The national state of emergency in response to the COVID-19 pandemic is forcing many employers to carefully weigh their workforce options. Some employers have been able to continue business operations by implementing remote work arrangements or by reducing staff hours. However, for many employers it has meant temporarily closing their business or imposing temporary furloughs or short-term layoffs until normal business operations can resumed.
Determining the right action to take for your business can be difficult and it is advisable to seek appropriate legal counsel to ensure you are making the appropriate decision for your business and workforce. Having said that, following are some things to consider.
Work Furlough vs. Short-Term Layoff
Work furloughs involve reducing the number of days or weeks that an employee can work. A furlough is a mandatory suspension from work without pay and can be as short or long as the employer deems necessary. Furloughed employees are still considered to be an active employee of the Company and have the expectation that they will be able to return to work at some point. An employer will generally furlough employees when it wants to retain its staff, while reducing the cost of separation.
A layoff is often meant to be a temporary reduction in workers during a particular event. In an event such as COVID-19, it may be that the employee subject to a short-term layoff will be able to return to their job when the business recovers; however, the employer could deem the layoff permanent after a certain period of time.
Employers that are considering a work furlough and/or reduced hours and pay for members of their staff should be cautious of pay-related matters. The Fair Labor Standards Act (FLSA) allows employers to have non-exempt employees work fewer hours each week and even pay them less so long as the pay meets the applicable Federal minimum wage. On the other hand, exempt employees must be paid their full salaries for any work they do during a workweek. Therefore, the employer should be careful to require exempt employees to take unpaid time off in full-increments and to not perform ANY work during the week. This includes working from home, reading and responding to emails, or phone calls. Exempt employees may take voluntary time off without pay; however, the unpaid time off must be completely voluntary and cannot be caused by the business condition of the employer or the result of pressure or request by the employer to take time off.
Non-Exempt vs Exempt Employees
Non-exempt employees are those that receive an hourly wage and are entitled to be paid for any overtime hours they work. An exempt employee is generally considered to be a salaried staff member that is not entitled to overtime. These are loose definitions and again it is advisable to seek the appropriate legal counsel to be sure you are following FLSA regulations.
To assist Americans affected by the COVID-19 outbreak, the U.S. Department of Labor (USDOL) announced new guidance outlining the flexibilities that states have in administering their unemployment insurance (UI) programs. Under this guidance, federal law permits states to amend their laws to provide UI benefits in multiple scenarios, examples include the following:
- An employer temporarily ceases operations due to COVID-19 preventing employees from coming to work;
- An individual is quarantined with the expectation of returning to work after the quarantine is over; and
- An individual leaves employment due to the risk of exposure or infection or to care for a family member.
In addition, federal law does not require an employee to quit in order to receive benefits due to the impact of COVID-19.
The Executive Office of Labor and Workforce Development (EOLWD) and the Department of Unemployment Assistance (DUA) has filed emergency regulations, which allows those impacted by COVID-19 to collect unemployment benefits if their workplace is shut down and expects to reopen. These regulations apply to all employees (full and part-time) who are impacted by the shutdown subject to the following conditions:
- Workers must remain in contact with their employers during the shutdown.
- Workers must be available for any work their employer may have for them that they are able to do.
- An employer may request to extend the period of the covered shutdown to 8 weeks, and workers will remain eligible for the longer period under the same conditions described above.
- If necessary, the DUA may extend these time periods for workers and employers.
Note: Employers who have been paying into the system for themselves (i.e. receiving a W-2 wage) are also eligible to apply. However, until such time as President Trump makes a disaster unemployment declaration for Massachusetts or nationwide, self-employed individuals and 1099 contractors are not eligible for unemployment assistance.
Finally, to assist employees impacted by COVID-19, the Baker-Polito administration filed emergency legislation that allows for claims to be paid more quickly by waiving the one week waiting period for unemployment benefits. This means that the DUA would be authorized to pay benefits without delay to persons who become unemployed due to the following:
- Lay-offs or business shutdowns in response to the virus;
- Quarantine orders or directives of illness that prevents them from leaving their homes; and
- They must care for a sick or quarantined family member.
Small Business Relief
You may be aware that the Baker-Polito Administration announced the establishment of a $10 million Small Business Recovery Loan Fund in an effort to provide emergency capital to Massachusetts-based businesses with under 50 full-time and part-time employees, including nonprofits. As of March 19, 2020, applications are no longer being accepted by this fund due to the availability of funds from U.S. Small Business Administration’s Economic Injury Disaster Loan (EIDL) program. Currently, all Massachusetts companies impacted by COVD-19 are encouraged to seek disaster loan assistance from the EIDL at https://disasterloan.sba.gov/ela.
Rules and regulations issued by federal and state agencies in response to COVID-19 change frequently. Guidance and directives from the Centers for Disease Control and Prevention, Massachusetts Department of Public Health, and other state agencies can be found at https://mass.gov/info-details/covid-19-guidance-and-directives.