The economic fallout from Covid-19 may include employer liability lawsuits. The Senate, and several states, have sought to enact protective legislation, shielding employers from the anticipated Covid-related claims. It is unclear whether this legislation will pass, and if it does, whether it will be judicially challenged. Moreover, this legislation will not shield employers from the two areas wholly within an employer’s control: wage and hour claims and newly required FFCRA leave claims. Employers should take control and enact proactive measures now to reduce potential liability in these areas:
Families First Coronavirus Response Act Leave Liabilities
The Families First Coronavirus Response Act (“FFCRA”) applies to companies with less than 500 employees creating significant minefields of potential employer liability. The Act creates two new forms of paid employee leaves related to Covid-19, providing stringent employee protections. (Families First Coronavirus Response Act Passes) Currently, the Act continues through the end of 2020, however that could change if Congress decides to extend it into 2021.
The first type of leave created by the FFCRA provides employees who have worked at least 30 days access to expanded FMLA leave under the Emergency Family Medical Leave Expansion Act (“EFMLA”). The second type of leave is paid sick time granted to all employees regardless of length of employment through the Emergency Paid Sick Leave Act (“EPSL”). These leaves do not replace, but rather supplement, leave rights afforded under Arizona state law and employers’ existing policies and practices. Arizona employers must provide all employees with paid sick leave in compliance with state law in addition to the leaves required under the FFCRA. (Reminder Arizona’s Paid-Sick Leave Requirements and Primer)
The EFMLA amends the Family and Medical Leave Act (“FMLA”) and provides an additional basis on which an eligible employee may take FMLA leave, i.e., to care for a son or daughter whose school or caregiver is closed or unavailable due to Covid-19. One key difference between traditional FMLA and the EFMLA is that up to 10 weeks of EFMLA are paid, and it is limited to only care for an employee’s child due to school or daycare closures resulting from Covid. (Employee Rights and Employer Obligations Under the FFCRA with School-Aged Children) As expected, anti-retaliation and anti-interference provisions of traditional FMLA apply with equal measure to the EFMLA.
The DOL recently confirmed in its FFCRA Questions and Answers that EFMLA leave under the FFCRA is available on days when a child must participate in virtual learning, even if that is on a part-time schedule. Many schools are providing in-person learning on alternating days or weeks. Because the FFCRA requires schools to be “closed,” leave would not be available on the days a child goes to school in-person. However, leave would be available “on each of [the] child’s remote-learning days because the school is effectively ‘closed’ to [the] child on those days.” This applies even if the school is open to some students every day on a rotating schedule or if a school starts the new school year virtually (i.e., offering only remote learning), EFMLA is only available until the school resumes in-person learning.
Further, that if a school offers a choice between in-person or remote learning, a parent electing remote learning would not be eligible for EFMLA leave because the school is not “closed”. If the parent chooses remote learning because the child is “under a quarantine order or has been advised by a health care provider to self-isolate or self-quarantine,” the employee may be eligible for two weeks of emergency paid sick leave.
As schooling evolves this fall, covered employers need to consider FFCRA leaves for their employees in connection with school closures.
EPSL under the FFCRA creates a new bank of leave requiring – with limited exceptions – covered employers provide full-time employees up to 80 hours of paid sick time and part-time employees with a number of paid sick time hours equal to the average number of hours they worked over a two-week period. Much like the Arizona State PSL Act, the FFCRA EPSL includes anti-retaliation provisions protecting employees against discharge, discipline or any form of discrimination for (1) taking EPSLA leave or (2) filing any complaint, instituting a proceeding, or causing a proceeding to be instituted, in each case relating to EPSL, or testifying or preparing to testify in any such proceeding. In addition, the FFCRA treats an employer’s violation of EPSL as a failure to pay minimum wages in violation of the Fair Labor Standards Act of 1938, providing significant penalties including liquidated damages and an award of attorneys’ fees for violations.
The FFCRA imposes posting requirements, (Updated Poster Required for the Families First Coronavirus Response Act) tracking qualified leaves, and maintaining employee confidentiality. A good overview of some of the key provisions can be found here.
The DOL is enforcing this Act and the penalties can be substantial. (Caution FFCRA Enforcement of Paid Leaves) Employers should review employees’ time off from April 1, 2020 (the effective date of the FFCRA) forward and evaluate whether such leave falls within FFCRA and make any needed adjustments. Rules and requirements are evolving under the FFCRA. For example, recent DOLchanges have revised employer’s responsibilities Health care employers should take note that the DOL recently revised its definition of “health care provider” for purposes of FFCRA leaves. (Updates to the FFCRAs Definition of Healthcare Provider for Paid Sick Leave)
Wage Claims
On a dime, many employees switched to remote work arrangements blurring the lines between home and workplace and raising exposure for wage and hour claims. Potential claims may include violations of state and federal wage laws, including failure to pay for all time worked, failure to pay overtime, or failure to reimburse necessary business expenses. These claims, often brought as class actions, can give rise to substantial exposure for employers.
Under the Fair Labor Standards Act (“FLSA”), employers must pay at least non-exempt employees minimum wage for all hours worked and must pay overtime for all hours worked in excess of 40 hours in a workweek. Pre-Covid timekeeping procedures may have fallen through the cracks with the nearly overnight conversion to employees now working from home with little oversight. Non-exempt employees working from home may work unscheduled time which may never be recorded and therefore not compensated, potentially leading to wage claims by employees that they were working “off-the-clock” and were not paid for all hours worked including overtime. Although exempt employees, if properly classified, are not entitled to overtime, state law requires they nonetheless must be paid at least minimum wage for all hours worked.
Additionally, the newly minted work from home employees may have been forced to purchase equipment and supplies, such as laptops, printers, scanners, and other standard office supplies, to work remotely. Or employees previously prohibited from using their personal cell phones or computers for business purposes will have been required to use such equipment. The FLSA requires companies to reimburse workers for expenses when such expenses would cause the employee’s pay to fall below minimum wage. In what has now become a bring your own device to work on steroids, working from home on personal devices may also lead to disclosure and potential misappropriation of confidential company information, or third-party client information in violation of NDA’s. Employers should carefully review existing confidentiality agreements and update procedures to ensure the security of confidential information during employment and in the event of separation. Working from home, and working on personal devices, creates additional hurdles both during employment and in the event of separation.
On August 24, 2020, the U.S. Department of Labor’s (DOL) Wage and Hour Division issued Field Assistance Bulletin (FAB) No. 2020-5 regarding employers’ obligations to use reasonable diligence in tracking remote employees’ hours. The DOL’s guidance provides some practical takeaways for employers to consider as the pandemic continues. The DOL confirms employer obligations under the FLSA have not changed. Although the working environment may have changed with increased telework, employers continue to have the same obligations under the FLSA which requires non-exempt employees be compensated for all hours worked, including all work performed remotely. Violations of the FLSA can be substantial. The DOL reminds employers that the burden of compliance falls on the employer who must “Exercise reasonable diligence.” Employers are required to compensate non-exempt employees for work the employer knows or has reason to know has occurred. Actual knowledge that employees are working outside of their scheduled hours can be shown by work produced or communications including emails and text messaging. To meet this burden employers should review work schedule policies and instruct employees not to perform unscheduled work and to remind employees to report all hours worked, scheduled or unscheduled.
Employers should also ensure management is enforcing such policies consistently. Employees should be informed that they are to work during scheduled work hours and that failure to do so, including working outside of scheduled hours, will result in corrective action. Of course, if an employee works outside of scheduled hours, the employer must nonetheless pay the employee for the time worked and then enact discipline.
Employers should keep in mind that when transitioning back to the workplace, time spent by non-exempt employees undergoing wellness checks including temperature checks and filling out wellness surveys is likely time worked. Failure to compensate non-exempt employees for the time completing these tasks could result in a wage and hour claim, including potentially overtime claims.
The lawyers at Faulkner Law Offices, PLLC have decades of experience in employment matters and can assist employers and employees in maneuvering during these challenging times.