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March 30, 2020

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

LAST UPDATED:  March 22, 2020

In response to the public health emergency caused by the Coronavirus Pandemic (“COVID-19”), we are providing this update for private sector businesses and non-profits on the current status of actions by Federal, State and County officials. As you know, a state of emergency exists at all levels of government.  These steps are taken in an effort to slow the spread of COVID-19, a dangerous and highly contagious pathogen. The following information provided is a summary of the limitations and guidelines imposed by these actions and the resources available to businesses, public entities, and individuals. Please understand that this is a fluid situation and as such we expect that there will be additional legislative actions and administrative steps taken over the days and weeks ahead.

  • Family First Coronavirus Response Act. On March 18, 2020, the President signed into law the Families First Coronavirus Response Act.  This Act will become effective on April 2, 2020 and remain in effect until December 31, 2020.  It applies to private employers with fewer than 500 employees and all government entities.  The Secretary of Labor can exclude small businesses with fewer than 50 employees if the required leave would jeopardize the viability of the business.  The three primary components of the Act provide for paid sick leave, paid family leave, and employer tax credits.

Paid Sick Leave. Employees who are unable to work or telecommute because they are quarantined for COVID-19 related symptoms, are caring for someone with COVID-19, or have to care for a child whose school or daycare closed because of COVID-19 will be able to take 80 hours of paid sick leave.  For part-time employees, the amount of leave will be their average hours worked in a two-week period.  This is in addition to any other paid sick leave they may be entitled to under employer policies or State law.  Pay is at the employee’s regular rate up $511 per day if the employee has COVID-19 or $200 per day if the employee is caring for another ($5,110 or $2,000, respectively, in the aggregate per employee).  Employers may exclude healthcare providers or emergency responders from this provision.  Wages paid under this provision will not be subject to the 6.2 percent social security payroll tax typically paid by employers on the employees’ wages.

Paid Family Leave.  Employees who have been on the job at least 30 days and are unable to work or telecommute because they must care for a child whose school or daycare closed as a result of COVID-19 can take up to 12 weeks of job protected leave.  The first 10 days of leave are unpaid (although the employee may use available PTO or federal paid sick leave to remain paid during this period).  After the first 10 days, employees will be paid 2/3 of their regular rate up to $200 per day ($10,000 in the aggregate per employee).  At the conclusion of their leave employees must be returned to the same or an equivalent position if the employer has 25 or more employees.  Employers may exclude healthcare providers or emergency responders from this provision.  Wages paid under this provision will not be subject to the 6.2 percent social security payroll tax typically paid by employers on the employees’ wages.

Employer Tax Credits. Refundable credits for the 6.2 percent employer portion of social security tax will be provided to employers to cover wages paid to employees for time off under the above sick leave and family leave programs.

Additional information and guidance on this Act may be found at https://www.dol.gov/agencies/whd/pandemic/ffcra-employer-paid-leave.  Please note that the Secretary of Labor will be issuing updated guidance in the next several days.

  • Executive Order No. 107. On March 21, 2020, Governor Murphy issued Executive Order 107 in response to COVID-19. This order requires all residents to remain home, unless they are out to obtain essential goods and services, visiting close family or friends, going to work, or outdoor activities. All non-essential retail and entertainment, businesses with the exception of several critical businesses must be closed. Businesses that are not open to the public may stay open if they make arrangements for employees to work from home and limit access to the business premises to a minimal number of essential employees. For a complete list of businesses deemed essential, please consult https://nj.gov/infobank/eo/056murphy/approved/eoarchive.html.
  • State Legislative Roundup. Almost thirty legislative bills have been introduced and fast-tracked last week spanning a full range of employment, insurance, foreclosure, and other issues.   These bills will need to be closely monitored as they make their way to the Governor’s desk.  Currently, New Jersey already has one of the most far-reaching laws in the country for paid sick leave in circumstances of quarantine.  It is possible that the Legislature will expand the number of paid sick days available under the law, which is currently five days.  A pending bill would prohibit an employer from terminating, or refusing to reinstate, an employee who takes time off from work at the recommendation of a medical professional due to an infectious disease.
  • Updated Guidance on the Law Against Discrimination. New Jersey’s Law Against Discrimination, known as the LAD, has long been considered one of the strongest anti-discrimination laws in the country.  The New Jersey Division on Civil Rights (“DCR”) has issued guidance reminding employers that actions or conduct of a discriminatory nature as to someone’s actual (or perceived) race, national origin, disability, religion, or other protected factors are illegal, and that these protections continue to apply during the COVID-19 pandemic.  Employers are reminded of their affirmative obligation to avoid any actions, conduct, or statements, whether affirmative, express, or implied, or on social media, which attribute blame or place responsibility for this pandemic to any particular group or class.  DCR is clear that if an employee is harassed by reason of Asian descent or reference to the virus as a “Chinese” virus, employers must act swiftly and immediately to stop such conduct.  These protections also apply to housing, contracting, and public accommodations.  Also be mindful that any leave or accommodation request is a confidential personnel matter that the employer is obligated to protect.
  • Employee Layoffs and Reductions in Hours. The COVID-19 pandemic has impacted business operations throughout the State.  As a result, many employers are considering whether to implement employee layoffs, temporary layoffs, and/or reductions in hours. Beyond the impact on the individual employees, employers must consider collective bargaining unit rights (where applicable), unemployment obligations, seniority rights, both State and Federal WARN Acts, and potential impacts on exempt employees related to FLSA overtime requirements. Further information on the Federal and State WARN Acts is available at: https://www.nj.gov/labor/lwdhome/warn/njwarn.html.
  • Unemployment Benefits. Should it become necessary for an employer to close or reduce the hours of its employees to less than 80% of their normal schedule as a result of the COVID-19 pandemic, even if it is only for a temporary period of time, employees may apply for unemployment benefits.  Additional information regarding unemployment benefits is available through the New Jersey Department of Labor and Workforce Development’s website at https://myunemployment.nj.gov/.
  • Temporary Disability/Family Leave Insurance. Any employee who has COVID-19, who was exposed to COVID-19 and quarantined while their business remains open, who is caring for a family member with COVID-19, or who is immune-compromised and instructed to self-quarantine by their healthcare professional may apply for Temporary Disability/Family Leave Insurance benefits.  Additional information regarding Temporary Disability/Family Leave Insurance benefits is available through the New Jersey Department of Labor and Workforce Development’s website at https://myleavebenefits.nj.gov/worker/tdi/.
  • Workers’ Compensation. Healthcare workers who are exposed to COVID-19 at work and self-quarantined will be eligible for workers’ compensation benefits.  Other employees who are exposed to COVID-19 at work and quarantined may also be eligible for workers’ compensation benefits.  Additional information regarding workers’ compensation is available through the New Jersey Department of Labor and Workforce Development’s website at https://www.nj.gov/labor/index.html.
  • Federal and State Tax Filing. On March 20, 2020, the U.S. Treasury Department officially moved the filing date for taxes to July 15, 2020. There is a pending New Jersey bill that will extend the State tax deadline for gross income or corporate returns if the Federal government extends either the filing or payment date for Federal taxes.
  • Insurance.  A typical insurance policy may provide coverage for the impact of the COVID-19 pandemic.  Coverage will depend on several key policy terms and coverage parts that will be subject to interpretation.  Generally, a typical property policy addresses property damage and business interruption resulting from physical loss or damage from a covered cause of loss.  Policy language and case law could affect the outcomes of any financial losses sustained as a result of the COVID-19 pandemic.  Some potential grounds for claims include Business Interruption/Time Element Coverage, Contingent Business Interruption/Supply Chain Coverage, Civil Authority Coverage, Decontamination Coverage, and others that may be covered under endorsements or other policies.  These grounds for coverage will depend upon the nature of your policies and the potential losses, and policy language. Consult your insurance broker and/or Brown & Connery for further information on any potential claims related to COVID-19.

Discussions are also ongoing with State and Federal legislators, as well as the various State insurance departments, to address business interruption coverage from the COVID-19 pandemic.  The New Jersey Assembly has introduced Bill A-3844, which is designed to directly address the suffered losses due to the interruption caused by COVID-19.  The Assembly and the Senate have not yet passed this bill.  However, if passed, the bill would require insurance policies, with applicable loss of use and occupancy, and business interruption coverage, to include coverage for business interruption caused by the COVID-19 pandemic as a covered peril.  Brown & Connery is closely monitoring the status of this bill.

  • What Should Private Employers Do Going Forward? With uncertainty still looming, employers should continue to develop planning strategies in anticipation of a multi-week event.  In addition to ongoing safety monitoring, all costs, expenses, and losses associated with closures or slowdowns should be tracked to the greatest extent practicable for potential insurance and tax purposes.  Employers must continue to maintain lines of communication with concerned employees and unions.  Employers should be creative in their management re-structuring, including potential transfers, re-training, or split shifts to avoid more drastic measures such as layoffs.  These options are complicated and should be considered with the advice of a qualified professional.

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.  

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