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Legislative Update: The Impact of the Coronavirus/COVID-19 on Employment Law

US Employment Laws are currently part of a changing legal landscape resulting from the coronavirus/COVID-19 pandemic. Federal, State, and Local governments have taken action to combat this public health emergency and limit the economic impact it will have. As of March 18, 2020, the federal government passed the Families First Coronavirus Response Act that, among other things, provides for an expansion of the Family Medical Leave Act (the “FMLA”), creates a new Emergency Paid Sick Leave Act (the “EPSLA”), and provides employers with refundable tax credits for qualified paid sick leave expenses (the “Tax Credits”). To date, other than Governor Cooper’s previous executive orders related to mass gatherings and business closures (restaurants, bars, personal care/grooming, and entertainment), North Carolina has not passed a law that impacts the state’s employment laws. Additionally, the US Department of Labor is and will continue to provide guidance to employee and employers throughout this emergency. However, it is critical to note that this is a changing landscape and federal and state law may change considerably over the coming days or weeks.

Emergency FMLA Expansion Act – Expands the FMLA to allow employees to take up to 12 weeks leave (2 weeks unpaid and 10 weeks paid) to care for the employee’s children (under age 18) whose school or child care provider is closed/unavailable due to a public health emergency, such as the coronavirus/COVID-19 pandemic.

  • Employers affected – employers with 50 or more employees
  • Employees who are eligible for leave
    • Employed for at least 30 days
    • Qualifying Need related to a Public Health Emergency – Employee is unable to work/telework because he/she must care for a child(ren) (under age 18) if school/childcare provider is closed/unavailable due to a public health emergency
    • Provide notice of need for leave as practicable
  • Limitation on Unpaid Leave
    • Initial 10 days of leave may be unpaid
      • Employee may elect to substitute employer paid leave for the initial 10 days
    • Employer must offer paid leave after initial 10 days of unpaid leave
      • Amount – not less than 2/3 regular hourly rate for each hour employee would normally be scheduled to work
        • If the employee works based on varying schedules
          • Average number of hours over previous 6-month period
          • Reasonable expectation of hours (if not worked for 6 months)
      • Maximum amount of leave - $200 per day and $10,000 total (10 weeks)
  • Restoration of Position
    • Does not apply if less than 25 employees and certain conditions are met
    • 1-year contact period beginning the earlier of
      • Public health emergency concludes
      • 12 weeks after date leave commences
  • This expansion appears to be temporary as it is set to expire on December 31, 2020.

Emergency Paid Sick Leave Act – Requires employers to offer employees affected by the coronavirus/COVID-19 pandemic up to 2 weeks of paid sick leave

  • Employers affected – employers with 500 or fewer employees
  • Employer must provide paid sick leave to employees that are unable to work or telework because of
    1. Federal/State/local quarantine/isolation order related to COVID-19
    2. Healthcare provider directed employee self-quarantine related to COVID-19
    3. Experiencing symptoms of COVID-19 and seeking med diagnosis
    4. Employee caring for individual subject to 1 or 2
    5. Caring for the employee’s children when the children’s school/childcare is closed/unavailable due to COVID-19 precautions
      • Note - For employers with 500 employees or less – paid leave is required in place of the initial 2 weeks (10 days) of limited unpaid leave as provided for in the FMLA expansions noted above. However, the US Department of Labor may allow an exemption from the childcare reason of the EPSLA for small businesses with fewer than 50 employees.
    6. Substantially similar condition as defined by the Secretary of the US Department of Health and Human Services
  • Exclusion – Employers may elect to exclude a healthcare provider/emergency responder employee from application of the EPSLA
  • Amount of hours
    • Full time – 80 hours (2 weeks)
    • Part-time – average number of hours worked over 2-week period
  • Maximum amount of Leave
    • For reasons 1, 2, and 3 above – $511 per day and $5,110 total
    • For reasons 4, 5, and 6 above – $200 per day and $2,000 total
    • US Department of Labor will provide guidelines for calculating leave amounts
  • Notice – Employer must provide posted notice of the requirements of this act (US Department of Labor will draft a model notice)
  • Termination of Leave – Paid leave terminates on the date of the employees next scheduled work shift after the need for leave terminates
  • Carryover – Employee may not carryover paid sick leave guaranteed by the EPSLA from year to year
  • Prohibitions
    • Employers cannot require employee to find replacement
    • Sequencing of Leave – Employer cannot require an employee to use employer provided paid leave before using the EPSLA paid leave
    • Failure to pay sick leave or unlawful termination of an employee is a violation of the Fair Labor Standards Act

Tax Credits – Provides employers with a refundable tax credit against payroll taxes (Sections 3111(a) and 3221(a) of the Internal Revenue Code) (see IRS guidelines)

  • Credit for 100% of qualified paid sick leave per calendar quarter
  • Any excess of credit over amount of tax owed is treated as an overpayment and refunded

Please note that any employer considering layoffs must remember to remain in compliance with the anti‑discrimination laws and the federal Worker Adjustment and Retraining Notification (“WARN”) Act – Requires that employers must give 60 days advanced notice to employees of any mass layoff/plant closing

  • Employers Affected - employers with 100 or more employees, not counting
    • those employees with less than 6 months on job
    • those employees working less than 20 hour per week
  • Applies to layoffs of
    • 50 or more people at a single site of employment
    • 500 or more at single site of employment during 30-day period
    • Temporary layoff of less than 6 months extended for more than 6 months
    • Reduces hours of 50 or more employees by 50% or more for each month in a 6-month period
  • Exceptions to 60-day notice (only need as much notice as practicable)
    • Faltering company
    • Unforeseeable business circumstances – likely the most reasonable exception to the notice requirement for any layoffs due to the coronavirus/COVID-19 pandemic
    • Natural disaster

The NC Bar Association Blog has a recent post Work in the Time of COVID-19: FAQs for Employers that provides additional information about these new laws and their impact on businesses.

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DISCLOSURE: This legislative update, drafted by attorneys at Homesley & Wingo Law Group PLLC, is only intended to be a summary of recently passed legislation in a legal environment that is subject to change daily. Accordingly, this summary is not intended to be a full explanation of the law, nor should it be considered legal advice. For a more detailed explanation of how these or other legislative changes may affect your business, contact your attorney.