Companies across the world are facing unprecedented fallout from the COVID-19 pandemic. From supply chain shocks, cancellations, and closures to turbulent markets and unfavorable forecasts, businesses across many industries will need to strategize new approaches for maintaining viability amid volatile times.
While this may entail a comprehensive focus on financial resilience and recovery well into the future, there also exist pressing and practical concerns regarding employment law and compliance with continually evolving and expanding emergency regulations.
Recession: Economic Forecasts Suggest Recovery Will Take Time
While the novel 2019 coronavirus’ economic impact has been undeniably disruptive, projections about the depth and duration of damage to the U.S. economy have become much darker.
According to economists, growing skepticism stems from predictions that U.S. economic output, which has grown uninterrupted for a record 10.5 years, could fall as much as 9% in 2020 – over 3x the sharpest drop during the Great Recession, and closer to the 12.9% downturn at the height of the Great Depression in 1932. Based on past recoveries, former Fed Chairwoman Janet Yellen explains, a return to pre-pandemic levels is more likely to take years, rather than months.
As social distancing emerges as the most viable means to combat the public health crisis, business closures, impeded consumer-spending, and an onslaught of new and emergency regulatory amendments are making it more difficult than ever for employers to stay afloat, and:
- Ensure regulatory compliance with various employment and industry-specific laws;
- Follow evolving guidance;
- Evaluate existing and new employment contracts; and
- Explore options for loans / grants, and available relief.
New Laws & Employment Issues Employers Should Know Amid The Coronavirus Outbreak
Though there are many, here are a few key employment issues employers should be look at when it comes to COVID-19 and employment:
- Worker Health and Safety: COVID-19 is first and foremost a public health emergency, and employers need to ensure they remain on top of the latest local, state, and federal guidance applicable to their workforce. For some, that may mean complying with Stay-at-Home orders, transitioning workers to remote work, and making various precautionary and communication guidance within their companies. For others, it could require the development of comprehensives safety plans that allow for continued essential work, as well as compliance with new and evolving coronavirus OSHA regulations and industry-specific, including those related to PPE, health and medical laws like TMB’s prohibition of elective procedures, and more.
- Paid Leave / Family Leave: The Families First Coronavirus Response Act requires certain employers to provide employees with paid sick leave and expanded family and medical leave for certain reasons related to COVID-19 (effective April 1, 2020 through December 31, 2020), and to refrain from any form of retaliation or discrimination against employees who lawfully take leave under the FFCRA, file a complaint, or institute proceedings with the U.S. Department of Labor’s Wage and Hour Division (WHD). The FFCRA also provides a payroll tax credit for employers of qualified family leave and sick leave wages. The FFCRA applies to private employers with less than 500 employees, though other coverage requirements and allowances apply (i.e. joint employers who meet the integrated employer test, and businesses with 50 or less employees that lack liquidity to pay for leave up front. The DOL has issued guidance on the FFCRA.
- Social Distancing / Telework: Social distancing is being increasingly seen as the sensible solution for flattening the curve and easing the strain on a burdened health care system. As such, employers who are able to adapt to remote work should ensure compliance with applicable laws, including wage, hour, and overtime regulations and changing privacy and confidentiality laws amid COVID-19. That’s especially true in health care, where increased adoption of telemedicine and relaxed HIPAA regulations are
- Preventative Measures: OSHA and CDC guidance make it clear employers should require employees with symptoms of contagious disease to remain at home. Employers should also determine how to best communicate to its workforce when an employee tests positive for COVID-19. Though employers have a duty to inform, they also must comply with HIPAA and other applicable laws regarding confidentiality and privacy.
- Travel (Business / Personal): Current guidance strongly encourages employers to adopt policies restricting business travel to high-risk destinations, and to require employees returning from such destinations to self-quarantine. Employees who contract COVID-19 due to business travel may be eligible to workers’ compensation (though they may not for contracting in office). Although employers cannot restrict personal travel, they may implement policies for employees to provide notice of personal travel and self-quarantine requirements thereafter.
- Social Security Taxes: The Coronavirus Aid, Relief, and Economic Security Act (CARES) expands the U.S. Small Business Administration (SBA) Economic Injury Disaster Loan program, implements the Paycheck Protection Program to help companies maintain payrolls, and updates business tax provisions, such as allowing deferrals of an employer’s portion of social security taxes through January 1, 2021. Under the CARES Act, 50% of taxes are due on December 31, 20201, with remaining amounts due December 31, 2021. CARES also provides forgiveness of certain small business loans if an eligible borrower uses loans for certain qualifying expenses, including payroll costs (such as paid sick and family leave); subject to reduction, including due to terminations and pay reductions implemented by borrowers. Experienced attorneys can help businesses determine eligibility for relief under the Act.
- Reduced Pay / Hours: Employers must pay particular attention to compliance with Fair Labor Standards Act (FLSA) regulations regarding pay for salary and non-exempt workers, including those who work at home due to facility closures or self-quarantine. Because remote work can increase risks of overtime and off-the-clock claims, employers should create, implement, and communicate policies that clarify employee work and pay policies, such as a policy prohibiting unauthorized overtime, and to record hours worked and breaks taken.
- Terminations: The federal Worker Adjustment and Retraining Notification (WARN) Act prohibits applicable employers (100 or more full-time employees) from implementing mass layoffs or plant closing without at least 60 days written notice when doing so results in over 6 months of employment loss or over 50% reduction in hours each month for 6 months. Employers who fail to provide notice or full pay / benefits in lieu can be held liable for back pay to each employee, as well as civil penalties of up to $500 per day of violation. The Act contains exceptions to certain faltering businesses, for natural disasters, and for unforeseeable circumstances.
Comprehensive Counsel for Employers With Coronavirus Concerns
There is no question that employers are facing unprecedented times fueled by uncertainty, volatility, and tough economic prospects. At Hendershot Cowart, P.C., our nationally recognized attorneys are committed to helping employers across Texas and the U.S. in a range of matters – from regulatory and industry-specific compliance, employment contracts, and wage and hour rules to the comprehensive counsel needed to explore all available options for relief.
Call or contact us online to speak with an attorney. Our team is standing by to help.