Emily P. Crowley

As COVID-19 rapidly changes the economic landscape throughout the country, businesses and individuals are facing new and evolving challenges. To address these challenges, federal and state governments are quickly drafting laws and regulations that may affect employers of all sizes.  

On March 18, the federal government enacted the Families First Coronavirus Response Act, which entitles some employees to paid sick time and leave for issues arising directly from the COVID-19 outbreak.  

In the face of the pandemic and under the provisions of this new law, employers can make use of several key strategies to address their workforce demands. 

Employers’ Options 

Foremost, employers do not have to pay non-exempt employees for time not worked, subject to potential exceptions based on the new federal legislation discussed below. This means businesses forced to temporarily close or scale back hours due to COVID-19 do not have to pay non-exempt employees for hours they may have been scheduled to work – only those that they do work. However, employers must pay exempt employees their full week’s salary if they perform any work during that workweek, including work from home. If an exempt employee does no work during a workweek, their employer need not pay them for that week. 

Employers have options short of layoffs for dealing with financial and personnel struggles brought on by COVID-19.  

Reduce hours: Employers may reduce the working hours of non-exempt employees, including moving full-time employees to part-time. Employers may also reduce hours for exempt employees (and reduce their salaries proportionally) but should remember that an exempt employee’s salary must remain above $684 per week to maintain exempt status under the Fair Labor Standards Act. 

In some cases, employees can bridge the financial gap created by the reduction in hours with unemployment benefits. Eligible part-time employees whose gross weekly wages are less than their weekly benefit amount can apply for unemployment benefits. Any wages above one-third of the employee’s weekly benefit amount are deducted from the employee’s benefit payments. Employers can choose to develop a WorkShare plan with the state Department of Unemployment Assistance to reduce hours by 10 to 60 percent for the entire company or specific departments or job categories. Affected employees will receive unemployment benefits for the remainder of their usual hours.   

Reduce pay: Employers may also decrease pay rates prospectively for non-exempt employees, subject to Massachusetts’ $12.75 per hour minimum wage, and for exempt employees who do not have an employment contract. Remember that an exempt employee could lose their exempt status if their salary falls below $684 per week. This may be less of a concern if there is no likelihood that an exempt employee will work over 40 hours in a workweek during this period. Employers should give employees notice of impending pay decreases in writing, so employees can plan.  

Furlough: Employers also have the option of putting some or all employees on furlough, which is mandatory time off without pay. Furloughs can be a preferable alternative to layoffs, because the employer reduces its payroll expenses while keeping its workforce in place, and furloughed employees are still eligible to receive unemployment benefits. Furloughs should always have a defined return-to-work date, to avoid being categorized as a termination.  

Employers who reduce wages or hours or furlough employees should perform an analysis to see if these changes have a disparate impact on a protected category of workers, which could lead to discrimination claims.  

Emergency Sick Time and Family Leave 

The Families First Coronavirus Response Act, which went into effect on April 1, has two primary provisions relevant to employers: emergency paid sick time (PST) and emergency partially paid Family and Medical Leave (EFML).  

These provisions apply only to private employers with less than 500 employees and some public sector employers. Employers with fewer than 50 employees can seek exemption from EFML requirements and certain PST requirements if those requirements would “jeopardize the viability of the business.”  

Employers required to offer PST or EFML under the law will be eligible for refundable tax credits. In addition, an employer may not require an employee to use other employer-provided paid leave before using the PST granted by the Families First Act.  

The law requires covered employers to provide 80 hours of PST to an employee unable to work or telework because they are experiencing symptoms of COVID-19, are caring for someone who is, are self-quarantining due to the virus or are caring for a child whose school or normal childcare options are closed thanks to the pandemic. 

Depending on the employee’s situation, the minimum amount they must be paid may differ. Employees are eligible for PST regardless of how long they have been on the payroll. 

The law also requires covered employers provide up to 12 weeks of job–protected EFML to an employee unable to work or telework because their minor child’s school or childcare service is closed due to a public health emergency. Only employees who have been on the payroll for 30 calendar days are eligible for EFML.   

Emily P. Crowley is an employment and trial attorney at the law firm of Davis Malm.