COVID-19 What Businesses Need to Know Update No. 2

California’s WARN Act Suspended During COVID-19 Pandemic.

There are several options for reducing labor costs during the COVID-19 pandemic, including employee furloughs and layoffs. However, until very recently, employers considering a large employee layoff or furlough due to the pandemic faced significant uncertainty due to state and federal notice requirements. Now, California’s Governor has issued an Executive Order, with immediate effect, to “suspend” the notice requirements of California’s WARN Act for employers who need to lay off or furlough large numbers of employees as a result of the pandemic.

The California WARN Act (similar to the federal WARN Act) generally requires employers to provide 60 days’ advance notice of a mass layoff or furlough of affected employees. The risks for non-compliance are serious, including liability for back pay, lost benefits, attorneys’ fees, and daily civil penalties. The only exception is for layoffs caused by a physical calamity or act of war. Because the Act does not define the term “physical calamity” and no current case law analyzes this issue, there has been significant uncertainty about whether the COVID-19 pandemic qualifies as an exception.

Given the current situation, Governor Gavin Newsom has ordered that employers are not required to strictly comply with the regular notice provisions of the Cal-WARN Act for the duration of the COVID-19 pandemic, subject to certain conditions. This will allow California business owners more flexibility in connection with, for example, furloughing or laying off 50 or more employees.

Employers must still meet the following legal requirements for mass furloughs and layoffs:

• Written notice of mass layoffs or furloughs must be given to the affected employees and to the California Employment Development Department (EDD), the local workforce investment board, and the chief elected official of each city and county government within which the mass layoff or furlough occurs.
  
• Employers must give as much notice as practicable and, at the time the notice is given, provide brief statements of the basis for reducing the notification period.
• The layoff, relocation or termination must be caused by COVID-19 related “business circumstances that were not reasonably foreseeable as of the time that notice would have been required,” consistent with the federal WARN Act.
• For written notices given after the date of the Executive Order, March 17, 2020, in addition to the other required elements, the notice must contain 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 https://www.labor.ca.gov/coronavirus2019/.”
  

Although implementing a lawful plan for near-immediate furloughs or layoffs is now less risky, these steps still require planning and guidance, including how to address employee communications about the actions being taken.

In these times, this news should bring some welcome relief to business owners considering large scale employee furloughs or layoffs as options to keep their enterprise operational during the pandemic.

Please contact us if you have any questions or would like to discuss.

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New Federal Coronavirus Paid Leave Law

Today, March 18, 2020, Congress passed the Families First Coronavirus Response Act. President Trump has just signed the bill into law.

Under the new law, employers with fewer than 500 employees must provide employees with two weeks (10 days) of emergency paid sick leave benefits to be used for Coronavirus-related absences through December 31, 2020.

• For full-time employees, this means 80 hours of paid sick leave.

• For part-time employees, this means the number of hours the employee works on average over a two-week period.

• All employees are eligible for this paid sick leave benefit, regardless of their length of employment.

• The full benefits must be available for immediate use and do not accrue over time based on hours worked.
• Employers cannot require employees to exhaust other forms of paid leave before using this new Coronavirus paid leave.
• The Coronavirus paid leave is in addition to any paid leave the employer already provides. Please note, it does not appear that an employer with an existing paid sick leave policy is excused from compliance with the new law.

An employee may use paid sick leave if the employee is unable to work for any of the following reasons:

1. The employee is subject to a federal, state, or local quarantine or isolation order for Coronavirus;

2. The employee is advised by a health care provider to self-quarantine due to Coronavirus concerns;

3. The employee is experiencing symptoms of Coronavirus and seeking a medical diagnosis;

4. The employee is caring for an individual who is under a quarantine or isolation order or has been advised to self-quarantine;

5. The employee is caring for a child whose school or child care has been closed due to Coronavirus;

6. The employee is experiencing any other substantially similar condition specified by the Secretary of Health and Human Services.

Failure to comply with the paid sick leave law will be deemed a failure to pay minimum wages under federal law, and subject an employer to various penalties.

Given the extent of California’s school closures, this law will have far reaching effects for California employers.

Employers are required to post a notice in the workplace explaining paid sick leave rights under the new law. The Secretary of Labor will publish this notice soon.

The Secretary of Labor has authority to issue regulations to small business with less than 50 employees, but they are not yet exempt.

Expanded Family and Medical Leave

The law also expands the Family and Medical Leave Act (“FMLA”) for employees unable to work due to childcare needs, if a child’s school or childcare is closed due to the Coronavirus public health emergency.

Importantly, employees are eligible for the leave if they have worked for the employer for at least 30 calendar days.

Pay to employees taking this pandemic-related FMLA leave is very different than that required under existing FMLA law:

• If an employee takes leave to care for a child due to a Coronavirus-related school closure, the first 10 days of the leave may be unpaid. The employee may elect (but cannot be required) to use accrued vacation or sick leave during this time.

• After this first 10 days, the employer must provide paid leaveof no less than two-thirds of the employee’s regular rate of pay, not to exceed $200 per day and there is a $10,000 per-employee aggregate limit.

An employee who uses this FMLA leave is entitled to reinstatement to the same or equivalent position unless:

• The employer has fewer than 25 employees;

• The position held by the employee at the time the leave started no longer exists due to economic conditions or other operating condition caused by the public health emergency; and

• The employer has tried to restore the employee to an equivalent position. If there is no position available, the employer still must make reasonable effort for one year to contact the employee if an equivalent position becomes available.

The expanded FMLA law takes effect “no later than” 15 days from today’s date, as President Trump has just now signed the bill into law.

Certainly, these enactments are helpful for employees, but will raise new questions for employers. We are here to assist. Do not hesitate to contact us to discuss how this brand new law will apply to your business.