And New Required Sick/paid Leave Laws; And Cost Reimbursements
There have been several state and federal, and some County rules relating to business closures and paid leave. In short analysis, the practical effect of the state, local and federal laws, programs and orders is that employers should likely cover payroll over the next two weeks based on paid sick leave; and they may then apply for a tax credit.
Paid Sick Leave in California
California law already required employers to accrue paid sick leave for each of their employees at a fixed amount each pay period. So, it appears that this previously-accrued sick leave should be ADDED to whatever mandated leave pay which employers must pay full-time employees, under the Emergency Paid Sick Leave Act, applicable to those employees who have to stay home because they fall under one of the categories of Section 5102 of the Emergency Paid Sick Leave Act. This may equal sick leave of 80 hours over and above what each employee has already accrued under the California sick leave laws which preceded the coronavirus crisis.
Further, Emergency Paid Sick Leave Act (“EPSLA”) §5107 states that the Act’s provisions cannot be interpreted to diminish rights or benefits to which an employee is already entitled. EPSLA §5102(e)(2)(B) forbids an employer from requiring an employee to use other forms of paid leave before using the new sick leave entitlement, showing the intent of the legislature that the new coronavirus-related sick-leave is over and above what states like California already required.
California Essential Services Order of March 19, 2020
The County of Los Angeles issued a Public Health Order on March 19, 2020 listing essential services – see §13 of the Order, found at:
Essential businesses include grocery/other food stores/pet food/certified farmer’s markets; farming/fishing; businesses providing food/shelter/services; media services; gas/auto repair/auto sales; banks/financial institutions; hardware stores, nurseries and building supplies; various construction-related personnel including plumbers, tree trimmers, landscapers, HVAC, carpenters, morticians, and many others; mail/shipping/PO box businesses; educational services; laundry and personal grooming; restaurants for delivery or curbside pickup only; airlines/taxis/private transportation; “businesses that provide parts and services for Essential Infrastructure”; senior/dependent adult home care and residential facilities; professional services (i.e., legal and accounting) but only if “necessary to assist in compliance with legally mandated activities and the permitting, inspection, construction, recording and transfer of ownership, of housing any anything incidental thereto”; military/defense contractors; childcare facilities “as permitted” [see mandatory guidelines]; and hotels/motels/shared rental units.
California Stay at Home Order of March 20, 2020
The Governor of California issued a “Stay at Home” Order on March 20, 2020 regarding staying at home due to the coronavirus.
Leave Benefits Under the California Stay at Home Order/Critical Sectors
So the question for those workers seeking LEAVE BENEFITS or employers having to pay same, what parts of the STAY AT HOME ORDER meets the definition of Section 5102(a)(1) of the Emergency Paid Sick Leave Act as a “Federal, State, or local quarantine or isolation order related to COVID-19?”
The basic threshold question is whether the services provided by the business in issue are necessary to maintain continuity of operations for one or more “Critical Infrastructure Sectors”.
These are the 16 CIS: Critical Infrastructure Sectors | CISA
“There are 16 critical infrastructure sectors whose assets, systems, and networks, whether physical or virtual, are considered so vital to the United States that their incapacitation or destruction would have a debilitating effect on security, national economic security, national public health or safety, or any combination thereof. Presidential Policy Directive 21 (PPD-21): Critical Infrastructure Security and Resilience advances a national policy to strengthen and maintain secure, functioning, and resilient critical infrastructure. This directive supersedes Homeland Security Presidential Directive 7.”
Chemical Sector: The Department of Homeland Security is designated as the Sector-Specific Agency for the Chemical Sector.
Commercial Facilities Sector: The Department of Homeland Security is designated as the Sector-Specific Agency for the Commercial Facilities Sector, which includes a diverse range of sites that draw large crowds of people for shopping, business, entertainment, or lodging.
Communications Sector: The Communications Sector is an integral component of the U.S. economy, underlying the operations of all businesses, public safety organizations, and government. The Department of Homeland Security is the Sector-Specific Agency for the Communications Sector.
Critical Manufacturing Sector: The Department of Homeland Security is designated as the Sector-Specific Agency for the Critical Manufacturing Sector.
Dams Sector: The Department of Homeland Security is designated as the Sector-Specific Agency for the Dams Sector. The Dams Sector comprises dam projects, navigation locks, levees, hurricane barriers, mine tailings impoundments, and other similar water retention and/or control facilities.
Defense Industrial Base Sector: The U.S. Department of Defense is the Sector-Specific Agency for the Defense Industrial Base Sector. The Defense Industrial Base Sector enables research, development, design, production, delivery, and maintenance of military weapons systems, subsystems, and components or parts to meet U.S. military requirements.
Emergency Services Sector: The Department of Homeland Security is designated as the Sector-Specific Agency for the Emergency Services Sector. The sector provides a wide range of prevention, preparedness, response, and recovery services during both day-to-day operations and incident response.
Energy Sector: The U.S. energy infrastructure fuels the economy of the 21st century. The Department of Energy is the Sector-Specific Agency for the Energy Sector.
Financial Services Sector: The Department of the Treasury is designated as the Sector-Specific Agency for the Financial Services Sector.
Food and Agriculture Sector: The Department of Agriculture and the Department of Health and Human Services are designated as the co-Sector-Specific Agencies for the Food and Agriculture Sector.
Government Facilities Sector: The Department of Homeland Security and the General Services Administration are designated as the Co-Sector-Specific Agencies for the Government Facilities Sector.
Healthcare and Public Health Sector: The Department of Health and Human Services is designated as the Sector-Specific Agency for the Healthcare and Public Health Sector.
Information Technology Sector: The Department of Homeland Security is designated as the Sector-Specific Agency for the Information Technology Sector.
Nuclear Reactors, Materials, and Waste Sector: The Department of Homeland Security is designated as the Sector-Specific Agency for the Nuclear Reactors, Materials, and Waste Sector.
Transportation Systems Sector: The Department of Homeland Security and the Department of Transportation are designated as the Co-Sector-Specific Agencies for the Transportation Systems Sector.
Water and Wastewater Systems Sector: The Environmental Protection Agency is designated as the Sector-Specific Agency for the Water and Wastewater Systems Sector.
Who Must Be Paid Leave Compensation?
The Order of the Governor of California seems clear. If the position is essential to maintaining a critical infrastructure sector (“CIS”), the employee is REQUIRED to go to work. Conversely, if the position is NOT essential to maintaining a CIS, then the worker MAY NOT go to work.
Where the position is NOT essential to maintaining a critical infrastructure sector (“CIS”), then the employer can only have its employees work remotely. BUT IF THE EMPLOYER CANNOT MAKE THE WORKING-REMOTELY ACCOMMODATION FOR THE EMPLOYEE, THEN THE EMPLOYEES ARE ENTITLED TO BENEFITS UNDER EPSLA and EFMLA.
1. The Emergency Family and Medical Leave Expansion Act (“EFMLEA”) is an amendment to the federal Family and Medical Leave Act of 1993 (FMLA), and now provides for up to 10 weeks of protected PAID leave to eligible employees for a coronavirus related reason. The EFMLEA appears to cover staying home from work due to the coronavirus, or caring for an immediate family member who is under quarantine for a minor who is stuck at home because his/her school or daycare is unavailable due to the coronavirus.
But the EFMLEA applies ONLY to employers with fewer than 500 employees. The benefits terminate on December 31, 2020. However, the EFMLEA allows the Department of Labor to create regulations to exempt small businesses with fewer than 50 employees from EFMLEA requirements “where the imposition of such requirements would jeopardize the viability of the business as a going concern”, meaning that business smaller than 50 employees likely won’t be able to receive EFMLEA paid leave.
Normally, the FMLA gives 12 weeks of UNPAID protected leave, but with the new EFMLEA, only the first two weeks are UNPAID, but eligible employees (those who were employed by THAT employer for 30+ calendar days) shall receive TWO-THIRDS pay while on leave over the subsequent 10 weeks. As for those first 2 weeks (14 days) of UNPAID leave, the employee may use any paid personal, sick, medical or sick days during these 14 days.
2. The “EPSLA”, or the Emergency Paid Sick Leave Act, is a new law created under the federal Families First Coronavirus Response Act (“FFCRA”). It provides full-time employees up to 80 hours (two weeks) of paid sick leave for the same coronavirus related reasons. Part-time employees can also recover PAID sick leave in the amount of his/her average number of work hours over a two week pay period.
The EPSLA also exempts employers with 500+ employees and also expires December 31, 2020, but unlike the EFMLEA, EPSLA’s paid sick leave benefits apply to most government employees, and EPSLA does NOT appear to allow the Department of Labor to create regulations to exempt small businesses with fewer than 50 employees, so it seems likelier, for now, that EPLSA may provide benefits to smaller-business-employees which the EFMLEA does not.
The rate of leave compensation is calculated by the employee’s regular rate of compensation, but if that employee is caring for a child or family member due to the coronavirus, he/she receives just two-thirds of his/her employee’s regular pay.
Employers may not discriminate or retaliate against an employee who takes advantage of benefits under EPLSA or who files a complaint or initiates a claim under the EPSLA.
Employers violating EPSLA are subject to penalties [§§16-17 — 29 U.S.C. §§216-217 of FLSA, including fines, imprisonment, damages recoverable by an employee of double the unpaid wages, plus reasonable attorney’s fees and court costs].
Are Employees’ Home Office Costs Reimbursable?
Pursuant to California Labor Code §2802, an employer is required to reimburse employees’ expenses which were “necessarily” incurred by the employee in the performance of their duties. So the employer could argue that any employee who chooses to work from home (as opposed to being ordered to by the employer) does not “necessarily” incur any related costs, since the costs would not have been incurred had the employee worked from the office. Those employees working from home who could come to the office for work but choose not to do so for personal reasons (fear of exposure to the coronavirus) may seek reimbursement from their employer for computer use, internet access, and similar things.
However, California Industrial Wage Order Nº 14 [Cal. Code Regs., tit. 8], defines “employ” to means “to engage, suffer, or permit to work”. Therefore, if a worker is working from home for any reason, whether because the government ordered it or because both the employer and employee agreed, and if using the internet or printer, for example, is “necessary” for the employee to perform his/her duties, then it seems likely that Labor Code §2802 requires the employer to reimburse such expenses which are “necessary expenses or losses incurred by the employee in direct consequence of the discharge of his or her duties”. Besides, if there is a government “stay at home” order, as in California and New York, the situation where the employee will continue to work remotely is essentially a mutual decision (better than terminating the worker).
Regarding cell phones, a California case, Cochran v Schwan, held that, “when employees must use their personal cell phones for work-related calls, Labor Code §2802 requires the employer to reimburse them. Whether the employees have cell phone plans with unlimited minutes or limited minutes, the reimbursement owed is a reasonable percentage of their cell phone bills.” So cell phones are reimbursable on a pro-rata basis.
Regarding rent, typically some portion of rent is allocatable in tax refund scenarios, for a home office. That raises the issue of whether an employer knows or “reasonably should know” that an employee working remotely has such expenses which are “necessary” for work functions. Obviously, there are limits, since exorbitant rents or spending cannot simply be the subject of mandatory reimbursement by employers. However, California Labor Code §2804 is strongly worded – expense reimbursement cannot be waived. The standard for an employer’s knowledge about such expenses is “knew or should have known” – and expense reimbursement may thus be affected by what an employer “reasonably should have known” was an expense. [Stuart v. Radioshack Corporation (N.D. Cal. 2009) 641 F. Supp. 2d 901, 903 (“whether the employer either knows or has reason to know that the employee has incurred a reimbursable expense. If it does, it must exercise due diligence to ensure that each employee is reimbursed”). Other courts have adopted that standard as well. So the best practice is to reach an agreement in writing on what is reimbursable (“necessary” expenses for the benefit of the employer) and what is not, with the understanding that reimbursements cannot be waived by an employee.
More Government Links
Here is the “Families First Coronavirus Response Act: Employee Paid Leave Rights” put out by the United States Department of Labor
Here is the poster which summarizes same, also put out by the U.S. Department of Labor (Wage & Hour Division)
Here are the Department’s guidelines on how to post the poster