CASTLE PUBLICATIONS LAUNCHES EMPLOYER’S GUIDE TO COVID-19 AND EMERGING WORKPLACE ISSUES

LOS ANGELES, CA April 20, 2020 — Castle Publications, in partnership with Sheppard, Mullin, Richter & Hampton LLP, is pleased to announce the publication of Employer’s Guide to COVID-19 and Emerging Workplace Issues. The nearly-500-page online book, created by Castle Publications founder and Sheppard Mullin partner Richard Simmons and Sheppard Mullin partners Brian Murphy and Adam Rosenthal, provides employers with a comprehensive resource for managing employment issues related to the COVID-19 pandemic during – and after – the crisis. It is a one-stop, go-to “desk reference” that provides businesses and employers throughout the country reliable information that is a click away. As an online publication, the forward-looking Employer’s Guide will be routinely updated throughout 2020 to reflect the effects of the pandemic and the regulatory responses on the legal landscape.

“COVID-19 has fundamentally changed America’s workplaces and the ways employers across the country must address their obligations to employees,” said Simmons. “Our definitive new Guide provides employers with a thorough analysis of current and constantly-evolving labor and employment laws to help employers effectively navigate this new employment world.” Some of the topics covered in the Employer’s Guide include:

• Families First Coronavirus Response Act (FFCRA): Comprehensive analysis of Department of Labor guidance, regulations and other authorities issued since March 2020.

• First & Second Generation Challenges: Addresses employer obligations in the wake of the COVID-19 shutdown, and legal strategies for employers emerging from the crisis.

• Federal and State Guidance: Compilation and analysis of CDC guidelines; reshaping wage and hour considerations, the increasing role of public health standards in workplaces, new remote working environments; continuing WARN Act responsibilities, the CARES Act, Unemployment Programs, OSHA and workplace safety, and more.

In addition to the online publication, Castle Publications will offer webinars covering a variety of topics featured in the guide. To receive notifications regarding the webinars, send an email to info@castlepublications.com.

For more information and to order Employer’s Guide to COVID-19 and Emerging Workplace Issues, click here.

About Sheppard, Mullin, Richter & Hampton LLP

Sheppard Mullin is a full-service Global 100 firm with more than 900 attorneys in 15 offices located in the United States, Europe and Asia. Since 1927, industry-leading companies have turned to Sheppard Mullin to handle corporate and technology matters, high-stakes litigation and complex financial transactions. In the U.S., the firm’s clients include almost half of the Fortune 100. For more information, please visit www.sheppardmullin.com.

CALIFORNIA SUSPENDS SELECTED FEATURES OF STATE WARN ACT FOR LAYOFFS DUE TO COVID-19

On March 17, 2020, Governor Newsom issued Executive Order N-31-20, which addressed the California Worker Adjustment and Retraining Notification (WARN) Act and its 60-day notice requirement for closures of establishments. Pursuant to the directive in that order, the California Department of Industrial Relations (“DIR”), Division of Labor Standards Enforcement (“DLSE”) and the Employment Development Department (“EDD”) have provided guidance regarding the order’s conditional suspension of the California WARN Act. Some of the questions and answers are reviewed below.

1. Is there a change to the 60-day notice requirement in the California WARN Act because of the COVID-19 pandemic?

Yes. Governor Newsom issued Executive Order N-31-20, which temporarily suspends the 60-day notice requirement in the California WARN Act for those employers that give written notice to employees and satisfy other conditions. The suspension was intended to permit employers to act quickly in order to mitigate or prevent the spread of coronavirus.

The Executive Order does not suspend the California WARN Act in its entirety, nor does it suspend the law for all covered employers. It only suspends the California WARN Act’s 60-day notice requirement for those employers that satisfy the order’s specific conditions.

2. What impact does the Executive Order have on an employer’s ability to close an establishment (temporarily or permanently) because of COVID-19?

Recognizing that employers have had to rapidly close down their businesses to prevent or mitigate the effects of the COVID-19 pandemic, but have not been able to provide their employees the usual advance notice of at least 60 days, the Executive Order provides a conditional suspension of the usual 60-day notice requirement. For purposes of the California WARN Act, closures can occur in one of three ways:

A mass layoff: a layoff during any 30-day period of 50 or more employees at a covered establishment.

A relocation: the removal of all or substantially all of the industrial or commercial operations in a covered establishment to a different location 100 miles or more away.

A termination: the cessation or substantial cessation of industrial or commercial operations in a covered establishment.

3. What conditions must an employer satisfy to qualify for the Executive Order’s suspension of the California WARN Act’s 60-day notice requirements?

An employer seeking to rely on the Executive Order’s suspension of the California WARN Act’s 60-day advance notice requirement must satisfy the following conditions:

(1) The employer’s mass layoff, relocation or termination must be caused by COVID-19-related “business circumstances that were not reasonably foreseeable at the time that notice would have been required.”

(2) The employer must provide written notices to:

Employees affected by the mass layoff, relocation or termination;

All representatives of employees affected (such as their union);

EDD; the Local Workforce Development Board; and the chief elected official of each city and county government within which the termination, relocation, or mass layoff occurs.

(3) The employer must provide written notice that satisfies the following requirements:

(a) Give as much notice as is practicable (i.e., reasonably possible) at the time notice is given to employees and their representatives.

(b) Provide a brief statement as to why the 60-day notification period could not be met.

(c) Include the following statement:

“If you have lost your job or been laid off temporarily, you may be eligible for Unemployment Insurance (UI). More information on UI and other resources available for workers is available at labor.ca.gov/coronavirus2019”

(d) Include the following information:

i. Name and address of the employment site where the closing or mass layoff will occur.

ii. Name and phone number of a company official to contact for further information.

iii. Statement as to whether the planned action is expected to be permanent or temporary and, if the entire location is to be closed, a statement to that effect.

iv. Expected date of the first separation, and the anticipated schedule for subsequent separations.

v. Job titles of positions to be affected, and the number of employees to be laid off in each job classification.

vi. In the case of layoffs occurring at multiple locations, a breakdown of the number and job titles of affected employees at each location.

vii. An indication as to whether or not bumping rights exist.

viii. Name of each union representing affected employees, if any.

ix. Name and address of the chief elected officer of each union, if applicable.

4. How do I send the California WARN Act notices?

To Employees. When providing the required notice, any reasonable method of delivery that ensures receipt of notice is acceptable (e.g., first class mail, personal delivery with optional signed receipt, electronic mail, etc.).

To EDD. Please send an email to eddwarnnotice@edd.ca.gov. Please provide the following information in the e-mail to EDD:

• The notice (as an attachment or within the body of the e-mail); and

• Contact information for an employer representative in the event that EDD needs information.

Attachments should be compatible with Microsoft Office or Adobe Reader software.

An employer may request acknowledgment of the receipt of their notification by including a request for acknowledgement in the e-mail.

To the Local Workforce Development Board and Chief Elected Officials. Your Local Workforce Development Areas (Local Areas) will assist you in contacting the chief elected officials in those communities affected by the planned layoff or closure. Visit the Local Area listing by county website for information on how to contact your Local Area Board.

5. How do I know if I am an employer covered by the California WARN Act?

The California WARN Act is applicable to employers that employ, or have employed in the preceding 12 months, 75 or more full-time or part-time workers.

6. What should an employer do with respect to notice if a closure occurred on or after March 4, 2020 but before the Executive Order was issued on March 17, 2020?

The COVID-19 state of emergency began on March 4, 2020. Between that date and the issuance of the Executive Order, because the California WARN Act was not subject to suspension, employers should have been providing notice as specified under the Act. Now that the Executive Order is in effect, an employer seeking to avail itself of the suspension must satisfy the conditions specified in the Executive Order (described in response to Question (3) above).

7. Do I still need to send a WARN Notice to EDD given the Executive Order suspending the 60-day notice requirement?

Yes. The Executive Order does not eliminate the written notice requirement—it only reduces the notice period. An employer is required to give as much notice as is practicable (i.e., reasonably possible) at the time notice is given. Employers who order a mass layoff, relocation or termination without any written notice could be subject to liability under the California WARN Act.

8. If an employer fails to give any notice at all on the basis that the layoff or closure is due to a “physical calamity,” will that employer be shielded from liability?

Only if the employer can prove that the claimed physical calamity actually meets the definition of a “physical calamity.” The Executive Order does not affect the California WARN Act’s so-called “physical calamity” exemption. That exemption permits an employer to avoid providing any notice altogether. To avail itself of the exemption, an employer would need to prove that the COVID-19 pandemic is a “physical calamity.” By contrast, the Executive Order temporarily suspends the usual 60-day requirement for those employers that provide notice to affected employees and fulfill the Executive Order’s other conditions. The employer would not have to demonstrate that the COVID-19 pandemic is a “physical calamity” if they follow the conditions of the Executive Order.

9. How long is the California WARN Act temporarily suspended by the Executive Order?

The Executive Order’s suspension of the California WARN Act is for the period that begins March 4, 2020 through the end of the state of emergency declared as a result of the threat of COVID-19.

10. Where can I find more information for employers and employees in California about COVID-19?

Additional information and other resources are available at: ALERT Newsletter today!

CENTERS FOR DISEASE CONTROL GUIDANCE FOR EMPLOYERS

1. CDC Background

The Centers for Disease Control and Prevention (“CDC”) is a federal agency under the Department of Health and Human Services. It is the agency responsible for providing guidance regarding the coronavirus disease 2019 (COVID-19). This is a high-level summary of the CDC’s guidance for employers. Like other information relating to the COVID-19 pandemic, the information provided may change as further developments occur. As is clear from most CDC pronouncements regarding COVID-19, a critical goal is to stop the spread of the virus. Many of the protocols discussed below are premised on the performance of duties at an employer’s worksite and must be considered in light of the new reality that many employees are currently working remotely. The CDC breaks down steps employers can take to decrease the spread of COVID-19 and lower the impact on their workplace into three different areas: (1) reduce transmission among employees; (2) maintain healthy business operations; and (3) maintain a healthy work environment.

2. Reduce Transmission Among Employees

The CDC provides an assortment of recommendations that employers should consider to try to reduce transmission of COVID-19 among employees, including:

• Actively encourage sick employees to stay home

• Identify where and how workers might be exposed to COVID-19 at work

• Separate sick employees

• Educate employees about how they can reduce the spread of COVID-19

If an employee is confirmed to have COVID-19, the CDC recommends that employers inform fellow employees of their possible exposure to COVID-19 in the workplace but maintain confidentiality as required by the Americans With Disabilities Act (“ADA”). The fellow employees should then self-monitor for symptoms (i.e., fever, cough, or shortness of breath).

If an employee contracts COVID-19, the CDC provides guidance for when the individual may be discharged from the hospital or discontinue at home isolation. Employers are advised to review this guidance prior to permitting any employee who contracts COVID-19 to return to the workplace.

3. Maintain Healthy Business Operations

The CDC identifies several recommendations for employers to try to maintain healthy business operations amidst the COVID-19 pandemic, including:

• Identify a workplace coordinator responsible for COVID-19 issues

• Implement flexible sick leave and supportive policies and practices

• Determine how to operate if absenteeism spikes

• Consider establishing policies and practices for social distancing

In this guidance, the CDC specifically recommends that employers not require employees to present a positive COVID-19 test result or medical note to validate their illness, qualify for sick leave, or return to work given how busy healthcare providers’ offices are at this time.

4. Maintain A Healthy Work Environment

The CDC also provides considerations for employers to help maintain a healthy work environment, including:

• Consider improving engineering controls using the building ventilation system

• Support respiratory etiquette and hand hygiene for employees, customers, and worksite visitors

• Perform routine environmental cleaning

• Perform enhanced cleaning and disinfection after persons suspected or confirmed to have COVID-19 have been in the facility

• Advise employees before traveling to take additional preparations

• Limit in-person meetings and gatherings

If an employee or visitor to a workplace is suspected or confirmed to have COVID-19, the CDC provides specific cleaning and disinfection recommendations.

Given the rapidly changing nature of the COVID-19 pandemic, the CDC is regularly updating its guidance. Employers are encouraged to talk with their legal and health advisors and to monitor the CDC website for updates.

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EMPLOYERS MUST COMPLY WITH ALL LABOR CODE AND OTHER LEGAL OBLIGATIONS DESPITE THE COVID-19 PANDEMIC

Employers throughout the country are immersed in legal, employee relations, HR, PR and government-response issues due to the Coronavirus (COVID-19) pandemic. It is essential that employers in every industry have go-to resources they can rely on for guidance on the health and safety front. They also require guidance regarding the day-to-day obligations they must address, even in stressful times. This is particularly important where many employers are operating with reduced staffs who are physically separated or working remotely from home as the concepts of “social distancing” and “teleworking” take root. Employers are cautioned that they are not shielded from liability if they violate the basic employment law rules because their attention is diverted to COVID-19 issues. Plaintiffs’ attorneys have shown little sympathy for “unintentional” violations of the law, regardless of the circumstances. And, the Private Attorneys General Act (“PAGA”), a law that has resulted in thousands of lawsuits against businesses, has not been eliminated by COVID-19.

This article identifies some of the legal obligations employers should pay close attention to, even while responding to the pandemic. Each of the issues examined below can form the basis of substantial liability and penalties if overlooked or deferred now.

1. Basic Wage And Hour Responsibilities

While assessing and administering their responsibilities during this crisis, employers are first reminded that they should not lose sight of their ongoing obligations to comply with numerous wage and hour obligations. This includes their responsibility to maintain lawful practices and to (1) pay wages in a timely manner, (2) pay final wages (including wages owed as of the date of a separation, layoff or resignation) immediately, as required by the Labor Code, (3) abide by the standards governing vacation pay, sick pay, and overtime, including the special considerations triggered by layoffs, and (4) reimburse employees for business-related expenses they necessarily incur. The business expense issues may be unusual given the fact that many employees are temporarily working remotely from home (teleworking/telecommuting) and may incur unusual expenses in order to perform their duties. Expenses incurred for business-related activities performed using a cell phone, home computer, office supplies, and mileage for work-related travel, etc. should be considered. Nonexempt employees who work from home remain subject to California’s meal and rest period rules and must record their work time, as well as the times their meal periods begin and end. It can be argued that exempt and nonexempt employees who are laid off, even temporarily, are entitled to accrued vacation and paid time off benefits along with their “final” wages for work performed before the layoff. (For detailed information regarding wage-hour obligations, readers are encouraged to review the relevant sections of the Wage and Hour Manual for California Employers, by Attorney Richard J. Simmons of Sheppard Mullin. The 2020 edition of the Manual was published in January.)

2. The Parade Of Other Legal Requirements

Wage and hour issues are extremely important, but are not the only concerns that employers must address. They should also assess the relevant obligations that exist under the federal and California OSHA rules, employment discrimination concerns, and issues relating to employee privacy, immigration, and leave of absence laws. Employers should review and consider updating their Injury and Illness Prevention Programs (“IIPPs)” to ensure they incorporate the elements required by California law. None of these laws have been suspended or repealed because of the pandemic. It certainly would help if the government enacted measures to relax, suspend or repeal burdensome government standards to assist businesses to get back on their feet and return employees to paid status, although it is unclear if any relief will be provided. The threat of penalties under the Labor Code and the Private Attorneys General Act of 2004 (“PAGA”) remains very real and plaintiffs’ attorneys have not stopped daily online filings of PAGA actions during the pandemic.

3. State And Federal WARN Rules

Notably, despite the general sense that layoffs and furloughs resulting from the COVID-19 pandemic and government “stay-at-home” and “shutter-in-place” orders were absolutely unforeseeable, the state and federal “WARN” laws must be carefully evaluated if an employer is considering or has implemented a staff reduction, layoff, furlough or any type of reduction in force that affects the minimum number of employees specified in the laws. WARN is the acronym for the “Worker Adjustment and Retraining Notification Act.” Governor Newsom’s recent Executive Order N-31-20 (March 17, 2020), addresses the obligation to provide WARN notices under California law, but only from a limited perspective. It should be read in tandem with Executive Order N-33-20 (March 19, 2020), the Governor’s “stay home” order and any applicable local measures adopted in cities and counties where employers do business. Many employers are adopting a “better safe than sorry” approach to providing WARN notices, even while maintaining that specific exceptions to the notification rules apply. As discussed in a separate article, the California Department of Industrial Relations (“DIR”) issued guidance regarding these issues on March 23, 2020. This is just another area where employers should consult with their legal counsel and make decisions promptly.

4. The DIR’s COVID-19 FAQs

The California DIR has issued guidance regarding its enforcement positions in a new document entitled, “Coronavirus Disease (COVID-19) – FAQs on laws enforced by the California Labor Commissioner’s Office.” The 10 FAQs address (a) the use of California paid sick leave, (b) travel to “high-risk” countries, (c) reporting time pay, (d) salary obligations to exempt employees in the event of work interruptions due to a shutdown, (e) retaliation, and (f) participating in Labor Commissioner actions remotely. The FAQs briefly mention vacation pay, but do not address the payment of vacation if there is a layoff or termination.

5. HR 6201 – The Families First Coronavirus Response Act

On March 18, 2020, President Trump signed the “Families First Coronavirus Response Act” into law. It will take effect on April 1, 2020, and creates new paid sick leave and expanded family leave obligations for employers with fewer than 500 employees. The legislation and the important new rules it creates are discussed below in a separate article. That article also reviews the March 24, 2020 guidance issued by the U.S. Department of Labor.

6. Practical Note

The ever-changing legal landscape reminds employers that the ”new norm” is here. The rapidly changing and evolving rules will require employers, attorneys, HR and payroll professionals to remain constantly vigilant. They must ensure that existing obligations are met and new, ubiquitous obligations are considered and implemented. Castle Publications, LLC and the ALERT will seek to offer guidance along the way. We also note that Sheppard Mullin has created a COVID-19 task force to assist its clients to navigate this new legal terrain.

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DOL ISSUES GUIDANCE REGARDING THE FAMILIES FIRST CORONAVIRUS RESPONSE ACT

This month, President Trump signed the Families First Coronavirus Response Act (“FFCRA”), HR 6201, which will take effect on April 1, 2020. The Act contains eight divisions that include the “Emergency Paid Sick Leave Act” and the “Emergency Family and Medical Leave Expansion Act.” While both Acts contain provisions that allow eligible employees to receive “paid sick leave” and “paid leave,” these laws are dissimilar from conventional sick pay policies that allow employees to use sick pay for numerous reasons relating to illness and preventive care, such as California’s paid sick leave law in Labor Code Sections 245 – 249. The new Acts in HR 6201 authorize paid leave under very narrow reasons associated with COVID-19 and not for other illnesses.

On March 24, 2020, the U.S. Department of Labor (“DOL”) published guidance explaining paid sick leave and expanded family and medical leave under the FFCRA. This first round of guidance provides information to employees and employers about how each will be able to take advantage of the protections and relief offered by the FFCRA. The guidance ambitiously announces the FFRCA’s goal of combatting and defeating COVID-19 by giving all American businesses with fewer than 500 employees funds to provide employees with paid leave, either for the employee’s own health needs or to care for family members. The legislation is intended to ensure that workers are not forced to choose between their paychecks and the public health measures needed to combat the virus while at the same time reimbursing businesses. The DOL also issued a new “Employee Rights” poster (WH 1422 REV 03/20) and is expected to issue implementing regulations under the law soon.

The March 24 guidance uses a questions and answers format to describe the new law. It begins by defining “paid sick leave” as paid leave under the Emergency Paid Sick Leave Act and “expanded family and medical leave” as paid leave under the Emergency Family and Medical Leave Expansion Act. The paid leave provisions will become effective on April 1, 2020, and apply to leave taken between April 1, 2020, and December 31, 2020.

Employer Coverage:

The FFCRA apples to employers with fewer than 500 full-time and part-time employees in the U.S. This is measured at the time an employee’s leave is to begin. Employees on leave, temporary employees who are jointly employed and day laborers supplied by a temporary agency are counted, but independent contractors under the Fair Labor Standards Act (“FLSA”) (whose standards differ from those applicable under California law) are not.

The DOL made clear that a corporation that is considered a single employer must count each employee towards the 500-employee threshold. Even if an employer has an ownership interest in another corporation, the two corporations are separate employers unless they are joint employers under the FLSA. If they are joint employers, all of their common employees must be counted in determining whether paid sick leave and expanded family and medical leave must be provided. The guidance also recognizes the integrated employer test and states that two or more entities are separate employers unless they meet the test under the Family and Medical Leave Act (“FMLA”). If the test is met, the employees of all entities making up the integrated employer are counted in determining employer coverage. The Acts do not apply to private sector employers that have 500 or more employees.

Small Business Exemption:

The Acts contain a small business exemption for businesses with fewer than 50 employees that meet criteria that will be set out in the DOL’s regulations. Such businesses will be required to establish the criteria by establishing that child-care related paid sick leave and expanded family and medical leave would jeopardize the viability of the business as a going concern.

Part-Time Employees:

Part-time employees are entitled to leave for the average number of hours worked in a two-week period. You calculate hours of leave based on the number of hours the employee is normally scheduled to work.

Other Areas Of Guidance:

The DOL’s guidance includes 14 questions and answers. Additional questions address (1) calculating paid sick leave, (2) the amount of pay employees will receive when taking paid sick leave or expanded family and medical leave, (3) the employee’s regular rate of pay, (4) limitations on the total number of hours for which employees can receive paid sick leave for any combination of qualifying reasons, such as self-quarantining and another reason, (5) the availability of paid sick leave and expanded family and medical leave for child-care reasons, (6) the effect of providing paid sick leave for a qualifying reason prior to the Acts’ April 1, 2020 effective date, (7) the unavailability of paid leave for leaves covered by the FMLA prior to April 1, 2020, (8) the fact that the Acts are not retroactive, and (9) the 30-day eligibility requirement for expanded family and medical leave.

There are rumors that the DOL has issued an enforcement memo to field staff indicating a practical approach to FFCRA enforcement at the early stages following the Act’s April 1 effective date. If an employer does not intentionally violate the Act and has made reasonable, good faith efforts to comply, the DOL will apparently not sue the employer. This litigation amnesty enforcement policy will continue only until April 17. It is essential, however, that the employer correct any mistakes quickly and commit not to violate the law again.

It is important to note that the DOL’s March 24 guidance tackles a number of issues without providing a comprehensive review of the FFCRA. Additional information can be expected in the DOL’s anticipated regulations and other clarifications.

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WORKERS’ COMPENSATION ISSUES ARISE FROM COVID-19 TELECOMMUTING

The COVID-19 pandemic suddenly created hundreds of thousands, if not millions, of new telecommuters (aka “teleworkers”) across California and the United States. Some telecommuters may be working from already established, safe workspaces in their homes. However, many are likely working from makeshift workstations in dining rooms, spare bedrooms, garages, and other less-than-ideal “home office” setups. These telecommuters are also potentially surrounded by numerous distractions during the workday that include spouses, children, pets, and related disruptions that may make a home office potentially unsafe.

Generally, California’s workers’ compensation scheme will apply to any injury sustained by an employee “[w]here, at the time of the injury, the employee is performing service growing out of and incidental to his or her employment and is acting within the course of his or her employment.” Labor Code Section 3600(a). A compensable injury may occur away from the employee’s traditional worksite. Therefore, employees who are now telecommuting from potentially unsafe home offices may file workers’ compensation claims if they sustain an injury while working at home.

Imagine, for example, an employee slips on a child’s toy left in the kitchen, or an employee burns his or her hand on the stove during an off-duty meal period, or an employee makes a claim for a carpal tunnel injury after working from a non-ergonomic home workstation. Depending upon the facts and circumstances, an employer may be liable for an employee’s injury suffered at home, whether on-duty or not. The case law concerning telecommuting is underdeveloped, but there is some guidance about injuries sustained while off-duty and at home. For example, in an unpublished decision, Warner v. Workers’ Compensation Appeals Board, 2011 WL 6762898 at *5 (2011), the court of appeal held an employee’s injury suffered while trimming wisteria bushes while he was on call at home was a compensable workers’ compensation injury. Similarly, in Santa Clara Valley Transportation Authority v. Workers’ Compensation Appeals Board (Tidwell), 2017 WL 5713227 at *2-3 (2017), a disabled employee’s injury sustained by the employee in her own home restroom was compensable because the home was the employee’s worksite.

Now that employees are working at home under varying conditions, employers should review telecommuting and work-from-home policies. At a minimum, telecommuting polices should affirmatively require employees to keep designated remote work areas in which the employee will perform work. The work area should be free from hazards, and employees should be required to comply with all of the employer’s workplace safety and health standards. The policy should also require that injuries suffered while working from home should be reported through the same procedures as workplace injuries. Employers should remind employees how to obtain necessary work from home equipment such as computers, accessories, and software necessary to do the employee’s job. And, employers should remind employees about reasonable expense reimbursement policies should the employee need to purchase necessary work equipment that the employer does not provide.

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WHAT EMPLOYERS NEED TO KNOW ABOUT THE NEWLY-ENACTED FAMILIES FIRST CORONAVIRUS RESPONSE ACT

On March 18, 2020, shortly after it was passed in the Senate by a vote of 90-8, President Trump signed H.R. 6201, the Families First Coronavirus Response Act (the “FFCRA”) into law.

There are two paid leave provisions of the Act that employers with fewer than 500 employees should be aware of: (1) the Emergency Family and Medical Leave Expansion Act; and (2) the Emergency Paid Sick Leave Act. The FFCRA also provides, among other things, $1 billion in grants to states for emergency unemployment insurance and refundable tax credits for employers providing paid emergency sick leave or paid FMLA. Further, for those closely following the trajectory of this bill, it is worth noting that there are key differences (as highlighted below) between the original version of the bill passed by the House on March 14 and the final law. These changes resulted from several “corrections” that the House made to the bill on March 16 before sending it to the Senate.

1. Paid Job-Protected Leave Under The Family And Medical Leave Act

The law provides employees of employers with fewer than 500 employees the right to take up to 12 weeks of job-protected leave under the Family and Medical Leave Act (“FMLA”) for limited reasons related to the COVID-19 pandemic. Unlike the original March 14 bill, however, the reasons for which an employee can take this paid FMLA leave were significantly curtailed. Further, the amount of pay an employee is entitled to receive while taking this FMLA leave was also reduced.

Here are the key points that employers need to know:

• Who Is Eligible for the FMLA Leave? An employee who has been employed for at least 30 days and is unable to work (or telework) due to a need to care for minor children if: (1) a school or place of care has been closed; or (2) the child care provider of such children is unavailable due to a public health emergency (defined as an emergency with respect to COVID-19 declared by a federal, state, or local governmental authority).

• What Are Eligible Employees Entitled To? An employee is entitled to 10 days of unpaid leave (the employee may choose to substitute accrued paid time off or other medical or sick leave during this period) and 10 weeks of paid leave at a rate of two-thirds of the employee’s regular rate of pay. The paid leave is based on the number of hours the employee is normally scheduled to work. Under the Act, employees may be paid up to $200 a day or $10,000 in total. However, an employer is free to exceed that total.

• Is the Job Leave Protected? As with traditional FMLA leave, this leave is job-protected. An employer must therefore return the employee to the same or equivalent position upon their return to work. The bill outlines an exception for employers with less than 25 employees if the employee’s job no longer exists due to the coronavirus pandemic. In that case employers must make reasonable efforts to restore the employee to an equivalent position.

• Are There Any Types of Employers Excluded From the Act? The bill grants the Secretary of Labor the authority to issue regulations exempting: (1) certain health care providers and emergency responders from taking leave under the bill; and (2) small businesses with fewer than 50 employees if it would jeopardize the viability of the business. The FFCRA also gives employers of health care providers and emergency responders the ability to opt out of providing the FMLA leave required by the Act. Further, under certain circumstances, an employer party to a multiemployer collective bargaining agreement can satisfy its obligations to provide paid sick time by making an equivalent contribution to the multiemployer plan fund.

• What Are the Notice Provisions? When the need for leave is foreseeable, employees need to notify employers of the need for leave when it is practicable. The Act is silent regarding notice requirements for unforeseeable leave.

• Are the Civil Penalties the Same as Under the FMLA? They appear to be with one exception: employers who do not meet the standard definition of employer under the FMLA (employers with less than 50 employees) are excluded from civil liability for violations of this amendment.

• What about employees who are temporarily laid-off and then re-hired once business picks-up? Employees who are temporarily laid-off as of March 1, 2020, and then re-hired by their employer prior to December 31, 2020, are eligible, upon hire, for paid leave benefits so long as prior to March 1, 2020, they worked at least 30 of preceding 60 days for the employer.

This amendment to the FMLA will take effect April 1, 2020 and expire on December 31, 2020.

2. Emergency Paid Sick Leave

The FFCRA also provides employees of employers with fewer than 500 employees with up to 2 weeks (80 hours) of paid sick leave. Notable aspects of the legislation include the following:

• Who Is Eligible for the Paid Sick Leave? Regardless of length of employment, an employee is entitled to paid sick leave if they are unable to work (or telework) for the following reasons:

1. The employee is subject to a federal, state, or local quarantine or isolation order related to COVID-19;

2. The employee has been advised by a health care provider to self-quarantine due to concerns related to COVID-19;

3. The employee is experiencing symptoms of COVID-19 and seeking a medical diagnosis;

4. The employee is caring for an individual who is subject to an order to quarantine or self-isolate or has been advised by a health care provider to self-quarantine due to concerns related to COVID-19;

5. The employee is caring for a son or daughter if the child’s school or place of care has been closed, or the child care provider is unavailable, due to COVID-19 precautions; or

6. The employee is experiencing any other substantially similar condition specified by the Secretary of Health and Human Services in consultation with the Secretary of the Treasury and the Secretary of Labor.

• How Much Leave Are Eligible Employees Entitled To? Full-time employees are eligible for up to 2 weeks (80 hours) of paid sick leave. Part-time employees are entitled to the number of hours of paid sick time equal to the number of hours they work, on average, over a two-week period.

• How Much Are Employees Required to Be Compensated When Taking Paid Sick Leave Under the Act? Unlike the original March 14 bill, the law states that employers shall not be required to pay more than: (1) $511/day and $5,110 in the aggregate for employees utilizing the leave for the reasons listed in (1) – (3) above; and (2) $200/day and $2,000 in the aggregate for employees utilizing the leave for reasons listed in (4) – (6) above. For reasons (1) – (3), the pay must be provided at an employee’s regular rate of pay (which must equal or exceed minimum wage); for reasons (4) – (6), the rate of pay must be no less than two-thirds of the employee’s regular rate of pay or the minimum wage, whichever is greater. The Secretary of Labor is required to issue regulations regarding how paid leave should be calculated under the Act. (The Secretary also has the authority to issue regulations excluding health care providers and emergency responders from compliance with the Act, exempting businesses with less than 50 employees if compliance would jeopardize the viability of the business, and as necessary to carry out the Act.)

• What Are the Notice Requirements? After the first workday (or a portion thereof) on which leave is utilized, the employer can require the employee to comply with “reasonable notice procedures” to continue receiving paid sick leave.

• Can an Employer Require an Employee to Utilize Other Paid Leave Before Accessing Emergency Paid Leave? No.

• What About Health Care Providers and Emergency Responders? Employers of health care providers or emergency responders may exclude employees from entitlement to this leave.

• Do Employers Need to Payout Unused Leave Under the Act Upon Separation of Employment? No.

• What Are the Penalties for Failure to Comply? The penalties are the same as those under the Fair Labor Standards Act for failure to pay the federal minimum wage.

The Act also has: (1) a notice-posting requirement (the Secretary of Labor has published a model notice); (2) a provision prohibiting discrimination and retaliation against employees who utilize this leave; and (3) an exception for certain employers signatory to a multiemployer collective bargaining agreement.

This provision of the Act will take effect April 1, 2020 and expire on December 31, 2020 (unused leave cannot carry over to 2021).

3. Tax Credits And Tax Issues

Initially, employers will bear the brunt of expenses associated with the new paid sick and paid FMLA leave benefits. The Act, however, provides tax credits to help reimburse employers for wages paid while employees are on paid sick and paid FMLA leave.

The paid sick leave credit is equal to the wages actually paid, up to a maximum of $511 per day while an employee is on paid sick leave to care for themselves, and $200 per day if the employee is on paid sick leave to care for a family member or child. The credit is also limited to 10 days per employee. The credit is refundable to the extent it exceeds the amount the employer owes in payroll taxes.

The paid FMLA leave credit for each employee is limited to $200 per day, up to a maximum of $10,000. The paid FMLA credit is not available to employers already receiving a credit under the Tax Cut and Jobs Act. The credit is refundable to the extent it exceeds the amount the employer owes in payroll taxes.

This provision of the Act will take effect April 1, 2020 and expires on December 31, 2020.

We will continue to provide updates after the Secretary of Labor issues regulations.

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DOL FINALIZES NEW SALARY RULE FOR EXEMPT EMPLOYEES UNDER FLSA

Both California and federal law establish minimum wage and overtime rules. Both laws also contain exemptions from those rules for “white collar employees” who meet the standards of the executive, administrative, and professional exemptions. The state and federal exemptions differ in numerous material respects, including the minimum salary level that employees must be paid in order to qualify as exempt. Currently, California law requires that exempt employees receive a salary of no less than $960 a week. In contrast, the minimum salary under the federal Fair Labor Standards Act (“FLSA”) has been set at $455 a week since 2004. (The rules are explained in Chapter 10 of the Wage and Hour Manual for California Employers, by Attorney Richard J. Simmons of Sheppard Mullin.)

1. Changes In The Federal Salary Level

Several years ago, the U.S. Department of Labor (“DOL”) proposed a substantial increase in the minimum salary required under the FLSA from $455 to $916 per week. The proposed hike, which was scheduled to take effect in December of 2016, was derailed after the regulations were challenged and blocked in federal court. Following changes in administrations resulting from the election of President Trump, a new proposal was issued earlier in 2019 that included an increase in the minimum salary level to an amount lower than the increase proposed by the Obama Administration.
On September 24, 2019, the DOL announced a final rule that will update the earnings threshold necessary to qualify as an exempt executive, administrative, or professional employee. The new rule also allows employers to count a portion of certain bonuses/commissions toward meeting the salary level. The DOL announced that the increase in the minimum salary level will result in 1.3 million workers losing their exempt status and becoming eligible for overtime pay.
Under the final rule that will become effective on January 1, 2020, the “standard salary level” will increase from $455 to $684 per week. This is equivalent to $35,568 per year for a full-year worker. In addition, unlike California law, the FLSA contains a special exemption for “highly compensated employees” (“HCE”). The total annual compensation level that must be paid to qualify under the HCE standard will increase from $100,000 to $107,432 per year. The final rule also will allow employers to use nondiscretionary bonuses and incentive payments (including commissions) that are paid at least annually to satisfy up to 10% of the standard salary level, in recognition of evolving pay practices.

2. The California Standard Will Remain Higher

California employers should take note of the fact that the minimum salary required for the state exemptions will remain higher than the new federal standard. Under Labor Code Section 515, the minimum salary is set at a level equivalent to two times the minimum wage for a full-time employee working 40 hours a week, or 80 times the minimum wage. Because the minimum wage in 2019 is $12 an hour, the minimum salary in 2019 is $960 per week. This amount will increase to $1,040 per week (i.e., 80 x $13 an hour) on January 1, 2020, when the state minimum wage increases from $12 to $13 an hour. California law does not have an HCE standard and does not permit employers to credit commissions or bonuses towards the minimum salary requirement.

3. Remember That Other Rules Also Apply

It should also be remembered that state and federal laws impose requirements beyond the minimum salary level. The additional requirements include a “salary basis test” and a duties test. Under federal law, an exempt employee’s “primary duty” must consist of exempt activities. California law requires that employees be “primarily engaged in” exempt activities to qualify as exempt. Even though the language in the state and federal rules is similar, they are defined to include significantly different standards. For a detailed review of the state and federal exemption standards, see Chapter 10 of the Wage and Hour Manual for California Employers, by Attorney Richard J. Simmons of Sheppard Mullin. The book is available from Castle Publications, Ltd. either in print or electronic form.

4. The Wage And Hour Seminar

The new rules will be discussed at Castle’s October 2, 2019 program on Wage and Hour Laws at LAX. Details regarding the program are discussed later in the ALERT.

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RICHARD SIMMONS FEATURED IN CEB’S CATALOG

Castle Publications is pleased to announce that Richard J. Simmons is featured on the cover of CEB’s In Practice Summer Catalog. CEB is the California legal professional’s trusted source for innovative and practice-oriented solutions. Partnering with some of California’s most experienced lawyers and judges, CEB is renowned for authoritative content, analysis and guidance.

Recently, Simmons teamed up with CEB to launch the new CEB and Simmons Employment Law Library on CEB’s OnLAW online platform. The Summer Catalog, which is distributed to approximately 100,000 California attorneys and firms, includes a detailed description of this new subscription offering, as well as an article authored by Simmons on defining compensable “hours worked” as related to travel time.

For more information on the new CEB and Simmons Employment Law Library, please visit CEB’s website.

RICHARD SIMMONS’ WAGE AND HOUR MANUAL ON CEB AND SIMMONS EMPLOYMENT LAW LIBRARY PLATFORM

Sheppard Mullin is pleased to announce that one of the firm’s leading Labor and Employment partners, Richard J. Simmons, is teaming up with CEB to launch the CEB and Simmons Employment Law Library. As part of the new partnership (a first for CEB), Simmons’ essential reference book, Wage and Hour Manual for California Employers, is now available through OnLAW’s powerful online platform.

“I’m honored – and excited – about this new partnership,” said Simmons. “CEB is an outstanding resource for lawyers all across California and its reputation is stellar. It is the California lawyer’s trusted source for fast, relevant and practical legal guidance. I’m hopeful that my publication on California labor and employment law will be beneficial to those who use CEB and will enhance CEB’s leadership in the area of practical legal research.”

“We are pleased to welcome Mr. Simmons to CEB’s community of highly respected and trusted authors,” said Kelly Lake, CEB’s Executive Director. “Richard Simmons is one of the foremost experts in California labor and employment law, his ability to distill extensive knowledge into practical advice is exceptional and will empower CEB customers to better support their clients and grow their practices.”

The CEB and Simmons Employment Law Library features authoritative tools and advice and includes:
• In-depth coverage of California substantive law, with links to cases and codes;
• Guidance on compliance;
• A detailed review and analysis of the unique California laws as well as the federal standards; and
• Practice tips and strategies for employers and attorneys.

About Richard J. Simmons

Simmons represents employers in various labor and employment matters involving state and federal wage and hour laws, wrongful discharge, employment discrimination, employee discipline and termination, employee benefits, affirmative action, and arbitrations. He received his B.A., summa cum laude, from the University of Massachusetts, where he was a Commonwealth Scholar and graduated in the Phi Kappa Phi Honor Society. He received his J.D. from Boalt Hall School of Law at the University of California, Berkeley where he served as Editor-in-Chief of the Industrial Relations Law Journal, now the Berkeley Journal of Employment and Labor Law.

About CEB

CEB is the California legal professional’s trusted source for innovative and practice-oriented solutions. Partnering with some of California’s most experienced lawyers and judges, CEB is renowned for authoritative content, analysis and guidance. As a non-profit program of the University of California, CEB is committed to strengthening the California legal community.

About Sheppard, Mullin, Richter & Hampton LLP

Sheppard Mullin is a full-service Global 100 firm with more than 850 attorneys in 15 offices located in the United States, Europe and Asia. Since 1927, industry-leading companies have turned to Sheppard Mullin to handle corporate and technology matters, high-stakes litigation and complex financial transactions. In the U.S., the firm’s clients include more than half of the Fortune 100. For more information, please visit www.sheppardmullin.com.