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CoronaVirus / COVID-19 and Some Employment Law Issues Part 2

by D. Gregory Valenza | | Mar 16, 2020

Telework / Telecommuting, “Forced” Leave, and Temporary Shut-Downs

Updated 3/17/20, some typos fixed, a few small additions.

Here is part 2 of a series of posts about employment law issues that arise due to this COVID-19 / Coronavirus crisis.  See Part 1 here.  And here is our compiled list of COVID-19 resources.

If these posts are not enough content for you, Shaw Law Group will be presenting a ****FREE**** COVID-19 Webinar on March 23, 2020.  Sign up here. 

As stated in our initial post, we can’t address everything that may arise here. Our hope is to provide some solid general information. But this blog does not give legal advice over the internet. So, get additional help and advice for your business’ particular situation.

It is becoming clear that state and local governments are going to temporarily limit business operations to some degree or totally.  There is a news report out this a.m. (Mon. 3/16) that six Bay Area counties are considering an order requiring all residents to “shelter in place” until April 7, which would mean most employees cannot go to work at the work site. See Here.   Businesses in many industries will have to shift to telework or telecommuting if possible.  Others will have to close because of the nature of the business.  Some essential businesses will remain open, naturally.  Wait until plans are finalized.

Here is some employment law guidance for Telecommuting, “Forcing” Leaves of Absence, and temporary shut-downs.

A. Telecommuting:

Telecommuting or telework is not new, of course.   If workers are already remotely working, then you may not need to read this.  Those employers seeking to implement teleworking should take the following into account, among other things:

  1. There is no “COVID-19” exception to wage and hour laws, such as timekeeping, overtime, breaks, on-call, and the like.  Implementing telework without ensuring compliance with normal laws and procedures may result in post-COVID liabilities.
  2. There should be a written teleworking agreement and policy, which covers the job, productivity, and hours expectations, the duration of the arrangement, and how it can come to an end.
  3. Tricky issues arise, such as ensuring teleworking employees take meals and breaks, time recording, non-productive time, the work area, interruptions, how productivity is measured, safety of the work area, confidentiality of information, data security, expense reimbursement, and the like. These should be addressed in the agreement.
  4. Employees dealing with confidential information at home covered by medical or other privacy laws must comply with those laws, which may include data security such as VPNs, as well as shredding paper files, and measures to keep information confidential from non-employees.
  5. Reasonably necessary business expenses must be reimbursed under California law. That may include the cost of office supplies, as well as data and phone plans (or a reasonable portion of the home data plan), postage, mailing supplies, etc.  Remember, it does not matter that an employee has a “fixed price” data plan for home internet under California law.
  6. If employees must use personal computer equipment while teleworking, the work-related data stored on them may commingle with personal data. That can cause problems down the line. Consider whether installation of a company-owned computer is necessary.  Some employees may need assistance with setting up an ergonomically feasible work area, depending on the home environment.
  7. There must be measures in place to ensure non-exempt employees may submit accurate time records to payroll, and that pay checks are processed timely for pay day. Those employees who are not participating in direct deposit must receive pay checks timely.
  8. Allowing telecommuting may set a precedent regarding reasonable accommodations in the future. Employers may be reluctant to permit telework for some jobs because essential job functions cannot be accomplished. If so, it is important to document the essential functions that are temporarily removed during this crisis. The telework agreement should make clear that telework during the COVID-19 crisis is a temporary arrangement, involving a temporary reduction in responsibilities, which may be accomplished because of lower volume, or other legitimate reasons. This is a sensitive and difficult issue that requires further attention.

B. Forcing Leave

With mandatory shut-downs looming, and reductions in operations already underway, some employers cannot shift employees to remote work. Some employers may have to reduce operations before fully shutting down even temporarily. In addition, some employers may wish to remove employees from the workplace who appear ill, although given these new government orders that may not occur as often anymore.

  1. Sending employees home because of an order to close.

Some employers may be concerned about what they have to pay workers if there is an order to close shop early.

Salaried exempt employees (such as managers, administrative employees, lawyers) must be paid their full salary for any work week in which they perform any work.  There is no exception for partial days when the employer decides to send the exempt employee home (even if the employer has no choice).  However, an employer does not have to pay an exempt employee during any *full workweek* in which the exempt employee performs no work.  So, if these “shelter in place” orders last a full work-week or more, the employer does not have to pay exempt employees’ salaries for any entire workweek in which no work is performed. Note, “workweek” does not mean “week.” To the extent the order covers only a partial workweek, though, or spans across two workweeks, full salary is due.

Can an employer substitute PTO / Vacation pay for an exempt employee’s salary?  If you already owe the employee the full salary for the week because the exempt employee worked part of the week, then the answer is: no.  At least not in California. The rule is different under federal law because California law treats vacation / PTO as vested wages.

Can an exempt employee be paid PTO or vacation time for the full work-week in which s/he performs no work?  Sure.  Can you pay full salary (or a reduced salary) and choose not to debit PTO/ vacation? Of course, but document and apply this rule in a non-discriminatory way.

Non-exempt employees  When the shut-down order comes, employers may wish to pay non-exempt workers for a full shift as a humanitarian gesture, but are not obligated to do so. “Reporting time” pay does not apply when operations cannot continue due to “recommendations by civil authorities.”

2. Sending employees home because of decreased business volume.

Exempt employees: The same issues discussed above arise for exempt employees when employers have to reduce operations due to lower business volume.  Cutting an exempt employee’s day or week short without a mandatory order requires payment of the full, weekly salary, as discussed above.

What about reducing exempt employees’ salaries because of reduced business operations?  The general rule is that employers cannot fluctuate exempt employees’ salaries based on volume of work. But it may be possible to reduce exempt employees’ salaries prospectively, tied to a specific reason, if a business must cut operations for a period of time.  For example, if a business will open only three days per week instead of five for three months while the COVID-19 crisis endures, the law may permit a reduction in salary.  Example: During the crisis, you will be paid 3/5 your base salary. But you will only have to work 3 days out of 5.  Note: The salary must remain above the minimum salary needed to sustain the exemption, however.

Non-Exempt Employees:  For non-exempt employees, reporting time obligations may apply when the employer cuts the day short.  Consult Section 5 of the applicable Wage Order.  Reducing the schedule prospectively likely will not result in liability except if a “Fair Scheduling Ordinance” applies, such as in San Francisco.  In addition, employers may trigger unemployment insurance obligations when cutting hours below certain levels.  See our resources post linked above for the EDD’s website.

3. Sending Employees Home Due to Illness

By now, it should be well understood that employees are expected to stay home if they have symptoms of COVID-19.  Employers should communicate those expectations to employees, and ensure employees understand the benefits available to them (including disability insurance, paid family leave, etc.)  Again, the resources linked above will provide information that you can share with employees.

Setting expectations that employees stay home when they are ill may avoid the unpleasant possibility that an ill employee will come to work.  But that possibility is always there.  So, what to do?

This is one of those “rock and a hard place” issues for employers. There is a legal duty to provide a safe workplace.  OSHA and Cal-OSHA impose specific requirements in certain industries.  (See the resources linked above). Therefore, employers – and co-workers –  understandably may be concerned about the spread of a virus that has caused the ***near shut down of the entire world!!!! **** we are witnessing.

At the same time, not every person with a cough is COVID Charlie.  The employee suspected of being ill has obligations and feelings too and should not be made to suffer based on unfounded suspicions. Employers must take great care not to jump to conclusions regarding an employee’s illness, or to single out employees based on discriminatory criteria.  Along the same lines, management of co-workers who hastily report other employees whom they suspect are ill will be important.

Legally speaking, it is risky to require an employee to leave work because of a suspected illness. Employers that have objective reasons for suspecting an employee is symptomatic should strongly consider speaking with an employment lawyer before taking action. There not only are employee relations issues but also anti-discrimination laws and more to worry about.  However, these are extraordinary times and there is great public concern about the spread of COVID-19.  Documentation of objective reasons for suspicion will go a long way towards prevention of liability.

Sending an employee home who appears ill with COVID-19 should be based on an objective assessment that the employee is symptomatic and poses a danger to the work force.  It is important to consult the CDC’s page (linked at our resources page above) and determine if an employee is symptomatic.  If there is a medical professional at the worksite, the professional should make the determination.

If the employee is objectively symptomatic, management may wish to make a decision to send the employee home to telework, or to obtain a doctor’s certification or, as COVID-19 testing becomes more available, favorable test results and then return to work.

Once the decision is made, the employer should be prepared to address reporting time discussed above.  The discussion regarding exempt and non-exempt employees and pay apply to involuntary time off for suspected illness.

Employers may wish to consider a brief period of paid leave to allow a non-exempt employee to obtain a doctor’s certification or test if they cannot be obtained quickly. Employers with access to an occupational health facility may wish to arrange for the examination or test at the employer’s cost, or otherwise pay for the employee’s transportation and any out of pocket costs for the examination or test.  This will of course depend on the locality and availability of health care.  If testing can be done during the work-day, the employer should keep the employee on the clock and pay for transportation to and from the test, as well as any costs not covered by insurance.

If absence is necessary, employers cannot “force” the use of state or local mandated sick leave.  If the employee wishes to use it, that is of course acceptable. And the employer may allow the employee to use vacation or paid time off, or may require a non-exempt employee to use same if statutory sick leave is unavailable or exhausted.

If the employee is recalcitrant and refuses to go for a test or a doctor’s visit, the employer may treat the time off as a suspension.  However, an indefinite suspension requires payment of all unpaid wages due, including any accrued, unused vacation or PTO.  This will avoid claims for “waiting time” if the employee does not return to work.  The length of the suspension of course depends on whether the employee is ill or not, or whether the employee requires quarantine.

If the test is positive, and the employee must quarantine, consider the availability of job-protected medical leave. Try to work with the employee to arrange for reinstatement after the appropriate period, and ensure the employee is provided with information about company and government resources available to mitigate the financial hardships.

Hopefully, none of this will be necessary.  In most cases, treating people with dignity and respect will result in far better outcomes than trying to follow regulations.

C. Temporary Shutdowns

Temporary shutdowns may result because of decisions by authorities or may be necessary due to business needs.

Employers must be mindful of payroll obligations.  If a shutdown is indefinite, it may be necessary to treat it as a “termination” for payroll check purposes only and pay employees on the date of the shutdown.  That will mean all pay up through the last day of work, and accrued, unused vacation pay as well.  However, the California Division of Labor Standards Enforcement (DLSE) has taken the position that a fixed duration suspension is not a termination.  So, if operations are shutting down for a fixed period of 14 days, for example, it may not be necessary to cash out vacation or PTO balances.  It should be documented that the employee knows he or she is expected to return to work as normal after the temporary shut-down.

Temporary furloughs again raise the issue of exempt workers’ pay.  Exempt workers must be paid full salary for any workweek in which they perform any work.  That does not include the first and last week of employment. However,  a temporary shut down is not a “termination” of employment. Therefore, it is risky not to pay the exempt employee for the entire workweek if the shut-down begins mid-workweek.

Employers should ensure employees receive information about EDD programs available to them.  Unemployment benefits may be available even for short periods of time or reductions in hours.

During the shutdown, exempt employees who work will have to be paid their full salary.  Those exempt employees who take PTO or vacation for full workweeks should not be working during that PTO or vacation time, or their PTO / vacation balance should not be reduced by the amount of time spent working. If the time spent working (special projects, emails, etc.) amounts to more than 4 hours in a given day, consult with counsel about whether to pay the employee for the day without debiting the PTO / vacation balance.

Temporary shut downs also raise the issue of the WARN Act, or plant closing laws.  These are laws requiring advance, written notice of mass layoffs and facility closings.  These terms are specifically defined in federal regulations. Under federal law, a temporary shut down of less than six months is not covered. So, WARN is not going to apply to these short-term “shelter in place” shutdowns. If a shutdown goes on for a while, it is important to consult with counsel about the WARN Act’s requirements and whether an exception for the COVID-19 crisis will apply.  The WARN Act applies only to shutdowns, layoffs, and employers of certain sizes.  In a nutshell, if a qualifying event occurs, employers must provide up to 60 days of specific, written notice to employees, their union if applicable, and certain agencies. Failure to do so can result in liability of up to 60 days’ pay and benefits, and civil penalties.  There are defenses, however.

California also has a mini-WARN Act, located in the Labor Code at sections 1400-1408.  The California WARN Act is broader and less clear than the federal version.  There are temporary shutdowns or “mass layoffs” that theoretically could trigger the notice requirements of the California WARN Act.  However, the “Shelter In Place” Orders will not provide any employer with the opportunity to give 60 days’ notice to employees, as the law requires.  Additionally, there is a defense to the state WARN Act, when notice is not possible due to “physical calamity” or “act of war.”  Is COVID-19 a physical calamity?  Who knows? But I would make that argument.  The penalties for non-compliance with the state WARN Act are similar to those under federal WARN. So, again, this is an issue to discuss with a good lawyer.

Shutdowns, layoffs, and the like may affect employees’ benefits, including how employees pay their portions of premiums if any.  Please consult with benefits lawyers or insurance brokers regarding when COBRA notices are required, how to collect premiums from employees who do not receive a paycheck, how to avoid lapses in coverage, and other issues. With all that is going on, employers obviously should do what they can to prevent problems with health insurance coverage for employees.

Finally, there are shutdowns that may result in reductions in force.  California law has changed with respect to separation agreements and releases.  Therefore, those employers seeking to undertake layoffs and pay severance in exchange for releases should have them reviewed.

*  *  *  *  *

That’s it for Part 2 of our posts on COVID-19.  Stay tuned for Part 3 in the coming days, including the possible “Families First” Act coming from Congress if it’s passed?



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