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Covid-19 and Employer Workforce Decisions: 4:20 update

Jeff Hirsch
Jeff Hirsch

Head of Claims

By Jeff Hirsch

It is a breathtaking part of the pandemic reality that businesses have had to take drastic measures in response to the economic downturn, shelter-in-place orders and similar mandates aimed at “flattening the curve.”  The statistics that have been released for last 2 weeks are nothing short of staggering, record-setting and depressing. While there are some businesses that may actually thrive or be relatively unaffected by the pandemic, the vast majority will be impacted in drastic ways. 

For the week ending 3/21/2020 over 3 million Americans filed new unemployment claims; for the week ending 3/28/2020 that number grew to over 6.6 million

Daily chart - Covid-19 has pushed 3.3m American workers onto the ...

The goal of this blog is to provide references and resources for employers who have had to make or are about to make decisions impacting their workforce.  There are many posts, articles (scholarly and other), that offer guidance to adjust workers their “new reality” (a google search of “tips when working from home” returned 3.5 billion results). We will post helpful links – both for employers and workers – whether it be “best practices”, legal rights and lawsuit filings, Department of Labor (federal and local) bulletins and similar.

For example, the US Department of Labor has issued a guidance and FAQ relating to the FFCRA  (“Families First Coronavirus Response Act”). The Act includes the Emergency Paid Sick Leave Act and the Emergency Family Medical Leave Expansion Act. These acts (designed primarily for the public sector) also apply to only certain private sector employers who employ fewer than 500. Companies with 50 or fewer employees can request an exemption. They are available in relation to school closings or child care unavailability if the leave requirements would jeopardize the viability of the business as a going concern.

Of course, all of the legal and practical implications of downsizing and closing operations cannot be covered in one blog or in one place. For example, employers considering furloughing employees have to be careful. If an hourly employee does as little as open a work email while furloughed, the employer may likely be obligated to pay that employee for an hour. For exempt (salaried) workers responding to a few emails could make the employer liable for a week of pay. The rules are strict.

Many states, New York for one, have enacted emergency laws that ease some of the rules surrounding unemployment insurance claims, for example, and tax return deadlines (federal and most states) have been extended.

Violations of reduction in force, furlough and other similar laws are high value targets for law suits in the mind of savvy employment counsel. So, the best (non legal) advice from us is that if you can see a light for your business at the end of this version of the world we are all living in – and want to give your business the best chance at sustaining and future success – reach out to qualified employment counsel now, as you create a plan. If you’ve already pushed the button, it is still valuable to reach out to counsel or and HR specialist. DIY and getting signed releases from employees who are laid off isn’t a failsafe.

To kick this first roll out of the CV19/Employment blog off, we provide you with a link to Gordon & Rees’  Employer Considerations in the Wake of COVID-19 which Mark Posard and his colleagues have graciously provided. The firm also offers its COVID-19 Hub for ongoing updates. 

Insurance. We’ve tackled Business Interruption insurance questions mainly under property insurance policies here. We’ve also received many questions about insurance that might cover layoffs, etc. Employment Practices Liability (“EPL”) Insurance may protect companies who have made “improper” decisions when executing a partial layoff, furlough, reduction in force. If any or all of the workers you laid off (let’s say it’s a portion of your workforce) happen to fall into what is called a “Protected Class”, the employer could get sued, and that suit might be covered under an EPL policy.

But, we think that EPL policies will become harder and harder to obtain and will no doubt become more expensive, as the economy continues to suffer. In reality, EPL prices have been creeping up over the past couple years in the wake of the “me too” movement and various law changes.

Two important considerations: 1. You shouldn’t think that you can decide to plan a layoff, apply for EPL (and not disclose your plans – all applications will ask about it) and then get coverage for a lay-off related claim. 2. Although you may have some EPL coverage if you are part of a PEO, your PEO-supplied EPL coverage may have a very high deductible, and may exclude claims involving layoffs. Check this out for more information.

But even when you go through all the right steps in carrying out a reduction in force, or try to hold on and then later are forced to reduce the workforce, a claim arising out of the downsizing should be submitted to your EPL carrier for coverage consideration.  If you’d like to discuss EPL Insurance, contact us.

Update March 30, 2020. Another helpful link from the Gordon & Rees law firm, with thanks to Mercedes Colwin and their Covid-19 Task Force. The task force has compiled State specific updates for CA, CO, CT, DC/MD/VA, MA, MJ, NY, PA, TX, WA and WI – thus far. Also, Vox reports that State data indicates that the U.S. is headed for another record unemployment week.

According to glassdoor, a recent Harris Poll shows that about 3 in 10 workers said their employers had not taken steps to address the Covid-19 Coronavirus. We’ll watch out for an update since the survey was completed before March 23rd.   

Finally, Here’s a Founder Shield work-from-home tip: after you finish a work project, stand up and wave your hands like the wavy hand tube man…we’ve been doing this at the end of every all-hands meeting and it’s great!


April 2, 2020:

  • Labor & Employment counsel at Lehr Middlebrooks provide helpful commentary to the IRS and Department of Labor’s recent additional guidance on the application of the new emergency leave laws here.
  • The Gordon Rees team has just circulated a letter from Members of Congress to the Department of Labor pointing out problems with the “Q&A’s” in the Department of Labor’s materials interpreting the Families First Coronavirus Response Act (FFCRA). Read the letter here. GRSM’s Mark Posard notes that “the letter is not entirely unexpected given that the DOL Q&As started off as 20 questions/answers, grew to 59, then the DOL started revising existing Q&A sections…”

We’re sure there will be more to come and we will keep you posted.

Any statements contained herein are not legal opinions, warranties or guarantees, and should not be relied upon as such. Given the on-going and constantly changing situation with respect to the coronavirus/COVID-19 pandemic, this communication does not necessarily reflect the latest information regarding recently-enacted, pending or proposed legislation or guidance that could override, alter or otherwise affect existing law or insurance coverage. Please consult with an attorney at your own expense for specific advice in this regard.

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