Who is “Essential”?

I opened my laptop this morning to draft an incredible, helpful blog post about what industries and workers are “essential” under the various government orders right now.  And Rob Nuddleman had already posted one! Rassafrassa!  Rather than blatantly plagiarize, please check it out.

Please let me know if you have questions, concerns, etc. about your employment law needs.

Please stay safe (and sane).

The New Federal Paid Leave and Paid Sick Leave Law

The Families First Coronavirus Response Act was signed into law last night and will take effect April 1, 2020 (fifteen days later). By that date, the U.S. Department of Labor is to issue guidelines to assist employers in calculating how much paid leave their employees should get. After that, employees should be able to notify their employer, take the leave, and get paid by their employer the amount specified in the law.

The law is a response to the impact of COVID-19 on employees with respect to the need to shelter in place, the closing of businesses, and the closing of schools.  The law also contains provisions about nutrition for families (WIC and SNAP, etc.), I’m not addressing those changes here.

The two new programs this post will focus on about the Families First Coronavirus Response Act (FFCRA)  are the two provisions providing paid leave to employees forced to miss work because of the COVID-19 outbreak: an emergency expansion of the Family Medical Leave Act (FMLA) and a new federal paid sick leave law. I also talk about how these programs will be paid for.

In general, the FFCRA gives qualified workers two weeks of paid sick leave if they are ill, quarantined or seeking diagnosis or preventive care for coronavirus, or if they are caring for sick family members. This is the Paid Sick Leave portion.

The law also gives 12 weeks of paid leave to people caring for children whose schools are closed or whose child care provider is unavailable because of coronavirus. This is the Emergency FMLA part.

As above, the law takes effect April 2, 2020 and is to end December 31, 2020. 

Emergency Family and Medical Leave Expansion

  • Expanded Coverage and Eligibility

FFCRA significantly amends and expands the FMLA on a temporary basis (through December 31, 2020).

Under existing law, the FMLA only applies to employers with 50 or more employees.  Under the FFCRA, employees who work at companies with fewer than 500 employees are eligible for the job-protections of the FMLA.

Another big change is that any employee who has worked for the employer for at least 30 days prior to the designated leave may be eligible to receive paid family and medical leave (“Emergency FMLA”). Employers must provide job-protected leave to employees for a COVID-19 coronavirus-designated reason.

Healthcare providers and emergency responders may be exempt.  Also, small businesses with fewer than 50 employees may be exempt if the required leave would jeopardize the viability of their business.

  • Reasons for Emergency FMLA

The reasons for leave that will trigger the Emergency FMLA paid time off are somewhat limited: Any individual employed by the employer for at least 30 days (before the first day of leave) may take up to 12 weeks of job-protected leave to allow an employee, who is unable to work or telework, to care for the employee’s child (under 18 years of age) if the child’s school or place of care is closed or the childcare provider is unavailable due to a public health emergency.

  • Paid Leave

The first 10 days of Emergency FMLA may be unpaid. During this 10-day period, an employee may elect to substitute any accrued paid leave (like vacation or sick leave) to cover some or all of the 10-day unpaid period. After the 10-day period, the employer generally must pay full-time employees at two-thirds the employee’s regular rate for the number of hours the employee would otherwise be normally scheduled up to a limit of $200 per day and $10,000 in the aggregate per employee.

  • Calculating Pay for Non-Full Time Employees

Employees who work a part-time or irregular schedule are entitled to be paid based on the average number of hours the employee worked for the six months prior to taking Emergency FMLA. Employees who have worked for less than six months prior to leave are entitled to the employee’s reasonable expectation at hiring of the average number of hours the employee would normally be scheduled to work.

  • Job Restoration

Employers with 25 or more employees will have the same obligation as under traditional FMLA to return any employee who has taken Emergency FMLA to the same or equivalent position upon the return to work. However, employers with fewer than 25 employees are generally excluded from this requirement if the employee’s position no longer exists following the Emergency FMLA leave due to an economic downtown or other circumstances caused by a public health emergency during the period of Emergency FMLA. This exclusion is subject to the employer making reasonable attempts to return the employee to an equivalent position and requires an employer to make efforts to return the employee to work for up to a year following the employee’s leave.

Emergency Paid Sick Leave

  • Reasons for Paid Sick Leave

The FFCRA allows an eligible employee to take paid sick leave because the employee is:

  1. Subject to a federal, state or local quarantine or isolation order related to COVID-19;
  2. Advised by a health care provider to self-quarantine due to COVID-19 concerns;
  3. Experiencing COVID-19 symptoms and seeking medical diagnosis;
  4. Caring for an individual subject to a federal, state or local quarantine or isolation order or advised by a health care provider to self-quarantine due to COVID-19 concerns;
  5. Caring for the employee’s child if the child’s school or place of care is closed or the child’s care provider is unavailable due to public health emergency; or
  6. 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.

Of note, caring for another who is subject to an isolation order or advised to self-quarantine as described above is not limited to just family members.

  • Eligibility

This provision requires employers with fewer than 500 employees to provide full-time employees (regardless of the employee’s duration of employment prior to leave) with 80 hours of paid sick leave at the employee’s regular rate (or two-thirds the employee’s regular rate to care for qualifying reasons 4, 5, or 6 listed above).

  • Cap on Paid Sick Leave Wages 

The FFCRA places limits on paid sick leave. Specifically, paid sick leave wages are limited to $511 per day up to $5,110 total per employee for their own use and to $200 per day up to $2,000 total to care for others and any other substantially similar condition.

  • Carryover and Interaction with Other Paid Leave

This paid sick leave will not carry over to the following year and may be in addition to any paid sick leave currently provided by employers.

  • Calculating Rate of Pay

Employees who work a part-time or irregular schedule are entitled to be paid based on the average number of hours the employee worked for the six months prior to taking paid sick leave. Employees who have worked for less than six months prior to leave are entitled to the average number of hours the employee would normally be scheduled to work over a two-week period. A business employing fewer than 500 employees is required, at the request of the employee, to pay a full-time employee for 80 hours of mandated emergency paid sick leave instead of the initial 10 days of unpaid leave permitted by the Emergency Family and Medical Leave Expansion Act (summarized above).

HOW DO EMPLOYERS PAY FOR THIS?

Employers will be reimbursed for the full amount of what they pay out under the FFCRA within three months, in the form of a payroll tax credit.  (If an employer can’t wait that long, the Trump Administration said it will advance the money – we await the mechanics of that).

The reimbursement will also cover the employer’s contribution to health insurance premiums during the leave.

The amount paid out by the employer is fully refundable – which means that if the amount an employer pays out to workers under the FFCRA is larger than what they owe in taxes, the employer will be paid by a check for the difference.

Specifically, the FFCRA creates provides a series of refundable tax credits for employers who are required to provide the Emergency Paid Sick Leave and Emergency Paid Family and Medical Leave. These tax credits are allowed against the employer portion of Social Security taxes.

Employers are entitled to a refundable tax credit equal to 100% of the qualified sick leave wages paid by employers for each calendar quarter in adherence with the Emergency Paid Sick Leave Act. The qualified sick leave wages are capped at $511 per day ($200 per day if the leave is for caring for a family member or child) for up to 10 days per employee in each calendar quarter.

Similarly, employers are entitled to a refundable tax credit equal to 100% of the qualified family leave wages paid by employers for each calendar quarter in accordance with the Emergency Family and Medical Leave Expansion Act. The qualified family leave wages are capped at $200 per day for each individual up to $10,000 total per calendar quarter. Only those employers who are required to offer Emergency FMLA and Emergency Paid Sick Leave may receive these credits.

Questions!

We have a few!  Like does an employer need to verify that an employee “has kids”?  What if your employee doesn’t actually have custody of the school-age children – do we have to track down the employee for “proof”?

What if an employee is already on protected FMLA and then this hit – do they get another 12 weeks of protected time off (with pay)? (I read the law as “yes” to that)

More to come?

We’ll keep you updated as we learn more about the response of local, state and the federal government to the COVID-19 situation.

 

California FTB Already extended the tax deadlines!!

Rob Nuddleman (www.nuddleman.com) pointed out that I didn’t mention that California’s FTB ALREADY extended the state tax deadlines!

On March 13, 2020, the Franchise Tax Board announced special tax relief for California taxpayers affected by the COVID-19 pandemic.
Affected business and individual taxpayers are granted an extension to file 2019 California tax returns, and make certain payments, until June 15, 2020. According to the Franchise Tax Board, a taxpayer does not have to be directly impacted to qualify for relief. Taxpayers who experience any difficulty in filing or paying, as a result of COVID-19, are included in this relief. 
Thanks Rob!

IRS Tax PAYMENT (not filing) deadline extended to July 15, 2020

The IRS announced that the April 15, 2020 tax payment deadline for individuals and businesses has been extended to July 15, 2020.  This does not extend the time to file a return, but if you act promptly, you can request a six month extension to file.

(This is not for state taxes!)

 

 

Relief regarding mass terminations from Governor Newsom

A new Executive Order signed by Gov. Newsom may be helpful for any mass-reduction/layoff caused by COVID-19 (but as usual, be mindful of any federal law that may still limit steps you can take).

 

Disability Laws and COVID-19

While California is much more protective of disabled (or perceived to be disabled) employees, the EEOC’s “What You Should Know about the ADA, the Rehabilitation Act, and COVID-19” can be helpful for general guidance about your employment practices. Meaning, if what you want to do runs afoul of the EEOC, it will likely run afoul of California’s rules. But  . . . beware that California may have even stricter rules – so even if you are safe under the EEOC’s rules, you may be violating California laws. Got it?

Next . . it looks like the Senate passed the second version of the House’s COVID 19 relief bill. We’re reviewing it now and hope to update the blog soon.

COVAD-19 info for California employers and workers

California’s EDD is trying to help workers and employers affected by the COVID-19 (Coronavirus).  As you know, everything we think we know seems to be changing throughout every day, but here is what is happening now.

Next post: the pending assistance from the Federal government (don’t hold your breath for it actually being much help, though, given the many limitations and exemptions).

For California workers, the EDD provides the following:

A sick or quarantined worker who unable to work due to having or being exposed to COVID-19 (certified by a medical professional), can file a Disability Insurance (DI) claim. DI provides short-term benefit payments to eligible workers who have a full or partial loss of wages due to a non-work-related illness, injury, or pregnancy. Benefit amounts are approximately 60-70 percent of wages (depending on income) and range from $50-$1,300 a week.

The Governor’s Executive Order waives the one-week unpaid waiting period, so individuals can collect DI benefits for the first week they are out of work.

A worker unable to work because they are caring for an ill or quarantined family member with COVID-19(certified by a medical professional), can file a Paid Family Leave (PFL) claim. PFL provides up to six weeks of benefit payments to eligible workers who have a full or partial loss of wages because they need time off work to care for a seriously ill family member or to bond with a new child. Benefit amounts are approximately 60-70 percent of wages (depending on income) and range from $50-$1,300 a week.

A worker who has a child whose school has closed (all of them!) and who must work to be home, may be eligible for Unemployment Insurance benefits. Eligibility considerations include if the worker has no other care options and is unable to continue working your normal hours remotely.

If an employer has reduced a worker’s hours or shut down operations due to the virus can file an Unemployment Insurance (UI) claim. UI provides partial wage replacement benefit payments to workers who lose their job or have their hours reduced, through no fault of their own. Workers who are temporarily unemployed due to COVID-19 and expected to return to work with their employer within a few weeks are not required to actively seek work each week. However, they must remain able and available and ready to work during their unemployment for each week of benefits claimed and meet all other eligibility criteria. Eligible individuals can receive benefits that range from $40-$450 per week.

This is another benefit for which the one-week unpaid waiting period is waived by the Governor’s Executive Order.

For California employers, the EDD has information on protecting workers from COVID-19.

Also, employers experiencing a slowdown in their businesses or services as a result of the coronavirus impact on the economy may apply for the UI Work Sharing Program. This program allows employers to seek an alternative to layoffs — retaining their trained employees by reducing their hours and wages that can be partially offset with UI benefits. Workers of employers who are approved to participate in the Work Sharing Program receive the percentage of their weekly UI benefit amount based on the percentage of hours and wages reduced, not to exceed 60 percent.

Employers experiencing a hardship as a result of COVID-19 may request up to a 60-day extension of time from the EDD to file their state payroll reports and/or deposit state payroll taxes without penalty or interest. A written request for extension must be received within 60 days from the original delinquent date of the payment or return.

These are difficult times for all – we need to all be our best to each other!

Gun Violence and Your Business

Worried that a coworker or employee is a harm to self or others? For 2020, in addition to the workplace violence restraining order, a coworker or employer should also consider a Gun Violence Restraining Order.

On Sunday, March 1, 2020, the Sunnyvale Department of Public Safety (DPS) received a report of a United Parcel Service (UPS) employee sending threatening text messages to his employer. The text messages indicated the employee was planning a mass shooting at the UPS facility in Sunnyvale. After obtaining a search warrant for the employee’s house, Sunnyvale detectives found over 20,000 rounds of handgun and rifle ammunition, numerous high capacity magazines, 5 tactical style rifles, 1 shotgun, 3 handguns and body armor. Several tactical backpacks containing ammunition were staged at the front door of the apartment where the suspect resides.

Why is this on an employment law blog? Well, the issue of gun safety is extremely important to me. And this is a rare case where we can talk about potential gun violence rather than focusing on victims and their pain. It is also related to employment!

On January 1, 2020, AB 61 “Gun Violence Restraining Orders” took effect in California. This law authorizes an employer, a coworker who has substantial and regular interactions with the person (and with the approval of the employer), or an employee of a school, to file a petition for a one-year (or renewed) gun violence restraining order. If a court grants a petition, the person cannot have in their custody or control, cannot own or buy or possess or receive, a firearm or ammunition for a period of one year.

Judges do not award these restraining orders lightly or on weak evidence. They require clear and convincing evidence that the subject of the petition poses a significant danger of personal injury to themselves or others by having easy access to a firearm. The purpose of the law is to reduce people’s self-harm and harm to others that is enhanced by access to a firearm. Judges are extremely thoughtful and diligent in their review, balancing everyone’s rights and safety. They poke and prod at the affidavits that are submitted to establish grounds for the order and the closely review any messages or verbal statements of the employee. “Having a feeling” isn’t enough.  But if there is evidence of a credible, imminent threat, the Court will act.

If you have any questions about workplace violence restraining orders or gun violence restraining orders, contact me!

AB5 – MY contractors are exempt from the new rules, right?

I was talking to an excellent employment lawyer friend yesterday (Robert Nuddleman – who has a great blog and actually posts more than once a year!).  He and I agreed that we are getting a LOT of questions about AB5. The most common questions I am getting about AB 5 and its application to workers are:

  • Can’t my workers fit under an exemption? Come on!
  • What’s the big deal if they don’t and I keep paying them as 1099 contractors?
  • Are any City Attorneys/DA’s really going to enforce the new rules, when PAGA is so effective?

Well. . . let’s work backwards:  Yes!  City Attorneys and District Attorneys are going to bring actions: on February 25, 2020, San Diego City Attorney Mara W. Elliott obtained a preliminary injunction against Instacart, a multi-billion-dollar grocery-delivery company, for not complying with the worker classification standard established in Dynamex (and codified by AB 5).

It is very important to analyze any workers you have that are not being paid as W2 employees. Even if it seems outrageous to you – and even if the worker wants to be paid as a 1099 contractor –you need to know your risks.

Organizations must confirm that an independent contractor is really an independent contractor, or suffer the consequences – unpaid wages, unpaid employment taxes, PAGA and class action claims (Lions! And Tigers! And Bears! but more dangerous).

AB 5 codified the California Supreme Court’s 2018 Dynamex “A-B-C test” and then took the whole thing “up to an 11” when it comes to applicability.  Under the A-B-C test, a worker is an employee unless:

  • she is free from the control and direction of the hirer in performance of the work; and
  • she performs work that is outside the usual course of the hiring entity’s business; and
  • she is customarily engaged in an independently established trade, occupation, or business of the same nature as the work performed for the hiring entity.

Each of these prongs is difficult and can derail the classification. Think you are just acting as a referral service for others who do the same work as you (with a little kick back)? Well, unless you fit under a specific business, you must fit under the A-B-C test, and if you are referring people to others who do the same work as you, the “B” prong cannot be met.  Ugh!

Now, more than ever, you need to analyze your classification of workers. Need help? Contact me! Jdebacker@mstpartners.com

 

 

2020 California Employment Law Changes

New Year! New You!

As we write every year, California has new rules, regulations and court rulings that have changed the employment law landscape.  Here is a summary of the key new laws for 2020 (meaning, not every law is covered here. And no case law is discussed.  Think: Summary!)

Hiring

Arbitration Agreements. California now prohibits employers from requiring employees and applicants to arbitrate claims under the Fair Employment and Housing Act (FEHA) and the Labor Code. These laws cover discrimination, harassment, retaliation and wage and hour. The new law also prohibits class action waivers and arbitration programs requiring employees to “opt out” if they do not want to be part of an arbitration program. There are exceptions to the new bar, including for settlement agreements and negotiated severance agreements.

This change takes effect January 1, 2020 and arbitration agreements signed before that will be subject to the prohibition.

Compensation

Minimum Wage. Effective January 1, 2020, California employers with at least 26 employees must pay minimum wage at the rate of $13.00 per hour. For employers with 25 or fewer employees, minimum wage will increase to $12.00 per hour.

Employers are generally subject to federal, state and local minimum wage laws and must follow the stricter standard; that is, the one that is the most beneficial to the employee.

Exempt employees. The minimum salary that must be paid to exempt employees in California corresponds to the state minimum wage. Exempt employees must earn at least twice the state’s minimum wage for full-time employment, e.g. $54,080 annually for employers with 26+ employees. For employers with 25 or fewer employees, the amount is $49,920. This minimum salary increases as minimum wage increases. As always, the “duties” tests must be satisfied for any employee classified as exempt. 

Overtime for the Computer Software Professional Exemption. As of January 1, 2020, the computer software employees’ minimum hourly rate of pay exemption increases to $46.55 per hour.  (The minimum monthly is $8080.71; annual is $96,968.33). The applicability of this exemption requires careful analysis to see if the worker is performing the necessary duties. And note that this exemption is only from overtime. Exempt Computer Software Professionals must still be afforded the opportunity to take meal and rest breaks.  

Independent Contractors. California’s AB 5 is getting a lot of news coverage – and rightfully so. If you have anyone performing services for you that isn’t paid as a W2 employee, careful review of that relationship is a must. Companies must confirm that an independent contractor is really an independent contractor, or suffer the consequences.

In many important ways, AB 5 is “just” a codification of the California Supreme Court’s 2018 Dynamex “A-B-C test.” Under the test, a worker is an employee unless:

  • she is free from the control and direction of the hirer in performance of the work; and
  • she performs work that is outside the usual course of the hiring entity’s business; and
  • she is customarily engaged in an independently established trade, occupation, or business of the same nature as the work performed for the hiring entity.

One big expansion under AB 5 is that Dynamex applied to the Wage Orders of the California Industrial Welfare Commission, while AB 5 applies more broadly to the California Labor Code and Unemployment Insurance Code definitions of an “employee.” As before, we do not recommend trying to parse this too liberally when reviewing your work relationships. We strongly recommend that you analyze all persons who perform work for your business to see where they fit under the laws.

In the event the “ABC” test cannot be applied to a particular work relationship, AB 5 clarifies that the determination of independent contractor status is governed by an evaluation set forth in a case called S.G. Borello & Sons, Inc. v. Department of Industrial Relations. Many employers are familiar with this review with the most significant factor being the control of the business over the worker.

The law also specifies certain jobs as exempt from the “ABC” test – but the Borello test must still be met!  These include licensed insurance agents, certain licensed health care professionals, certain practicing licensed professions (attorneys, architects, engineers, private investigators and accountants), registered securities broker-dealers or investment advisors, direct salespersons and construction subcontractors.  Other “professional services” may fit in an exemption if they have a business license and negotiate their own rates of pay, including travel agents, graphic designers, certain human resources and marketing professionals, certain photographers, freelance writers, licensed barbers and cosmetologists. Real estate licensees are subject to provisions of the Business & Professions Code instead of the “ABC” test. And there are new rules for business-to-business situations and “referral agencies” that connect clients with service providers who provide graphic design, photography, event planning, minor home repairs, moving, home cleaning, errands, and dog walking, among others.

Of note, employers may not reclassify an individual who was an employee on January 1, 2019 to an independent contractor because of these exemptions! But, the bill’s exemptions do apply retroactively if a worker fits under one.

Fair Employment

Hairstyle Discrimination Prohibited. California’s Fair Employment and Housing Act is expanded with regard to race. The definition of “race” now includes “traits historically associated with race, including, but not limited to hair texture and protective hairstyles,” including “braids, locks, and twists.” During the legislative process, lawmakers pointed to the fact that workplace dress code and grooming policies that prohibit natural hair, including afros, braids, twists and locks, have a disparate impact on Black individuals. Hair has historically been a determining factor of a person’s race, thus targeting certain hairstyles constitutes racial discrimination.

Revised Lactation Accommodation Requirements. Employers must provide employees the use of a room or other location that is in close proximity to the employee’s work area. The space has to be free from intrusion and it cannot be a bathroom. It has to be safe, clean, and free of hazardous materials. The employer must provide a place to sit, a surface to set the breast pump on (along with other personal items) and access to electricity. A sink and refrigerator must also be available.

The lactation space does not need to be used solely for lactation, but when a lactating employee needs to use it, they get priority.

Employers with less than 50 employees may be exempt from the specific requirements if they can demonstrate undue hardship (meaning compliance would create significant difficulty or expense in light of the employer’s size and financial resources). We suggest assuming that this is a very difficult standard to meet and you should talk with counsel before trying to rely upon hardship.

Employers must provide a reasonable break time for lactation. The new law provides that a failure to provide this break time or a location as described above, is a failure to provide a rest break. And when you fail to provide a rest break, there is a penalty of one additional hour’s pay per violation (limited to one per day).

Employers must implement a written policy describing the process for requesting lactation accommodation and informing employees of their right file a complaint with the Labor Commissioner. This policy should be in your handbook, in a separate document given to new hires, and to employees who ask about or ask for parental leave.

Expanded Time to File Claims of Harassment, Discrimination and Retaliation.  Under current law, a victim had one year from the last act to file a claim of harassment, discrimination or retaliation.  This time is now extended to three years.

“No-Rehire” Provisions Barred from Settlement Agreements. Often, when employers and employees enter into settlement agreements about employment law claims, the employee agrees never to seek employment from the employer (and any related companies).  Starting January 1, 2020, these provisions are not permitted. This rule covers matters resolved internally and those that have progressed to litigation.

The parties to the agreement may agree to end an employment relationship or prevent the employee from working for the employer again, if the employer made a good faith determination that the employee engaged in sexual harassment or sexual assault.  The employer is not required to keep that employee on or rehire them.

Training Requirements. Last year, harassment prevention training requirements were expanded to include small employers (employers with five or more employees) and for all employees to receive some training. Over the summer, the deadline for such training was extended to allow companies to comply.

By January 1, 2021, employers with five or more employees must provide two hours of training to supervisory employees and one hour to all non-supervisory employees in California.  The training must be repeated every two years. New hires must receive the training within six months of hire or promotion to a supervisory position.

Seasonal, temporary, and employees hired to work for less than six months must be trained within 30 calendar days after their hire date, or within 100 hours worked, whichever occurs first.  If the employee is employed by a temporary services employer, that company is to provide the training, not the end-client.

Time off

Organ Donation Time Off Expanded. Current law provides that employers with 15 or more employees must provide a paid leave of absence to an employee for the purpose of being an organ donor. The time off was for 30 days in a one-year period. The new law (AB 1223) gives the organ donor another 30 days of unpaid time off.  As before, any time off under this law may run concurrently with time off under the FMLA and CFRA.

Paid Family Leave.  Later this year (July 2020), California’s Paid Family Leave wage replacement benefits will increase from six to eight weeks of benefits.  These benefits are for employees who are on protected (or granted) time off to care for another – an ill family member or for new child bonding.  As before, this is not the right to take time off, but access to wage replacement while on leave. In San Francisco, the San Francisco Paid Parental Leave Ordinance will extend to eight weeks as well.

Questions? Please do not hesitate to contact me!

www.mstpartners.com •  408.293.1900 jdebacker@mstpartners.com