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COVID-19 Paid Sick and Family Leave & Updates to Unemployment Insurance

Saturday, April 11, 2020

By William M. Mandell, Robert R. Pierce, Michael C. Fee, Hannah Schindler-Spinelli, and Scott M. Zanolli

Many small businesses are being significantly impacted by the economic situation created by the COVID-19 virus, and there are an increasing number of instances in which employers may have to temporarily or permanently reduce their workforces.  As a result, lawmakers at both the state and federal level have acted to pass legislation and allocate funds for to help support businesses and protect workers. 

Below is a summary of some of the legal developments of which both employers and employees should be aware.

The Families First Coronavirus Response Act (“FFCRA”)

This will apply to employers with less than 500 employees from April 1, 2020 through December 31, 2020.  Employers with less than 50 employees may qualify for an exemption from the requirement to provide leave due to school closings or childcare if the requirement would jeopardize the viability of the business as a going concern.

Under the Act, employers must provide all employees with:

  • Emergency Paid Sick Leave equivalent to two weeks, up to 80 hours, of leave at the employee’s regular rate of pay where the employee is unable to work or telework because the employee is quarantined, pursuant to a federal, state, or local government order or advice of a health care provider, and/or experiencing COVID-19 symptoms and seeking a medical diagnosis. This pay should be made at the employee’s regular rate of pay up to $511 per day, or a maximum total benefit of $5,100. This paid leave must made immediately available to all employees. 
  • Emergency Family and Medical Leave for all employees that have been employed for at least thirty (30) days for up to twelve weeks leave if the employee is unable to work because of a bona fide need to care for an individual subject to quarantine, pursuant to federal, state, or local government order or advice of a health care provider, or care for a child under 18 years old whose school or child care provider is closed or unavailable for reasons related to COVID-19. The first ten (10) days may be unpaid, and the remaining ten (10) weeks must be paid at two-thirds the employee’s regular rate of pay up to $200 per day, or a maximum total benefit of $2,000 for two weeks, or $12,000 for twelve weeks. Employees may substitute accrued vacation leave, personal leave, or medical or sick leave for the first ten (10) days of unpaid leave.  

Emergency leave under this provision also provides for job protection.  This requires an employer to restore an employee to the same or equivalent position when they are able to return to work.  Employers with fewer than twenty-five (25) employees are exempt from this requirement, if the employee’s position no longer exists after the leave period due to business changes caused by the COVID-19 public health emergency.  If the employer does not return the employee due to business changes, the employer must make reasonable efforts to contact the displaced employee concerning any equivalent positions which come available for up to one year after the displacement.

Employers that pay employees under this Act are eligible for dollar-for-dollar reimbursement through payroll tax credits for all qualifying wages, including amounts paid or incurred to maintain health insurance coverage. 

Employers with less than 50 employees or “health care” employers, a term which excludes dental practices, can file for an exemption from the requirements of the FFCRA.  For businesses under 50 employees, it appears the exemption will be allowed only if the requirements would "jeopardize the viability of the business as a going concern."  The Department of Labor (“DOL”) has issued guidance indicating that a small business may claim this exemption if an authorized officer of the business has determined that:

  1. The provision of paid sick leave or expanded family and medical leave would result in the small business’s expenses and financial obligations exceeding available business revenues and cause the small business to cease operating at a minimal capacity;  
  1. The absence of the employee or employees requesting paid sick leave or expanded family and medical leave would entail a substantial risk to the financial health or operational capabilities of the small business because of their specialized skills, knowledge of the business, or responsibilities; or
  1. There are not sufficient workers who are able, willing, and qualified, and who will be available at the time and place needed, to perform the labor or services provided by the employee or employees requesting paid sick leave or expanded family and medical leave, and these labor or services are needed for the small business to operate at a minimal capacity.

This exemption is only available from the provisions of the FFCRA concerning expanded Family Leave which covers leave requests due to school closures and childcare unavailability.  Small businesses are not exempt from providing leave for any of the other types of permissible requests under the FFCRA.  In other words, if an employee has been advised by a health care provider to self-quarantine related to COVID-19, or if an employee requests leave to care for an individual who is self-quarantining, the small business must still provide paid leave and no exemption will be granted.

 

Unemployment Insurance

The FFCRA includes a provision entitled the Emergency Unemployment Insurance Stabilization and Access Act of 2020 which provides $1 billion in emergency relief to the states for unemployment insurance programs.  Here in Massachusetts, the legislature passed an emergency act Authorizing Waiver of the One Week Waiting Period for Unemployment Benefits. 

Individuals that have found themselves out of work, or having had their work hours and/or pay substantially reduced, may immediately apply for unemployment insurance without the need to wait for any period.  This includes employees who have seen their workplace shut down due to a lack of work for a temporary period of time, and employees relegated to home due to a risk of infection or subject to quarantine by a health care provider or governmental authority and not allowed to return to work. An employee will not be required to provide a note from a health care provider and only need to be available for work when and as able.

Many employers have found themselves in the unenviable position of having to decide whether to make permanent or temporary layoffs or furlough employees due to the COVID-19 public health emergency. Employers may send their employees home due to lack of work because of COVID-19 with the intention to bring them back, and the employees will become immediately eligible for unemployment benefits. This “stand-by” status is granted automatically for the first 4 weeks, and then an employer may request that such temporary status be extended to 8 weeks.  Employees must remain in reasonable contact with their employer, and be prepared to go back to work when the employer has hours and they are able to do so. 

Employers that do send employees home due to a lack of work, whether a permanent or temporary layoff or furlough, must notify employees of their right to file for unemployment insurance and provide them with information on to how to file, such as a link to the Massachusetts Department of Unemployment Assistance website.

The federal government recently passed the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”).  The CARES Act dramatically expands the eligibility for UI in terms of the amount of benefits available, the types of claimants that qualify, and the duration of the benefits.  The Massachusetts Department of Unemployment Assistance (“DUA”) recently received some guidance from the federal government on portions of the CARES Act and is acting quickly to add an additional $600 to the weekly benefits received by current unemployment claimants, retroactive to March 29, 2020.  The DUA in the process of building a platform through which to disburse Pandemic Unemployment Assistance under the CARES Act.  This will make UI benefits available to individuals who are self-employed, have exhausted their unemployment benefits, or are otherwise not covered under the general unemployment regulations.  The platform is expected to begin accepting claims around April 30, and eligible individuals will be retroactively compensated to February 2, 2020 or the first week in which they were unable to work due to the public health crisis.  You should check the DUA website for updates on the availability of the application for this program.             

Notwithstanding these developments, employers must carefully comply with federal and state wage and hour laws when sending employees home due to lack of work, operational changes, or going out of business due to the COVID-19 public health emergency. This includes paying employees for all earned wages, including accrued but unpaid vacation time, paid leave, or any other wages due under an employment agreement.  It is important to note that nothing in the FFCRA or CARES Act modifies an employer’s obligations under the Massachusetts Wage Act.  Thus, if an employer fails to pay its employees in a timely manner as required by the Wage Act, the employer is subject to liability for treble damages and attorneys’ fees. 

The legal landscape in employment law is rapidly changing.  Small businesses and workers should review Pierce & Mandell’s Employers’ COVID-19 Frequently Asked Questions blog and contact our experienced employment attorneys with any specific questions. 


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