Posted: March 18, 2020 |
We have seen containment efforts for COVID-19 continue to expand. Employers are facing governmental closures of businesses. The impact of COVID-19 is having an unprecedented impact on employers and employees with school closures, reduction in work hours, or elimination of jobs. In an effort to mitigate the impact of the pandemic, employers and employees will have to work together. Currently, the State and Federal Government have several programs to provide assistance.
California Unemployment Insurance Work Sharing Program
As an alternative to layoff, California employers may participate in the California Employment Development Department's ("EDD") Work Sharing Program. If eligible, employees will receive up to 60% of their weekly unemployment benefits, based on how much their wages have been reduced. In order to participate in the Program, at least 10% of the employer's workforce must be affected by a reduction in hours and wages. The reduction in hours/wages cannot exceed 60%. An employer cannot discriminate with regard to health or retirement benefits being offered to employees on the Program. Temporary or seasonal employees cannot participate in the Program and only regular full- or part-time employees may receive the benefits. The Program lasts for 12 months but employers may apply to renew or cancel it earlier if circumstances change. Additional information about the EDD's Work Sharing Program may be found here: https://www.edd.ca.gov/Unemployment/Work_Sharing_Program.htm
Payroll Tax Deadline Extension
Employers impacted by COVID-19 may apply for a hardship requesting up to a 60-day extension of time to file their payroll taxes without penalty or interest. This extension may be granted under Section 1111.5 of the California Unemployment Insurance Code (CUIC). The EDD requires that the request be received by the EDD within 60 days of the original delinquency date. The following link provides additional information about the EDD payroll extension: https://www.edd.ca.gov/Payroll_Taxes/emergency_and_disaster_assistance_for_employers.htm
Small Business Loans:
Employers that are impacted by COVID-19 may qualify for a Small Business Administration ("SBA") loan. The SBA is offering low-interest federal disaster loans for working capital to small businesses suffering substantial economic injury as a result of COVID-19. SBA's Economic Injury Disaster Loans offer up to $2 million in assistance for a small business. These loans can provide vital economic support to small businesses to help overcome the temporary loss of revenue they are experiencing. The loans may be used to pay fixed debts, payroll, accounts payable and other bills that can't be paid because of the disaster's impact. The interest rate is 3.75% for small businesses without credit available elsewhere; businesses with credit available elsewhere are not eligible. The interest rate for non-profits is 2.75%. SBA offers loans with long-term repayments in order to keep payments affordable, up to a maximum of 30 years. Terms are determined on a case-by-case basis, based upon each borrower's ability to repay.
Link to SBA Loan Information: https://www.sba.gov/about-sba/sba-newsroom/press-releases-media-advisories/sba-provide-disaster-assistance-loans-small-businesses-impacted-coronavirus-covid-19
On March 4, 2020, Gavin Newsom signed executive Order N-26-20, to provide assistance to workers:
If you're unable to work because you are caring for an ill or quarantined family member you may qualify for Paid Family Leave (PFL).
If you're unable to work due to medical quarantine or illness, you may qualify for State Disability Insurance.
Those who have lost a job or have had their hours reduced for reasons related to COVID-19 may be able to partially recover their wages by filing an unemployment insurance claim.
If a worker or a family member is sick or for preventative care when civil authorities recommend quarantine, workers may use accrued paid sick leave in accordance with the law.
If workers are unable to perform their usual job because they were exposed to and contracted the virus during the regular course of their work, they may be eligible for workers' compensation benefits.
Employer Best Practices for COVID-19 and What's to Come
* Permit remote work where job duties allow and encourage employees to use telephone and video conferencing instead of face-to-face meetings. Make certain that IT support is easily accessible.
* Review the EDD's Work Sharing Program as an alternative to layoffs.
* Be mindful of the tension between preventing the spread of COVID-19 and protecting your employee's privacy under the requirements of the Americans with Disabilities Act and related state law. The ADA prohibits an employer from making disability-related inquiries and requiring medical examinations of employees, except under limited circumstances. During a pandemic, you may send employees home if they display COVID-19-like symptoms. Speak with counsel before taking the temperature of your employees, however. You must maintain the confidentiality of any employee with confirmed COVID-19.
* Review your Telecommuting Policy and if none, create one. Non-exempt employees who work remotely should be reminded to take all meal and rest breaks as if they were working onsite, and that they must record and report all time worked accurately.
* Review your sick leave and vacation policies so that you are prepared to respond to employee questions about time off. Many schools have cancelled classes, so in addition to paid time off, parents, guardians and grandparents and others may be entitled to up to 40 hours of unpaid School and Child Care Activities Leave if you have 25 or more employees. School closures trigger this obligation, although you can require employees to use existing vacation, paid time off or other personal leave first. The CDC's guidance to employers suggests that you do not require a doctor's note for employees who are sick with acute respiratory illness because healthcare providers are extremely busy and are not able to provide documentation in a timely manner.
This Article is one of a series of Articles Ferruzzo & Ferruzzo, LLP will be circulating to address questions from clients related to COVID-19. Ferruzzo & Ferruzzo, LLP has formed a task force to assist business owners with their needs related to COVID-19.
Written by Timothy J McElfish. Esq. and and Colleen M. McCarthy, Esq
Colleen M. McCarthy, Esq. is a Partner and chairs the Firm’s Employment Practices Group. She has dedicated her practice to representing and protecting employers, with a particular emphasis on risk mitigation through preventative counseling and sound practical advice. For 15 years, Ms. McCarthy has counseled employers about the complicated employment laws that impact their businesses to ensure that they are in compliance, and to reduce the chance of costly litigation.
Timothy J McElfish, Esq. is a Partner and chairs the Firm's Corporate and Real Estate Practice Group. His practice group dedicates itself to representing business owners and entrepreneurs. Mr. McElfish also handles all aspects of Corporate Governance, Mergers and Acquisitions, Real Estate Acquisitions and Dispositions, and Business Succession Planning.