Category Archives: Unemployment

BREAKING NEWS: FEDS PASS REVISED PAID LEAVE & OTHER EMPLOYER MANDATES IN RESPONSE TO COVID-19

Contributed by SmithAmundsen’s COVID-19 Task Force, March 18, 2020

As we previously reported, on March 14, 2020, the U.S. House of Representatives passed House Bill 6201 (HR6201). The legislation seeks to protect private sector workers and government employees during the COVID-19 pandemic. In the face of some pushback from the “small business community” and other “special interests,” the House subsequently revised the original legislation and delivered it to the U.S. Senate on March 16, 2020.  Today, March 18, 2020, the U.S. Senate passed a modified bill for the President’s signature. The mandates focus on three (3) primary areas that employers must IMMEDIATELY pay close attention to: 1) PAID LEAVE; 2) EXPANSION OF FMLA LEAVE; and 3) EXPANSION OF UI BENEFITS (including the possible extension of UI benefits beyond 26-weeks). Once signed into law, the mandates are set to expire on December 31, 2020.

  1. Paid Sick Leave:
  • All private sector employers with LESS THAN 500 employees and all government employers must pay any employee 2-weeks of paid leave (up to 80 hours for full-time workers, and the average number of hours over a standard 2-week period of time for part-time workers).
  • All private sector employers with 500 OR MORE employees (regardless of location) are exempt.
  • Paid sick leave will be provided to any employee who is not able to work or able to work remotely (“telework”)  under the following circumstances:
    • Subject to a government quarantine or isolation order related to COVID -19;
    • Been advised by health provider to self -quarantine due to COVID -19;
    • Experiencing symptoms of COVID -19 and seeking a medical diagnosis;
    • Caring for an individual subject to quarantine order or self -quarantine;
    • Caring for children if schools are closed or their caregiver is unavailable because of a public health emergency ; or
    • A “catch all” category for other substantially similar conditions as may be specified by the Secretary of Health and Human Services in consult with other federal agencies. 
  • Employers with less than 50 employees may be exempt from this paid sick leave mandate. The U.S. DOL will publish regulations that will guide small employers on the exemption process.  The exemption will be triggered if the “viability” of the business is in jeopardy — due to the mandates. There is also an exemption for healthcare workers and emergency responders.
  • Such paid sick leave appears to be NOT in addition to other paid sick leave policies or local/state mandates.  Also, there is nothing prohibiting an employer from changing its voluntary paid time off policies after the effective date.
  • The amount of paid leave is capped.  Employees are compensated at the higher of their regular rate of pay, the federal minimum wage, or the local minimum wage, but not to exceed $511 per day and $5,110 in the total.
  • However, if an employee must care for a sick family member, a child unable to attend school, or because they meet the criteria for “similar conditions,” then they are to be paid 2/3rds of the rate of their regular rate of pay, but not to exceed $200 per day and $2,000 in total.
  • Each quarter, private sector employers are entitled to a tax credit equal to 100% of the qualified sick leave wages paid.
  • The tax credit will be applied against the employer’s Social Security taxes. 
  • Due to concerns over an employer’s cash flow, the U.S. Treasury Secretary has broad regulatory authority to help employers meet their financial obligations while awaiting the tax credit. 
  • The employer can also seek a tax credit to offset any costs of continuing to provide health insurance while the worker is utilizing this benefit.
  • The payments made under these mandates are not considered wages for Social Security payroll tax purposes.
  • Interestingly, the self-employed can also receive the same tax credits as if they were employed by an employer under the new paid sick leave mandate.

2. Paid Family and Medical Leave (FMLA):

  • All private sector employers with LESS THAN 500 employees and all government employers must provide any employee (who has been employed for 30 calendar days or more) up to 12 weeks of paid family and medical leave (FMLA) in order to care for children (under 18), if and when: a) schools are closed or daycare is unavailable because of the current emergency and b) the employee is unable to work or work remotely (“telework”).
  • There is no 75 mile radius or hours worked requirement.
  • All private sector employers with 500 OR MORE employees (regardless of location) are exempt.
  • After 10 days (or what would likely be the equivalent of the paid sick leave mandate as summarized above), an eligible employee would be entitled to additional pay at the rate of 2/3rds his or her regular rate of pay.
  • Employers with less than 50 employees may be exempt from this paid leave mandate. The U.S. DOL will publish regulations that will guide small employers on the exemption process.  The exemption will be triggered if the “viability” of the business is in jeopardy — due to the mandates.  Further, such employers will not be subject to civil penalties for violating this leave mandate.  There is also an exemption for healthcare workers and emergency responders whereby their employers may exclude them at the employer’s discretion.
  • Such leave appears to be NOT in addition to other sick leave policies or local/state mandates.  Also, there is nothing prohibiting an employer from changing its voluntary leave policies after the effective date.
  • The paid leave component here is also capped.  The caps are $200 per day and $10,000 in total.
  • Each quarter, private sector employers will be entitled to a tax credit equal to 100% of any paid FMLA benefits.  
  • Again, due to concerns over an employer’s cash flow, the U.S. Treasury Secretary has broad regulatory authority to help employers meet their financial obligations while awaiting the tax credit. 
  • The employer can also seek a tax credit to offset the costs of continuing to provide health insurance while the employee is on this leave.
  • Paid sick leave is not considered wages for Social Security payroll tax purposes.
  • Self-employed individuals can also receive the same tax credits as if they were employed by an employer under the new paid sick leave mandate for up to 50 days.

3. Unemployment Compensation:

  • The federal government is allowing and encouraging states to be more flexible with respect to eligibility. 
  • The federal government will provide states $1 billion in additional funding for UI benefits.
  • HR6201 also authorizes states to extend unemployment benefits beyond 26 weeks should they experience higher levels of unemployment.

President Trump is expected to sign this any moment!

SmithAmundsen’s Labor & Employment COVID-19 Task Force is continuing to monitor all local, state and federal orders and legislative initiatives in these unprecedented times. Be assured that we will continue to provide updates where and when warranted. We will also be providing ongoing webinars on the subject to try and help employers operate as effectively and safely as possible. With that in mind, please do not hesitate to contact your SA relationship attorney in the days and weeks ahead for direct guidance.  We are here 24/7.

COVID-19 Webinar Series: The Latest Local, State and Federal Mandates Impacting the Workplace

Families First Coronavirus Response Act: What It Means For Employers

Contributed by SmithAmundsen’s COVID-19 Task Force (Kelly Haab-Tallitsch, Rebecca Dobbs Bush, Suzannah Overholt, and Jeff Risch), March 15, 2020

On March 14, 2020, the U.S. House of Representatives passed House Bill 6201 (HR6201). The legislation seeks to protect private sector workers and government employees during the COVID-19 pandemic. However, the legislation does not apply to any private sector employer with 500 or more employees. To be clear, the current legislation will regulate only those private sector employers who employ less than 500 employees. The Senate is expected to take up the bill early this week. The legislation would take effect within 15 days of enactment and expire on December 31, 2020.

HR6201 contains major changes to the FMLA as it seeks to provide job protected paid leave to any employee who has been on the job for at least 30 days – for up to 12 weeks – related to the COVID-19 pandemic. The legislation also mandates up to 80-hours of paid sick leave for reasons related to COVID-19. It also provides $1 billion in additional funding to the Unemployment Insurance (UI) System and encourages states to relax UI eligibility requirements. Tax credits are provided to employers to help offset the financial cost of the paid leave.

Highlights of the legislation include:

PAID TIME OFF:

Emergency Paid Sick Leave – up to 80-hours for ALL employees working for a private employer with less than 500 employees or any public sector employer

HR6201 requires employers with fewer than 500 employees and all government employers to provide all employees up to 80-hours of paid sick leave, paid at the employee’s regular rate of pay in order to:

  1. self-quarantine if diagnosed with COVID-19;
  2. seek a diagnosis or care for symptoms of COVID-19; or
  3. comply with an order or recommendation by a public health official or health care provider to self-isolate due to exposure to or symptoms of COVID-19.

Additionally, this paid sick leave entitlement must also be available – at two-thirds the employee’s regular rate of pay – for employees to care for a family member for such purposes or to care for a child (under 18 years of age) whose school has closed or paid child care provider is unavailable due to the coronavirus.

Full-time employees are entitled to 2 weeks (80 hours) of paid leave and part-time employees are entitled to the average number of hours that they work in a typical two-week period. Paid sick leave under HR6201 must be provided in addition to any paid time off provided under an employer’s existing policies and employers may not require employees exhaust existing accrued paid time off prior to using emergency paid sick leave. The bill ensures employees who work under a multiemployer collective agreement are also provided such benefits that meet the requirements of the Act.

EXPANDED COVERAGE FOR FMLA:

Paid Family and Medical Leave — up to 12 weeks for employees employed for 30 or more days by a private employer with less than 500 employees or any public sector employer

Employees of employers with fewer than 500 employees or government employers, who have been on the job for at least 30 calendar days, have the right to take up to 12 weeks of job-protected leave under the Family and Medical Leave Act to be used for any of the following reasons:

  • To comply with a requirement or recommendation by a public health official or health care provider that the presence of the employee in the workplace would jeopardize the health of others due to the employee’s exposure to or symptoms of coronavirus;
  • To care for a family member who is adhering to a requirement or recommendation by a public health official or health care provider to quarantine due to exposure to or symptoms of coronavirus; and
  • To care for a child (under 18 years of age) of an employee if the child’s school or place of care has been closed, or the child-care provider is unavailable, due to coronavirus

The first 2-weeks of time off for the above reasons are unpaid under the FMLA, but the Emergency Paid Sick Leave Law requires that an employee is paid during that time period, as described above.  After the first 2-weeks of leave under the FMLA, employees will be entitled to receive a benefit from their employers that will be no less than two-thirds (2/3rd) of the employee’s usual pay. The bill ensures employees who work under a multiemployer collective agreement and whose employers pay into a multiemployer plan are provided with leave.

Certain small employers can be exempt from this expanded FMLA coverage if they meet a “viability” exception.  While we can assume the general intent behind the exception, the precise mechanism and process for such an exception is subject to US DOL regulation yet to be published.

The Act also clarifies that individuals that are subject to a multiemployer collectively bargained agreement and whose employers pay into a multiemployer plan must be provided with leave and benefits on par with the benefits provided under the Act.

PAYROLL CREDIT FOR PAID LEAVE

HR6201 provides a refundable tax credit applied to the employer portion of the Social Security payroll tax equal to 100 percent of paid sick leave and family leave wages paid by an employer for each calendar quarter, subject to the following caps: Sick leave wages paid with respect to employees who must self-quarantine, obtain a diagnosis or care for symptoms, or comply with a self-isolation recommendation or order from a public health official or health care provider are capped at $511 per day for purposes of the payroll tax credit; Sick leave wages paid to employees caring for a family member or for a child whose school or place of care has been closed, are capped at $200 per day; and  Family leave wages under the expanded FMLA taken into account for each employee are capped at $200 per day and $10,000 for all calendar quarters.

If the credit exceeds the employer’s total Social Security payroll tax liability for any calendar quarter, the excess credit is refundable to the employer. Employers may elect to not have the credit apply. A similar refundable tax credit is available for self-employed individuals.

SmithAmundsen’s Labor & Employment COVID-19 Task Force is continuing to monitor all local, state and federal orders and legislative initiatives in these unprecedented times. Be assured that we will continue to provide updates where and when warranted. We will also be providing ongoing webinars on the subject to try and help employers operate as effectively and safely as possible. With that in mind, please do not hesitate to contact your SA relationship attorney in the days and weeks ahead for direct guidance. We are here 24/7.

Misconduct & Unemployment Benefits

Contributed by Noah A. Frank

Finally!  As of 1/3/2016, Illinois statutorily enhanced employers’ rights to conduct business through enacting statutory misconduct as a basis for terminating an employee and denying unemployment benefits.  Other jurisdictions may follow suit to protect business rights.

Statutory misconduct now includes:

  • Falsification of employment information (application, references, education/work history, SSN) is now terminable misconduct and allows denial of benefits.
  • Failure to maintain reasonably required licenses, registrations, etc.
  • “Insubordination” – refusal to obey reasonable and lawful instructions.
  • Attendance, provided that there is a written policy and employee has received at least one prior written  warning. This is a “two strike” policy.
  • “Grossly negligent” conduct that damages employer property or endangers the employee or coworkers (the Act is silent as to endangering third-parties, such as customers)
  • Drugs & Alcohol – use of, or reporting to work under the influence of any impairing substance (including off-label use of lawful medication).

Of course, there are exceptions and circumstances which may cause the administrative agency to still allow benefits.  These include:

  • Employer delay between discovery of misconduct and termination;
  • Government shutdown delaying issuance of a license;
  • “Significant” time passing between attendance issues, or circumstances beyond the employee’s control;
  • Employer forcing an unscheduled/not on-call employee to report for work after the employee has disclosed he/she is impaired (legally or otherwise);
  • Employee refusal to obey instructions which are unsafe or not legal, or where the employee is not appropriately trained;

While laws are evolving, employers should still follow best practices:

  • Have employment policies/handbooks that are enforceable, understandable, and acknowledged by the employees. This includes attendance, licensure, and acceptable conduct standards policies.
  • Just as employers should have faithfully done before these amendments, documentation is the lynchpin of demonstrating misconduct, including prior warnings.
  • Investigate the misconduct.  Determine in good-faith that the employee is “at fault” (so to speak), and that there are no mitigating exceptions which might allow benefits, or worse, set the company up for a potential discrimination/retaliation claim.
  • Consider non-statutory bases for misconduct termination.  Just because it is not statutory, does not mean the employer may not safely terminate. Examples include overt threats of violence, fraud, and other obvious types of misconduct.
  • Terminate when the misconduct occurs. Avoid post-discovery delay in investigation or termination that would cause the administrative agency (or plaintiff’s counsel) to question the true motivation behind the termination.
  • Protect the workforce. Do not let fear of an employee receiving benefits prevent you from correctly terminating to protect the rest of the workforce.  Similarly, do not allow anger to lead you to protest benefits that are properly allowed.
  • Apply policies equally. Consistency avoids questions regarding favoritism, discrimination, and retaliation.
  • Seek the advice of counsel. Formulating a simple plan of action and reviewing the basis of termination can lead to more successful unemployment protests and avoid headaches associated with discrimination and/or retaliation claims.

The Unemployment Trap

Contributed by Terry Fox

We have seen a recent uptick of terminated employees getting counsel involved in the unemployment fight.  When the employer lodges a protest, particularly based on misconduct, there is normally a telephonic hearing.  Testimony is taken in that hearing under oath.  The proceedings are to be confidential.  However, the factual basis asserted by the employer for the protest can be and is more frequently used outside of the unemployment context by the employee, including in employment litigation against the employer.

This presents a conundrum for the employer, who wants to efficiently handle the unemployment dispute.  Resolution of unemployment contests are designed to be quick, efficient, and inexpensive. A cottage industry has grown up in Illinois where non-lawyers represent employers in these telephonic hearings.  Sometimes they charge per hearing, sometimes per dispute. 

We recently experienced such a dispute, handled by a non-lawyer, where the results were less than ideal.  First, this consultant dealt with “custom” of the unemployment agency, not bothering to pay close attention to the administrative procedures of the agency.  Second, the consultant refused to provide witness statements to the employee’s attorney prior to the hearing.  Third, the consultant refused to provide identities of the employer’s witnesses prior to the telephonic hearing. 

Result- the employee appealed, got the employer’s win reversed and set for a second hearing.  In addition to the time and expense, the employer is faced with differing versions of its witnesses’ testimony under oath.  If there are multiple versions of the reasons for termination, the employer will never get out of the main age discrimination claim this employee has filed, absent a jury trial.

Suggestion – if the employer is contesting unemployment benefits on misconduct grounds, think seriously about getting legal counsel involved prior to any hearings, especially if the employee has made threats of a discrimination or other wrongful termination claim.