Critical Information for California Employers 3.30.2020 - Also see below for a list of critical links.

In light of COVID-19 and how this is affecting companies, the CA HR Services team as created some material to help employers address the growing concerns regarding this pandemic and mitigate some questions employers and employees may be having. Some of this information is universal while some information and links are CA-specific.

  • Important questions for employers to ponder: Can you keep the company open or temporarily shut down? To avoid layoffs, you may follow these steps:
    1. Identify which employees can work full time or part-time and out of those, who can work from home/telecommute vs. those who can’t (essential personnel vs. non-essentials). Non-essentials could be laid off or furloughed. See below for details.
    2. Ask for volunteers to have a modified schedule and or modified pay vs. layoff. Options to consider:
      • Instead of open-ended time frames, suggest a 30, 60 or 90-day rate decrease and reassess at the end of that time frame.
      • Enact permanent rate decreases for employees (with notice, moving forward but not backwards). Then, once the company is in a better position financially, you can consider giving increases again – potentially restoring rates or whatever fits the organization’s financial status at that time. This change will avoid a temporary reduction in pay but does risk employees’ exempt status if they fall below the minimum threshold.
      • Another option is to schedule salary/exempt employees to be off work for an entire week or two weeks, which allows the employer to not pay for that time period. Asking for volunteers is a great place to start. Creating a rotating schedule for this may help the company avoid pay reductions or layoffs.
      • If exempt employees are reducing pay that goes below the exempt threshold, then it is recommended that companies place them on a Non-Exempt/hourly status until further notice.
      • Whatever option you choose, communicate openly and honestly with your team. Some planning and strategizing can mitigate unnecessary stress and confusion for all.
    3. Based on the feedback, create a modified schedule that will help the company budget. If you reduce employee hours via furlough and reduce their pay, employees may be able to collect compensation via state programs. In CA: State Unemployment Insurance (see Form DE 2063) via EDD. Please see other state-specific websites for more details.
    4. Regarding Alternative Workweek Schedules (AWS), you may have to rotate days off and consider some creative schedules to ride out this turbulent climate but we recommend strong communication with employees first so all employees are in agreement. No surprises. Document everything and ask employees to sign off their acknowledgment of these temporary plans. Note: Consult a labor attorney regarding AWS schedules.
    5. If hours are reduced and/or employees are laid off, this may impact benefits continuation, so please consult your broker and ensure that employees receive their COBRA notices ASAP!!
  • How do those who must reduce hours or will be fully released get paid?

    1. On March 18, 2020, President Trump signed into law the Families First Coronovirus Response Act (FFCRA). This unprecedented legislation expands the Family Medical Leave Act and provides Emergency Paid Sick Leave. Click here for the ACT summary details. For the FFCRA Summary Table Click here.
      • In addition to the FFCRA, If employees are ill they may apply for State Disability Insurance (SDI) via EDD (physician certification may be waived)
      • In addition to the FFCRA, if caring for ill family members: employees may apply for Paid Family Leave (PFL) via EDD (physician certification may be waived)
      • Companies should apply for Work Share Program via EDD if hours and wages are reduced by at least 10 percent and not exceed 60 percent.
    2. Other company pay options:
      • Accrued/unused Vacation, PTO or paid sick leave (PSL) make sure you are providing the correct paid sick amount: CA @ 24 hours vs. City of San Diego @ 40 hours. Los Angeles and other northern CA cities have other requirements. Same applies to other states.
      • Unpaid time off;
      • Apply for UI (CA: EDD) (company may also look into the Work Sharing Program as stated above);
      • A combination of the first 3 options; See links below.
    1. If employees have no vacation/PTO or sick time left, consider offering additional hours or providing loaner hours – also permit employees who don’t need their hours to share with others who do need it more. Document everything.
  • Dealing with layoffs (permanent) vs. Furloughs (temporary) - Consider who and why and for how long.

    1. Layoffs are permanent so take great care in considering whom you will lay off and why and how this vacancy will impact the business on a short and long term basis. Questions to ask: how will this impact the company culture during this turbulent time? Would a furlough be a better option? See below. With layoffs, consider the following:
      • You have to pay all accrued/unused vacation only (not sick time)
      • The employee(s) can apply for unemployment insurance immediately.
      • Will you pay the affected employee a severance or pay for COBRA premiums?
      • Your unemployment rating will be affected.
    1. FurloughsReserved for when employees are asked to take mandatory cut in hours or time off of work with no pay. The goal is to save lowering employee salary expenses. Furloughs can be a positive alternative to layoffs but they can have negative consequences, too.If you're considering implementing a furlough, make sure your communication is clear and consistent with all employees. On one hand don’t say your need to cut costs and furlough hourly employees while management team receives bonuses and other fringe benefits. Cut fringe benefits across the board. Furlough should be perceived as a team effort. There is no need to furlough all employees but please ensure that it is well thought out. Sales and manufacturing team may be furloughed but maybe customer service can work from home and continue fielding calls. And when the tide begins to shift, consider bringing sales gets called back in first to help build the pipeline before manufacturing. Formally document the changes and inform all employees with all the details regarding hours and no work rules, ways to get paid during furloughs, affect to benefits, COBRA, etc.See information below RE form DE 2063 or ask us about Furlough letters.
    2. Emergency communication plan:
      • Have a communication plan as to how important information gets disseminated to others and who will be responsible for disseminating information to whom. This can include group calls, texts or messaging.
      • Managers should have their employees’ contact information or emergency numbers in order to provide employees with critical updates.
      • Employees should be given a contact number to call for regular updates. The company may wish to pre-record information on a general line and update it daily or as often as needed.
  • Small Business Exemption – Updated March 30, 2020

    The Department of Labor has issued further guidance regarding the small employer exemption to certain FFCRA requirements.

    • Small businesses (with fewer than 50 employees) may qualify for an exemption from the requirement to provide (a) paid sick leave due to school or place of care closures or child care provider unavailability for COVID-19 related reasons and (b) expanded family and medical leave due to school or place of care closures or child care provider unavailability for COVID-19 related reasons. A small business may claim this exemption if an authorized officer of the business has determined that:
      • The provision of paid sick leave or expanded family and medical leave would result in the small business’s expenses and financial obligations exceeding available business revenues and cause the small business to cease operating at a minimal capacity;
      • The absence of the employee or employees requesting paid sick leave or expanded family and medical leave would entail a substantial risk to the financial health or operational capabilities of the small business because of their specialized skills, knowledge of the business, or responsibilities; or
      • There are not sufficient workers who are able, willing, and qualified, and who will be available at the time and place needed, to perform the labor or services provided by the employee or employees requesting paid sick leave or expanded family and medical leave, and these labor or services are needed for the small business to operate at a minimal capacity.

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Hope you all stay safe and healthy during this turbulent time!

Warmest of regards,

Nadia Ardebili and the CA HR Services team