The Families First Coronavirus Response Act (the “Act”), which we detailed in a previous Advisory, requires private employers with fewer than 500 employees (“covered employers”) to provide paid sick leave (“Emergency Paid Sick Leave”) and family leave (“Public Health Emergency Leave”) for certain COVID-19 related absences and includes a tax credit for employers for the cost of the paid leave.

As covered employers prepare to meet these requirements, questions have arisen related to the payroll tax relief associated with these payments.  This update addresses some of these questions based on the guidance available at this moment.

  1. When are tax credits available to eligible employers?

Eligible employers will be able to claim payroll tax credits based on qualified leave taken by their employees between April 1, 2020, the effective date of the Act, and December 31, 2020.  These employers qualify for dollar-for-dollar reimbursement through tax credits for all qualifying wages paid under the Act.  Qualifying wages are those paid to an employee who takes leave under the Act for a qualifying reason, up to the appropriate per diem and aggregate payment caps.  Applicable tax credits also extend to amounts paid or incurred to maintain health insurance coverage.

Note also that under the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) passed by the U.S. Senate on March 26, 2020, employers will most likely be able to postpone payment of the employer payroll taxes they do owe for 2020.  Unless modified before enactment, the CARES Act would permit 50 percent of employer payroll taxes for 2020 to be payable on December 21, 2021, with the other 50 percent to be payable on December 31, 2022.

  1. How will the payroll tax credits under the Act work?

While the Act as passed provided for a tax credit on Emergency Paid Sick Leave against the employer’s portion of Social Security taxes, a joint statement issued on March 20, 2020 by the Department of Treasury,  Internal Revenue Service (IRS), and the Department of Labor (IR-2020-57) (the “Joint Statement on the Act”) clarified that the employer tax credit under the Act includes employee income tax withholding, and both the employee and employer portion of Social Security and Medicare taxes.  Emergency Paid Sick Leave provided under the Act is credited against these payroll taxes, and any excess is refundable on an expedited basis.

The Joint Statement on the Act elaborates on how the Act caps the tax credit available to eligible employers to equal the amount of Emergency Paid Sick Leave and Public Health Emergency Leave taken by eligible employees.  The Act allows each eligible employer to retain total payroll taxes up to the amount of the credit, rather than having to deposit those amounts quarterly to the IRS.  If the total Emergency Paid Sick Leave taken exceeds the employer’s payroll tax liability for a quarter, an eligible employer can request an expedited cash refund using a streamlined form that the IRS will release this week.

  1. How will the mechanics of the credit work?

 For example, if an employer pays $100,000 in paid sick leave under the Act, and the employer’s total payroll tax liability for the quarter is $150,000, the employer would only need to make a quarterly payroll tax deposit of $50,000.  If the employer pays $100,000 in Emergency Paid Sick Leave under the Act, and the employer’s total payroll tax liability for the quarter is $50,000, the employer would make no payroll tax deposits to the IRS for that quarter, and could request an expedited credit refund of $50,000, based on procedures soon to be announced.

  1. Is there any other administrative guidance at this time?

The Joint Statement on the Act previewed the formal administrative guidance that will be forthcoming.  Formal guidance may set forth additional requirements or distinctions regarding the application of employer tax credits with respect to qualified leave under the Act.  The CARES Act also appears to provide that employers can seek advance refunds of the payroll tax credit for Emergency Paid Sick Leave and Public Health Emergency Leave refunds using forms and instructions to be provided by the IRS, and further instructs the IRS to waive any penalties payable by employers for failure to deposit payroll taxes, if the failure were due to an anticipated payroll tax credit for Emergency Paid Sick Leave and Public Health Emergency Leave.

  1. Are private employers that are part of a larger group of related companies eligible for payroll tax credits provided by the Act, if their combined employee totals equal or exceed 500 employees? 

According to guidance published by the Department of Labor (the “DOL Q&As”) if two or more entities are part of an integrated employer under the Family Medical Leave Act  (“FMLA”), which the Act amends, then employees of all entities making up the integrated employer count.  The DOL Q&As state that the relevant count is whether, at the time the employee is to take leave, the employer has, in total, fewer than 500:

  1. full-time and part-time employees within the United States (including any State, the District of Columbia, or any Territory or possession of the United States);
  2. employees on leave;
  3. jointly employed temporary employees; and
  4. day laborers supplied by a temporary agency.

The Act does not regard workers who are independent contractors under the Fair Labor Standards Act (the “FLSA”), rather than employees, as employees for purposes of the 500-employee threshold.

Unlike the Public Health Emergence Leave provisions of this Act, the Emergency Paid Sick Leave provisions do not specifically amend, or become part of, an existing substantive law like the FMLA or the FLSA.  However, companies subject to the FMLA already must provide unpaid sick leave (whereas state law has governed general paid sick leave requirements).

Neither the Act nor the DOL Q&As specify that the integrated employer concept applies for purposes of counting employees under the Emergency Paid Sick Leave provision.  Thus, it is unclear whether there is an intended distinction under the Act as to whether an employer who may equal or exceed 500 employees under an FMLA integrated employer analysis would still be eligible to claim payroll tax credits for paid sick leave so long as it is not a joint employer surpassing the employee thresholds.

  1. How should an employer proceed if unclear whether they are part of an integrated employer?

It seems reasonable to argue that an employer who is an integrated employer under an FMLA analysis, who would have been subject to unpaid sick leave obligations prior to the passage of the Act, should apply the same analysis to determine whether it is eligible for the credits associated with providing paid sick time under this Act.  However, DOL may elect to clarify this issue in forthcoming regulations or other guidance materials.

For the time being, employers with fewer than 500 employees but that are part of a potential integrated employer with 500 or more employees face a choice: (1) provide paid sick leave and risk taking the tax credit erroneously, or (2) do not provide the paid sick leave under the terms of this Act (unless other State requirements apply) and risk a deemed violation of the FLSA.  For employers presented with this dilemma, a practical approach may well be to provide the paid sick leave under the terms of this Act and take the tax credit.

As set forth in the Internal Revenue Service’s IR-2020-57, DOL issued guidance in Field Assistance Bulletin 2020-1 (March 24, 2020) (the “FAB”) providing a temporary 30-day non-enforcement policy of violations of the Act (from March 18 through April 17, 2020) for employers that acted reasonably and in good faith as defined therein.  Thus, employers will need to monitor guidance and determine in the coming weeks whether they need to take any corrective actions.  For purposes of this non-enforcement policy, it is worth noting that footnote 3 of the FAB also provides that employers who are eligible for tax credits but that have insufficient cash flow should make payment of sick leave or family leave wages as soon as possible, but not later than seven calendar days after the employer has withdrawn an amount equal to the required paid sick leave and expanded family and medical leave wages from the employer’s federal payroll tax deposits or, to the extent such deposits are not sufficient, has received a refund of the credit amount from the IRS to cover the required wages.

  1. How does the FMLA identify an integrated employer?  

The FMLA regulations provide that whether separate entities are an integrated employer depends on the entire relationship in its totality, not one single criterion.  Factors considered in determining whether two or more entities are an integrated employer include:

  1. common management;
  2. interrelation between operations;
  3. centralized control of labor relations; and
  4. degree of common ownership/financial control.

Employers must consider these integrated employer issues before using the payroll tax credit procedures because there is no guarantee that the payroll tax credits will be available if integration with one or more other entities takes the employee count to 500 or more.  Of course, Congress may still enact additional laws requiring all employers to provide the paid leave and sick time regardless of payroll tax credits.  Employers should closely monitor any further statutory and regulatory developments.

The closure orders issued by federal and state government authorities across the United States have resulted in the reduction and loss of income for a significant percentage of the U.S. workforce. On March 18, 2020, President Trump signed into law the Families First Coronavirus Report Act (the “Coronavirus Act”), effective April 2, 2020, providing relief for certain eligible families, employers and businesses. Further legislation is on the horizon. Meanwhile, under existing law, the Internal Revenue Code of 1986, as amended (the “Code”) permits employers to provide some immediate and direct employee assistance on a tax-favored basis.

The following summarizes some of the tax-favored benefit strategies employers may consider to assist their employees in these challenging times:

  • Qualified Disaster Relief Payments. Employers in states receiving FEMA assistance could make direct “qualified disaster relief payments” to their employees under Section 139 of the Code. Qualified disaster relief payments may pay for reasonable and necessary personal, family, living or funeral expenses as a result of a qualified disaster. This could include childcare due to school closures; commuting expenses in excess of normal commuting costs due to the reduction of, or medical inadvisability of taking, mass transit; and food deliveries for quarantined individuals. Qualified disaster relief payments, however, do not include income replacement payments, such as provisions for lost wages or unemployment compensation. Expenses that are otherwise reimbursed through insurance or FEMA grants also do not qualify.
  • Coronavirus Act Paid Sick and Family Leave. The Coronavirus Act grants private employers with fewer than 500 employees payroll tax credits to provide sick leave, emergency FMLA leave and group health plan coverage. For more information, please see Epstein Becker Green’s Act Now Advisory titled “Families First Coronavirus Response Act: Employers’ New Paid Family and Sick Leave Obligations Take Effect by April 2.”
  • Childcare and Elder-Care Stipends. Employers could provide childcare and elder-care stipends. Without further guidance from the IRS, childcare and elder care stipends generally are treated as taxable income to employees, unless the expenses meet the exception for a dependent care assistance program under Code Section 129.
  • Commuting Assistance Benefits. Different types of pre-tax commuting assistance benefits could be offered. Generally employer payments of employee ride-sharing and ride-hailing expenses, such as Uber gift cards, ride sharing or other special types of employer-organized transportation, may not constitute qualified transportation fringe benefits entitled to tax-favorable treatment under Code Section 132. However, where employees are engaged in essential businesses under a stay-at-home governmental mandate with limited or shut-down public transportation, such expenses arguably could be considered outside the normal day-to-day commuting expenses and perhaps could qualify as a de minimis fringe benefits for unsafe conditions and/or unusual circumstances. The IRS may recognize that employers are currently paying for taxi and carpool rides because mass transportation such as trains and buses pose higher risks of COVID-19 community spread, and because employees are working hours outside their normal hours, overtime, and/or late hours. If the unsafe conditions and unusual circumstances exclusion applies, such payments should also be deductible by employers. If special commuting arrangements otherwise qualify as a qualified transportation fringe benefit under Code Section 132, such amounts could be excluded up to the $270 monthly cap.
  • On-Premise Meals. Given the current circumstances of the COVID-19 outbreak, employers of essential businesses can likely take a 50 percent deduction for providing on-premise meals to employees for the “convenience of the employer” under Code Section 119.
  • 401(k) Plan Hardship Distributions. Employees may be eligible for hardship distributions under their 401(k) plans. For more information, please see Epstein Becker Green’s Blog titled May Employees Take Hardship Distributions Under Their 401(k) Plan? Benefits Guidance in the Time of COVID-19.
  • Home Office Expenses. As discussed further in an Epstein Becker Green blog post, office-related expenses, such as internet service, computer service and cleaning supplies, should qualify as working condition fringe benefits excludable from employee wages under Code Section 132(a)(3), but the IRS will need to issue clarifying guidance with respect to the tax treatment of such expenses.
  • Leave Donation Programs. Employers may be able to sponsor leave sharing or leave donation programs for their employees. For more information, please see Epstein Becker Green’s Blog titled Employer-Sponsored Leave Sharing or Leave Donation Programs: Benefits Guidance in the Time of COVID-19.
  • Charitable Emergency Funds. Employers may be able to provide tax-free emergency funds to their employees through their related 501(c)(3) charities and private foundations.
  • Health Insurance. Finally, employers could pay health insurance premiums during a temporary layoff or furlough (subject to insurer/third party agreement on coverage). For more information, please see Epstein Becker Green’s Blog Benefits Guidance In the Time of COVID-19: Continuing Employer Group Health Coverage During Temporary Layoffs or Furloughs.

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For more information about this post, please contact:

Gretchen Harders
New York
212-351-3784
gharders@ebglaw.com
Sharon L. Lippett
New York
212-351-4630
slippett@ebglaw.com
Rina Fujii
New York
212-351-4686
rfujii@ebglaw.com

 This document has been provided for informational purposes only and is not intended and should not be construed to constitute legal advice.  Please consult your attorneys in connection with any fact-specific situation under federal law and the applicable state or local laws that may impose additional obligations on you and your company.

IRS Circular 230 Disclosure

We inform you that any tax advice contained in this communication (including any attachments) is not intended or written to be used, and cannot be used, for the purpose of: (i) avoiding any tax penalty, or (ii) promoting, marketing or recommending to another party any transaction or matter addressed herein.

On March 24, 2020, the Wage and Hour Division (“WHD”) of the U.S. Department of Labor (“DOL”) issued initial guidance (“Guidance”) on the Families First Coronavirus Response Act (“FFCRA” or the “Act”), which we detailed in a previous Advisory.  In short, the Act requires private employers with fewer than 500 employees (“covered employers”) to provide paid sick and family leave for certain COVID-19 related absences and includes a tax credit for employers for the cost of the paid leave.

The Guidance comprises (i)  a Fact Sheet for Employers, (ii) a Fact Sheet for Employees,  (iii) FAQs about the Act, (iv) a model poster that employers may use to comply with the FFCRA notice requirements and (v) FAQs regarding the required notice. The DOL plans to issue additional guidance and regulations in the near future.

Fact Sheet and FAQs Addressing Employer Paid Leave Requirements

The Fact Sheet summarizes the FFCRA’s requirements to provide employees with paid sick leave and family and medical leave for specified reasons related to COVID-19.  These provisions apply from April 1 through December 31, 2020 only.

To recap, the Act generally provides that covered employers must provide to all employees:

  • Two (2) weeks (up to 80 hours for full-time employees) of paid sick leave at the employee’s regular rate of pay (up to a cap of $511/day) where the employee is unable to work because the employee is quarantined pursuant to federal, state, or local government order or advice of a health care provider, and/or experiencing COVID-19 symptoms and seeking a medical diagnosis; or
  • Two (2) weeks (up to 80 hours for full-time employees) of paid sick leave at two-thirds the employee’s regular rate of pay (up to a cap of $200/day) because the employee is unable to work because of a bona fide need to care for an individual who is quarantined, or care for a child whose school or child care provider is closed or unavailable for reasons related to COVID-19, and/or the employee is experiencing a substantially similar condition, as determined by the Secretary of Health and Human Services.

In addition, a covered employer must provide to employees that it has employed for at least 30 days:

  • Up to an additional 10 weeks of paid family and medical leave at two-thirds the employee’s regular rate of pay (up to a cap of $200/day and $10,000 in the aggregate) where an employee is unable to work due to a bona fide need for leave to care for a child whose school or child care provider is closed or unavailable for reasons related to COVID-19.

As the Guidance confirms, FFCRA includes some exceptions to the paid sick and family leave requirements for otherwise covered employers. Specifically, employers of health care providers or emergency responders may elect to exclude such employees from eligibility for the paid sick leave and expanded family and medical leave provided under the Act.  In addition, small businesses with fewer than 50 employees qualify for a waiver of the requirement to provide leave due to school closings or child care unavailability, if the leave requirements would jeopardize the viability of the business as a going concern. The DOL stated additional guidance on the small business exemption would be forthcoming.

The Fact Sheet advises employers that the DOL will not enforce the FFCRA for the first 30 days after the law takes effect, provided the employer has acted “reasonably” and “in good faith” to comply.  The WHD defines “good faith” to mean that the employer remedies violations and makes the employee whole as soon as practicable, the violations were not willful, and the DOL receives a written commitment from the employer to comply with the Act in the future.  After the first 30 days (i.e., beginning May 1, 2020), employers who violate the Act will be subject to penalties.

Although the WHD does not administer this aspect of the Act, covered employers qualify for dollar-for-dollar reimbursement through tax credits for all wages paid to an employee who takes leave under the Act for a qualifying reason, up to the appropriate per diem and aggregate payment caps.  Applicable tax credits also extend to amounts paid or incurred to maintain health insurance coverage.

Supplementing the Fact Sheet, the FAQs clarify specific aspects of FFCRA coverage and key provisions.  Among the most helpful FAQs for employers are:

  • FAQ #2, which explains how employers should count employees to determine if their business is covered (independent contractors are not covered; separate establishments or divisions may be considered a single employer, based on the joint employer test under the Fair Labor Standards Act, as well as the integrated employer test under the Family and Medical Leave Act);
  • FAQ #4, which gives preliminary guidance applying for the small business waiver;
  • FAQ #6, which addresses how to calculate pay due to employees and explains the difference between paying an employee for family and medical leave and paying for sick leave (which is capped at 80 hours over a two-week period);
  • FAQ #10, which explains how the two types of leave interact: there’s a cap of 12 weeks of total paid leave (for example, if a child’s school is closed, an employee can take two weeks of paid sick leave, and then take an additional 10 weeks of family leave at 2/3 of the employee’s pay, up to the cap); and
  • FAQ #14, which clarifies how to determine whether an employee meets the threshold requirement of 30 days employment to be eligible for paid leave (the guidance states that the employee must have been on the company’s payroll for the 30 calendar days immediately preceding the day leave would begin).

Model Poster and FAQs Addressing Notice Requirements

The FFCRA includes a notice posting requirement. The WHD has created a model notice for employer use. The notice must be posted in a conspicuous place in each of the employer’s locations, or alternatively, an employer may e-mail or direct mail the notice to employees, or post it on an employee information internal or external website (e.g., a company intranet).  In addition, new employees must receive copies of the notice upon hire.  Currently laid-off employees, however, are not entitled to the notice.

An employer must only provide the notice in English, although the DOL will issue translations in other languages (which, at this point, are to be determined).

As noted in EBG’s Wage and Hour blog post, the DOL is soliciting employer and employee comments and questions as it continues to develop materials to assist with FFCRA as the effective date approaches.  The comments and questions the DOL receives may lead to further guidance and materials clarifying the Act’s requirements, so stay tuned for further updates.

[Updated on April 1, 2020]

As temporary layoffs and furloughs become more prevalent during the COVID-19 outbreak, employers have been asking whether they may allow employees to take hardship distributions under their Section 401(k) plans for expenses and losses resulting from COVID-19.

Under the IRS hardship distribution final regulations, employers were permitted to add a new safe harbor hardship category that would allow an employee to take a hardship withdrawal to cover expenses and losses (including loss of income) incurred by the employee on account of a disaster declared by FEMA under the Stafford Act. To qualify, either the employee’s principal residence or place of employment must be in the disaster area designated by FEMA for assistance. Expenses and losses incurred by family members do not count for this purpose.

If the employer’s 401(k) plan incorporates the IRS safe harbor definition of hardship, employees whose principal place of residence or principal place of employment is in New York, Washington,  California, Maryland, Missouri, Illinois, New Jersey, North Carolina, Florida, Texas, Louisiana, Iowa, Kentucky, Michigan, Massachusetts, South Carolina, Connecticut, Colorado, Oregon, Kansas, Alabama, District of Columbia, Georgia, Rhode Island, Ohio, and Pennsylvania (as of the date of this Blog) (collectively, the states listed in this sentence and any other state that is a FEMA-declared major disaster area “Eligible States”) may take a hardship withdrawal from their 401(k) accounts for expenses and losses (including loss of income) incurred on account of the COVID-19 outbreak. At this time, employees whose principal place of residence or principal place of employment is in a state other than one of the Eligible States may not be eligible for a hardship withdrawal to cover expenses and losses from COVID-19 because FEMA has not declared such state to be a major disaster area. However, employees in these other states may be able to rely on other provisions of the IRS safe harbor to take a hardship withdrawal.  For example, the IRS safe harbor permits a hardship withdrawal to prevent eviction from the employee’s principal residence or foreclosure on the mortgage on that residence.

Finally, the IRS could provide special disaster relief expanding the scope of the hardship.  For example, such relief could permit hardship withdrawals that would cover expenses and losses incurred by the employee’s family members as a result of COVID-19.

While hardship withdrawals for expenses and losses from COVID-19 may not be available to employees in all states, eligible employees in all states may now be eligible for distributions referred to as “coronavirus-related distributions”.  The Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”), which was enacted on March 27, 2020, provides for coronavirus-related distributions to individuals who meet the requirements specified in the CARES Act.  For more information on these distributions and other employee benefit-related provisions of the CARES Act, please refer to the Client Advisory, which is available here.

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For more information about this post, please contact:

Sharon L. Lippett
New York
212-351-4630
slippett@ebglaw.com
Rina Fujii
New York
212-351-4686
rfujii@ebglaw.com
Gretchen Harders
New York
212-351-3784
gharders@ebglaw.com

 This document has been provided for informational purposes only and is not intended and should not be construed to constitute legal advice.  Please consult your attorneys in connection with any fact-specific situation under federal law and the applicable state or local laws that may impose additional obligations on you and your company.

IRS Circular 230 Disclosure

We inform you that any tax advice contained in this communication (including any attachments) is not intended or written to be used, and cannot be used, for the purpose of: (i) avoiding any tax penalty, or (ii) promoting, marketing or recommending to another party any transaction or matter addressed herein.

Many employers are looking for ways to assist employees directly impacted by COVID-19 and employees on temporary lay-off or furlough who are exhausting their available paid-time-off (PTO). One option employers often ask about is the feasibility of adopting a leave sharing or leave donation program that would permit employees to donate vacation, sick leave or PTO to employees who need the additional time because they have been impacted by COVID-19. Properly structured, leave donated to a co-worker is a viable option, which will not be taxable to the donor but rather taxable to the co-worker when the leave is actually taken.

Employers generally may offer three different types of leave donation programs: (1) a major disaster leave sharing program (2) leave donations for employees on medical leave; and (3) leave donation to an employer-designated public charity or private foundation. Employees on leave for their own COVID-19 medical treatment could be beneficiaries of a medical leave sharing program; if an employee is not on medical leave, however, donating PTO to the employees would require a major disaster leave sharing program.

Major Disaster Leave Sharing. The current IRS guidance on “major disaster leave sharing programs” can be found under IRS Notice 2006-59. Such a program requires that the President declare a major disaster under Section 401(a) of the Stafford Act (or, as to federal employees only, a major disaster or emergency affecting a sufficient number of federal employees).On March 13, 2020, President Trump declared the COVID-19 outbreak to be an “emergency” under Section 501(b) of the Stafford Act. He did not, however, formally declare it a Section 401(a) “disaster,” but merely stated that he would not preclude the possibility that the COVID-19 outbreak would also rise to a Section 401(a) “disaster.” To fully utilize a major disaster leave sharing program, IRS guidance in the form of an announcement, notice or otherwise, would be welcome.

Continue Reading Employer-Sponsored Leave Sharing or Leave Donation Programs: Benefits Guidance in the Time of COVID-19

On Monday March 23, 2020, President Donald Trump signed an executive order aimed at preventing hoarding and price gouging.  Attorney General William H. Barr indicated that the order is authorized under the Defense Protection Act, which allows the United States to compel private industry to assist in meeting national defense needs in response to national emergencies.

The new executive order empowers the Health and Human Services Secretary to designate supplies as “critical.”  Hoarding – accumulating quantities beyond those reasonable to satisfy personal or business needs – or price gouging is prohibited with respect to these “critical” supplies.  Presently, the Health and Human Services Secretary has not designated any supplied as “critical,” It is, however, anticipated that the order will be directed toward medical supplies, as opposed to traditional consumer goods like toilet paper or cleaning products that have also been the subject of supply shortages in the face of COVID-19.

Businesses already required to comply with various state anti-price gouging laws (see previous post) will need to confront the additional challenge presented by this new executive order. This is particularly true, given that the executive order carries with it the possibility of criminal penalties.  Employers should vigilantly ensure that the necessary personnel are aware of these additional requirements being imposed by various levels of government.

The Illinois “Stay at Home” Order took effect at 5:00 p.m. on March 21, 2020, and will last through April 7 (full text here).  This post will briefly summarize the Order’s application to Illinois businesses, and then provide a one-stop-shop index pointing you to Epstein Becker & Green, P.C. (“EBG”) and governmental resources to help you comply with existing and COVID-19-specific federal, state, and local regulations.

What Does “Stay at Home” Mean for My Business?

The Order requires “all individuals currently living within the State of Illinois” to “stay at home or at their place of residence” – subject to three significant exceptions.  It similarly directs that “All businesses and operations in the State . . . are required to cease all activities within the state” – but again, subject to three significant exceptions.

First, the Order clarifies that all businesses may “continue operations consisting exclusively of employees or contractors performing activities at their own residences (i.e., working from home).”  Accordingly, businesses whose employees can work from home may continue full operations, albeit electronically.

Second, “Essential Businesses and Operations are encouraged to remain open.”  The list of Essential Businesses and Operations is broad, covering 23 separate categories ranging from the obvious (“Healthcare and Public Health Operations” and “gas stations”) to the less obvious (“dry cleaners” and “real estate appraisal and title services”).  See here for the full list.

Third, businesses may remain open to conduct “Minimum Basic Operations,” defined as the minimum necessary activities to maintain the business (e.g., maintain inventory value, process payroll, ensure security, and the like).  See here for full details.

Generally speaking, then, many Illinois businesses are exceptions to the Stay at Home Order, all businesses may remain open for critical “Minimum Basic Operations,” and all businesses may operate via telecommuting.

Doing Business in Illinois:  Employment Regulation Index for the COVID-19 Era

Below is a list of issues and associated links to resources that will help guide you through these challenging times.

Illinois Expense Reimbursement Law and Requirements

Pursuant to an amendment to the Illinois Wage Payment and Collection Act that became effective on January 1, 2019, Illinois employers are required to reimburse employees for all “necessary expenditures or losses incurred by the employee within the employee’s scope of employment and directly related to services performed for the employer.”  If you have required your employees to work from home, you may be subject to reimburse employees for the “necessary expenses” they incur.  “Necessary expenditures” include any reasonable expenses or losses that the employee incurs that primarily benefit the employer and are a result of the employee discharging the duties of his or her position (e.g., required travel to an off-premises work site or required usage of a personal data plan, but not an ordinary commuting expense).  See here for more detailed guidance on Illinois expense reimbursement requirements.

Illinois Changes to Unemployment Benefits

Illinois has suspended the one-week waiting period for unemployment insurance claims, and has expanded eligibility to include employees temporarily laid off for extended periods due to COVID-19.  NOTE:  paying out accrued, unused vacation or other paid leave during the period of temporary unemployment may affect the amount of unemployment insurance employees ultimately receive.  See the IDES Covid-19 and Unemployment Benefits FAQs and here for more information.

Federal Family and Medical Leave Act Amendments

Congress’ first legislative response to COVID-19 provides a paid leave benefit, grants emergency paid sick leave benefits, and enhances unemployment benefits.  See here for more information.

Local Sick Leave Laws

Cook County, the City of Chicago, and several other municipalities mandate sick leave benefits.  See here for information.

Relaxation of I-9 In-Person Requirement and Temperature-Taking Prohibitions

For businesses that continue to hire, the DOJ has relaxed the requirement that I-9 employment documents be provided in-person:  See here.

The Americans with Disabilities Act generally prohibits “medical examinations,” such as taking an employee’s temperature.  Nevertheless, the EEOC is deferring to CDC guidance permitting the taking of temperatures, and permitting other similar recommended “medical examinations.” Pertinent EEOC information can be found here and here.

Unionized Workforces

The Stay at Home Order largely permits union work forces to keep working.  See here for union-specific considerations.

Wage and Hour Considerations

The COVID-19 era workplace raises numerous wage and hour, FMLA, and OSHA issues that employers may not normally face.  See here for some of those issues and compliance strategies, and here for telecommuting-specific considerations and guidance.

Employer COVID-19 Reporting Obligations and Governmental Guidance and Resources

We are not currently aware of any requirements that impose an obligation on private employers to report employee suspected or confirmed cases of COVID-19 to any city, local, or state governmental agencies in Illinois.  Should you choose to report, here are some contact numbers:

CDC:  Call 1-800-CDC-INFO or use the contact form available at https://wwwn.cdc.gov/dcs/ContactUs/Form.

Illinois Department of Public Health: The Illinois Department of Public Health has a statewide COVID-19 hotline and website to answer any questions from the public or to report a suspected case: call 1-800-889-3931 or visit http://www.dph.illinois.gov/.

Chicago Department of Public Health: The Chicago Department of Health has established a call center to address questions from the public. Email: coronavirus@chicago.gov or call 312-746-4835.  Further information is also available at https://www.chicago.gov/city/en/sites/covid-19/home.html.

Employers, however, may have an OSHA obligation to record work-related confirmed cases of COVID-19 on their OSHA Form 300 log, Form 300A, and Form 301.  The OSHA website has provided guidance on when COVID-19 reporting is required which can be found here.  In addition, Illinois private employers must report work-related occurrences of COVID-19 that result in: (1) an employee fatality; (2) in-patient hospitalization of one or more employee; (3) amputation; or (4) a loss of an eye.  Certain time limits regarding the reporting apply.

The OSHA website provides information on the hotlines and online forms that employers can use for reporting: https://www.osha.gov/report.html.

For more information about this Advisory, please contact Peter Steinmeyer, Brian Spang, Kathleen Barrett, Amy Bharj, or Michelle Marks.

The Connecticut Department of Labor issued guidance entitled “Frequently Asked Questions About Coronavirus (COVID-19) For Workers and Employers” (last updated on March 20, 2020 (the “Guidance”).  The Guidance provides no new legal requirements or amendments to existing laws, but instead, analyzes issues raised by the COVID-19 pandemic under existing laws in the areas of unemployment insurance, paid sick leave, wage and hour law and the Connecticut Family and Medical Leave Act (“CTFMLA”).

Unemployment Insurance Benefits for Shut Downs and Quarantines

The Guidance confirms that employees can apply for unemployment insurance benefits where their employer requires them to self-quarantine without pay for 14 days even though they are not sick.  Similarly, it confirms that employees may apply for unemployment benefits when their employer closes and requires employees to stay home for 14 days (without opportunity for telecommuting) without pay.  While the Guidance does not guarantee receipt of unemployment benefits, it clarifies that an employee can apply for unemployment insurance and will be considered for wage replacement benefits.

Waiver of Work Search Requirements

Normally, in order to qualify for unemployment benefits, the individual must demonstrate that they are making reasonable efforts to obtain work.  Conn. Gen. Stat. Sec. 31-235(a)(2).  On March 19, 2020, the Connecticut Labor Commissioner waived the work search requirement for all individuals who are receiving unemployment benefits until such time as the Governor terminates the public health emergency and civil preparedness emergency.  Thus, so long as these individuals remain ready to work once the pandemic crisis measures have been lifted, they do not need to demonstrate that they are searching for employment in order to obtain unemployment insurance benefits.

Unemployment Insurance Benefits Where the Employee or a Family Member Has COVID-19

The Guidance addresses the situation where an employee needs to take time off from work because he or she has COVID-19 and does not have paid time off benefits or has been terminated due to the illness.  The Guidance provides that the individual may apply for unemployment insurance, and a determination will be made as to whether they are eligible for benefits.  The Guidance states that decisions will be on a case-by-case basis but cautions that one of the eligibility requirements is that the individual be physically able and available for full time work, unless they have a note from a physician stating they are only available for part time work.

The Guidance also states that if an employee is unable to work because a family member has COVID-19, they may apply for unemployment but are likely ineligible for benefits.

Further, the Guidance provides that employers can require an employee who is sick with COVID-19 to stay home, and reminds employers to provide the employee with the Unemployment Separation Package at the time they are sent home if there are no paid time off benefits available.

Unemployment Insurance Benefits For Part Time Employment

The Guidance also addresses the issue of whether a reduction in hours from full time work allows an employee to seek unemployment benefits.  If employees are still working part time, they should apply for unemployment benefits, as they could be eligible for partial benefits.  For example, if an employer only permits an employee to work part time, as opposed to his or her normal full time schedule, the employee should apply for partial unemployment benefits.  Similarly, the Guidance provides, if an employee has both a full time job and a separate part time job, and the full time job terminates due to COVID-19 leaving the employee with only the part time position, the employee should apply for partial unemployment benefits.

Where To File Unemployment Claims

The American Jobs Centers are closed to in-person visits, but the Guidance provides telephone numbers for employees (860) 263-6975 or (203) 455-2653 and a web address to submit general questions: dol.webhelp@ct.gov.  The CTDOL offers an online assistance center, which will include LiveChat to answer questions about unemployment compensation, including the impact of COVID-19: www.filectui.com.  Employers with questions may call (860) 263-6705 or email DOL.MeritRating@ct.gov.

The Shared Work Program – An Alternative to Layoffs

The Guidance reminds employers that the Shared Work program is available to employers.  Instead of laying off employees if business has slowed as a result of COVID-19, employers can apply for the Shared Work program.  Under this program, employers can reduce hours by as much as 60% and employees can collect partial unemployment benefits to replace a portion of their lost wages.

The Guidance explains that the Shared Work program will have less impact on an employer’s unemployment taxes than a full layoff.  It will also allow employers to retain its skilled workforce through a downturn, and save the employer the time and expense of hiring and training new employees when business improves.

Employers with two or more full-time or permanent part-time employees can participate in the program. The program can be applied to part or full-time permanent employees.  The program is not designed for seasonal separations.  In order to qualify, an employee’s hours and wages cannot be reduced by less than 10% or more than 60%.  Additional information about the Shared Work program is available at http://www.ctdol.state.ct.us/progsupt/bussrvce/shared_work/index.htm.

Connecticut’s Paid Sick Leave May Provide Benefits For Employees Unable to Work Due To COVID-19

The Guidance also reminds employees that Connecticut’s Paid Sick Leave Law (“PSL”) may provide pay for certain absences caused by COVID-19.  The PSL applies to employers with 50 or more employees in Connecticut who employ “service workers” under the PSL.  Covered service workers (as defined by the PSL) are entitled to up to 40 hours per year of PSL for the following reasons:

  • A service worker’s illness, injury or health condition,
  • The medical diagnosis, care or treatment of a service worker’s mental illness or physical illness, injury or health condition,
  • Preventative medical care for a service worker,
  • A service worker’s child’s or spouse’s illness, injury or health condition,
  • The medical diagnosis, care or treatment of a service worker’s child’s or spouse’s mental or physical illness, injury or health condition,
  • Preventative medical care for a child or spouse of a service worker.

Connecticut FMLA Provides Unpaid Leave For Employees Impacted by COVID-19

The CTFMLA currently provides up to 16 weeks of unpaid leave of absence and certain job protections for employees who, among other things, have a serious health condition or are needed to care for their spouse, son, daughter or parent who has a serious health condition.  Only employers with 75 or more employees in Connecticut are covered by the CTFMLA.  To be eligible for CTFMLA, an employee must have worked for at least 12 months and 1,000 hours during the preceding 12 months prior to the leave.

The Guidance reminds employers that the CTFMLA may protect an employee’s job where, for example, an employer sends the employee home because they have a fever, if the employee meets the eligibility requirements and works for a covered employer.  By way of a further example, the Guidance explains that the CTFMLA may apply to an employee whose employer sends them home because their 17 year-old daughter just returned from travel to a Level 3 country under the CDC guidelines and has a fever and cough.  However, if the employee’s daughter in the above example does not have any signs or symptoms of COVID-19, the CTFMLA would not apply because the daughter does not have a serious health condition.

Wage and Hour Laws

The Guidance also applies the existing wage and hour laws to several COVID-19 situations.  For example, the Guidance provides that if an employer closes for the day and notifies its employees not to report to work, non-exempt (hourly) employees are not required to be paid, because an employer is not required to pay a non-exempt employee when they perform no work.  If the employee is exempt, however, and has worked for any portion of that workweek, then as the Guidance explains, the employer is required to pay the exempt employee their full weekly salary.  This is because employers must pay exempt employees their full salary if they work any portion of the workweek (except where the employee asks for the time off for personal reasons).  Employers should be careful that they have properly designated their employees as exempt or non-exempt in applying these rules.

The Guidance provides that when an employer closes for 14 consecutive days and its employees do not work during that period, then neither exempt nor non-exempt employees are required to be paid, since they did not work at all during each of the two workweeks.  In addition, the Guidance states that if an employer decides to keep the business open, but the employee elects not to report for work, then the employee does not need to be paid.  This is true for the non-exempt employee because the employer need not pay non-exempt employees for any time they do not work.  According to the Guidance, the Connecticut State Agencies Regulations Sec. 31-60-14(b)(1)(B), allows the employer to make a deduction in full day increments for the exempt employee where the employee asks for the day off for personal reasons.  Again, employers must ensure that they are properly classifying their employees as exempt or non-exempt.

The Guidance does not answer all questions and issues employers are currently facing. It is provided for general informational purposes only and is not intended to be a substitute for state statutes. It does, however, provide helpful advice to employers on how the Connecticut Department of Labor is likely to apply its existing laws to the new issues facing employers as a result of COVID-19.   Please contact EBG for guidance regarding dealing with issues related to COVID-19.

Department of State Suspends Routine Visa Services

On March 20, 2020, in response to significant worldwide challenges related to the novel coronavirus (“COVID-19”) pandemic, the Department of State announced that routine visa services will be temporarily suspended at all U.S. embassies and consulates. Further, embassies and consulates will cancel all routine immigrant and nonimmigrant visa appointments. Please note that services will continue to be available to U.S. citizens, and applicants with an urgent matter and need to travel immediately should follow the guidance provided at the embassy’s website to request an emergency appointment. For more information, please visit the embassy website that applies to you.

USCIS Announces Temporary Suspension of Premium Processing for All I-129 and I-140 Petitions Due to the COVID-19 Pandemic

Effective March 20, 2020, U.S. Citizenship and Immigration Services (“USCIS”) will not accept any new requests for premium processing for all I-129 and I-140 Petitions. USCIS will continue to process any petition with premium processing in which the agency had previously accepted premium processing service, in accordance with the premium processing service criteria. However, USCIS will not be able to send notices using prepaid envelopes; only batch-printed notices will be sent. Petitions that were filed with premium processing prior to the effective date and accepted by USCIS, but cannot be adjudicated within the required 15-calendar-day window, will receive a refund of their premium processing fee, consistent with 8 CFR 103.7(e).

USCIS Announces Flexibility in Submitting Required Signatures During COVID-19 National Emergency

On March 20, 2020, USCIS announced that it will accept forms and documents without an original “wet” signature for submission dated on or after March 21, 2020, for the duration of the COVID-19 national emergency. This means that clients may now submit reproduced original signatures, such as scanned, faxed, photocopied, or similarly reproduced signatures, provided that the copy is from an original document containing original handwritten signatures. Clients opting to use this option must still retain the original signed documents containing the “wet” signature, as USCIS may, at any time, request the original signed documents.

Office of Foreign Labor Certification (“OFLC”) Issues FAQs on LCA and PERM Posting Periods During the Pandemic

On March 20, 2020, the U.S. Department of Labor’s (“DOL’s”) OFLC issued FAQs to address employer concerns related to agency operations and other related topics, including meeting statutory and regulatory requirements for filing a Labor Condition Application (“LCA”) and an Application for Permanent Labor Certification (“PERM Application”) during the COVID-19 pandemic.

Per DOL regulations, employers are required to begin recruitment efforts no more than 180 days before filing a PERM Application and to complete all mandatory recruitment steps at least 30 days before filing. Due to the impact and disruptions to the business operation caused by the COVID-19 pandemic, OFLC will accept recruitment completed within 60 days after the regulatory deadlines for recruitment have passed, as long as the employer initiated necessary recruitment within the 180 days preceding the President’s emergency declaration on March 13, 2020 (“Emergency Declaration”).

Employers must also post a Notice of Filing (“NOF”) for at least 10 business days and complete the posting at least 30 days before filing the PERM Application. The DOL will extend the posting period and accept an NOF posted within 60 days after the regulatory deadlines for recruitment have passed, as long as the recruitment began within 180 days preceding the Emergency Declaration. Employers that began their PERM recruitment on or after September 15, 2019, may file the related PERM Application up to May 12, 2020.

The FAQs also address concerns surrounding the LCA posting requirement in light of the COVID-19 pandemic. Under DOL regulations, employers with an approved LCA may move H-1B, H1-B1, or E-3 workers to other worksite locations that are not listed on the LCA without filing a new LCA, provided that the work locations are within the same area of intended employment covered by the approved LCA.  When moving the affected worker within the same area of intended employment, either hard-copy or electronic notice must be provided at the new worksite on the day or before the worker begins at the new worksite location. To address challenges surrounding the notice and posting requirement due to the COVID-19 pandemic, notice of an LCA filing will be considered timely when placed no later than 30 calendar days after the H-1B, H1-B1, or E-3 worker starts working at the new worksite.

E-Verify Extends Timeframe for Taking Action on Tentative Nonconfirmations (“TNCs”)

E-Verify is extending the timeframe to (i) resolve Social Security Administration (“SSA”) TNCs due to SSA office closures to the public, and (ii) take action to resolve Department of Homeland Security TNCs in limited circumstances when an employee cannot resolve a TNC due to public or private office closures.

Should you have any questions or wish further guidance on these or any other immigration issues during the current pandemic, please contact one of the authors or your Epstein Becker Green attorney.

On Saturday, March 21, 2020, New Jersey Governor Phil Murphy signed two Executive Orders to bring state-wide consistency to the mandated restrictions and closures arising from the COVID pandemic. The first, Executive Order 107 (Order 107) requires all nonessential New Jersey private businesses and nonprofits to close to the public (with certain exceptions), details restrictions and guidelines for those that are not required to close, and requires residents to stay at home unless they are engaging in excepted conduct.  Order 107 supersedes and increases the prior restrictions set forth in Gov. Murphy’s March 16, 2020 Executive Order No. 104 (which among other actions, closed schools, some entertainment venues and put restrictions and limited hours on certain businesses).  The second, Executive Order 108 (“Order 108”) invalidates most county or local restrictions that conflict with Order 107.

Update: As summarized below, on March 24, 2020 the State Director of Emergency Management (the “Director of Emergency Management”), in accordance with his authority, designated additional essential businesses under Order 107 and added a clarification regarding municipal control of beaches and boardwalks.

Closure of Non-Essential Retail Businesses and Guidelines for Those Businesses That Can Remain Open

Order 107 requires “brick and mortar premises of all non-essential retail businesses” to close to the public, and allows certain essential retail businesses to remain open (but wherever practicable they must provide pickup services outside or adjacent to their stores for goods ordered in advance online or by phone).  If a business is already authorized to operate an online or telephonic delivery service under existing law, it may continue to do so.  The list of essential retail businesses that may remain open are:

  • Grocery stores, farmer’s markets and farms that sell directly to customers, and other food stores, including retailers that offer a varied assortment of foods comparable to what exists at a grocery store;
  • Pharmacies and alternative treatment centers;
  • Medical supply stores;
  • Retail functions of gas stations;
  • Convenience stores;
  • Ancillary stores within healthcare facilities;
  • Hardware and home improvement stores;
  • Retail functions of banks and other financial institutions;
  • Retail functions of laundromats and dry-cleaning services;
  • Stores that principally sell supposes for children under five years old;
  • Pet stores;
  • Liquor stores;
  • Car dealerships, but only to provide auto maintenance and repair services, and auto mechanics;
  • Retail functions of printing and office supply shops; and
  • Retail functions of mail and delivery stores.

Order 107 requires that any retail business whose brick-and-mortar premises remains open to the public shall abide by social distancing practices to the extent practicable, including by keeping customers six feet apart and frequent use of sanitizing products on all surfaces.

Mandated to close pursuant to Order 107 are all personal care facilities (such as beauty salons, barber shops, spas, nail salons tanning salons, tattoo parlors and the like); indoor or outdoor “places of public amusement” (such as amusement parks, water parks, aquariums, zoos, bowling alleys and arcades); and indoor portions of shopping malls (except for restaurants and other stores within malls that have their own external entrances for the public, which may remain open only if they comply with the applicable directives).

Order 107 continues the restrictions previously imposed by Order 104, to:

  • limit all restaurant establishments, with or without a liquor license, to offering only delivery and/or take out-services only; and
  • require the closure of all recreational and entertainment businesses (such as casinos, racetracks, gyms and fitness centers and classes, movie theatres and performing arts centers and other concert venues and nightclubs).

Those business or non-profits that can continue to operate (whether or not they are open to the public), must allow telework or work-from-home arrangements wherever practicable.  Order 107 recognizes that some employee have functions that cannot be performed remotely (for example, law enforcement officers, fire fighters and other first responders; cashiers or store clerks; construction, utility, repair/maintenance or warehouse workers; lab researchers; information technology employees; janitorial and custodian staff and certain administrative staff).  In such cases, the business or non-profit must make best efforts to reduce these on site staff to the “minimal number necessary to ensure that essential operations can continue.”

The State of New Jersey has provided further guidance regarding Order 107 here. (including examples of employers in other industries who may have positions that cannot work remotely, such as manufacturing, which according to the guidance can continue to operate at minimum essential numbers even though they are not specifically listed in Order 107).

Any business not listed in Order 107 that believes it should be considered essential may contact the State Director of Emergency Management (currently the Superintendent of the State Police), who has the discretion under Order 107 to make additions, amendments, clarifications and exceptions to the specific list of essential businesses.

Order 107’s Stay-At-Home Requirements for New Jersey Residents

Order 107 requires that “all New Jersey residents shall remain at home or at their place of residence” unless they are:

  • obtaining goods or services from essential retail businesses (as described above and in Order 107);
  • obtaining takeout food or beverages as permitted by Order 107;
  • seeking medical attention, essential social services or assistance from law enforcement or emergency services;
  • visiting family or other individuals with whom the resident has a close personal relationship (such as those for whom the person is a caretaker or romantic partner);
  • reporting to or performing their job;
  • walking, running, operating a wheelchair, or engaging in outdoor activities with immediate family member, caretakers, household members or romantic partners while following best social distancing practices with other individuals (e.g. staying six feet apart);
  • leaving home for an educational, religious or political reason;
  • leaving due to a reasonable fear for his/her health of safety; or
  • leaving at the direction of law enforcement or other government agency.

Order 107 requires anyone in public to stay six feet apart whenever practicable; asks residents to use public transportation only if they have no other option (and if so, to stand or sit six feet away from other riders and to frequently use sanitizing products); and mandates the cancellation of any social gathering such as parties and celebrations.

Order 108

Order 108 invalidates any COVID-19-related county or municipal restriction that in any way will or might conflict with the provisions set forth in Order 107.  The only exceptions are two categories over which municipalities or counties may impose any additional restrictions: (a) online marketplaces for arranging or offering lodging; and (b) municipal or county parks.

March 24, 2020 Update:   The Director of Emergency Management added the following to the list of essential retail businesses that may remain open, subject to the same limitations described above:

  • Mobile phone retail and repair shops;
  • Bicycle shops, but only to provide service and repair;
  • Livestock feed stores;
  • Nurseries and garden centers; and
  • Farming equipment stores.

The Director also clarified Order 108 to state that municipalities have the discretion to impose additional restrictions to local beaches and boardwalks in response to COVID-19.