COVID 19 Q&A PT 4: If I layoff an employee, do I have to pay this new sick leave?

This is going to be Part IV of our Q&A on COVID-19. And we’re going to talk specifically a little bit about the FFCRA (Families First Coronavirus Response Act). Since the last podcast episode, this is past. It’s a law that provides many provisions, but some of them are things like, paid sick leave and paid emergency family leave for those employees. The question we’re going to be addressing is, “If I lay off an employee, do I have to pay this new sick leave and when does that kick in?”. We’re also going to talk about the differences between a “layoff” and a “furlough” as that seems to be coming up quite a bit in our chats. 

Before we go too deep, please subscribe to our podcast. If you can find us on iTunes, Google podcast, Spotify, Stitcher, any pod catcher of your choice makes a huge difference. You can also subscribe at peopleprocesses.com. If you’re on there right now, where you go there, a little pop up will show up. It’s also in the top right. We have tons of exclusive subscriber only content, like our entire coronavirus kit, where we have sample communications with employees, how to communicate a furlough, how to talk about salary reduction, how to do telework and get people to utilize that and not necessarily take the leave. Those are all addressed in our policies. So please subscribe there. 

Okay. Here’s what you need to know. Starting April 1, 2020, which is when this podcast comes out. The Families First Coronavirus Relief Act (FFCRA) is a federal law that will require employers to facilitate two major changes. Under the law, employees must be given:

1. Up to two weeks of emergency paid leave (EPSL) for illness, quarantine or school closures and; 

2. Up to 12 weeks during which the first two weeks are unpaid. So another 10 weeks for care for children during school closures related to COVID-19, most of which must be paid as well. There are a few exceptions to both of those. This is not going to be an in -depth on the FFCRA. There’s tons of information about that on our website. And again, for our subscribers. 

This is the question,

Do we still have to provide the Emergency Paid Sick Leave (EPSL) or Emergency Family Leave (EFMLA) if we lay off or furlough our employees?

And the answer is,

If you’ve laid off (ended the employment relationship), they are no longer employees. So these leaves are not going to apply. 

Workers who are still employed by you but not currently working any hours due to a business slowdown or shelter-in-place order are basically a furlough versus termination, they would also not qualify. The leave may only be used when an employee is unable to work because of the reasons listed in the law (their own sickness, a family member sickness, or school daycare closures). An employee who has already been put on a furlough is unable to work because you have nothing for them to do, either because business slowed down or the government has required closure. That’s different than if they can’t come in because they are sick or under a government order themselves. For quarantine government orders normally a medical order in the case of an employee. 

You gotta be cautious, though, not to base layoff or furlough decisions on the employees’ potential need for leave, as this can constitute unlawful retaliation or interference with their rights under the law. So you can’t put people on furlough because you think they’re the ones who are going to take the leave. You put people on furlough, because you don’t have work for them to do. Does that make sense? Same with termination. 

Remember, the government is going to fully fund these leaves through a payroll tax credit. If you don’t have the funds available to cover the leaves until tax time, then you may use your payroll tax set aside to fund them. You still don’t have enough, you can apply for an advance from the IRS. And as of Friday, March 27, a whole new law is passed where they expect to do significant loans that are forgivable, basically cash payments to businesses, but only if you do not lay off a bunch of your staff. So the decision to lay off is beyond the scope of this episode. But basically, be careful if you’re going to decide to do that. But if you don’t have business for them to do, if you don’t have work for them to do because you’re shut down, then that’s easy enough. You don’t have work, that’s a furlough or a layoff. 

What is the difference between a furlough and a layoff? 

That’s our next question. 

Well, note the language used when sending employees home for a period of time is less important than communicating your actual intent. Since temporary layoffs and furloughs are only used regularly in certain industries like seasonal industries, roofing like they may lay off for a snowstorm. Excuse me I have allergies by the way, not Coronavirus, but this time of year just kills me. You should not assume that employees will know what those words mean. Be sure to communicate your plans for the future even if they feel quite uncertain or only short-term. 

So, a furlough continues the employment relationship, but reduces scheduled hours or requires a period of unpaid leave. The thought process is that having all employees incur a bit of hardship is better than some losing their jobs entirely. For example, a company may reduce hours to 20 per week for a period of time as a cost-saving measure or they may have everyone on a two week unpaid leave while the store is shot. This is typically not considered termination; however, you will still need to provide notices to the employee about the change in the relationship, and they would still be eligible for unemployment for that difference in pay. 

If the entire company isn’t going to be furloughed, but only certain employees, it’s very important to be able to show that the staff selection is not being done for a discriminatory reason. Remember, you can’t base this on protected classes. And you can’t do it just because you think these certain people are going to take leaves. For example, don’t put everyone on furlough that has kids, that would be bad. Obviously, if they’re black, white, Asian, female, male, those are for religious reasons. These are not reasons to do that. But other than that, you got to want to document the nondiscriminatory reasons that support that decision to furlough certain employees and not others, such as those that perform central services, you got to have this person but not this person because of their job. Makes sense. Now, that’s a furlough. 

A layoff involves terminating the employment during a period when no work is available. This may be temporary or permanent if you close down completely, but you intend to reopen in a relatively near future or have an expected reopening date —at which time you will rehire the employees or all employees —this would be considered what’s called a temporary layoff. Temporary layoffs are appropriate for relatively short-term slowdowns or closures. A layoff is generally considered permanent if there are no plans to rehire the employee or employees because the slowdown or closure is expected to be lengthy or permanent. 

So a couple key things in here, there are some weird rules about, 

Pay for exempt employees (those are people who are not eligible for overtime)

FLSA exempt employees do not have to be paid if they do not work at all for an entire workweek. However, if work is not available for a partial week for an exempt employee, they must be paid their full salary for that week, regardless of the fact that they had less work. Remember salary people, FLSA exempt people, you get this exemption because you’ve agreed to pay them by the workweek. Whatever the amount of work they have to do is why you don’t pay overtime if they work 60 hours great if they work 20 fine. If the point is to save money and of course it usually is, it’s best to ensure that the layoff covers the company’s established seven-day workweek for exempt employees. Make it very clear to exempt employees that they should do absolutely no work during any week you’re shutdown. Exempt employees do any work during that time, they get their normal weekly salary. 

For your non exempt employees (those who get overtime) 

Your FLSA covers people who only need to be paid for actual hours worked, so single day or partial-week furloughs are fine without worrying about pay implications. 

You want to maintain open communications with the affected employees before and during the furlough or temporary layoff period. We have a great episode with Kith, consulting Bill Coletti, crisis management expert. He did an outstanding job laying out the steps you can take around communication during this, and should check that out as well. 

One other question we’re getting is, 

Is this retroactive or applicable before its effective date? 

No. The Act goes into effect April 1, you do not get credit for things you did before April 1. They did not have the least before April 1, it is not applicable before that time. 

The other kind of thing to think about in this is that if you are making decisions after April 1, you need to definitely take into account, make sure you’re not laying off people because you think they’re going to take the lead. That is specifically illegal and you don’t want to do it that way. 

I hope this was helpful for you. It’s just a quick Q&A. We’ve been getting a lot of them. We still have parts V and VI coming up. So I hope this was helpful to you to tune in to the next one. 

Part V. Is going to go into employer live. I’m sorry, benefits changes and how those work around the new laws and;

Part VI. Is going to be about employer liability workers comp claims related to this coronavirus stuff. 

We’ll be continuing to post new episodes and new interviews along the way. If you haven’t subscribed yet, please do so. My name is Rhamy Alejeal and I appreciate you taking the time to hang out with us and learn something this morning. Have a great day. Now it’s time for you to go out there and get your work done.

COVID-19 Q&A Part I, II & III links here:

Part I – Should we send everyone to work from home with this Coronavirus?

Part II – I think an employee may be sick… what do I do?

Part III – Can an employee refuse to come to work because of fear of Coronavirus?