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March 30, 2020

RESPONSE TO THE COVID-19 PANDEMIC: UPDATED GUIDANCE FOR EMPLOYERS

LAST UPDATED: March 30, 2020

The following is an update on the latest State and Federal legislative enactments in response to the COVID-19 pandemic. These enactments have created new employee entitlements to leave and compensation in a variety of COVID-19 related circumstances. We encourage all employers to review Brown & Connery’s previously issued COVID-19 Guidance for Public Employers and Private Employers, and to contact our office with any specific questions.

  • Passage of Bill S-2304.  On March 25, 2020, Governor Phil Murphy signed into law Senate Bill No. S-2304 (“S-2304”) amending and updating the New Jersey Paid Sick Leave Law, New Jersey Family Leave Act, and New Jersey’s statewide temporary disability and family leave insurance programs. As described in more detail below, S-2304 provides additional sick leave, family leave, and disability insurance benefits to employees who have tested positive for COVID-19, who are suspected of having COVID-19, who are caring for a family member who has or is suspected of having COVID-19, or who are at home with a child whose school or day care has closed as a result of the COVID-19 pandemic.
  • New Jersey Paid Sick Leave Law Amendments (“NJPSLL”). The NJPSLL was passed last year to require up to 40 hours of paid sick leave for all employees. S-2304 amends the NJPSLL by expanding the reasons for which an employee may use some or all of this paid sick leave. Under the amended NJPSLL, an employee may use paid sick leave in the following circumstances: (i) when the employee’s workplace, or the school or place of care of a child has been closed “because of a state of emergency”; (ii) upon a healthcare provider’s determination that the presence of the employee or a member of the employee’s family would jeopardize the health of others; or (iii) the employee or the employee’ family member has been ordered to undergo isolation or quarantine, as a result of suspected exposure to a communicable disease. Sick leave taken for one of these expanded reasons will still be taken from the employee’s existing 40-hour annual bank under the NJPSLL.
  • New Jersey Family Leave Act Amendments (“NJFLA”). The NJFLA is New Jersey’s analogue to the FMLA. The NJFLA has never allowed an employee to take such leave for his or her own serious health condition. This does not change under S-2304. Instead, S-2304 amends the NJFLA by making it clear an employee can take leave to care for a family member who is ordered to be isolated or quarantined “during an epidemic of a communicable disease, or a known or suspected exposure to a communicable disease.” It does not extend the NJFLA job-protection periods and it does not allow NJFLA leave to be taken to care for a child who is home from school or daycare. Finally, the NJFLA previously exempted the highest paid 5% of employees based on certain circumstances. S-2304 eliminates this exemption when an authorized official or healthcare provider recommends that a family member of an employee be isolated or quarantined, or when a family member’s place of child care has closed because of a state of emergency due to an epidemic of communicable disease.
  • New Jersey Temporary Disability Insurance (“TDI”); Persons with COVID-19, Treating for Symptoms, or on Self-Quarantine. After the passage of S-2304, available TDI benefits now extend to an employee or family member of an employee who requires in-home care or treatment related to COVID-19 (or other epidemics of communicable disease) or when such individuals are ordered to be quarantined or isolated as a result of COVID-19 (or other epidemics of communicable disease). The standard 7-day waiting period is eliminated for such cases. As a result of S-2304 and recent legislative enactments, individuals who qualify for TDI benefits will first receive 80 hours of paid sick leave under the federal Emergency Paid Sick Leave Act (“EPSL”), and would then receive TDI benefits upon the expiration of their EPSL leave. The employee would apply to the State Division of Pensions and Benefits for TDI benefits as in the normal course – it is not employer-administered. It remains an open question whether the State will require use of paid time off before TDI benefits go into effect, but the elimination of the 7-day waiting period suggests the answer will be no. Finally, employers should review their collective bargaining agreements as to any pay-up provisions which may apply as a TDI supplement.
  • New Jersey Temporary Disability Benefits Law – Family Temporary Disability (“NJFLI”). New Jersey family temporary disability benefits, also known as “NJFLI” benefits, have long been available for employees who are expecting a child or who are on NJFLA to care for a family member with a serious health condition. NJFLI is now available for persons caring for a family member who has COVID-19 or is treating for COVID-19 related symptoms. NJFLI does not appear to be available to care for a child who cannot attend school or daycare because of a COVID-19 related closure. Persons in this latter category will receive EPSL benefits at a percentage of their normal pay for two weeks, followed by 10 weeks of FMLA paid benefits.
  • Federal Stimulus and Employer Loan Program. In response to the detrimental economic impacts of the COVID-19 pandemic, on March 27, 2020, the President signed into law the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”). The CARES Act provides $2 Trillion in economic relief to healthcare providers, distressed industries, businesses, and individuals. The CARES Act includes a $349 Billion “Paycheck Protection Program” designed to assist businesses with fewer than 500 employees by providing loans to maintain existing employee headcounts. Loan eligibility will be conditioned on the extent to which the employer retained a certain number of employees, as well as salary levels during the COVID-19 crisis. Employers are strongly encouraged to consult with legal counsel as to their eligibility under the Paycheck Protection Program. Tax professionals should further be consulted concerning the implications of the loan programs under the CARES Act.
  • Business Interruption Insurance Coverage. New Jersey Assembly Bill A-3844, which we reported about last week, has been pulled from consideration pending further discussion with industry representatives. It is unclear at this time whether the bill will be reinstated. In the meantime, two new lawsuits on business interruption have been filed, both in Oklahoma. The lawsuits are brought by the Chickasaw Nation which oversees various casinos in the state. The complaints allege that, as a result of the COVID-19 pandemic, the Chickasaw Nation’s properties sustained direct physical loss or damage and will continue to sustain direct physical loss or damage covered by the policies. The plaintiffs seek coverage including but not limited to business interruption, extra expense, interruption by civil authority, limitations on ingress and egress, and expenses to reduce loss. We will continue to monitor these lawsuits and any similar actions filed in the State of New Jersey. All employers should continue to record losses of revenues or income, as well as expenses for remediation or other preventative measure for purposes of available claims.

Should you have any questions about the ongoing COVID-19 pandemic and how it could impact your work force, please contact the employment lawyers at Brown & Connery, LLP. The information contained in this chart does not constitute tax advice. Employers are urged to confer with a tax professional as to any potential negative consequences associated with furloughs, layoffs, or reduced shift schedules

By: William J. Cook, Partner and Michael J. Watson, Associate at Brown & Connery, LLP