Workplace Shifts: Employment Issues During COVID-19 - Asian American Bar Association of the Greater Bay Area Education Committee April 8, 2020 ...
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Workplace Shifts:
Employment Issues During COVID-19
Asian American Bar Association of the Greater Bay Area
Education Committee
April 8, 2020
PANELISTS
John B. Lough, Jr. Angel L. Garrett Lisa P. Mak
Scherer Smith & Kenny Trucker Huss APC Minami Tamaki LLP
LLP
TOPIC AREAS
► Remote work, and company shutdowns
and furloughs
► WARN Act and Governor’s Executive
Order N-31-20
► Family and sick leave
► Wage replacement benefits
► Employee benefits and health plans
Background – Expedited Timeline
► March 4, 2020: Governor proclaimed State of Emergency as a result of
the threat of COVID-19 (Executive Order N-31-20, dated March 17, 2020).
► March 16, 2020: Seven Northern California counties issued shelter-in-
place orders (SIP), effective from March 17 to April 7, 2020.
► March 19, 2020: State-wide SIP “shall stay in effect until further
notice” (Executive Order N-33-20, dated March 19, 2020).
► March 31, 2020: County SIP extended until May 3, 2020.
► IMPACT: “Essential Businesses” continue to operate, and other
businesses work from home or cease operations.
Remote Work and Labor Code
Sect. 2802
► Labor Code Section 2802 requires employers to reimburse
its employees for “necessary expenditures or losses incurred
by the employee” while performing his or her job duties.
► Potential Expenses: cell phone, home internet, computer
usage, office supplies, postage, mileage, etc.
► Mandatory Expenses: reimburse “reasonable percentage.”
Cochran v. Schwan’s Home Services, Inc. (2014) 228 Cal.
App. 4th 1137, 1144.
► “[R]egardless of whether the employee would have incurred cell
phone expenses absent the job.” Herrera v. Zumiez, Inc. (9th
Cir. Mar. 19, 2020) __ F.3d __, 2020 WL 1301057, at *11 (class
action).
► Note: Optional WFH - If employer provides physical
workspace so employee does not need to work remotely,
then home office is not “necessary” expense. Novak v.
Boeing Co. (C.D. Cal. July 20, 2011) 2011 WL 9160940, at *3.
Company Shutdowns and Furloughs
► Employer’s Options in light of SIP: (a) remote work (if possible), (b) continue
paying employees even if no work available, (c) layoff/shutdown, or (d)
furloughs.
► Layoff/Shutdown: Termination of employment triggering payment of all
wages owed, including any accrued vacation or PTO. See Cal. Labor Code
Sect. 203 (waiting time penalties).
► “Furlough” – an alternative to terminating employees:
► (a) reduce hours, or
► (b) temporary unpaid leave with a definite return date within shorter of (i) 10
days or (ii) employee’s normal pay period (DLSE Op. Ltr. 1993.05.04; DLSE Op.
Ltr. 1996.05.30).
► Caution: Cal-WARN issues!
► Resource: California Labor & Workforce Development Agency, Coronavirus
2019 (COVID-19) Resources for Employers and Workers,
https://www.labor.ca.gov/coronavirus2019/.
Worker Adjustment and Retraining
Notification Act (WARN)
► Covered Employers: (a) federal WARN – 100 employees and (b)
California WARN – 75 employees.
► Purpose: 60-days’ advance notice to (a) employee, (b) Employment
Development Department (EDD), and (c) Local Workforce
Development Board and Chief Elected Officials.
► Employer Liability: up to 60 days of back pay, benefits, and civil
penalties.
► Triggering events:
► Mass Layoff: a layoff during any 30-day period of 50 or more employees.
Labor Code Sect. 1400(d).
► Relocation: the removal of all or substantially all of operations to a
different location 100 or more miles away. Labor Code Sect. 1400(e).
► Termination: the cessation or substantial cessation of operations. Labor
Code Sect. 1400(f).
WARN Act (continued)
► Possible Fourth Trigger:
► Furlough: Three to five week temporary layoff triggered Cal-WARN. Int’l
Bhd. of Boilermakers et al. v. NASSCO Holdings, Inc. (2017) 17 Cal.App.5th
1105, 1111–12, 1128.
► “Significant” change in hours or working conditions —“much lower” wage or
“much inferior” conditions — may trigger Cal-WARN. MacIsaac v. Waste
Mgmt. Collection & Recycling, Inc. (2005) 134 Cal.App.4th 1076, 1087 n.8
► Compare: Federal WARN: more than 50% reduction in hours during each
month of any 6-month period = “employment loss.” 20 C.F.R. Sect.
639.3(f)(1)(iii).
► Limited Exemptions to Cal-WARN notice: for example, “physical calamity” and
“act of war.” Labor Code Sects. 1400(g), 1401(c).
Substantial Consequences for Noncompliance!!!
Governor’s Executive Order N-31-20
► Much Needed Relief! Conditional Suspension of 60-Day Notice Requirement from March 4,
2020 until end of COVID-19 emergency. Executive Order N-31-20
► Qualifying for EO’s Suspension of Cal-WARN 60-day notice requirement:
1. The Triggering Events must be caused by COVID-19-related “business circumstances that were not
reasonably foreseeable at the time that notice would have been required.”
2. Give required notices to (a) employee, (b) Employment Development Department (EDD), and (c)
Local Workforce Development Board and Chief Elected Officials. Labor Code Sect. 1401(a)-(b).
3. Give as much notice as is “practicable” (i.e., reasonably possible) and include brief statement
explaining need for reduced notification period. See 29 U.S.C. 2102(b)(3).
4. Notices to Employees must include the 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.”
► Resources: EDD, Worker Adjustment and Retraining Notification (WARN) Information for Employers,
https://www.edd.ca.gov/Jobs_and_Training/Layoff_Services_WARN.htm; EDD, COVID-19 WARN FAQs,
https://www.edd.ca.gov/About_EDD/coronavirus-2019/faqs/Warn.htm; DLSE, Guidance on Conditional
Suspension of California WARN Act Notice Requirements Under Executive Order N-31-20,
https://www.dir.ca.gov/dlse/WARN-FAQs.html.
Anti-Discrimination Laws
► Cautionary Notes:
► Decision to layoff, furlough, or reduce compensation may be “adverse employment action”
► COVID-19 is a pandemic, but discrimination and harassment against employees because of
race, national origin, or disability remain the law of the land.
► Agency Resources:
► DFEH Employment Information on COVID-19 (March 20, 2020)
► U.S. EEOC, What You Should Know About the ADA, the Rehabilitation Act, and COVID-19
(last updated March 19, 2020)
► Highlights:
► Maintain confidential any employee illness information, including health status of
employee.
► Caution: Measuring temperature: (a) generally, cannot because it is a medical exam,
but (b) based on CDC and local public health information and guidance on COVID-19,
employers may measure temperature. BUT some with COVID-19 do not have a fever.FAMILIES FIRST
CORONAVIRUS RESPONSE ACT
► Effective April 1, 2020 to December 31, 2020
► Enforced by the U.S. Department of Labor
Wage and Hour Division
► Covers private sector employers with up to 500
employees
► Covers public agencies regardless of number of
employees (but only some federal employees)
► Employers with fewer than 50 employees can
seek exemption in certain situations
► Provides emergency paid sick leave and paid
family leave to employees who qualify
► Employers can seek reimbursement of paid
leave amounts through refundable tax creditFAMILIES FIRST CORONAVIRUS RESPONSE ACT
EMERGENCY SICK LEAVE
An employee is entitled to up to two weeks of paid sick leave if the employee:
(1) is subject to a federal, state, or local quarantine or isolation order related to COVID-19;
► Includes shelter-in-place or stay-at-home orders that cause you to be unable to work (or telework) even though
your employer has work that you could perform but for the order
► May NOT take paid sick leave for this qualifying reason if your employer does NOT have work for you as a result
of a shelter-in-place or stay-at-home order, or because of company shutdown or lack of business
(2) has been advised by a health care provider to self-quarantine due to concerns related to COVID-19;
(3) is experiencing symptoms of COVID-19 and seeking a medical diagnosis;
(4) is caring for an individual who is subject to a quarantine order or who has been advised to self-
quarantine;
(5) is caring for a child, if the child’s school or place of care is closed or unavailable due to COVID-19
precautions; or
(6) is 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.FAMILIES FIRST CORONAVIRUS
RESPONSE ACT
EMERGENCY SICK LEAVE
PAYMENT:
► If employee taking sick leave to care for
oneself = paid full regular rate of pay, up
to $511 per day and $5,110 in total
► If employee taking sick leave to care for
others or for other qualifying reasons = paid
two-thirds of regular rate of pay, up to
$200 per day and $2,000 in totalFAMILIES FIRST CORONAVIRUS RESPONSE ACT EMERGENCY FAMILY LEAVE Employees can take up to twelve weeks of family leave, if they: ► Have worked for the employer for at least 30 calendar days; and ► Are unable to work or telework due to a need to care for their child, if the child’s school or place of care is closed or unavailable due to a public health emergency (COVID-19). PAYMENT: ► First 10 days may be unpaid. Employee may elect to substitute accrued vacation leave or personal leave, medical or sick leave for unpaid leave during the initial 10 days. ► After 10 days: Employee will be paid two-thirds of their regular rate of pay, up to $200 per day and $10,000 in total. NOTE: This is a new qualifying leave reason under the federal FMLA; it does NOT provide more weeks of leave on top of the FMLA. FFCRA family leave is deducted from your available FMLA leave in a 12-month period (but FFCRA sick leave is not deducted from your FMLA leave).
FAMILIES FIRST CORONAVIRUS RESPONSE ACT
CLARIFICATIONS FROM DOL COMPLIANCE Q&A
► If you are unable to work because your company/business shuts down due to shelter-in-
place orders or lack of business due to COVID-19, you are NOT eligible for paid sick leave
under the FFCRA. (But could try unemployment insurance benefits)
► You can only qualify for the family leave benefit due to a need to care for your child; a
need to care for other family members does not qualify. (But could try FMLA or CFRA
leave)
► You are required to provide documentation to support need for sick leave, and may be
required to provide documentation to support need for family leave.
► If you work for an employer with more than 500 employees, the FFCRA does not apply and
you would not be eligible for the Act’s leave benefits. (But could try other benefits/leave)
► FFCRA requirements are not applicable prior to effective date of April 1, 2020.
► DOL will not bring enforcement actions against employers for FFCRA violations occurring
within 30 days of enactment (March 18 to April 17, 2020) provided employer has made
reasonable, good faith efforts to comply. After April 17, DOL will lift stay of enforcement
and can retroactively enforce violations back to April 1.OTHER POSSIBLE LEAVES
► Use accrued vacation, PTO, or sick leave from employer
► CA requires employers to provide eligible employees with at least 3 days paid sick
leave. Local ordinances may require as much as 6 to 9 days paid sick leave.
► Family Medical Leave Act (FMLA) and California Family Rights Act (CFRA)
► Require employers to provide up to twelve weeks of unpaid, job-protected leave
each year for a serious health condition of the employee or their family member
► Eligibility:
► Employer has at least 50 employees within 75 mile radius
► Worked for employer for at least one year total and at least 1,250 hours in
last calendar year before start of requested leave
► Employer continues maintaining employee’s health coverage
► Although leave is unpaid, employee can try applying for State Disability Insurance
► Leave can be taken intermittently through the calendar yearWAGE REPLACEMENT BENEFITS Unemployment Insurance Disability Insurance Paid Family Leave
UNEMPLOYMENT INSURANCE (EDD)
► Provides income replacement benefits to workers who are fully or partially
unemployed through no fault of their own
► Employees who lose their jobs or have their hours reduced due to COVID-19 can file
for unemployment insurance benefits
► Benefits up to maximum of $450 per week + CARES Act additional $600 per week (up
to 4 months)
► Benefits for up to 26 weeks + CARES Act additional 13 weeks = up to 39 weeks
► Employees who miss work due to their child’s school shutting down may be eligible
for UI benefits; applications being considered by EDD on case-by-case basis
► CARES Act expands UI benefits to self-employed, gig economy workers, freelancers, if
they are out of work due to COVID-19
► Usual one-week waiting period for UI benefits waived, so eligible workers can receive
benefits fasterSTATE DISABILITY INSURANCE (EDD)
► Provides short-term benefits payments to
workers who have full or partial loss of wages
due to non-work-related illness or injury
► If employee unable to work due to having or
being exposed to COVID-19, can file for SDI
claim
► Need supporting medical documentation
► Benefit amounts cover about 60 to 70 percent
of an employee’s wages (depending on
income), up to maximum of $1,300 per week
for up to 52 weeks
► Usual one-week waiting period for SDI
benefits waived, so eligible workers can
receive benefits fasterPAID FAMILY LEAVE (EDD)
► Provides up to six weeks of benefits payments at the SDI rate
(about 60 to 70 percent of wages) to employees who have full
or partial loss of wages due to time off work to care for a
seriously ill family member
► Employees who are unable to work because they are caring for
a sick or quarantined family member due to COVID-19 can file
a claim for Paid Family Leave
► Starting July 1, 2020, PFL will provide up to eight weeks of
benefits payments to eligible employees
► Can choose to delay filing of claim until July 1, 2020 or
after to receive extended leave benefit
► Need supporting medical documentationEMPLOYEE BENEFITS AND HEALTH PLANS
Income Taxes
► Federal income tax filing and payment due date is
automatically extended from April 15, 2020 to July 15, 2020
► The Franchise Tax Board (FTB) on March 18, 2020 announced
that it is postponing until July 15 the filing and payment
deadlines for all individuals and business entities for:
▪ 2019 tax returns
▪ 2019 tax return payments
▪ 2020 1st and 2nd quarter estimate payments
▪ 2020 LLC taxes and fees
▪ 2020 Non-wage withholding paymentsLegislation and Government Actions Affecting Employee Benefits ► Families First Coronavirus Response Act ► Coronavirus Aid, Relief and Economic Security (CARES) Act ► Major Disaster Programs ► Access to Funds Outside of the CARES Act
Families First Coronavirus Response Act
► Passed on March 18, 2020
► Requires group health plans to provide coverage, and not impose any cost
sharing requirements, prior authorization or other medical management
requirements, for the following:
▪ (1) COVID-19 diagnostic testing
▪ (2) Items and services relate to the furnishing of the COVID-19 test or to the
evaluation of whether an individual needs COVID-19 test
► This Act does not require that the actual treatment for COVID-19 be
covered
► Plans not subject to these rules are benefit group health plans (such as
vision-only plans and dental-only plans) and retiree-only health plansCoronavirus Aid, Relief and
Economic Security (CARES) Act
► Passed on March 27, 2020
► Stimulus package includes approximately $2
trillion in aid
► Expands the no-cost sharing for COVID-19
diagnostic testing to include:
▪ Tests provided by clinical labs on an emergency basis;
▪ State-developed labs; and
▪ Other tests that the Secretary determines appropriateCARES Act (cont.)
► Covers preventive services and vaccines for COVID-19. Health plans must cover,
without any cost-sharing, any “qualifying coronavirus preventive service.”
► The CARES Act contains numerous provisions regarding Health Savings Accounts
(“HSAs”), such as how all telehealth and other remote care services can be
covered pre-deductible.
► Over-the-counter medical products and menstrual care products are treated as
qualified medical expenses. This means individuals with HSAs, health flexible
spending accounts (“Health FSAs”), and health reimbursement arrangements
(HRAs) may receive reimbursements of OTC medical products without a
prescription and menstrual care products.
► Allow employers to reimburse employees (or directly pay a lender) the
principal or interest for a student loan incurred by the employee for the
education of the employee, up to $5,250.Major Disaster Leave-Sharing Plans
► Under a leave-sharing plan, an employee donates his/her leave for use
by another employee
► Generally, this donation is taxable to the employee donating the leave
► The IRS has recognized some exceptions to this general tax rule, such
as major disaster leave-sharing plans (see IRS Notice 2006-59)
► The employer must treat payments made to the leave recipient as
wages for purposes of FICA, FUTA, and income tax withholding
► The leave donor may not claim an expense, charitable deduction, or
loss deduction due to his/her donation
► Only states declared major disaster can be covered by a major-disaster
leave-sharing planQualified Disaster Relief Payments
► These type of payments are set forth in Internal Revenue Code
Section 139
► Provides that gross income does not include any amount received
by an individual as a “qualified disaster relief payment”
► A qualified disaster relief payment are amounts paid to or for the
benefit of employees in order for them to cover reasonable and
necessary personal, family, living or funeral expenses incurred as a
result of a qualified disaster
► Although it is unclear what kinds of benefits could be included,
some examples are:
▪ Temporary housing costs for an employee who needs to be quarantined
away from his/her family
▪ Additional commuter expenses so that an employee can avoid mass transit
▪ Extra costs for delivering groceries and other essential itemsCARES Act’s Impact on Retirement Plans
► Coronavirus-Related Distributions (“CRD”): “Qualified individuals” may take
penalty-free distributions of up to $100,000 from their retirement plan
accounts.
► Qualified Individuals are plan participants who:
▪ (1) are diagnosed with the coronavirus by a test approved by the CDC;
▪ (2) have a spouse or dependent who is diagnosed with the coronavirus disease by a
test approved by the CDC; or
▪ (3) experience adverse financial consequences as a result of being quarantined,
being furloughed or laid off or having work hours reduced, be unable to work due to
lack of child care, or close or reduce hours of their owned or operated personal
business due to the coronavirus
▪ Employer or plan sponsor may rely on an individual’s self-certification that
they are eligible to receive a CRDCoronavirus-Related Distribution
(cont.)
► CRDs are not subject to the 10% early distribution
penalty tax that usually applies when a distribution is
made prior to the participant attaining age 59.5
► The participant can spread the income taxes due on the
CRD over a three-year period
► CRDs are not subject to the mandatory 20% tax
withholding
► Distributions must be made between January 1, 2020
through December 31, 2020 to be treated as a CRD
► The participant may repay the distribution at any time
during the 3-year period beginning on the day after the
distribution datePlan Loan Limits and Repayment Period
► The CARES Act increases the maximum loan limit for “qualified
individuals” to the lesser of: (1) $100,000 (from $50,000); or (2)
the greater of $10,000 or 100% (from 50%) of the present value of
the participant’s vested benefit.
▪ Note: This temporary increase is only available for plan loans made to
participants during the 180-day period commencing on March 27, 2020.
► TheAct also provides a 1-year extension period for plan loan
repayments to any “qualified individuals” who have outstanding
plan loans on or after March 27, 2020, if the due date for any such
loan repayment occurs during the period beginning on March 27,
2020 and ending on December 31, 2020.Access to Funds Outside of CARES Act
► Hardship withdrawals — Allows participants of retirement
plan to obtain a hardship distribution for expenses and
losses incurred on account of a FEMA-designated disaster
► Principal residence or principal place of employment at
the time of disaster must be in the FEMA-designated
disaster zone
► For these type of withdrawals there is a 20% tax
withholding, 10% early distribution penalty, and limited to
amount of needPossible Future Legislation (?)
► Coverage for treatment of coronavirus
► Government subsidies for COBRA premiums
► Increased sick and family leave coverage applicable to loss of work or
inability to work due to shelter-in-place orders and related business
shutdowns
► Easing medical certification requirements for relief benefits related to
COVID-19
► Support for undocumented workers out of work due to COVID-19RESOURCES DOL Families First Coronavirus Response Act: Questions and Answers https://www.dol.gov/agencies/whd/pandemic/ffcra-questions#23 LWDA Coronavirus 2019 Resources for Employers and Workers https://www.labor.ca.gov/Coronavirus2019/ California EDD Claims https://www.edd.ca.gov/claims.htm Coronavirus 2019 FAQs https://www.edd.ca.gov/about_edd/coronavirus-2019/faqs.htm Cal-WARN Notice Requirements Under Executive Order N-31-20 https://www.edd.ca.gov/About_EDD/coronavirus-2019/faqs/Warn.htm; https://www.dir.ca.gov/dlse/WARN-FAQs.html EEOC and DFEH Information and Guidance Concerning COVID-19 https://www.eeoc.gov/eeoc/newsroom/wysk/wysk_ada_rehabilitaion_act_coronavir us.cfm; https://www.dfeh.ca.gov/wp-content/uploads/sites/32/2020/03/DFEH- Employment-Information-on-COVID-19-FAQ_ENG.pdf
QUESTIONS? John B. Lough, Jr. Angel L. Garrett Lisa P. Mak John@sfcounsel.com AGarrett@TruckerHuss.com LMak@MinamiTamaki.com
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