Reopening Checklist for Employers—The Fight for Survival
Complying with a myriad of employment laws, rules and regulations was complicated before the COVID-19 pandemic; now, it is exponentially more daunting.
May 01, 2020 at 10:40 AM
10 minute read
Businesses are reopening and workers are returning who had been teleworking, furloughed, or fired. Employers are feverishly trying to solve unprecedented legal and logistical challenges to strike the best balance between savings lives and saving businesses. Complying with a myriad of employment laws, rules and regulations was complicated before the COVID-19 pandemic; now, it is exponentially more daunting. Here are some important pitfalls to avoid and tips to follow for employers as they cautiously transition.
Safety is job one. Employers are legally obligated maintain a safe work environment. Every day, they must closely monitor and comply with federal, state and local governmental directives, guidelines and recommendations for businesses considering reopening to ensure their workers return to a safe environment. Lawsuits have already been filed against meatpacking plants and emergency injunctions mandating immediate compliance with OSHA and CDC safety rules have been issued almost immediately. Employers will need all of their ingenuity to conduct proper employee testing and screening, deny access to employees with symptoms, supply protective equipment, refit workstations, stagger schedules, use four-day work weeks and Saturdays, continue teleworking, permit returns to be voluntary, limit workplace occupancy levels, and spread out and disinfect work spaces.
Insurance. Employers should immediately secure Employment Practices Liability Insurance (EPLI) in anticipation of an onslaught of lawsuits. They should sue their carrier if their claims for business interruption damages under their commercial property "all risk" insurance policies are denied. Insurance brokers may be liable for not properly advising their clients to obtain adequate business interruption insurance or explaining the pitfalls of co-insurance.
Paycheck Protection Program (PPP) loan forgiveness. Use it or lose it. PPP loan proceeds can be used for payroll costs, rent, interest on mortgage and debt obligations, utility payments, and refinancing, but at least 75% must be spent on payroll costs. Loss of forgiveness occurs if there is a reduction in the amount paid to each employee over the eight-week period or a reduction in the number of employees. Payments made to someone unwittingly reclassified as an "independent contractor" do not count towards forgiveness.
FLSA overtime and wage claims. With teleworking being ubiquitous, coming so widespread overnight, employers need to be ever more vigilant in meeting the obligation the Fair Labor Standards Act places on employers to keep accurate records of hours worked by employees. The obligation to pay all overtime and minimum wage is not excused during a pandemic. Some previously exempt employees may start performing many more non-exempt duties than before, thereby losing their exempt status and becoming entitled to overtime. They need to be reclassified and their hours recorded too. When they return to doing their exempt duties and re-qualify for being exempt, the basis should be documented. Overtime policies can prohibit employees from working overtime without prior written supervisory authorization, and employees can be disciplined for violations, BUT, all overtime actually worked must be paid, even if it was in violation of the policy. An employer who violates the Families First Coronavirus Response Act, and fails to make the mandated payments to employees who qualify for the COVID-19 related leave, can be sued Under the FLSA for a minimum wage violation. Lastly, if the salary of a Highly Compensated Employee is reduced below the minimum level, the exemption may be lost.
Beware the whistleblower and avoid retaliation in all of its forms. Employees will have a lot to complain about! An employee who objects to an employer violating a law, rule or regulation and who suffers an adverse employment action as a result, may bring a claim for retaliation and can recover damages and attorneys' fees under Florida's private whistleblower statute, Fla.Stat. Section 448.101. Similarly, employees who are retaliated against for making claims for overtime (even orally), workers compensation relief for an injury on the job (like being infected in an unsafe workplace), discrimination, harassment, or hostile work environment, leave under the regular Family Medical Leave Act (FMLA) or are denied benefits under the recent emergency FMLA under the Families First Coronavirus Response Act, or for discrimination, may also have retaliation claims—where they can seek recovery of the wages they lost. Under current circumstances, an employer may get sued for not bringing back an employee from a furlough, layoff or reduction of pay if that employee had previously complained or objected to an employer's legal non-compliance. With the ever-growing list of legal requirements facing employers, employees won't run out of material.
Avoid Qui Tam claims under the False Claims Act. An employer, especially one with government contracts, should ensure that it does not expose the Company to a claim made by an employee (or stranger) under the Federal False Claims Act (Qui Tam claims), i.e., a lawsuit brought by a private citizen (whistleblower) against a person or company who is believed to have violated the law in the performance of a contract with the government or in violation of a government regulation (like Medicare reimbursement regulations or the Internal Revenue Code tax provisions, for example), when there is a statute which provides for a penalty for such violations. The person who brings the lawsuit to help the government collect damages against the wrongdoing Company is awarded a percentage of the government's recovery. In today's environment, disgruntled employees may turn in an employer who may have used falsified information to defraud the government in obtaining PPP loans or forgiveness of the loans for example.
Discrimination based on potential bias in rehiring. Employers may get sued for mishandling which employees get asked to return to work. For example, if an employer decided not to bring back right away older workers or those with pre-existing underlying conditions who are deemed more susceptible to infection, or pregnant workers, the employer could unwittingly be setting itself up to an age, gender or disability discrimination claim. Also in the mix may be situations where those who had previously taken a medical-related leave or leave under the new FFCRA could bring a retaliation claim. As testing and screening continues to ramp up, and contact tracing and other immune-identifying techniques are put into place, discrimination-related claims may explode, particularly regarding individuals who have tested positive for COVID-19.
Unemployment/re-employment assistance and re-onboarding Issues.Some furloughed employees may be receiving more in unemployment (with the $600 per week federal supplement under the CARES Act) than they would be paid if they returned to work full-time. Employers can recall workers and fire any who refuse to return. That can lead to loss of benefits in some states. To encourage returns, some employers are deciding to increase pay above what the employee would have received staying on unemployment, especially if the employer wants PPP loans forgiven. In other instances, employees are concerned that if they earn a little money on the side, their unemployment benefits may be stripped, but that doesn't seem it will end up being case in most instances.
Employers would be prudent to re-onboard correctly. If an employee was officially terminated, the employer should be sure to fully re-onboard the employee, have the employee re-enroll in insurance benefit plans, and re-sign Employee Handbooks, mandatory arbitration agreements, and restrictive covenant agreements, etc. as if they were a brand new employee.
Family Medical Leave (FMLA) notice of eligibility and the Americans With Disability Act (ADA) interactive process. Under the FMLA, if the employer knows or has reason to know an eligible employee has a serious health condition or may qualify for leave, the employer has an affirmative obligation to provide the employee with formal written notice of eligibility and rights and responsibilities. Under the ADA, if the employer knows or has reason to know an employee has a disability or regards the employee as having a disability (physical or emotional), the employer has an affirmative obligation to engage in the "interactive process" to determine if a reasonable accommodation must be provided to the employee, unless the employer can prove that providing the accommodation sought by the employee would work a hardship on the employer's business.
The potential immune-based workforce and privacy and HIPAA issues it would create. A more robust reopening process may require something akin to an immune-based workforce as its base. Dr Anthony. Fauci has stated that we may need to adopt such a program in the United States. at least for frontline workers. Our medical experts state that we'll first need to know the degree to which the virus has affected our society, and how many may have developed immunities, so we can plan intelligently. We don't yet have sufficient testing capabilities or a system we can implement and monitor to determine who might be healthy and eligible to return to work. We're nowhere near set up to do contact tracing, which would be necessary as well. Would employers be allowed to gather, control and access that information? Would the system be centralized and who would ensure the data would be safeguarded and free from being misued? All that may expose the employer to claims for invasion of privacy and HIPAA violations for failure to protect protected health information. Would employers get broad general statutory immunity for themselves so they can't get sued by employees who get sick after returning? Would individual waivers from liability be enforceable or void as against public policy? There won't be enough legislators, rule makers, and officials available to handle the administration of such a vast and intrusive system, nor will there be enough attorneys, judges, or juries to deal with the explosion of anticipated litigation it could engender.
Conclusion: Employers are, and will remain, right dab in the middle of these unchartered waters. There are credible predictions of a second surge in the Fall that might be worse than what we have experienced thus far. The reports from areas overseas that have reopened are mixed at best. No vaccine is in sight, although, it has been reported that the U.S. Food and Drug Administration plans to announce an emergency-use authorization for remdesivir, a drug that has been fast-tracked. For an indeterminant period, employers need to carefully prepare their workplaces, implement technology, adopt policies and procedures, consult with experienced legal counsel, and monitor federal, state and local government laws, orders, regulations, guidelines and recommendations, especially EEOC, OSHA and CDC websites. Now, more than ever, employers need to make the most of their entrepreneurial skills and financial wherewithal to strike the right balance between personal and business survival.
Steven L. Schwarzberg is a partner with Schwarzberg & Associates. He focuses his practice handling litigation and trials in the areas of employment law as well as commercial, probate, intellectual property, corporate and real estate law.
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