Part Nine of the COVID-19 Roadmap Series: Ensuring Compliance – Leave Management
By Natalie Groot, Corbin Carter, Michael S. Arnold & H. Andrew Matzkin
As management and human resources professionals are well aware, COVID-19 has drastically and rapidly impacted the workplace. Among other things, employees require more flexibility, employers are increasingly reliant upon remote work arrangements, and legislative and administrative responses to the pandemic from various levels of government have created new requirements for businesses, including new leave entitlements for employees. In Part Nine of our Roadmap Series, we explore key considerations surrounding leave management and compliance as employees and businesses navigate this new terrain.
Planning Ahead
Ahead of any “return” to the workplace, businesses must address a variety of leave-related issues, including preparing to implement policies that promote flexibility where possible and that are compliant with applicable federal, state and local laws and orders regarding employee leave entitlements (including leaves that address an employee’s own needs, as well as those that provide time to care for their children and family). Now is the time to review and update any policies or employee handbooks to reflect the new reality.
Many employers are also creating new stand-alone COVID-19 policies or COVID-19 employee handbook addenda that reflect the various COVID-19-related updates, including addenda addressing state or local laws that have changed due to COVID-19. Creating a stand-alone policy or addendum may make compliance around many temporary protocols easier, and will allow employers to modify or revoke certain policies more quickly when appropriate.
Policy updates should reflect practical realities. For instance, if remote working arrangements are successful, should an employer continue to utilize these arrangements even after restrictions regarding physical workplaces are lifted? How can an employer maximize operational efficiencies while also promoting employee wellness? Should an employer go beyond compliance with applicable law and offer employees additional flexibility in an attempt to boost and maintain employee morale? Such considerations should be examined, along with compliance requirements, when plotting a post-COVID-19 course. Finally, employers should ensure that any new policy retains sufficient flexibility and employer discretion to account for potential additional outbreaks resulting in stay-at-home orders.
Paid Time Off Issues & Flexible Arrangements
In light of COVID-19, many employers have changed their paid time off (“PTO”) policies to reflect the moment, including accounting for flexible work arrangements and an inability to use PTO in the normal course.
First, in an effort to support employee well-being during COVID-related events, some employers are considering offering personal days or “mental health” days to their workforce (if they do not already do so). When considering any alterations to company-provided leave policies, including on this basis, employers should ensure that updated policies reflect the structure of the particular workplace and the leave needs of the particular workforce – such as any remote work arrangements that might change how PTO policies apply.
Second, COVID-19 concerns and travel restrictions have prevented many employees from using PTO days or taking vacations that were planned for Spring and Summer 2020, and ongoing concerns could affect their ability to take vacations during the remainder of the calendar or benefit year. Many employers are recognizing that when COVID-19 restrictions subside, there may be a deluge of PTO requests that threaten to disrupt regular operations. Other employers recognize the fact that employees may forfeit accrued vacation at year end without any real opportunity to use it. And some employers face an increased financial burden if their PTO policies provide for pay out for unused time at year-end, or if the employer is considering a personnel reduction and must pay employees for accrued but unused PTO at termination. There are several different approaches employers can take to help address these issues, each offering particular incentives and disincentives, including:
Increasing the number of days that can be carried over into 2021, if the employer has a carry-over limitation in its current written policy;
Requiring the usage of PTO during certain points in time (including during the remote working period) to avoid bottlenecking;
Suspending or modifying future PTO accruals (at least temporarily);
Creating a PTO premium to incentivize employees to use PTO now instead of later. For instance, employees taking leave in certain timeframes will have only a portion of PTO days charged against their balance (e.g., the employee could take five actual days of vacation, but only have four PTO days deducted) or will be awarded additional PTO (e.g., the employee could take five accrued days of vacation, and receive an additional PTO day next year).
Offering to pay employees for a portion of unused time at year-end so that employees do not seek to use it later this year (although employers must be careful of the potential tax consequences associated with such an offering);
Ending the PTO payout upon termination provisions (but only where allowed under applicable law);
Creating a PTO “leave sharing” program that allows employees to contribute their own PTO time to coworkers who have exhausted their available PTO time due to COVID-19 related situations;
Implementing certain blackout dates; and/or
Creating an approval priority system that is applied in a non-discriminatory manner.
Employers should review their current time off policies to ensure that all policies, including any modifications thereto, comply with federal, state, and local leave and benefit entitlements. As part of this review, in all cases, employers modifying PTO policies should ensure that any proposed updates do not cause employees to forfeit any accrued or existing amounts classified as wages under applicable law and that such changes are prospective.
Leave Entitlements: Considerations
As noted, COVID-19 has led to the enactment or expansion of numerous leave programs in various jurisdictions. Employers should review their current leave policies to ensure that appropriate leave benefits are offered and granted. This process goes beyond simply incorporating new entitlements into existing policies – employers should also take stock of how these new entitlements may affect existing benefits like parental leaves, or impact employers’ ability to follow standard notice, certification and documentation requirements.
As part of conducting this review, employers should carefully consider where certain leave entitlements run concurrently, and where other leave entitlements must be granted on a stand-alone basis. For instance, for New York State employers, New York’s 14-day Emergency Paid Sick Leave (i.e., quarantine leave) may run concurrently with the federal Families First Coronavirus Response Act’s (“FFCRA”) Emergency Paid Sick Leave (NOTE: the leave entitlements under the FFCRA are described in more detail below). But employees utilizing both the New York and federal FFCRA’s Emergency Paid Sick Leave provisions must be allowed to use these leave entitlements before – and without diminishing—any accrued sick leave provided under preexisting law or company policy, unless the employee elects to use accrued sick time. Employers should consult with counsel if they are unsure how to ensure compliance and properly incorporate newly-minted leave entitlements. This exercise should be conducted on a jurisdiction-by-jurisdiction basis to ensure compliance.
Employers should also be mindful to follow the documentation requirements particular to each law, and should incorporate any such requirements in their updated policies. Now is the time for employers to work with their payroll providers and human resources teams to ensure proper tracking of all leave requests. We covered documentation and recordkeeping requirements, as well as payroll considerations, extensively in a previous post.
Finally, be mindful that the return of certain employees who had previously been furloughed, laid off, or even terminated may present specific issues. Under the FFCRA, if an employee was laid off/terminated on or after March 1, 2020, and is rehired or resumes employment on or before December 31, 2020, then the employee will remain entitled to the FFCRA’s Emergency FMLA benefits (so long as the employee was on the employer’s payroll for 30 or more of the 60 days prior to the layoff/termination). Several states and municipalities also have laws requiring the restoration of employees’ accrued leave balance upon rehire if the employee was temporarily separated from employment and the employer did not pay out the employee’s accrued balances at the time of temporary separation. For example, California employers should be cognizant that under the California Healthy Workplaces, Healthy Families Act, they are required to reinstate all accrued, unused paid sick leave to employees who are rehired within 12 months of being terminated. Similarly, in New York City, an employee’s accrued sick leave under the City’s Earned Sick and Safe Leave Law is restored in full if they are rehired within 6 months. As such, to the extent that employees had unused paid sick leave accrued prior to being temporarily separated, that leave must be returned to the employee in certain jurisdictions.
Leave Entitlements: Key COVID-19 Leave Laws
We summarize below some of the major leave entitlements that have been enacted in response to COVID-19, as well as some preexisting laws that employers should review in relation to COVID-19 related absences.
Families First Coronavirus Response Act (“FFCRA”):
We have covered the recently enacted FFCRA and the guidance interpreting the new federal law in depth on several occasions. The FFCRA applies to employers with fewer than 500 employees and is currently set to expire as of December 31, 2020. As a brief review:
Emergency FMLA Leave:
Eligible employees may take up to 12 weeks of job-protected Emergency FMLA leave where they are unable to work or telework because of a need for leave to care for a son or daughter if their primary or secondary school or place of care has been closed, or their child-care provider is unavailable, because of a public health emergency declared with respect to the COVID-19 coronavirus.
The first 10 days of Emergency FMLA leave is unpaid, but employees may elect to substitute Emergency Paid Sick Leave (described below), accrued vacation, personal leave, or sick leave for the unpaid leave portion of the FFCRA’s Emergency FMLA Leave.
After the first 10 days are exhausted, employers must pay the employee not less than two-thirds of the employee’s regular rate of pay for each day of FMLA leave taken thereafter, capped at $200 per day, and $10,000 in the aggregate.
Emergency Paid Sick Leave:
The FFCRA also includes the Emergency Paid Sick Leave Act, which permits employees to use sick leave related to COVID-19. All full-time employees (subject to limited exceptions and regardless of their length of employment) are entitled to take 80 hours paid sick leave immediately.
These sick leave amounts are in addition to, and not in lieu of, any other statutorily provided or employer-provided paid sick leave benefits, and employers must permit employees to use COVID-19-related sick leave before other accrued sick leave.
Employees can use this sick leave where they cannot work or telework because the employee:
(1) is subject to a federal, state, or local quarantine or isolation order related to COVID-19;
(2) has been advised by a health care provider to self-quarantine due to COVID-19-related concerns;
(3) is experiencing symptoms of COVID-19 and seeking a medical diagnosis;
(4) is caring for someone who is subject to a quarantine or isolation order or who has been advised to self-quarantine;
(5) is caring for a child if the child’s school or place of care is closed or the child-care provider is unavailable because of COVID-19 precautions; or
(6) is experiencing any other substantially similar condition specified by the Secretary of Health and Human Services (“HHS”) in consultation with the Secretary of Treasury and the Secretary of Labor (NOTE: HHS has not yet identified any “substantially similar condition” that would allow an employee to take paid sick leave).
Family and Medical Leave Act (“FMLA”):
The regular, non-emergency version of FMLA applies to employers with 50 or more employees within a 75-mile radius, and provides up to 12 weeks of unpaid leave for eligible employees (those who have worked at least 1,250 hours within the last 12 months) for any of the following reasons:
the birth of a child and to care for the newborn child within one year of birth;
the placement with the employee of a child for adoption or foster care and to care for the newly placed child within one year of placement;
to care for the employee’s spouse, child, or parent who has a serious health condition;
a serious health condition that makes the employee unable to perform the essential functions of his or her job; or
any qualifying exigency arising out of the fact that the employee’s spouse, son, daughter, or parent is a covered military member on “covered active duty.”
Although the flu ordinarily would not qualify as a “serious health condition” making the employee eligible for FMLA leave, complications from COVID-19 may qualify where it requires hospitalization and develops into a much more serious respiratory illness. An employee could be eligible for FMLA for his or her own serious health condition or to care for a family member with a serious health condition. Whether COVID-19 related or not, for employees seeking to take regular FMLA leave because of the employee’s own serious health condition or to care for a family member with a serious health condition, normal FMLA certification requirements apply (i.e., the employer may require the employee to submit a certification from a health care provider).
State and Local Leave Laws:
In response to COVID-19, many states and municipalities have adopted leave laws that employers must incorporate in leave policies where applicable. For example, several local governments in California have enacted or expanded COVID-19 leave protections for workers, including Los Angeles, San Francisco, and San Jose. As noted above, New York State has enacted Emergency Paid Sick Leave (i.e., quarantine leave), but also (unrelated to COVID-19) recently enacted a statewide permanent paid sick leave law, with accruals beginning in September 2020 and leave benefits beginning in January 2021. The District of Columbia has also expanded several of its laws to bolster COVID-19 employee protections. While Massachusetts has not yet enacted COVID-19 related leave entitlements, family and medical leave benefits will become available to employees effective January 1, 2021 pursuant to Massachusetts Paid Family and Medical Leave.
Given the interaction between federal, state, and local leave laws aimed at addressing these benefits, employers may decide to create state-specific addendums to their employment handbooks. Employers should be aware of the leave laws in the states and municipalities in which they operate, and should revise their handbooks to reflect the same if they have not already done so.
Americans with Disabilities Act (“ADA”):
Finally, employees with temporary disabilities due to COVID-19 or whose existing disabilities are exacerbated by COVID-19 who are not otherwise entitled to leave under the FMLA or state laws may be entitled to leave or a continued remote working arrangement or other accommodations under the ADA. These types of requests should be supported by medical documentation, but a flexible approach is recommended if an employee cannot quickly secure such documentation.
As discussed in our previous post, employers should remember that a request to continue working remotely may be considered a reasonable accommodation request if it comes from an individual with a qualified disability. If an employer fields such a request, it should engage in the interactive process as it normally would prior to the pandemic. Given the increased attention and shifting considerations under COVID-related disability law, employers should consult with counsel before denying any disability-related accommodation requests.
Parting Thoughts & More to Come
Compliance with the various workplace regimes established as a result of COVID-19 requires a dynamic and proactive approach. More than ever, businesses and human resources professionals will need to continually review and account for ever-evolving leave mandates and grant employees increased flexibility in certain situations. Creating updated policies and communicating these changes to employees now will allow businesses to identify potential issues early and address them before they become problems.
Next up in our Roadmap Series, we will shift our focus to employee communications and trainings, focusing on effective ways to inform workers of new workplace requirements and methods for reinforcing existing policies.