Yes. you are able to lay off employees and hire them back if they agree to come back.
Employment in Pennsylvania is usually “at-will,” which means that either you or your employees can terminate an employment relationship at any time. The exceptions to this rule are if you have a specific employment contract with your employee that limits your ability to lay off that employee, or if your employee is a member of a union with a collective bargaining agreement.
However, you may not need to lay off your employees. The Coronavirus Aid, Relief, and Economic Security Act (CARES Act) provides eligible employers a tax credit for 2020 wages paid after March 12, 2020 in a quarter during which: (a) the employer’s business is suspended or (b) a 50% gross revenue reduction occurs. These tax credits lessen the financial burden of retaining employees during the period in which COVID-19 affects business. Specifically, the tax credits are meant to undo the financial burden of payroll taxes, which may allow you to retain your employees.
Yes, your employees can apply for unemployment insurance. It is important that they file promptly during the week in which their hours are reduced or eliminated.
Even if your company is furloughing its employees or reducing their hours with the intention of hiring them back in the short or medium term, your employees can still qualify for unemployment insurance. Specifically, anyone who has lost their job, been furloughed, or is unable to find work because of COVID-19 is eligible for unemployment benefits. The amount received will vary per state. However, in addition to state benefits, the President’s Memorandum on Authorizing the Other Needs Assistance Program for Major Disaster Declarations Related to Coronavirus Disease 2019 directs the Federal Emergency Management Agency (FEMA) to provide additional unemployment benefits through the Lost Wages Assistance Program. This program may provide up to a $400 per week to eligible claimants. The program will last until the balance of federal funding reaches $25 billion or December 6, 2020, whichever occurs first.
There are a variety of impediments to the implementation of this program, including a requirement that states provide at least $100 of the $400 weekly benefit to claimants. However, the President’s memorandum notes that states may use existing unemployment compensation benefits paid to cover the states’ portion of the benefit.
Yes, you can lay off some of your employees and not others, as long as your layoffs are not based on some discriminatory characteristic, such as age, disability, sexual orientation, race, sex, religion, or national origin. If you do choose to lay off certain employees and not others, you should document the reasons for those decisions and, if appropriate, communicate those reasons to your employees.
Yes. Generally, you must provide sick and paid leave to employees affected by COVID-19. Additionally, the Families First Coronavirus Response Act (the FFCRA) creates a number of new requirements for paid sick leave, including (a) providing paid sick leave for COVID-19 related absences and (b) providing paid sick leave to certain employees if a child’s school has been closed due to COVID-19. However, it also provides for (c) tax credits with amounts paid for this leave.
a. Paid Sick Leave for COVID-19 Related Absences
A new requirement under the FFCRA is that employers with fewer than 500 employees provide each employee with two weeks paid sick leave to address COVID-19-related absences.
For full-time employees, you must provide 80 hours of paid leave, and for part-time employees, you must provide leave equivalent to the average number of hours worked in a two-week period.
Paid sick leave must be provided if:
- the employee is subject to a quarantine or isolation order or has been advised by a healthcare provider to self-quarantine due to COVID-19;
- the employee is experiencing symptoms of COVID-19 and is seeking a medical diagnosis;
- the employee is caring for an individual who is quarantined due to concerns related to COVID-19; or
- the employee is caring for a son or daughter whose school is closed or whose childcare provider is unavailable due to COVID-19 precautions.
If the employee uses paid sick leave due to his or her own quarantine or symptoms, you must pay the greater of the employee’s regular rate of pay or minimum wage, with a daily maximum of $511 per day and an aggregate maximum of $5,110.
If the employee takes paid sick leave to care for another individual, the required pay rate is two-thirds of the greater of the employee’s ordinary pay rate or minimum wage, with a daily maximum of $200 and an aggregate maximum of $2,000.
Unlike under the Family and Medical Leave Act (FMLA), there is no minimum required time an employee must be employed before using paid sick leave under the FFCRA, and employers may not require that employees use other paid leaves before paid sick leave under the FFCRA.
Employees are not entitled to benefits provided by the FFCRA just because you have no work for them to do.
FFCRA paid sick leave is an additional entitlement, not a substitute for other PTO an employee has already accrued. Accordingly, you may not force an employee to use other PTO before using FFCRA leave.
2. Additional FMLA Paid Leave:
In addition, the FFCRA amends the FMLA, creating a new paid leave requirement for certain employees caring for a child if the child’s school has been closed or childcare is unavailable due to COVID-19.
If an employee: (1) is employed by an employer with fewer than 500 employees, and (2) has been on the job for at least 30 days, the employee is entitled to this new category of FMLA leave. For the first 10 days of such leave, the employee is entitled to paid sick leave as described above. For the next 10 weeks of FMLA leave, the employer must provide paid leave of at least two-thirds the employee’s normal rate of pay for the number of hours the employee would ordinarily be scheduled to work. This requirement is subject to a daily maximum of $200 and an aggregate maximum of $10,000.
The FFCRA authorizes the Secretary of Labor to exempt small businesses with fewer than 50 employees from these paid sick leave and paid FMLA leave requirements when those requirements would jeopardize the viability of the business as a going concern.
c. Tax Credits:
The FFCRA provides employers required to pay wages pursuant to the FFCRA’s paid sick leave and FMLA provisions with tax credits for amounts paid pursuant to those provisions and, in some cases, for a portion of amounts paid or incurred to provide group health coverage to their employees.
Employees must provide you with documentation sufficient to justify their need to take leave. The employee can give you this notice either before or one day after the employee has taken COVID-19 related sick leave. This notice must consist of a signed statement containing the following information: (1) the employee’s name; (2) the date(s) for which leave is requested; (3) the COVID-19 qualifying reason for leave; and (4) a statement representing that the employee is unable to work or telework because of the COVID-19 qualifying reason. This statement must contain the name of a health care provider or government agency that has informed the employee of her need to take sick leave.
Finally, if an employee requests paid sick leave or expanded family and medical leave to care for their child, the employee must provide: (1) the name of the child, (2) the name of the school, place of care, or child care provider that closed or became unavailable due to COVID-19, and (3) a statement representing that no other suitable person is available to care for the child during the period of requested leave.
Yes. You must post a notice of the requirements of the Families First Coronavirus Response Act (the FFCRA) in a conspicuous place on your premises. You can satisfy this requirement by emailing or direct mailing such a notice to employees or posting such a notice on an employee information internal or external website. You only need to provide notice of the FFCRA requirements to your current employees.
You are not required to post the notice in multiple languages.
You can download and print the notice here.
You should obtain as much information as possible from the affected employee about how the employee is feeling and with whom the employee has been in contact in recent days. You should ask the affected employee if he or she would consent to you telling other employees that he or she has tested positive for COVID-19, so that other employees who have been in contact with the affected employee can self-quarantine. If the affected employee does not consent to his or her identity being revealed, you should alert other employees that they may have been in contact with someone who has COVID-19. But you must not reveal the affected employee’s identity without his or her consent.
Many employment contracts will have a force majeure clause, which excuse performance if certain events occur. Generally, force majeure is defined as an event or effect that can be neither anticipated nor controlled. (Link to FAQ on force majeure clauses)
If there is no force majeure clause in the contract, non-performance may still be excused due to the common law doctrines of impossibility, frustration, and impracticality.
Impossibility exists when wholly unforeseeable events make performance “impossible,” in which case nonperformance is excused. Change in market conditions or economic hardship won’t be enough. It must objectively be impossible.
Frustration of Purpose exists when the parties’ primary purpose for entering a transaction is frustrated by an unpredictable event that destroys the basic foundation of the parties’ agreement..
Impracticality exists when performance of a duty is excused when the duty has become unfeasibly difficult or expensive for the party who was to perform. This is different from impossibility. Here, performance is physically possible. However, it would be extremely and unreasonably burdensome for the party whose performance is due.
We recommend consulting a labor and employment attorney before you cancel any employment contracts based on a force majeure clause or any of these doctrines.
As is the case generally, a small business may convert an employee to an independent contractor at any time. However, you must make sure that the individual properly falls within the characteristics of an independent contractor as laid out by the IRS. If they do not, you may be penalized. In determining whether an individual is an employee or an independent contractor, look at the following characteristics:
- Behavioral: Does the company control or have the right to control what the individual does and how the individual does his or her job?
- Financial: Are the business aspects of the individual’s job controlled by the payer? (These aspects include things like how the individual is paid, whether expenses are reimbursed, and who provides tools/supplies).
- Type of relationship: Are there written contracts or employee-type benefits (which include a pension plan, insurance, and vacation pay)? Will the relationship continue and is the work performed a key aspect of the business?
Generally, an individual is an independent contractor if you have the right to control or direct only the result of the work, not what will be done and how it will be done. For example, a consultant is generally an independent contractor because while you might dictate the result that is to be achieved, the consultant is usually free to do so in the manner the consultant deems appropriate. An individual is an employee, however if you do have the right to control what the individual does as part of their work and how that work will be done. For example, a grocery sales associate would be considered an employee because you retain the ability to control what they do and how they are to do it. For more information, please visit the IRS website linked below.
Yes, current programs include (a) the Main Street Lending Program and (b) the Paycheck Protection Program. They are described below.
a. The Main Street Lending Program
The Main Street Lending Program functions as a traditional loan, however, it comes with significantly low interest rates. However, there are key differences between Main Street loans and the Paycheck Protection Program. Specifically, for example: (1) there is no minimum company size requirement; (2) Main Street loans will have variable interest rates in the range from 2.5 percent to 4 percent; (3) the repayment term is four years; (4) the smallest loan amount is $1 million; and (5) Main Street loans will not be forgiven.
b. The Paycheck Protection Program
Moreover, if you are ineligible for Main Street loans, you can apply for a loan via the Paycheck Protection Program. Earlier in the year, the Paycheck Protection Program ran out of funding. However, Congress allocated additional funding for the Paycheck Protection Program at the end of April. Under the Paycheck Protection Program provided by the U.S. Small Business Association, small businesses can obtain forgivable loans that they can use to keep employees on their payrolls.
The deadline to apply for a PPP loan is now December 31, 2020 following Congressional approval of the Paycheck Protection Program Flexibility Act of 2020 (PPPFA) on June 3, 2020.
To be eligible under the Paycheck Protection Program, your business must: (1) have no more than 500 employees; (2) have your principal place of business physically in the United States; and (3) be operational as of February 15, 2020. If these requirements are met, you can borrow up to its average total monthly payroll costs during the one year immediately before the loan multiplied by 2.5, or 250% of average monthly payroll expenses. The cap, however, is $10 million. Moreover, payroll costs are capped at $100,000 (not including healthcare, retirement benefits, and state and local taxes). The money can be used towards employee salaries, paid sick or medical leave, insurance premiums, and mortgage, rent, and utility payments.
However, these funds cannot be used towards qualified sick and family leave wages that are receiving a tax credit due to the FFCRA. In other words, a small business cannot “double-dip” by receiving benefits from both for the same expenses.
The loan can be forgiven if your business uses all of the loan proceeds within 24 weeks of receiving them up until December 31, 2020. Prior to the passage of the PPPFA on June 3, 2020, businesses were required to use their loan proceeds within 8 weeks of receiving them. Businesses can still elect to use their loan proceeds within 8 weeks of receiving them, however. To qualify for loan forgiveness, you must spend a minimum of 60% of your loan proceeds on payroll costs. Prior to the PPPFA, businesses were required to spend a minimum of 75% of loan proceeds on payroll costs.
For non-forgivable uses, the interest rate will be 1% and will be deferred to the date on which the forgiveness amount is remitted to the lender or 10 months after the end of the covered period (8 or 24 weeks, depending on the borrower’s election) of the loan if the borrower does not apply for forgiveness.
Although the PPP currently has funding, it did briefly run out of funding in the middle of April and could conceivably run out of funding again. To check the current status of PPP funding, please click here.
Yes. However, the Equal Employment Opportunity Commission mandates that you screen all entering employees who have the same type of job in a similar manner. Moreover, you can discuss teleworking options or postpone a start date for individuals who are at higher risk from COVID-19 but cannot withdraw an offer because an individual is at a higher risk.
For more information regarding the U.S. Equal Employment Opportunity Commission and COVID-19, please visit this site.
Of course, you cannot force your employees to return to work. However you should make sure that your employees are aware that employees who refuse to return to work may not eligible for supplemental unemployment benefits under the Lost Wages Assistance Program. They may also forfeit their eligibility for their state-provided unemployment benefits.
However, some employees who refuse to return to work may be able to retain their access to unemployment insurance if they suffer from “other qualifying issues”. Examples of “other qualifying issues” include situations where the employee is the sole caregiver for a child whose school is closed, or where a health care worker has advised the employee to remain in self-quarantine.
A harder question is raised when employees communicate that they could return to work, but are not comfortable returning to work because of either their own health issues, or because they perceive their work environment to be unsafe. Generally employees can refuse to perform work if it poses an unusual risk to their health – however if this refusal results in a complete cessation of work, the employee would likely forfeit employment benefits until a court case involving their refusal is resolved.
It is highly likely that as states reopen, state legislatures will enact new rules and regulations addressing this situation. Colorado has already done so, and their FAQ describing their “Safer at Home” order may be instructive. Specifically:
- No vulnerable individuals can be compelled by their employer to return to work if their work requires in person work near others;
- Employers must accommodate vulnerable individuals with remote work options, if the work can be done remotely.
- Employees who refuse to return to work due to unsatisfactory or hazardous working conditions based on the employee’s status as a member of a vulnerable group (or a co-inhabitant’s similar status) may continue to be eligible for benefits based on the risk to their health;
Pennsylvania’s Department of Labor and Industry has issued similar guidance. Specifically:
- In counties under the “red” phase of reopening, employees can refuse to return to work and still collect unemployment benefits.
- In counties in the “yellow” phase of reopening, the Department of Labor and Industry will review each individual’s circumstances to determine if the worker has “good cause” for refusing to return to the job.
- The good cause determination will be based on the employee’s age and medical history; and
- Conditions at the worksite.
- If an individual is unable to accept work because they have childcare or other caregiver responsibilities, they may be eligible for unemployment compensation through the Pandemic Unemployment Assistance program.
- If the worker was receiving unemployment benefits before they were called back to their job, they will continue to receive benefits while the department reviews their case.
We will update this page with information accordingly.
Recent news stories have discussed reported instances where employees may refuse to return to work because they receive more income from unemployment insurance than they do from their normal salaries. If you find your business in this situation, we recommend you engage in a dialogue with your employees to understand their situation. Also, you may want to consider increasing employee salaries as an enticement to return to work.
Per EEOC guidance, you may choose to administer mandatory COVID-19 testing to employees before they enter the workplace to determine if they have the virus. You must ensure that the tests that you use are accurate and reliable. You must test consistently.
For information about which tests the FDA considers accurate and reliable, please see this page.
In recent guidance, the EEOC stated that employers cannot mandate that their employees undergo COVID-19 antibody testing before they return to work to determine if they have previously had the virus. The EEOC’s guidance suggested that such a requirement would violate the Americans with Disabilities Act. This decision was made in light of the CDC’s interim guidelines that employers should not use antibody test results to make decisions about returning persons to the workplace. However, if at a later time the CDC determines that antibody test results should be used in determining if employees should be allowed to return to work, the EEOC may adjust its stance towards antibody testing.