COVID-19 Employee Lay-Off Questions & Answers
Due to fall-out from the coronavirus pandemic, many of our clients are grappling with tough business questions including temporary lay-offs and how they can retain valuable employees long-term. Temporary lay-offs are further complicated by two provisions of the Families First Coronavirus Response Act (FFCRA); The Emergency Paid Sick Leave Act and the Emergency Family Medical Leave Act.
UPDATE: 3.26.2020 – DOL Issues Emergency Paid Sick Leave Act (EPSLA) and Emergency Family Medical Leave Act (EFMLA) Guidance. DOL guidance provides good news for employers struggling with state ordered closures. It appears based on guidance points below that employers do NOT have to pay two weeks EPSLA due to lay-offs or state ordered closures either before or after FFCRA effective date (April 1, 2020). Instead, employees may be eligible for expanded unemployment benefits
The Emergency Paid Sick Leave Act, effective April 2, 2020, requires employers with fewer than 500 employees and public employers with at least one employee to provide employees with up to two weeks of paid sick leave. Employers of health care providers or emergency responders may elect not to provide this leave to those specific employees. In addition, the Secretary of Labor may exempt small businesses (defined as fewer than 50 employees) if the required leave would jeopardize the viability of their business.
Covered employers are required to provide emergency paid leave to an employee who is unable to work or work remotely because:
- the employee is subject to a federal, state, or local quarantine or isolation order related to COVID-19; The DOL clarified in its recent FFCRA guidance that State ordered closures and lay-offs DO NOT qualify employees for EPSLA. Instead, they may be entitled to unemployment. See DOL Guidance.
- the employee has been advised by a health care provider to self-quarantine because of COVID-19;
- the employee is experiencing symptoms of COVID-19 and is seeking a medical diagnosis;
- the employee is caring for an individual subject (or advised) to quarantine or isolation;
- the employee is caring for a son or daughter whose school or place of care is closed, or childcare provider is unavailable, due to COVID-19 precautions; or
- the employee is experiencing substantially similar conditions as specified by the Secretary of Health and Human Services, in consultation with the Secretaries of Labor and
NOTE: Caring for another who is subject to an isolation order or advised to self-quarantine as described above is not limited to family members.
Employees may also be eligible to receive protected leave and pay benefits under the Emergency Family Medical Leave Act. This applies to any full-time or part-time employee that has been on the employer’s payroll for 30 days prior to taking the leave. Employees will be entitled to take up to 12 weeks of job-protected leave if an employee is unable to work (or remote work) due to caring for the employee’s son or daughter (who is under 18) because the child’s school or place of care has been closed or his or her childcare provider is unavailable due to the public health emergency. There are a variety of restrictions and requirements. Click HERE for more information.
Here are the most common questions we are hearing from our clients:
Q. Unfortunately, I can’t afford to pay my employees. What options do I have and how does FFCRA apply?
A. Lay-off. If you lay-off employees on or after April 2, 2020, then The Emergency Paid Sick Leave Act and Emergency Family Medical Leave Act may apply. You can temporarily lay-off your employees. Employees can return to work when conditions improve.
Employers can ask employees to voluntarily take unpaid time-off and/or use remaining sick and vacation benefits first then switch to unpaid. NOTE: Employees will still qualify for unemployment under this scenario as the employer requested they voluntarily switch to unpaid status due to lack of work. If employees are still employed by you after the effective date of FFCRA (April 2, 2020), then they may be eligible for Emergency Paid Sick Leave and Emergency Family Medical Leave.
Q: Are employers eligible for reimbursement for providing these additional paid benefits to employees?
A: To ease some of the financial burden this will place on employers, a limited refundable tax credit will be allowed against the tax imposed by section 3111(a) (the employer portion of Social Security taxes), equal to payments made to the employee. For example, under the Emergency Paid Sick provision, employers can claim up to $511 or $200 for any day of absence for the reasons outlined above, to a maximum of ten days per employee for the year. Please consult your tax attorney or accountant for specific guidance on caps and credits.
Q. What happens to employee health insurance benefits during a lay-off?
A. The question of how to handle health insurance benefits during a layoff varies from employer to employer depending on the agreement they have in place with their insurance provider. The MRA, a national HR Association, recommends that employers reach out to their insurance broker/provider and review the contract they have in place to understand how an employee should be treated in a lay-off situation and if their insurance provider is making any exceptions due to COVID-19 pandemic.
NOTE: If you are able to keep the employee on the group health plan, that is recommended, if at all possible.
Q. Who pays the employees’ health insurance premium share during the lay-off?
A. Regarding an employee’s premium share, employers have two options:
- Pay the employee share on their behalf and have them catch up when they return to work;
- Have employees pay you their premium amount up front. Set expectations so that the employee knows how to get you the payment so they can keep their health benefits intact.
Q. What unemployment benefits are available to my employees?
A. The Act provides $1 billion in aid to state unemployment compensation programs so long as a state:
- Waives any waiting period;
- Waives the work search requirements for employees directly impacted by COVID-19 on account of an illness in the workplace or direction from a public health official to isolate or self-quarantine; and
- Does not charge employer accounts for these COVID-19 related benefits.
The State of Illinois has issued NEW: Illinois Emergency Unemployment Benefits for workers whose unemployment is attributable to COVID-19 – IDES
We are Here For You
The COVID-19 situation is fluid and rapidly evolving. We know that many of you have questions and concerns during this unprecedented time. Please be sure to consult your attorney and do not hesitate to reach out to your Warady & Davis business advisor for help and guidance. Call 847-267-9600 or email email@example.com.
This publication is distributed with the understanding that the author, publisher and distributor are not rendering legal, accounting or other professional advice or opinions on specific facts or matters, and accordingly assume no liability whatsoever in connection with its use. © 2020 All Rights Reserved.