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Client Alert: COVID-19 Labor & Employment FAQs - You've Asked, We've Answered

Date: April 2, 2020
In light of the current state of affairs surrounding COVID-19, employers are facing challenges not typically encountered in their day-to-day roles.  Our Whiteford professionals have addressed the following questions for our clients in hopes these answers will assist in easing how to deal with this particularly difficult, ever-changing situation.
 
If I am located in a jurisdiction where a stay-at-home order is in place and my business is an “essential” business, should I issue a letter to my employees in case they are questioned about reporting to work?
 
While not required by the law, to ease the anxiety of your employees, if your business is essential it is recommended that the employer issue letters on company letterhead to employees describing their job duties and the need for the employee to report to work.  Such letters are useful to clarify the employee’s role with regard to the essential business should the employee be questioned about their need to travel for work.  Please contact your WTP legal counsel if you need assistance with developing a letter.
 
If my business has been closed as a result of an order to close non-essential businesses, does that mean my employees are “subject to a federal, state, or local quarantine or isolation order”?
 
Under the Emergency Paid Sick Leave Act, one of the reasons an employee may use leave is that the employee “is subject to a federal, state, or local quarantine or isolation order related to COVID-19.”  That has spurred many questions as to whether this leave provision would be triggered when an employer temporarily ceases operations due to an order that closes non-essential businesses.
 
On April 1st, the Department of Labor issued regulations that clarify this provision.  The regulations state that a “quarantine or isolation order” will be interpreted to mean an order that has the effect of causing an employee to be unable to work even though his or her employer has work that the employee could perform.  This would indicate that where an employer has suspended operations and therefore has no work available, this provision of the paid leave statute will not be applicable. 
 
Are small businesses exempt from the employee leave provisions of the FFCRA?
 
There is no universal exemption to the employee leave requirements for employers under a certain size.  The FFCRA does, however, contain a provision that authorizes the Department of Labor to exempt employers with fewer than 50 employees where imposition of the leave requirements upon that employer “would jeopardize the viability of the business as a going concern.” 
 
On April 1st, the Department of Labor issued regulations that clarify how that exemption will be interpreted.  The regulations provide that the exemption may be claimed by an employer when an authorized officer of the business has determined that providing leave requested under the statute would satisfy at least one of three conditions identified in the regulations that would qualify for the exemption. 
 
What documentation is an employer entitled to obtain from an employee seeking to use leave under the FFCRA?
 
Regulations issued by the Department of Labor provide that an employee seeking leave under the FFCRA is required to provide documentation containing the employee’s name, the dates for which leave is requested, the qualifying reason for which the leave is being used, and an oral or written statement by the employee that he or she is unable to work because of the qualifying reason. 
 
The regulations also provide for the employee to submit additional information, which varies depending on the reason for which leave is being requested.
 
Finally, the regulations provide that an employer may request that an employee provide such additional material as is needed for the employer to support a request for a tax credit based upon its provision of paid leave under the FFCRA. 
 
What recordkeeping obligations does an employer have in connection with the leave provisions of the FFCRA?
 
Regulations issued by the Department of Labor provide that an employer must maintain all documentation provided by an employee in connection with a request for leave under the FFCRA for a period of four years.  If an employer makes a determination that it is exempt from the leave requirements of the FFCRA based upon its status as a small business that meets the conditions for exemption, documentation of that determination must likewise be retained for a period of four years.
 
The regulations also state that employers that claim a tax credit in connection with their provision of paid leave to employees should maintain certain additional documents relating to the claimed tax credit for a period of four years.

Is there a tax credit for employers paying COVID leave?

Yes. Below you will find a few ways to receive tax credits for employers, including, IRS Form 7200 for refundable tax credits;  offsetting the leave paid against payroll liability; claiming a tax credit for the employer’s share of health insurance costs for the employment; and self-employed business owners/independent contractors claiming an equivalent credit for COVID leave against self-employment tax.
 
  • There is a new IRS Form 7200 for refundable tax credits. The Form may be used to claim tax credits for Covid19 leave given to employees. Form 7200 may also be used to claim the Employee Retention Credit. Information on Form 7200 can be found in the links below.
 
  • Employers who pay COVID leave can receive a 100% reimbursement for the qualifying portion of leave paid.
    The mechanism for doing this is as follows:  Employer can offset the leave paid against payroll liability (including income tax withholding and FICA/Medicare taxes.  If the leave paid exceeds the amount of payroll liability, the employer can apply for a refund of the excess.  The IRS is releasing a new form for this week of March 30 and expects to process those forms within two weeks of filing them.
For example, employer has 3 employees on COVID leave.  Each qualifies for the maximum 80 hours at $5,110.  The employer would be eligible for a tax credit of $15,330.  Suppose the employer only has a tax liability of $10,000 to offset.  The employer can claim a refundable credit for $5,330.
 
  • Paying health insurance when employee is on COVID leave
    In addition to the 100% reimbursement for leave, employers may claim a tax credit for the employer’s share of health insurance costs for the employment.
For example, the employer’s share of health insurance for the 3 employees is $500 per employee per month.  The employer would prorate the premium by the hours per month.  (For example, in a month with 160 hours of working time, 80 would be half.)  The employer could then claim a credit of $250 x 3, or $750, either through offset of payroll taxes or a refundable credit.
 
  • Self-employed individuals are eligible
    Self-employed business owners/independent contractors may claim an equivalent credit for COVID leave against self-employment tax.  That leave will be refundable under the same procedures.
    A self-employed person cannot claim an amount in excess of “average daily self-employment income,” which is the self-employment income for the year, divided by 260.

*  *  *
These provisions are effective for leave between April 2 and December 31, 2020.
 
There is no double benefit allowed—therefore the amounts paid under these provisions for wages and health insurance cannot be deducted as wages or treated as deductible health insurance costs.  This is going to make payroll tax administration more difficult, and we recommend you consult with your payroll provider if you have a third-party payroll contractor. 

I have an employee working for me who has an H-1B Visa. Is there anything I need to be concerned about?

H-1B workers present a number of potential issues which can trip up unaware employers and cause serious immigration consequences for both the employer and the H-1B worker. For example, every H-1B petition is supported by a Labor Certification Application (“LCA”). This document specifies both where the H-1B worker will be working and what he or she will be paid. Any material changes to either of these two items will trigger an obligation to file an amended or new H-1B petition.
 
The Department of Labor (“DOL”) has recently issued guidance regarding moving workers (or shift to work at home) due to COVID-19, where necessary. They explained in particular: 
 
“If an employer’s H-1B employee is simply moving to a new job location within the same area of intended employment, a new LCA is not generally required. Therefore, provided there are no changes in the terms and conditions of employment that may affect the validity of the existing LCA, … employers with an approved LCA may move workers to other worksite locations, which were unintended at the time of filing the LCA, without needing to file a new LCA, provided that the worksite locations are within the same area of intended employment covered by the approved LCA. The employer [must still, however,] provide either electronic or hard-copy notice at those worksite locations meeting the content requirements of [the regulations] for 10 calendar days total, unless direct notice is provided, such as an email notice. It is important to note that if the move includes a material change in the terms and conditions of employment, the employer may need to file an amended petition with [United States Citizenship and Immigration Services] (USCIS).” 
 
Note that the term “area of intended employment” usually means normal commuting distance to the work location, and is generally defined to be no more than 50 miles.
 
The “no-benching” rule applicable to H-1B workers does not permit an employer to withhold the wages of an H-1B worker during a company shut down.  H-1B regulations specifically require that an employer continue to pay the H-1B worker the required wage during such a period of shut down due to the unavailability of work. Otherwise, an employer could be exposed to liability such as fines, back wage obligations, and in serious cases debarment from the DOL’s temporary and permanent immigration programs for a period of time. Debarment prohibits the USCIS from approving immigrant and non-immigrant petitions filed by the employer.
 
Note, however, that an employer’s duty to pay does not extend to an H-1B worker’s voluntary absence from work or a hospitalization. The regulations do not require an employer to pay the required wage if an H-1B worker is not able to work due to a reason which is not directly work related and required by the employer, such as personal illness, family care duties or other similar personal leave requests. If an employer has policies in place where a COVID-19 positive employee must remain in a period of quarantine, such time may be covered by the no-benching rule, requiring payment of the H-1B worker.
 
Finally, in order to terminate the wage obligation through termination of the H-1B worker, the employer is required to notify USCIS in writing that the employment relationship has ended, and that the employer has made arrangements to cover the cost of the worker’s return transportation to his or her country of citizenship or permanent residence. The employer should also withdraw the underlying LCA which applies to the H-1B worker, through the Department of Labor. It is not sufficient to simply notify the worker of the termination. The wage obligation will continue until proper notice has been given.

We have new employees starting soon, but we are under a telework order from the Governor. How do we complete the I-9 employment verification process?

Unfortunately, no guidance has been issued by U.S. Immigration and Customs Enforcement (“ICE”) regarding this issue. This leaves the employer with a few, probably impractical choices to make. These may include postponing the start date of employment; delay completion until an in-person meeting is possible, leaving the business exposed to possible civil fines for late completion; hire remote agents to conduct in-person I-9 verification, which may leave the business exposed to liability for errors made by the agent; or complete the I-9 verification process through video conference – a procedure not yet approved by ICE. This last approach also raises the possibility of fines, and also has logistical hurdles insofar as the actual documents presented to verify employment must be inspected by the employer.

Do employers have to issue any notices in connection with the new employee leave laws passed by Congress?

Yes.  The FFCRA directed the Department of Labor to prepare and issue a poster describing the leave provisions contained in the statute.  Employers who are covered by the leave provisions of the FFCRA (those with fewer than 500 employees) are required to post the notice “in conspicuous places on the premises of the employer where notices to employees are customarily posted.”  

The poster can be accessed here.

Do employers who have already provided paid leave in response to the COVID-19 pandemic have to comply with the leave provisions of the new laws passed by Congress?

Yes.  The leave provisions of the FFCRA take effect on April 1, 2020.  The Department of Labor has issued guidelines indicating that any leave provided prior to April 1st will not count toward the leave amounts that an employer must provide under the FFCRA.  

If an employer closes its business or furloughs an employee, can the employee still use the leave provided for under the new federal statute?

No.  Guidance issued by the Department of Labor states that the leave time provided for in the FFCRA cannot be used during time periods when the employer is not operating.  Likewise, if an employer furloughs an employee, the employee may not use any of the leave time during the furlough period.  

If an employee is laid off and then rehired, will the employee be eligible to use the new leave rights after being rehired?

Yes.  The FMLA provisions of the FFCRA defined an eligible employee as one who had been employed by the employer for at least 30 calendar days prior to the employee’s request for leave.  That created a question of whether leave would be available to an employee who was laid off and later rehired after a break in service.  Under the CARES Act, the eligibility provision of the FFCRA was modified to provide that where an employee has been laid off on or after March 1, 2020, the employee will be eligible for leave rights if he or she worked for the employer on at least 30 of the 60 days preceding the layoff.

Will workers qualify for unemployment benefits if the coronavirus (COVID-19) causes an employer to shut down operations?
 
Yes. Maryland and Virginia unemployment benefits are available to employees who are unemployed through no fault of their own. If an employer must shut down operations and no work is available, individuals may be eligible for unemployment benefits if they meet the monetary criteria and the weekly eligibility criteria.

In addition, Virginia’s Governor Northam has waived the one-week waiting period to aid Virginia workers in obtaining benefits as soon as possible. 
 
If an employer lays off employees due to the loss of production caused by the coronavirus, will the employees be eligible for unemployment insurance benefits?
 
Yes. Maryland and Virginia unemployment benefits are available to employees who are unemployed through no fault of their own. If an employer must shut down operations and no work is available, individuals may be eligible for unemployment benefits if they meet the monetary criteria and the weekly eligibility criteria.

In addition, Virginia’s Governor Northam has waived the one-week waiting period to aid Virginia workers in obtaining benefits as soon as possible. 

Has Congress passed any new employment laws in response to COVID-19 and its associated economic impacts? 

Yes.  On March 18, 2020, the Senate approved a bill titled the Families First Coronavirus Response Act, which had previously been passed by the House of Representatives.  The new statute will take effect on April 1, 2020. 
 
What does the new federal legislation require?
 
The statute contains two significant components that affect employers’ obligations with regard to their employees.

First, the legislation amends the Family and Medical Leave Act to provide for employees to be able to use FMLA leave when they are unable to work due to a child’s school being closed, or a child’s daycare provider being unavailable, as a result of circumstances resulting from COVID-19.  Notably, while the FMLA generally applies to employers with 50 or more employees, this new requirement applies to any employer with fewer than 500 employees.  As a result, small employers that are not generally subject to the FMLA will be impacted by this new law.  Additionally, the leave obligation extends to any employee who has been employed for at least 30 days, which represents a significant change from the FMLA’s normal eligibility requirements.  Finally, the new statute requires that a portion of this leave allotment be in the form of paid leave, although the amount of payment that must be provided to each employee is subject to a cap. 
 
Second, the legislation imposes a new requirement that employers with fewer than 500 employees provide two weeks of paid leave to their employees, with a pro-rated amount to be provided to employees who normally work a part-time schedule.  The leave is to be made available to employees who are unable to work as a result of (i) being quarantined or being placed in isolation, (ii) becoming ill with COVID-19, or (iii) caring for an ill family member or a child who is unable to attend school as a result of closure.  The paid sick leave hours provided under the statute are payable at each employee’s regular rate of pay in certain instances, and in other instances are to be paid at 2/3 of the employee’s regular hourly rate.  The amount of pay to be provided is also subject to caps contained in the legislation. 
 
As a final note, the House bill provides for tax credits to be available to employers based upon the amounts they pay out in the form of paid leave pursuant to the legislation. 

What health information can an employer request from an employee in connection with the COVID-19 pandemic?

Over time, employers have learned to be very cautious about seeking employee health information due to legal concerns arising under the Americans with Disabilities Act (ADA) and other anti-discrimination statutes.  In light of those concerns, many employers have been uncertain as to how much information they can request from employees who have symptoms consistent with COVID-19 or who call out sick during the ongoing pandemic.  The Equal Employment Opportunity Commission has just issued a publication providing guidance to employers regarding the type of information they can request from employees as they seek to protect their workplaces against the spread of COVID-19.  

The guidance provides that when an employee calls in sick, the employer may ask the employee whether he or she is experiencing symptoms of the virus, such as fever, chills, cough, shortness of breath, or sore throat.  Any information provided by an employee must, however, be treated as a confidential medical record in compliance with the ADA.

The guidance also authorizes employers to measure an employee’s body temperature.  The guidance does caution, however, that not all individuals who have the virus will display a fever.  

The guidance also explains that the ADA does not prohibit an employer from following the CDC’s recommendation to send how an employee who is showing symptoms of COVID-19, or to direct such employees to remain away from the workplace in accordance with the CDC’s recommendations.  

The full guidance document published by the EEOC can be viewed here.

We are considering having our employees telework rather than report to the office.  Are there any particular issues we should be aware of before we take this step?
 
Allowing employees to work remotely, to the extent that they are able to perform their regular job duties, is a practical step in reducing transmission rates.  Special consideration should be given to whether the employee is exempt or non-exempt under wage and hour laws, as tracking of hours may be problematic for hourly employees.  Having a detailed telework policy will greatly assist you in making this transition.  Also, where the job may not be done remotely, such as with support staff, consideration should be given to other possible accommodations, such as modifying job duties and shifts to permit safe completion of required job tasks. You should also be testing your system resources and accounting for available equipment to be certain that both can support a largely remote workforce. 
 
Our employees travel frequently for work as well as for personal pleasure.  We are looking toward restricting travel and possibly other steps to limit potential exposure.  What should we consider in developing a policy? 
 
Serious consideration should be given to suspending work related travel except to those situations where there is a compelling need.  This is particularly so for persons who would travel to restricted areas.  Where work can be accomplished remotely, then that is preferable to travel.  An employer has less control over personal travel by the employee.  If an employee does travel to a restricted area, however, or engages in an activity that could create increased risk of exposure, a quarantine policy should be considered in order to lessen the chance of further exposure among the workforce.  Appropriate company contact information should be provided.
 
But what if we want our employees to travel?  Can we make them?
 
Occupational health and safety laws may give employees the right to refuse to travel if there is a known threat or danger to their health, although regular travel on airplanes or public transit would not necessarily constitute such a risk.  The CDC travel advisories should be helpful in allowing you to make a case specific assessment of any risk involved in travel.  Bear in mind, however, that a concerted refusal by the employees in the face of required travel may be protected under federal labor law.  Considerations should also be given to employee morale, and potential long term effects on employees, which may outweigh the short term gain of travel.

Can employers send employees who show signs of illness home from work?
 
Yes, employees may be required to stay home under certain circumstances.  The World Health Organization has declared COVID -19 a pandemic.  When an employer has a reasonable belief that employees will pose a direct threat due to a medical condition, employees can be required to be medically examined to determine if they have contracted the disease.  Employers may, and should, send employees home if they exhibit potential symptoms of COVID-19 at work, even if the employee objects.  Employees can be required to stay home on leave for COVID-19’s incubation period (currently determined to be 14 days).  Employers should not disclose any employee’s medical condition.  Instead, employers should communicate to co-workers that an unidentified employee with whom they have had recent contact has been exposed to the coronavirus or has tested positive.
 
Should employers require a doctor’s note if an employee is absent during the COVID-19 pandemic or a return to work certification?
 
Currently, doctor’s offices, hospitals, and urgent care facilities are inundated with patients.  Therefore, it may not be practical or advisable for an employee to visit a doctor’s office to obtain a note or certification.  There is also a strong likelihood such documentation cannot be provided in a timely manner.  Accordingly, employers are advised to waive requirements for doctor’s notes or return to work certifications due to the pandemic.
 
If teleworking is permitted, must an employer offer a teleworking option to all employees?
 
No, employers who permit remote work arrangements are not required to offer the arrangement to employees in all positions.  Working remotely will reduce the risk of spread of COVID-19.  Employers should prepare for employees to work from home and begin cross-training staff to perform essential business functions.  If not already in place, employers should consider implementing voluntary temporary telecommuting arrangements for employees whose job duties are conducive to working from home but who do not regularly telecommute.  However, employees should be notified that some positions require the employee to be physically present in the workplace and, therefore, are not eligible to telecommute.  Employers should consider making available flexible leave policies and alternate work schedules for employees who must work on-site.
 
Are employees who have contracted COVID-19 entitled to FMLA benefits? Are employees who refuse to come to work for fear of contracting the virus eligible for FMLA?
 
Employees who have a “serious health condition” and otherwise satisfy the FMLA eligibility criteria are entitled to FMLA benefits.  Although the symptoms of COVID-19 have been reported as similar to the flu, COVID-19 may be considered a serious health condition depending on the circumstances of the employee’s illness.  Serious health conditions under the FMLA include conditions requiring an overnight stay in a hospital or other medical care facility, and conditions that incapacitate an employee for more than three consecutive days and have ongoing medical treatment. Therefore, an employee who suffers from COVID-19 or an employee who is taking care of a qualifying family member who has contracted COVID-19 may be eligible for FMLA leave.  However, employees who refuse to come to work out of fear of contracting COVID-19 would not typically qualify for FMLA leave.
 
If our handbook policies state we follow the federal government with regard to office closures, must we adhere to this policy if the federal government closes?
 
If an employer’s handbook specifies that the employer follows the federal government with regard to closures for inclement weather, an employer is not bound to follow the federal government should it close due to COVID-19.  However, given the unprecedented nature of COVID-19 and the rapid rate of transmission of the virus to others, employers should strongly consider closing their offices if the federal government closes.  To plan for such an event, employers should identify all essential and non-essential personnel now, as well as evaluate telework options, to determine whether business operations can be sustained in the event of a shutdown.  
 
Which employees should we pay if we are forced to close? How do we pay them?
 
For non-exempt employees working from home, employers must pay the employee for the actual hours that employee worked.  If the non-exempt employee is not working from home, but using a form of paid leave offered by the employer, the non-exempt employee must be paid in accordance with the employer’s leave policy.  With regard to exempt employees, if an exempt employee performs any work during a given week, whether approved or not and regardless of their location, the employer is required to pay the employee their full weekly salary.  Likewise, if the employer makes an exempt employee self-quarantine, the exempt employee must be paid if they perform any work during that time.  However, an employer is not required to pay an exempt employee who does not work at all during the work week.  Regardless of whether an employee is exempt or non-exempt, employers should follow their normal payroll practices, to the extent possible, in issuing paychecks to avoid violations of wage and hour laws.  This means employees who typically receive payment by direct deposit should continue to be paid in that manner.  For employees that receive a live check, the employer should make sure to confirm the employee’s mailing address and deliver the check to that address.

If an employee needs to take time off work because of COVID-19, will the employee be eligible for unemployment insurance benefits?
 
The first and best option for employees who need to miss work due to illness is to use their employer-paid time off. The Maryland Healthy Working Families Act requires employers with 15 or more employees to provide paid sick and safe leave for certain employees.  Additionally, the FFCRA provides for additional leave rights for employees who work for employers with fewer than 500 employees. 
 
Normally, an employee who takes time off from work, but is still employed, would not be eligible for unemployment benefits.  However, under Maryland SB 1080/HB1663, which was recently enacted in response to the COVID-19 pandemic, Maryland’s unemployment statute has been modified to allow for unemployment benefits to be awarded in the event an employee (i) is quarantined, (ii) refrains from reporting to work due to fear of exposure, (iii) needs to care for a family member, or (iv) if the employer temporarily ceases operations as a result of COVID-19. At present, it does not appear that similar new legislation is imminent in either the District of Columbia or Virginia.
 
If an employee quits his job as a result of COVID-19, will the employee qualify for unemployment benefits?
 
Under normal circumstances, an employee who resigns from employment will generally not be eligible for unemployment benefits.  However, under Maryland SB 1080/HB1663, which was recently enacted in response to the COVID-19 pandemic, Maryland’s unemployment statute has been modified to allow for unemployment benefits to be awarded in the event an employee (i) is quarantined, (ii) refrains from reporting to work due to fear of exposure, (iii) needs to care for a family member, or (iv) if the employer temporarily ceases operations as a result of COVID-19. At present, it does not appear that similar new legislation is imminent in either the District of Columbia or Virginia.
The information contained here is not intended to provide legal advice or opinion and should not be acted upon without consulting an attorney. Counsel should not be selected based on advertising materials, and we recommend that you conduct further investigation when seeking legal representation.