For businesses of all sizes and types, the impact of COVID-19 on the workforce is a chief concern. Employers must balance the challenges of increased unemployment claims and employment reductions while addressing bottom lines and other business concerns. They must also follow federal and state laws. While state law cannot be directly contrary to federal law, states can impose additional requirements or protections for their constituents and choose what to implement where federal law is permissive.

For instance, the recently enacted federal stimulus package, specifically the Coronavirus Aid, Relief and Economic Security (CARES) Act affords states "significant flexibility…to amend their laws to provide [Unemployment Insurance] benefits in multiple scenarios related to COVID-19…[F]ederal law allows states to pay benefits where (1) An employee temporarily ceases operations due to COVID-19, preventing employees from coming to work; (2) An individual is quarantined with the expectation of returning to work after the quarantine is over; and (3) an individual leaves employment due to a risk of exposure or infection or to care for a family member."

However, many states have expanded the unemployment eligibility to include only one or two of these. As such, there is no one-size-fits-all decision for employers. This article provides a brief overview of some employment issues related to COVID-19.

Notice requirements and the WARN Act

Some states, such as Pennsylvania and South Carolina, have enacted new laws requiring employers to provide notice to employees about availability or entitlement to unemployment compensation benefits either at the time of separation from employment or when an employee's work hours are reduced. States with these requirements generally also specify the timing and method of delivery for these notices. Employers should consult their local department of labor (DOL).

Employers must also navigate federal notice requirements regarding the layoff itself. The Worker Adjustment and Retraining Notification (WARN) Act requires covered employers with 100 or more full-time workers (or 100 full- and part-time workers who work at least a combined 4,000 hours per week) to provide written notice to protected employees at least 60 calendar days in advance of covered employment losses, such as plant closings and mass layoffs. A layoff of less than six months does not trigger the federal WARN Act, but employers are expected to issue notice when it becomes foreseeable that the layoff or closing will last more than six months. As with other laws discussed, some states have WARN laws that expand covered employers by reducing the minimum size/number of employees.

A WARN notice is typically triggered in plant closings and mass layoffs, including a plant shutdown resulting in an employment loss of 50 or more employees during any 30-day period, layoffs of 500 or more employees during any 30-day period or layoffs of 50-499 employees that totals 33% of the total active workforce. An employer is also required to provide WARN notice when it reduces the work hours of 50 or more workers by 50% or more for each month in any six-month period.

Additionally, an employer is required to give WARN notice if it has a series of small, separate and related terminations or layoffs over a 90-day period that would not be covered individually, otherwise known as the "aggregation" rule.

While there are exceptions to the 60-day requirement, notice must still be provided as soon as practicable, and the employer must provide a statement of the reason for reducing the notice requirement in addition to fulfilling the other notice requirements. The three exceptions are a faltering company, unforeseeable business circumstances or a natural disaster.

Employers face uncertainty regarding whether the COVID-19 pandemic would qualify as an exception to the 60-day notice requirement. Because the natural disaster exception requires a direct relationship between the disaster and plant closing or mass layoff, the unforeseeable business circumstances exception is more applicable to decisions made due to COVID-19. However, the argument weakens with time, as the unforeseeable aspect diminishes.

Additionally, employers should be mindful of state laws. New York's DOL has announced that its state WARN notice requirements are not suspended by the COVID-19 pandemic. California created an "unforeseen business circumstance" exception to its state WARN Act.

Verifying employment information and IRCA

The Immigration Reform and Control Act (IRCA) of 1986 generally makes it unlawful for a person or entity to knowingly hire (including subcontractors), recruit, refer for a fee for U.S. employment or continue to employee any alien who is unauthorized to work. The Act also requires employers to verify the work status of an individual and complete Form I-9, Employment Eligibility Verification. Form I-9 requires prospective employees to attest they are authorized to work and provide proof of identity and employment eligibility. Employers must then physically examine each document in the presence of the employee to determine if it reasonably appears to be genuine and relates to the employee.

The federal government recently implemented a temporary policy permitting employers taking physical proximity precautions related to COVID-19 to defer the physical presence requirements associated with the Form I-9, including reverification. An employer may also designate an authorized representative to act on their behalf to complete and sign the Form I-9, but the employer is liable for any violations in connection with the form or the verification process. In addition, employers served with a Notice of I-9 Inspection during March 2020 were granted an automatic extension until May 18, 2020. Beginning on May 1, identity documents found in List B of Form I-9 set to expire on or after March 1, 2020, and not otherwise extended by the issuing authority, can be treated as if the employee presented a valid receipt for an acceptable document for Form I-9 purposes.

Employers that elect to defer the physical presence requirements must remotely inspect the documents provided (via video conference, email, fax, etc.). They must also obtain, inspect and retain copies of the documents within three business days and note "COVID-19" as the reason for the physical inspection delay. Once normal operations resume, all employees onboarded using remote verification must report to their employer within three business days for in-person verification of identity and employment eligibility documentation. Once the documents have been physically inspected, the employer should add "documents physically examined" with the date of inspection to the additional information field on the Form I-9 or to section 3 as appropriate.

Employers should note this option applies only to employers working remotely with no employees physically present at the work location, and the employer must provide written documentation of their remote onboarding and telework policy for each employee. There are no exceptions, but if newly hired employees or existing employees are subject to COVID-19 quarantine or lockdown protocols, the Department of Homeland Security (DHS) will evaluate the issue on a case-by-case basis.

Unemployment and the CARES Act

The CARES Act was signed into law on March 27, 2020. While the Act expands states' flexibility in determining eligibility and administering unemployment insurance, unemployment insurance is still governed by state law, meaning states ultimately choose how to implement the CARES Act.

Future unemployment insurance costs

The federal programs established by the CARES Act are fully funded by the federal government, and states are prohibited from charging an employer.

With respect to employer filed (partial) claims, laws vary. Some states have short-term compensation programs to provide unemployment benefits. Others, like Georgia, do not have such a program. Instead, Georgia enacted an emergency rule requiring employers to file partial claims on behalf of their employees when employees' hours are reduced, with employers not being charged on their DOL account. Employers found in violation of this rule will be required to reimburse the DOL for the full amount of unemployment insurance benefits paid.

Important employee classification considerations

The Pandemic Unemployment Assistance (PUA) program under the Act provides 29 weeks of benefits and eligibility for self-employed individuals, independent contractors, gig workers and other individuals who otherwise would not qualify for unemployment benefits under state or federal law. To be eligible, among other requirements, individuals must demonstrate they are otherwise able to work and available for work within the meaning of applicable state law, except that they are unemployed, partially unemployed or unable or unavailable to work due to COVID-19.

Employers should make sure to understand an employee's classification because it determines who files for unemployment. Employers may be required to file on behalf of their employees, while individual contractors or self-paid individuals file on behalf of themselves or their company. Additionally, failure to file for an employee could have consequences in certain states, such as Georgia.

Federal relief options

For qualified individuals, the Federal Pandemic Unemployment Compensation (FPUC) program under the Act provides an additional $600 benefit per week. The Pandemic Emergency Unemployment Compensation (PEUC) program extends the length of time an individual may receive unemployment compensation to 13 weeks after they exhaust their regular state unemployment. It also mandates states offer flexibility in meeting eligibility requirements related to "actively seeking work" if an applicant's ability to do so is impacted by COVID-19. These benefits can, and often, pay better than an employee's regular job, so employers should not be surprised if employees request to be laid off. However, despite an employee's incentive to receive increased unemployment benefits, some employers are incentivized to keep employees working or at least on their payroll.

For qualifying small businesses, the Small Business Administration (SBA) and U.S. Department of the Treasury have implemented the Paycheck Protection Program (PPP) through the CARES Act to incentivize employers to keep workers on the payroll. Neither the government nor lenders will charge fees and no collateral or personal guarantees are required. The loan will be fully forgiven if all employees are kept on the payroll for eight weeks and the employer uses the funds for payroll costs, interest on mortgages, rent and utilities. At least 75% of the forgiven amount must have been used for payroll.

Any reduction in the number of full-time equivalent employees is deducted on a pro-rata basis. Likewise, any reductions in salary greater than 25% during the eight-week covered period are totaled and deducted on a dollar-for-dollar basis from the loan amount forgiven.

Essentially, the advice for human resources managers is to maintain a relationship with local employment counsel and monitor state laws. Assume both state and federal laws will continue to evolve — as they have for the last several weeks and months, in response to new economic and public health data. On the whole, many of the laws that existed before the COVID-19 pandemic have been relaxed and, simultaneously, many new laws have popped up in response to this unprecedented global crisis. Know that these laws are a new frontier for everyone from legislators to CEOs, and you are not alone in trying to make sense of them all. Crystal McElrath (crystal.mcelrath@swiftcurrie.com) is a partner at Swift, Currie, McGhee & Hiers, LLP. She practices workers' compensation defense, as well as employment law defense and counseling, specializing in disability and leave laws.

Nichole Novosel (nichole.novosel@swiftcurrie.com) is an attorney for Swift, Currie, McGhee & Hiers, LLP, practicing workers' compensation defense, as well as employment law defense and counseling. Her clients include employers and insurance carriers.

Anandhi Rajan (anandhi.rajan@swiftcurrie.com) is a partner at Swift, Currie, McGhee & Hiers, LLP. She represents management in employment matters and counsels businesses and individuals in matters of potential liability arising from their business operations or actions.

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Navigating employment decisions during the coronavirus pandemic: Key aspects for HR managers

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