If you have questions about how to handle job cuts in your organization due to COVID-19 government shutdowns, read on for all the considerations you need to make informed decisions.
Layoff vs. Furlough – What are the differences? Why should I care?
When an employee is laid off, they are considered no longer an employee of the company. The company should follow state and local laws and pay the employee a final paycheck and provide all required separation notices upon layoff.
When an employee is furloughed, they experience either a full or partial reduction in hours. Furloughed employees should be provided a notice that clearly states the start and end of a furlough period.
A terminated employee is typically terminated due to performance or for a cause. It’s essential to classify the exit of employees correctly to avoid confusion and/or liability to the company.
While laid-off workers are sometimes rehired and return to work, the term usually refers to an indefinite—often permanent—break in the employment relationship. You can advise your employees at this point on how to access unemployment benefits.
A furlough, on the other hand, is typically for a shorter, fixed period. While laid-off employees are officially separated from employment, furloughed workers remain on your books as current employees. Usually, furloughed employees will not lose their seniority.
FAQ Questions As They Pertain to the Coronavirus Crisis
Q: Can we require furloughed employees to us accrued PTO when placed on furlough?
A: Employees should be allowed the option to use PTO and not be required to use their PTO. For laid-off employees, all accrued PTO should be paid out with their final check. If you offer an unlimited or flexible PTO policy, check your current policy to be sure a set number of hours are not offered upon termination in the policy. Typically, if the policy does not allow employees to save or accrue PTO time, employers are not required to pay out any PTO pay upon separation. Check your state and local laws to confirm requirements.
Clients have asked how long they can keep their teams on benefits while they are not working or being paid. If an employee is laid off, most benefits (medical, dental, vision) plans will end the last day of the month which the employee was laid off while life insurance benefits will likely end on their layoff/termination date. However, benefit plans differ. The best way to find out is to contact your health insurance company or broker directly to learn what timeline applies to your plan.
Eligibility for Unemployment Insurance (UI), Stated Disability Insurance (SDI), Paid Family Leave (PFL)
1. I’m a small business/startup: does any of this apply to me? Am I obligated to provide paid leave for EEs impacted by COVID-19? YES. Effective 4/1/20 – 12/31/20 all employers with less than 500 employees are required to provide paid leave under the Families First Coronavirus Response Act (FFCRA).
2. Are the paid leave of absences under FFCRA retroactive before April 1, 2020? No.
3. What about independent contractors? Am I obligated to provide paid leave for them? No. Independent contractors do not (and never) qualify for UI, SDI, or PFL under any circumstances, COVID-19 or not.
4. Which employees are potentially eligible for assistance? First, to be eligible, employees must have been employed for at least 30 days before their temporary leave request. Second, the employee must be unable to work or unable to telework.
Employees subject to a Federal, State, or local quarantine related to COVID-19
A health care provider has advised employees to self-quarantine related to COVID-19
An employee experiencing COVID-19 symptoms and is seeking a medical diagnosis
Employee caring for an individual subject to the case (a) or (b) above. The individual being cared for is not restricted to family members.
Employee caring for his or her child whose school is closed or place of care is unavailable due to COVID-19 related reasons
An employee experiencing any other substantially-similar condition specified by the US Dept. of Health and Human Service. Note that this is still pending definition.
5. How much is the FFCRA paid leave for eligible employees?
For FAQ cases 4a – 4c above, 100% of salary rate up to a maximum of 80 hours for full time (and two week equivalent for part-time) up to a maximum of $511 per day and $5,110 aggregate total
For FAQ cases 4d – 4g above, ⅔ of salary rate up to a maximum of 80 hours for full time (and two week equivalent for part-time) up to a maximum of $200 per day and $2,000 aggregate total
For FAQ case 4e above (child care), there are an additional ten weeks at ⅔ of salary rate up to a maximum of $200 per day and $10,000 aggregate total. (Total of $12,000 and 12 weeks for this case if you include 5b above.)
6. What is the process for an employee to initiate FFCRA paid leave? The first step is to notify the employer in advance of their intention to take paid leave, on what date, for what reason, and for how long (if known). The employer should then notify Infrastructure Group (or your payroll provider if we are not managing your payroll) in writing to implement this in payroll.
7. Can an employer require employees to use PTO before being eligible for paid leave under the FFCRA? No. But employees can elect on their own to use accrued PTO before or after the end of the paid leave period.
8. Does FFCRA pay leave carryover? Do I have to pay it out to an employee who separates? No. There is no carryover past 12/31/20. There is no payout liability. It is not PTO.
9. Can the FFCRA pay leave to be taken intermittently, or does it have to be continuous? It can be taken intermittently but only with the employer’s permission.
10. Can an employee take expanded family and medical leave intermittently while their child’s school or place of care is closed while teleworking? Yes, if the employer allows it.
11. I’ve heard about an exemption for businesses with less than 50 employees if compliance would jeopardize the viability of my business. I’m a startup, wouldn’t that qualify? Businesses with less than 50 employees may be able to exempt themselves from the ten additional weeks requirement explicitly related to the child care provision per FAQ case 4e above if business viability is threatened as a direct result of complying with the FFCRA. However, the government has not defined what “viable” means.
12. I’ve heard the government is offering payroll tax credits to offset costs employers will incur under the FFCRA? Yes, the US Treasury, IRS, and US Department of Labor announced a federal payroll tax credit for employers who are required to provide Coronavirus-related paid sick leave to their employees. Guidance on the mechanics of claiming this is still pending IRS clarification.
The plan allows businesses with less than 500 employees new refundable payroll tax credits to reimburse the cost of providing Coronavirus-related paid sick leave to their employees.
An immediate dollar-for-dollar tax offset against federal payroll taxes will be provided.
Where a refund is owed, the IRS will send the return as quickly as possible.
13. If I want to pay my employees more than they are entitled to under the FFCRA, can I do so and claim a tax credit? Yes, but only up to the maximum limits (see #5).
Immigration, H1B processing, and International Travel
1. With “Shelter in Place” in effect, do I still have to witness new employee I-9s in person? No, the Federal government is temporarily allowing remote I-9 verification
2. Are H1B, TN, and other I-129 visas still being processed? All premium processing services have been suspended. It is not clear yet what is happening to standard processing or if new applications are being accepted. Check with your immigration attorney for more information.
3. I still might have to travel out of the country. Can I even get visas for international travel? Not at this time. The Federal government has suspended all routine visa services as of 3/20/20.
4. Income Taxes – The IRS and CA FTB have automatically extended tax filing deadlines until 7/15/20, including payment of the $800 2020 CA minimum franchise tax.
GCG HR Can Assist With The Following Topics:
Virtual on and offboarding for employees
Employee leave policy Documentation
Human resources policy and procedure review and updates
Fielding your employees’ questions about furlough and unemployment benefits
Updating clients on the rapid changes to the laws
San Francisco organizations look to GCG for their interim human resources needs; please reach out.
Any search for an outsourced human resource should include multiple candidates – and we highly encourage you to consult with GCG as part of that process.
Our Human Resources Leadership Team has extensive knowledge of the human resource knowledge of several industries and has provided value to early-stage startups and Fortune 500 companies alike. Our consultants can accomplish your strategic objectives and also pioneer new ones.