should as well.

My last update focused on how business leaders should be looking for opportunities to reposition your company to not only survive but thrive in the post COVID world.  Here is another great article on this topic from Harvard Business Review: https://hbr.org/2020/04/a-way-forward-for-small-businesses

Today, I want to springboard off the national discussions regarding planning for specific steps for reopening the economy and encourage all of us to start that same planning process for our individual businesses.

It seems quite likely that there will be opportunities for some businesses to begin at least a transition to normal business operations within the next few weeks. So, now is the time for you to plan for that process.  Likely, the “rules” which come out will integrate some level of continued social distancing and shelter in place, along with testing, contact tracing, and isolation of infected individuals.  So, here are some questions to start asking:

  • What functions in your business are essential and must be done in the office?  What changes in procedures/technologies need to be implemented to perform those tasks at distance or “touchless”?  What safety procedures need to be implemented to keep your staff healthy?
  • What functions in your business can start or continue to be done remotely?  What changes in procedures/technologies need to be implemented to support and manage that remote work?
  • What employees are essential to reopening your business?  Can they work remotely or do they need to be in the office?  As above, what needs to be in place to ensure their safety and enable their work?
  • How can you enable customer interactions (service or sales) remote or “touchless”?
  • If any testing or proof of antibodies is required, how will you comply with that without creating other HR issues?
  • What is your backup plan for key employees who might test positive or otherwise be required to go into isolation?

This, obviously, is not a complete list but hopefully will stimulate some discussions among your leadership team so that you are prepared to get back to business as much as possible as soon as the restrictions are relaxed.

UPDATE FOR 4/8/2020

During a meeting this morning of CEO’s and senior executives, the discussion was about strategies for emerging from the COVID-19 impact on our businesses and  the economy.  It was clear that every business, whether essential and continuing to operate or shut down, sees long term issues created by this crisis.  Some are the more immediate of cash flow or supply chain shortages, and others related to the potential of a recession.

As I’ve had a bit of a respite from the sudden torrent of HR issues which the COVID-19 pandemic has brought to me and my team on behalf of our clients, I have begun to think how my own small business will thrive in the future and how I can take some actions now to ensure that my team is aligned in getting us to that point.  There will, undoubtedly, be a myriad of opinions and research on this topic as the weeks and months progress, but here are some early thoughts which I found and thought you might find interesting for your business.

Michael Gunther, one of our partners and owner of Collaboration Business Consulting (https://collaboration-llc.com/), has authored a very interesting piece outlining the stages of business planning during this, or any, crisis:  Stabilize, Rebuild, Thrive.  This whitepaper goes into concrete actions for each of these stages and I would encourage you to read it in depth:  https://collaboration-llc.com/resource/managing-your-business-through-uncertain-times/.

I found another interesting perspective from an online source in New Zealand, Newroom (https://www.newsroom.co.nz/).  Mike Lee of the University of Auckland plots business which will survive, dive, and thrive across the axes of Synchronicity and Location Dependence.  A very quick and interesting read:  https://www.newsroom.co.nz/ideasroom/2020/03/21/1092476/how-business-will-survive-covid-19.

Finally, billionaire entrepreneur Mark Cuban took to LinkedIn to answer questions from small business owners about how to handle the immediate impacts of the pandemic, along with some thoughts on what to do now to come out of this crisis as a stronger business.  I mention this not because I have a strong feeling about Mr. Cuban as a business person, but because I appreciate that his ideas included looking ahead, not just hunkering down and managing expenses and cash flow:  https://www.cnbc.com/2020/03/16/mark-cubans-advice-for-small-business-owners-during-the-pandemic.html.

While many of are waiting on that PPP or EIDL loan, now is a good time to think about a way forward and how best to position your company.

UPDATE FOR 4/7/2020

From emails and calls with many clients starting late last week, everyone has been focused on submitting applications for the Paycheck Protection Program loan.   According to an SBA representative on a webcast last night, the SBA has significantly increased staff to process new applications for the PPP and the EIDL loans.  Let’s all hope that is correct, and that the financing assurances issued by the Federal Reserve yesterday will help the flow of PPP loan funds soon.

Here’s the SBA’s FAQ site for the PPP:  https://home.treasury.gov/system/files/136/Paycheck-Protection-Program-Frequenty-Asked-Questions.pdf

COMMON QUESTIONS

My revenue has decreased significantly and I’ve already laid off employees.   Given that situation, am I required to pay employees for the emergency FMLA (EFMLA) and sick leave (EPSL) provided under the CARES Act?

Yes.  For employees continuing to work, as of April 1st these new paid leaves apply and you cannot deny an employee the right to those.   Remember that employers are to be reimbursed 100% of the payroll costs associated with these leaves, up to certain daily caps.

If I incur payroll expenses for EFMLA and/or EPSL, how am I reimbursed?

Per the IRS (Instructions for Form 7200):

Eligible employers will be able to claim these credits based on qualifying leave wages they paid for the period between April 1, 2020, and December 31, 2020.

 Eligible employers who pay qualified sick and family leave wages or qualified wages eligible for the employee retention credit should retain an amount of the employment taxes equal to the amount of qualified sick and family leave wages (plus certain related health plan expenses and the employer’s share of the Medicare taxes on the qualified leave wages) and their employee retention credit, rather than depositing these amounts with the IRS. The employment taxes that are available for the credits include withheld federal income tax, the employee share of social security and Medicare taxes, and the employer share of social security and Medicare taxes with respect to all employees. If there aren’t sufficient employment taxes to cover the cost of qualified sick and family leave wages (plus the qualified health expenses and the employer share of Medicare tax on the qualified leave wages) and the employee retention credit, employers can file Form 7200 to request an advance payment from the IRS.

Our HR team has developed the new leave documents for employees who request EFMLA and/or EPSL to verify an employees reason for leave qualifies.  That is important, since employers are not entitled to the tax offset for any payments that do not meet the qualifying reasons identified in the law and by the DOL.

SOME NEW UPDATES:

INSURANCE PLANS

On March 18, 2020, California’s Insurance Commissioner Lara requested that all insurance companies provide a 60-day grace period to pay insurance premiums so that insurance policies are not cancelled for nonpayment of premium. Last Friday, Commissioner Lara issued a second notice advising insurance companies that they should “not attempt to enforce policy or statutory deadlines” on policyholders until ninety (90) days after the end of the statewide COVID-19 state of emergency.  This includes the submission of proofs of loss, claim forms, and any other policy, statutory, or insurer imposed deadlines where the failure to comply could result in the forfeiture or limitation of benefit rights under the policy.

If you need any of these accommodations for your company’s insurance plans, you should contact your broker.  For any plans that YPP manages for you, please contact us and we will handle that broker contact for you.   A word of caution, however…the insurance premiums will be due by the end of the grace period, so I do not recommend deferring these unless you are certain of the ability to fund those when due. 

RETIREMENT PLANS

Retirement plan administrators are providing guidance to Plan Sponsors for retirement plan provisions made under the CARES Act.  For clients participating in our Slavic plan, the necessary plan amendments are already in process to adopt these changes.  If you have another retirement plan, you should contact your plan administrator if you have not already received information about adopting these for your plan.  A summary of the CARES Act provisions follows:

CORONAVIRUS-RELATED DISTRIBUTION is any distribution from an eligible retirement plan made on or after the date of the enactment of this Act and before December 31, 2020 to Qualified Individual.

QUALIFIED INDIVIDUAL is one:

  1. who is diagnosed with the virus with coronavirus disease 2019 (COVID-19) by a test approved by the Centers for Disease Control and Prevention
  2. whose spouse or dependent  is diagnosed with such virus or disease by such a test
  3. who experiences adverse financial consequences as a result of being quarantined, being furloughed or laid off or having work hours reduced due to such virus or disease,
  4. being unable to work due to lack of child care due to such virus or disease, closing or reducing hours of a business owned or operated by the individual due to such virus or disease, or
  5. other factors as determined by the Secretary of the Treasury (or the Secretary’s delegate).

Coronavirus-related distribution provisions:

  • Waiver of the 10% early withdrawal penalty on distributions up to $100,000Distribution may be repaid during the 3-year period beginning on the day after the date distribution is received
  • Distribution repayment will not be subject to the contribution limits
  • Tax on the income from the distribution may be included ratably over the 3-taxable year period beginning with taxable year in which the distribution is taken
  • Coronavirus-related distributions will not be eligible for a rollover
  • Administrator of an eligible retirement plan may rely on an employee’s certification that the employee satisfies the conditions under Qualified Individual in determining whether any distribution is a coronavirus-related distribution

Coroanvirus-related loan provisions:

  • A qualified participant may receive a loan during the 180- day period beginning on the date of the enactment of this Act equal to the lesser of $100,000 or 100% of the participant’s vested balance in the plan. This is double the amount of the current retirement plan loan limits.
  • Participant with an outstanding loan from a qualified employer plan, with a repayment due after the date of the enactment of this Act through 12/31/2020 may delay the loan repayments for 1 Year.
  • Subsequent repayments with respect to any such loan shall be appropriately adjusted to reflect the delay in the due date.

Other Provisions of the Bill

Temporary Waiver of Required Minimum Distribution Rules

  • Individuals with a required minimum distribution due for 2020 may elect to use the RMD waiver and keep those amounts in the plan. This includes the 2019 RMDs due by 4/1/2020.
  • RMDs due in 2020 that have already been distributed may be rolled to a qualified plan.

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 3/25/2020

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.

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