Paid Sick Leave for Employers “Too Big” for FFCRA

Employers with more than 500 employees (and certain healthcare employers) were not required to provide paid sick leave under the federal FFCRA, a 2020 benefit I discuss in more detail in my blog (and would link here if wasn’t frustrated by this software and about to throw my computer out the window).

Last week, Governor Newsom signed AB1867 expanding the Paid Sick Leave to employees exempted from the FFCRA’s provisions. These new sick leave provisions take effect September 19th.  The California Labor Commissioner issued a new notice you can post here.

A new leave law! For REALLY small California employers!

The Great Rob Nuddleman just posted an important article on his blog about a new leave law for smaller employers. If you have ignored my FMLA/CFRA posts because you are “too small” have you got a change coming!

Read the full article here: https://nuddleman.com/california-mandates-fmla-cfra-leave-for-small-employers/

SB 1383 was just signed into law and it makes employers with 5 or more employees Covered Employers for purposes of the CFRA. These small employers will be required to provide up to 12 weeks of unpaid time off in the following situations:

(A) Leave for reason of the birth of a child of the employee or the placement of a child with an employee in connection with the adoption or foster care of the child by the employee.

(B) Leave to care for a child, parent, grandparent, grandchild, sibling, spouse, or domestic partner who has a serious health condition.

(C) Leave because of an employee’s own serious health condition that makes the employee unable to perform the functions of the position of that employee, except for leave taken for disability on account of pregnancy, childbirth, or related medical conditions.

(D) Leave because of a qualifying exigency related to the covered active duty or call to covered active duty of an employee’s spouse, domestic partner, child, or parent in the Armed Forces of the United States, as specified in Section 3302.2 of the Unemployment Insurance Code.

See the full article (link above) to find out more about how this works.

AB 5, Revised!

Welp, there it is:  Today, Governor Newsom signed AB 2257, which “revises and recasts” parts of AB 5.  And if your industry had a good, vocal lobbyist, you may have good news!

Of note, even if your industry/occupation is no longer governed by AB 5’s ABC test, the relationship is governed by the multifactor test previously adopted in the case of S. G. Borello & Sons, Inc. v. Department of Industrial Relations (1989) 48 Cal.3d 341.

Among other things, the new law –which takes effect immediately – does the following:

• Exempts certain occupations in connection with creating, marketing, promoting, or distributing sound recordings or musical compositions.

• Exempts a musician or musical group for the purpose of a single-engagement live performance event, unless certain conditions apply, and would define related terms.

• Exempts an individual performance artist presenting material that is their original work and creative in character and the result of which depends primarily on the individual’s invention, imagination, or talent, if certain conditions are satisfied.

• Deletes the existing professional services exemptions for services provided by still photographers, photojournalists, freelance writers, editors, and newspaper cartoonists. Instead, the law establishes an exemption for services provided by a still photographer, photojournalist, videographer, or photo editor, as defined, who works under a written contract that specifies certain terms, subject to prescribed restrictions.

• Establishes an exemption for services provided to a digital content aggregator, as defined, by a still photographer, photojournalist, videographer, or photo editor.

• Establishes an exemption for services provided by a fine artist, freelance writer, translator, editor, content contributor, advisor, narrator, cartographer, producer, copy editor, illustrator, or newspaper cartoonist who works under a written contract that specifies certain terms, subject to prescribed restrictions.

• Creates additional exemptions for various professions and occupations. In this regard, the bill would exempt from the “ABC test” people who provide underwriting inspections and other services for the insurance industry, a manufactured housing salesperson, subject to certain obligations, people engaged by an international exchange visitor program, as specified, consulting services, animal services, and competition judges with specialized skills, as specified.  

• Creates exceptions for licensed landscape architects, specialized performers teaching master classes, registered professional foresters, real estate appraisers and home inspectors, and feedback aggregators.

• Revises the conditions pursuant to which business service providers providing services pursuant to contract to another business are exempt. The law revises the criteria pursuant to which referral agencies and service providers providing services to clients through referral agencies are exempt and would revise applicable definitions.

• Creates an exemption for business-to-business relationships between 2 or more sole proprietors, as specified. The law provides that a hiring entity need only satisfy all of the conditions of one of the exemption provisions to qualify for the exemption from the ABC Test.

Does your relationship fit under these new rules?  Did you change how you were paying workers and now this changes what you THOUGHT were the rules?

This may shock you – this isn’t a complete explanation. But it is the Friday afternoon before a long weekend (during which I will do the same thing I do every weekend – not leave my house). But I am just summarizing a summary here. More to come when this is all parsed out!

CDPH’s Guidance for Employers re COVID-19

We’ve all been reviewing the appropriate county and state guidance for returning employees to work – and I’ve had some questions about the State’s overarching document.  So, note that the California Department of Public Health’s guidance for employers Responding to COVID-19 in the Workplace is here.

Welp . . . maybe all those new California bills won’t be going anywhere soon

I attended a great webinar last week on AB 5 (the independent contractor law that took effect in the old days — January 2020).  I mean, I know it ALL but . . . you know, to hear other people’s impressions of the implications of the law. One thing that was news to me is that there are 30 pending bills in the California legislature for substantive (and some non substantive) changes to the law.

I was looking to create a tracking log for these in terms of those I need to follow and then this just popped up on my phone:

“California Assembly postpones return to Sacramento – members and staff positive for COVID-19”

The Senate plans to return Monday. . .

COVID-19 Paid sick leave for bigger (and smaller) employers in San Jose, San Francisco and TBA . . .

A phrase that bugs me (since it means someone is going to pull some “whataboutism” on me) is “I think we can all agree . . .” But there comes a time when you just have to use it. So. . . I think we can all agree that it has been “a week/month/2020.”

But wait, there’s more!

A big change this week is for employers in the City of San Jose or San Francisco (and Oakland and Emeryville by the time I post this). Such employers may have understood that the new federal Paid Sick Leave (FPSL) and emergency FMLA (eFMLA) under FFCRA didn’t apply to you because of your size. Welp, that changed!

San Jose’s COVID-10 Paid Sick Leave Ordinance is intended to cover employers too big (over 500 employees) AND less than 50 employees. As you know, employers with less than 50 employees may have been exempt from FFCRA’s rules if the provision of the benefits would be detrimental to the financial viability of the company.

Under the San Jose emergency ordinance, businesses that remain in operation during the county and state’s stay-at-home mandates are required to provide employees affected by coronavirus with an 80 hours of sick leave. Businesses that already provide employees with at least 80 hours of paid sick leave or PTO are exempt. If an employer provides less than 80 hours, they have to offer the difference.

Generally, San Francisco employers who were too big (over 500 employees nationally), are now covered by the SF Public Health Emergency Leave Ordinance. This provides that employees who have performed 56 or more hours as an employee with SF during the year before the effective date of the ordinance get up to 80 hours of supplemental paid leave for COVID-19 related reasons. As with the FFCRA, healthcare worker are not eligible. This paid sick leave is in addition to sick leave under state and local law.

We’re still reviewing the new rules, so if you have questions, let me know!

The Paycheck Protection Program . . . a brief summary

Part of the relief package passed by the federal government (the Coronavirus Aid, Relief, and Economic Security (“CARES”) Act includes the Paycheck Protection Program.  The Paycheck Protection Program will provide cash to support emergency loans to qualifying businesses. Through the Program, the Small Business Administration (“SBA”) has the authority to provide 100% federally backed loans through December 31, 2020 to help eligible businesses pay operational costs such as payroll, rent, and utilities. If a business satisfies certain conditions, portions of the loans are forgivable!

Who is Eligible?

Generally, businesses (including, sole-proprietors, independent contractors, and other self-employed individuals) with fewer than 500 employees, that were in operation on February 15, 2020, and paid (salaries, compensation, and payroll taxes) employees or independent contractors are eligible for the Paycheck Protection Program. The 500-employee threshold includes all employees, including full-time, part-time and any other status. There are some limited exceptions to the 500-employee eligibility requirement for certain industries, such as businesses in the hospitality and food sectors that have multiple locations, which can have up to 500 employees per physical location of the business.

What is the maximum loan amount?
During the Covered Period (February 15, 2020 through June 30, 2020),  an eligible business’s maximum loan amount is based upon the business’s average total monthly payroll costs incurred during the one-year period before the date of the loan. (There is an adjustment for a seasonal workforce). For the period, an eligible business may receive up to 2.5 times its average monthly payroll costs subject to a $10 million limitation.

When determining what the “average total monthly payroll costs” are, the following are excluded:

  • Individual employee compensation over $100,000;
  • Payroll and income taxes;
  • Compensation for an employee with a principal place of residence outside the United States; and
  • Qualified sick leave or family leave wages for which a business will receive a credit under the Families First Coronavirus Response Act.

What can the loaned funds be used for?
During the Covered Period, an eligible business can the founds for the following:

  • Payroll costs;
  • Cost related to the continuation of group health care benefits during periods of paid sick, medical, or family leave, and insurance premiums;
  • Employee salaries;
  • Interest payments on any mortgage;
  • Rent and utility payments; and
  • Interest payments on any other debt obligations that were incurred before February 15, 2020.

This loan might forgiven?!!!
A loan through the Program is eligible for loan forgiveness. The amount of forgiveness cannot exceed the principal amount of the loan, but may equal up to a business’s costs during the 8 weeks following the date of the loan’s origination for the following categories of expenditures:

  • Payroll costs;
  • Interest on real or personal property mortgage obligations in existence before February 15, 2020 and incurred in the ordinary course;
  • Rent under a lease agreement in force before February 15, 2020; and
  • Utility payments, including electricity, gas, water, transportation, telephone or internet, for which service began before February 15, 2020.

The amount of loan forgiveness is subject to reduction based on a business’s decline in headcount or wages. Declines in headcount or wages between February 15, 2020 and April 26, 2020 will not trigger a reduction in loan forgiveness if the business reverses the decline and returns to pre-decline levels by June 30, 2020. Loan forgiveness will not be included in a business’s taxable income.

What else?

  • Collateral and a personal guarantee are not required (except if the funds are used for non-allowable uses).
  • SBA loan fees are waived for a loan.
  • Payments of principal and interest on a loan are deferred for a period of six months to one year.
  • There is no prepayment penalty.
  • The maximum rate of interest that can be charged for a is four percent; the maximum term is ten years from the date on which the business applies for loan forgiveness.

How does this program work with the Payroll Tax Credits under the FFCRA (for paid sick leave and emergency FMLA)?

A business that gets a loan through the program will not be able to use the payroll tax credits available under the FFCRA.

 

As per all these emergency laws, more guidance is forthcoming from the SBA!

Remember: A termination is (usually) a termination and we have RULES in California about that!

In California, when an employee is involuntarily terminated, all wages earned (including earned commissions and bonuses) and all accrued paid time off (vacation or PTO) must be paid out at termination.

When these amounts are not paid at termination, the employer must pay waiting time penalties. These can be costly – a full days’ wage for every day any of those monies are unpaid, up to thirty calendar days.

If a California employer lays off an employee without a return date within the pay period (or “furloughs” the employee or “sends them home without an expected return date because of a Stay at Home / Shelter in Place order”), the final pay rules are triggered.

The Labor Commissioner’s policy is that if there is a return date within the pay period and the employee is scheduled to return to work, the wages may be paid at the next regular pay day (and the payment rule isn’t triggered).

These are complicated issues given the Stay at Home orders (county and state). Be sure to check with legal counsel to help you navigate them.

The Governor’s Temporary “Suspension” of parts of Cal-WARN

Just to keep the blog links going . . . Here is a link to the Labor Commissioner’s Guidance on Conditional Suspension of California WARN Act Notice Requirements under Executive Order N-31-20.  And below is some guidance about the “suspension” of parts of Cal-WARN.

FedWARN.  There are two “WARN” acts that California employers have to be mindful of – the federal WARN act and California’s Cal-WARN. And of course, they are different!

The federal WARN act applies to employers of 100 or more full-time employees (or 100 full-time and part-time employees who work a total of 4,000 non-overtime hours per week. A covered employer must give 60-days notice to affected employees and specified government officials before it: (i) shuts down an employment site that causes employment loss for 50 or more full-time employees; (ii) conducts a layoff that effects 50 or more employees and 33% or more of the total workforce at a single location; or (iii) lays off 500 or more employees at a single location. Of note during this current crisis is that federal WARN has several exceptions. WARN does not apply to layoffs lasting less than 6 months. Nor does WARN apply to closures or layoffs resulting from a “natural disaster.” Finally, an employer could give less than 60 days notice in the case of a closure or layoff resulting from “business circumstances that were not reasonably foreseeable.”

Cal-WARN. Cal-WARN applies to an employer who has employed 75 or more persons, including part-time employees, at a single industrial or commercial facility (called a “covered establishment”) within the preceding 12 months. An employer has to give 60-days notice before (1) terminating operations at the covered establishment; (2) relocating the covered establishment’s operations more than 100 miles; or (3) laying off 50 or more employees at the covered establishment in a 30-day period. For an employee to count as part of the 50-employee threshold, that person must have worked for the employer for at least 6 of the preceding 12 months. Cal-WARN doesn’t have some of the helpful exceptions of WARN with regard to the shelter in place, etc. While WARN only applied to layoffs exceeding 6 months, Cal-WARN applies to layoffs of any duration. As such, employers must comply with Cal-WARN even for a short-term layoff. Prior to the Governor’s Executive Order, Cal-WARN had no express exception for unforeseen business circumstances.

The Executive Order Change About Cal-WARN.  Governor Newsom’s  Exeuctive ORder, which I blogged a link to here: Relief regarding mass terminations from Governor Newsom applies from March 4, 2020, through the end of the declared State of Emergency, suspends the 60-day notice requirement of Cal-WARN for employers who meet certain conditions.

While Cal-WARN still applies, the notice requirement is to be given “as soon as practicable.” The notices must include a basis for reducing the notification period, including reference to being due to “business circumstances that were not reasonably foreseeable as of the time of the notice would have been required.” In order to avail themselves of the exception, then, employers must:

  • Provide the requisite written notices to employees impacted by the mass layoffs or shutdown, and state and local government;
  • Provide as much paid notice as possible, and to explain in writing to the impacted employees and state and local government why full notice cannot be given, and
  • Expressly notify employees of their eligibility for unemployment insurance benefits (the written notice must contain the following 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“)

Employers must establish a causal connection between the mass layoff or shutdown and COVID-19. For example, if an employer was already planning a Cal WARN-triggering mass layoff or shutdown before the onset of the COVID-19 emergency, the executive order would not apply to such a layoff or shutdown.

DOL issues Poster for FFCRA and more FAQs

The DOL published a poster for employers to use regarding the FFCRA – a link is here that you can use to print out and post.

The DOL also issued guidance / FAQs about the notice.