Employment Update: What California Businesses Need to Know About Operating During the COVID-19 CrisisDec 23, 2021 California Cannabis Law Blog
This blog post provides some general guidance on employment issues that many California businesses are facing related to employment in light of the COVID-19 crisis, including the new federal laws on paid sick leave and paid family leave for taking care of children. As you consider the challenges and response strategies discussed in greater detail below, please know that Wendel Rosen is available to advise and answer the specific questions that you may have.
Staying Open / Essential Businesses
Essential businesses can stay open. See attached summary of essential businesses under California’s shelter-in-place executive order.
(a) Protecting Employees
Once a business determines that it can operate as “normal“ because it is essential, it should be aware of a few additional factors. The first obviously is to take reasonable steps to protect its employees from the virus, and thus protect against claims of negligence. This means assessing how the business is vulnerable to exposure to and/or spread of the virus. This would likely include methods of performing job duties while maintaining social distancing, providing protective gear, and some kind of training. The latter may just be a talk or memo with some common sense pointers and reiterating what the CDC and State has said.
(b) New Federal Laws for Sick Leave, etc.
Employers with less than 500 employees will be subject to the federal laws providing for paid sick leave and emergency family medical leave. Beginning April 2, 2020, employers with less than 500 employees will be required to provide paid sick leave and paid “FMLA” for circumstances related to the COVID-19 outbreak. The emergency FMLA is for employees who are unable to work, including telecommuting, because their minor child’s school/daycare has closed because of the virus. For more details, see section C below.
Non-essential businesses can operate, but in different formats. This may mean office workers telecommuting, restaurants providing only take-out meals, and bars being allowed to sell bottles of alcohol on a pick-up basis.
(a) Issues for Employers with Employees Working at Home
Having employees work at home raises a number of issues for employers, especially if they do not have telecommuting policies in place. Briefly:
- Non-Exempt employees should be reminded to take their rest and meal breaks. It would be good to have the employees report on a daily basis their time (including clocking out for meal breaks) and confirming they took their rest breaks.
- Employees should be reimbursed for expenses associated with requirements for working from home, such as internet costs and phone. It is common to reimburse employees $50-$75/month for these expenses.
- Workers comp – injuries incurred on the job while working at home should be reported immediately as they are still subject to workers comp.
- Protect confidential and proprietary information.
- If an employee refuses to work from home for a reason that is not protected by law (e.g., telecommuting does not work with their reasonable accommodation), then the employee can be furloughed or terminated, though the employer should consult with legal counsel.
(b) Federally Mandate Sick Leave and Leave Associate with Child Care
Employers with less than 500 employees will be subject to the federal laws providing for paid sick leave and emergency family medical leave. See section C below.
LAY-OFFS AND TERMINATIONS
Many employers are laying off or terminating employees or reducing their hours. Issues to keep in mind:
Last Day Issues
If employees are terminated or laid-off for an indefinite amount of time, then the employer must pay the employee on their last day of employment all amounts owed to the employees (just like before). This includes hours worked to date, premiums for missed meal and rest breaks, unused vacation/PTO, and reimbursement for expenses. Sick leave, whether provided by state or federal law or the employer, is not a wage and therefore is not paid out at termination. There are different rules applying to employees who earn commissions based on future events.
If employees are laid off with a definite return-to-work date (furloughed), they are to be paid regularly and do not need to be paid unused vacation/PTO. The return to work date should be reasonable; if it is too far into the future, the Labor Commissioner will consider it a termination for final pay purposes. There is no set rule for what is reasonable.
Employers may be subject to state or federal WARN Act requirements for mass layoffs. California has suspended the penalties associated with not complying with the state’s WARN Act, but it has not suspended the requirements relating to notice to employees and local authorities. See section D below. The notices and triggering events can be complicated and employers should consult with their attorneys.
Unemployment is available immediately to employees who are let go during the crisis (no one-week waiting period). The weekly benefit amount is about 60-70 % of wages earned in the prior 5 to 18 months, up to a maximum of $1300.
Also, full-time employees who lose income because of reduced hours may be eligible for unemployment benefits even if they are still working. These are called “partial benefits” by California’s EDD. Partial benefits occur in two circumstances for full-time employees:
- Who are laid off for no more than two consecutive weeks, OR
- Whose gross earnings, when reduced by $25 or 25 percent, whichever is greater, are less than their weekly beneﬁt amount.
A full-time employee is eligible for partial unemployment under the following conditions:
- The employee becomes partially unemployed through no fault of his/her own; and
- The employee works less than normal full-time hours because of lack of work; and
- The employee’s normal weekly earnings are reduced by lack of work; and
- The employee’s gross earnings, after deducting the first $25 or 25 percent of the total earnings (whichever is greater), are less than his/her weekly Unemployment Insurance benefit amount.
NEW SICK LEAVE / CHILD CARE LAWS
On March 18, 2020, President Trump signed House Bill 6201, the Families First Coronavirus Response Act (“FFCRA”). The law takes effect on April 2, 2020, and remains in effect until December 31, 2020. The FFCRA amends portions of the FMLA and also provides for paid sick leave in certain circumstances related to the current COVID-19 pandemic. It applies to employers with less than 500 employees.
Employers will be “reimbursed” for these paid wages by a credit against the tax employer’s pay roll taxes for each calendar quarter in an amount equal to 100 percent of the qualified sick leave wages paid by the employer.
The Federal government will be preparing guidelines for employers, but, at the time of writing, no further guidelines have been issued.
Federal Sick Leave Law
Amount: It provides for 10 days of sick leave to be paid by employers.
Employee Qualifications: Paid sick leave is available for immediate use, regardless of how long an employee has been employed.
Reason for Sick Leave:
Self-care: Employee is sick due to COVID-19 OR employee is quarantined due to COVID-19 (quarantine can be imposed by government or by the employee’s medical provider) OR the employee is experiencing symptoms of COVID–19 and is seeking a medical diagnosis.
Care of Others: Sick leave is also available for employees caring for someone who is experiencing symptoms of COVID–19 and who is seeking a medical diagnosis OR the employee is caring for a minor child whose school or day care provider is unavailable because of COVID-19.
Pay: For full-time employees, it is 80 hours; part-time employees receive the number of hours that the employee works on average in a two-week period.
Employees are paid at their regular rate of pay as determined by the federal Fair Labor Standards Act (FLSA) or at the minimum wage, whichever is greater, for uses associated with the employee (i.e., self-care or quarantine). Employees are paid at 2/3 of their regular rate of pay for uses related to care of another, including childcare.
Paid leave is capped at $511 per day and $5,110 in the aggregate for self-care or quarantine and is capped at $200 per day and $2,000 in the aggregate for care of another.
An employee may use paid sick leave under this law before using other leave, but cannot be required to.
Federal Emergency Family Medical Leave – Child Care
The new law provides for 12 weeks of leave related to having to care for a minor child because of school closure or unavailability of child care related to COVID-19. The first two weeks are not paid by the employer (though the employee can take the sick leave described above), whereas the remaining 10 weeks are paid at 2/3 the employee’s salary, subject to caps.
Employee Qualifications: Employees must have been employed by the employer for 30 days or more prior to the requested leave.
Reason for Emergency FMLA Leave: The leave is only for employees who are unable to work, or unable to telework, due to a need to care for a minor child if the child’s school or place of care has been closed or the child care provider is unavailable due to a public health emergency related to COVID-19.
This leave does not apply to employees who are not permitted to come to work because of a shelter-in-place order but are unable to work from home for some reason (such as they do not have internet or no phone).
Pay: Employers must provide paid leave for each day of emergency leave taken after the initial 10 days, in an amount not less than two-thirds of an employee’s regular rate of pay, with caps at $200 per day and $10,000 total.
Employees may elect to substitute any accrued paid vacation, parental, medical or sick leave for unpaid leave; employers cannot force them to use this time.
Exceptions: Employers with less than 50 employees if compliance would jeopardize the viability of the business as an on-going concern. Also, certain healthcare providers and emergency responders are exempt.
Job Protection: Like “regular” FMLA, the new law provides for job protection of employees using it. There is a limited exception for employers of less than 25 employees where the employee’s position no longer exists upon return to work due to economic conditions or other changes caused by the coronavirus emergency, and the employer has made reasonable efforts to restore the employee to an equivalent position.
“Regular” FMLA is still available pursuant to its own terms.
LAYOFF ISSUES – WARN ACTs
California and the federal government have WARN Acts (Worker Adjustment and Retraining Notification) that require notices be given to employees and certain government agencies. The California act applies in specific circumstances to employers with 75 or more employees. If the employer has 100 or more employees, they must also comply with the federal WARN Act. Employers should consult with an attorney because there are a lot variables. Below is a general summary.
Triggering event under California law: Layoff of 50 or more employees during any 30-day period regardless of percentage of work force.
The California WARN Act requires employers to provide 60 days’ advance notice when they conduct a mass layoff, relocation, or termination. Usually, failure to provide 60 days’ notice can result in severe liability – up to 60 days of back pay plus benefits for all laid-off, relocated, or terminated employees, in addition to civil penalties.
On March 17, 2020, Governor Newsom suspended the provisions of California’s WARN act that impose liability and penalties. His executive order waives the 60-day notice requirement for the duration of the COVID-19 emergency. The order applies where COVID-19-related business considerations result in mass layoffs, relocations, or terminations that were not reasonably foreseeable as of the time that notice would have been required.
To qualify for the waiver of the 60-day notice requirement under the order, employers must:
- give written notice to employees; the EDD, the local workforce investment board, and the chief elected official of the local city and county government;
- give as much notice as is “practicable,” along with a brief statement of the basis for reducing the 60-day notification period;
for written notice given after March 17, 2020, include the following statement: “If you have lost your job or been laid off temporarily, you may be eligible for Unemployment Insurance (UI). More information on UI and other resources available for workers is available at labor.ca.gov/coronavirus2019.”
Federal WARN Act
The federal WARN act applies to employers of 100 or more and is still in effect, though it contains an exception for “unforeseeable circumstances.” Triggering events vary, but include plant closures , permanent or temporary shutdown of a single site of employment or facility (or operating unit within a single site of employment) that involves 50 or more employees during a 30-day period if the number of affected employees is at least 33% of the workforce.
Notice requirements are much the same as California’s. In either case, attorneys should be consulted.