Tag Archives: Coronavirus (COVID-19)

Benefit Plan Deadlines Extended – COBRA, Special Enrollment, Plan Disclosures and More

Contributed by Kelly Haab-Tallitsch, May 11, 2020

hand holding megaphone – benefits

On April 29, 2020, the Department of Labor (DOL) and the Treasury Department issued guidance extending certain timeframes related to employee benefit plans due to the COVID-19 outbreak. The agencies acknowledge that plan sponsors, participants and beneficiaries may have difficulty meeting the standard timeframes due to the national emergency and the extensions are intended to help maintain group health plan coverage.

Relief for Participants and Beneficiaries

A joint final rule issued by the DOL and Treasury provides that all group health plans, disability plans, other employee welfare benefit plans subject to the Employee Retirement Income Security Act (ERISA) must disregard the period from March 1, 2020 until 60 days after the COVID-19 National Emergency ends (or such other date as the agencies announce), referred to as the “Outbreak Period,” in determining certain notice and payment deadlines.  

This includes:

  • The 60-day COBRA election period;
  • Due dates for making COBRA premium payments; 
  • The 30-day (or 60-day as applicable) HIPAA special enrollment period;
  • The 60-day period for participants to notify a plan of a COBRA qualifying event (e.g. divorce); and
  • The deadlines for filing a claim for benefits, an appeal, or a request for an external review of a denied claim.

The final rule provides examples of how these extensions work in practice, based on the assumption that the National Emergency ended on April 30, with the Outbreak Period ending on June 29 (60 days after the end of the National Emergency).

  • Electing COBRA – Individual A experiences a qualifying event for COBRA purposes as a result of a reduction of hours below the hours necessary to meet the group health plan’s eligibility requirements. Individual A is provided a COBRA election notice on April 1, 2020. The Outbreak Period is disregarded for purposes of determining Individual A’s COBRA election period. The last day of Individual A’s COBRA election period is 60 days after June 29, 2020, which would be August 28, 2020.
  • Special Enrollment – On March 31, 2020, Individual B gave birth and would like to enroll herself and the child into her employer’s plan; however, open enrollment does not begin until November 15. The Outbreak Period is disregarded for purposes of determining Individual B’s special enrollment period. Individual B may exercise her special enrollment rights for herself and her child into her employer’s plan until 30 days after June 29, 2020, which is July 29, 2020. 
  • COBRA Premium Payments – On March 1, 2020, Individual C was receiving COBRA continuation coverage under a group health plan. Monthly premium payments are due by the first of the month. Individual C made a timely February payment, but did not make the March payment or any subsequent payments during the Outbreak Period. As of July 1, Individual C has made no premium payments for March, April, May, or June. Does Individual C lose COBRA coverage, and if so for which month(s)? Under the terms of the COBRA statute, premium payments are timely if made within 30 days from the date they are first due. In calculating the 30-day period, however, the Outbreak Period is disregarded, and payments for March, April, May, and June are all deemed to be timely if they are made within 30 days after the end of the Outbreak Period. Accordingly, premium payments for four months (i.e., March, April, May, and June) are all due by July 29, 2020. Individual C is entitled to COBRA continuation coverage for these months if she timely makes payment. Individual C is eligible to receive coverage under the terms of the plan during this interim period even though some or all of Individual C’s premium payments may not be received until July 29, 2020.

Relief for Plan Sponsors

The joint final rule also states the Outbreak Period shall be disregarded when determining the date for providing a COBRA election notice. This provides additional time (if needed) for employers to notify qualified beneficiaries of their rights to elect COBRA continuation coverage.

Additionally, the DOL’s Employee Benefits Security Administration (EBSA) issued EBSA Disaster Relief Notice 2020-01 allowing additional time for plan sponsors to furnish benefit statements, annual funding notices, and other required notices and disclosures required under the Employee Retirement Income Security Act (ERISA). The notice provides that an employee benefit plan will not violate ERISA for a failure to timely distribute a notice, disclosure, or document due during the Outbreak Period, as long as the plan and responsible fiduciary act in good faith and furnish the notice, disclosure, or document as soon as administratively practicable under the circumstances. This includes Summary Plan Descriptions, Summaries of Material Modifications, benefit determinations, annual funding notices, periodic benefit statements, summary annual reports, participant fee disclosures, QDIA notices, and blackout notices.

UPDATE: Governor Pritzker’s Latest Executive Order Requires Employers with Employees On-Site to Post IDPH Workplace Safety Guidance

Contributed by John Hayes, May 1, 2020

hand writing work safety with black marker

In an update to our previous blog on Illinois extending its stay-at-home order through May 30, 2020, Governor Pritzker’s latest Executive Order on COVID-19 (Executive Order No. 2020-32), issued April 30, 2020, mandates that all businesses that have employees physically reporting to a work-site must post the guidance from the Illinois Department of Public Health (IDPH) regarding workplace safety during the COVID-19 emergency. 

The guidance is found on the IDPH website, and informs employees that their employer should:

  • Make sure that employees can maintain at least 6 feet of physical separation between themselves and others around them, including co-workers and customers.
  • Mark with signage or tape 6-foot spacing for employees and customers to maintain appropriate distance from one another.
  • Provide face coverings to employees, especially when it is not possible to maintain at least 6 feet of space between you and another person.
  • Provide handwashing stations with soap, clean water, and single use paper towels and encourage frequent handwashing for 20 seconds or longer.
  • Provide hand sanitizer (with at least 60% alcohol) and sanitizing products for employees and customers.
  • Regularly clean high-touch surfaces including doorknobs, light switches, shared equipment, toilet handles, sink faucets, and clock in/out areas.

The guidance also tells employees not to report to work if they are experiencing symptoms of COVID-19 including fever (100.4° or above), cough, shortness of breath, sore throat, chest tightness, extreme fatigue, loss of sense of taste or smell, diarrhea, muscle aches, or headaches.

Additionally, the poster informs the employee that if they have concerns that their employer is not allowing for safe social distancing or that it is not maintaining a safe and sanitary work environment to minimize the risk of spread of COVID-19, to contact the Illinois Attorney General’s Office.  It also informs employees that if they believe that two or more employees at their workplace have COVID-19, to notify their local public health department.

While most of the health and safety information contained in the IDPH guidance is not new, the requirement to post it is, along with encouraging employees to report suspected violations of the guidance by their employer. Employers with employees physically reporting to their work-site should be aware of the IDPH guidance and make every effort to comply with the Executive Order and post the guidance in their place of business as soon as possible. Because there is no “one size fits all” approach with COVID-19, employers must pay careful attention to all local and state guidelines and mandates unique to their geographic footprint.

What to do When Your Employee Tests Positive for COVID-19

Contributed by John Hayes, April 30, 2020

clip board and stethoscope conceptual illustration

With the constantly shifting state and local stay-at-home orders and the potential relaxing of these orders on the horizon, the question for employers still remains: What do we do if an employee has COVID-19? 

Once an employer receives a report that an employee has tested positive for or is presumed to have COVID-19, the employer should do the following:

  • Instruct the infected employee to stay home for the longer of the period of time recommended by his or her health care provider or the applicable health department or until 1) at least 3 days (72 hours) have passed since resolution of fever without the use of fever-reducing medications AND improvement in respiratory symptoms (e.g., cough, shortness of breath); and 2) at least 7 days have passed since symptoms first appeared. Employers may not disclose the identity of the employee diagnosed with or presumed to have COVID-19. Employers are also required to maintain the privacy of any health information they gather related to an employee’s medical condition or their symptoms, and any such documentation should be kept in a private health folder, separate from the employee’s personnel file, with limited access by only critical human resource staff.
  • Interview the infected employee to determine all co-workers, clients, vendors, or guests with whom the employee may have come into close contact during the 14-day period prior to the positive test or presumption of being positive for COVID-19 (the “Incubation Period”). “Close contact” means being within six feet of the sick employee for a prolonged period (10-30 minutes). The employee should also be asked to identify all areas within the workplace where he or she was physically present during the past 14 days and any employees with whom he or she shared a workspace or equipment. (The local health department may conduct this interview and provide the employer with this information.)
  • Contact directly each close contact and each co-worker who shared a workspace with the sick employee and advise that a person with whom they have been in recent contact and/or with whom they recently shared a common work area has been diagnosed with COVID-19. Instruct them that they are to remain out of the office for at least 14 days since the last contact with the infected employee and to work remotely, if possible. The co-workers should be encouraged to self-isolate and seek all medical care and testing that they feel may be appropriate. (The local health department may order the employees to be off work and inform the employer that it has done so.) It should also be noted that pursuant to recent CDC guidelines, under certain circumstances, an employer may allow an employee who is asymptomatic but was exposed to return to work.
  • Consider notifying clients, vendors and/or guests who may have been exposed to the diagnosed employee, while maintaining confidentiality.
  • Consider the wage and hour issues, such as mandatory paid sick leave, if the infected employee and close contacts are not able to work remotely and communicate the pay policies to employees pursuant to the FFCRA. 
  • Consider issuing a general notice to the workforce that an employee has tested positive for or is presumed to have COVID-19 (without identifying the employee). Any such notice should reassure employees that, unless the employee has been notified directly by the employer, the employee is not believed to have been in close contact with or shared a common workspace with the infected employee. Employees should be told all the steps the employer is taking to ensure their safety and should be advised to monitor themselves for symptoms of COVID-19 and reminded not to come to work if they are sick.
  • Shut down those areas of the workplace identified by the infected employee as areas that he or she used until those areas can be cleaned in accordance with CDC guidelines.

While employers may require a doctor’s note permitting an employee to return to work after recovering from COVID-19 or being mandatorily quarantined, such a requirement may not be practical. Acceptable alternatives include relying on local clinics to provide a form, a stamp, or an e-mail to certify that an individual does not have COVID-19.

State, federal, and local discrimination laws remain in place and apply to harassment related to COVID-19, which may take the form of race and national origin harassment. Employers should inform all employees that such harassment will not be tolerated.

Employers should take action immediately in response to an employee who reports a positive test for or a presumption of COVID-19. Employers should be flexible and efficient in order to maintain a safe workplace and allow the focus to be on the work of the company going forward. 

Why You Need to Pay Attention to How the Feds Are Approaching the Meat and Poultry Processing Industry

Contributed by Beverly Alfon, April 28, 2020

While most employers do not take issue with CDC and OSHA recommendations related to hand washing, sanitizing, personal protective equipment (PPE), or even employee screening – the  social distancing aspect of these guidelines often provoke the greatest resistance from manufacturing employers:  “We’re just not set up to operate that way.”

Over the last few weeks, we have all seen the headlines regarding Smithfield, JBS, and Tyson.  The meat processing plants have become alleged hot beds for COVID-19, leading to plant closures.  Last week, Smithfield workers sued the company alleging that the company “in direct contravention of CDC guidelines,” provides insufficient personal protective equipment, forces workers to work shoulder to shoulder, and schedules their working time and breaks in a manner that forces workers to be crowded into cramped hallways and restrooms. Last week, Tyson Foods also closed its Waterloo plant in the face of a significant COVID-19 outbreak among its workers and an OSHA complaint filed by Iowa lawmakers. According to a USA Today article  published a week ago, the outbreaks have caused the closure of 17 U.S. facilities, including a Smithfield pork plant in South Dakota that handles 5% of U.S pork production. 

In response, the CDC and OSHA issued joint agency guidance for Meat and Poultry Processing Workers and Employers on April 26.  The agencies identified “distinctive” factors that increase workers’ risk for exposure to COVID-19 in these workplaces:

  • Distance between workers – workers often work close to one another on processing lines. Workers may also be near one another at other times, such as when clocking in or out, during breaks, or in locker/changing rooms.
  • Duration of contact – workers often have prolonged closeness to coworkers (e.g., for 10-12 hours per shift). Continued contact with potentially infectious individuals increases the risk of SARS-CoV-2 transmission.
  • Type of contact –workers may be exposed to the infectious virus through respiratory droplets in the air – for example, when workers in the plant who have the virus cough or sneeze. It is also possible that exposure could occur from contact with contaminated surfaces or objects, such as tools, workstations, or break room tables. Shared spaces such as break rooms, locker rooms, and entrances/exits to the facility may contribute to their risk.
  • A common practice at some workplaces of sharing transportation such as ride-share vans or shuttle vehicles, car-pools, and public transportation
  • Frequent contact with fellow workers in community settings in areas where there is ongoing community transmission.

However, these factors do not appear to be so distinct to the meat and poultry processing industry. Some or many of these conditions likely exist in any number of manufacturing  operations. Notably, these factors are all focused on a lack of physical distance between workers.

The events occurring within the meat and poultry processing industry should be a cautionary tale to all manufacturing employers who recognize any of the above factors within their operations and workforce. While some of these recommendations may require herculean efforts during this time of overstretched resources, some consideration should be given to the potential costs of a COVID-19 outbreak among employees, OSHA investigation, production shutdown, and litigation aimed a enforcing these non-mandatory guidelines. 

Breaking news:  Just hours ago, President Trump indicated that he intends to use the Defense Production Act issue to order meat and poultry (and likely other types of food) processing plants to remain open as the country is starting to see food-supply disruptions from the COVID-19 outbreak. This comes on the heels of the declaration from Tyson Foods Chairman John Tyson that the U.S food supply chain “is breaking.”  President Trump has indicated that the executive order will “solve any liability problems,” so as to shield meat plants from legal liability if they are sued by employees who contract COVID-19 while on the job.  Media reports also indicate that the executive order will include provisions for additional protective gear for employees, guidance, and virus testing capacity. This is a developing matter and we will continue to monitor it. 

Governor Pritzker Extends the Illinois Stay at Home Order through May 30, 2020

Contributed by John Hayes, April 23, 2020

On Thursday April 23, 2020 Governor Pritzker announced that he was extending and modifying the existing Stay at Home Order for Illinois, which was set to expire April 30, 2020. The new executive order will run through the end of May and will include the following modifications effective May 1, 2020:

• OUTDOOR RECREATION: State parks will begin a phased re-opening under guidance from the Department of Natural Resources. Fishing and boating in groups of no more than two people will be permitted. A list of parks that will be open on May 1 and additional guidelines can be found on the Illinois Department of Natural Resources website. Golf will be permitted under strict safety guidelines provided by the Illinois Department of Commerce and Economic Opportunity (DCEO) and when ensuring that social distancing is followed.

• NEW ESSENTIAL BUSINESSES: Greenhouses, garden centers and nurseries may re-open as essential businesses. These stores must follow social distancing requirements and must require that employees and customers wear a face covering. Animal grooming services may also re-open.

• NON-ESSENTIAL RETAIL: Retail stores designated as non-essential businesses and operations may re-open to fulfill telephone and online orders through pick-up outside the store and delivery only.

• FACE COVERINGS: Beginning on May 1, individuals will be required to wear a face-covering or a mask when in a public place where they can’t maintain a six-foot social distance. Face-coverings will be required in public indoor spaces, such as stores. This new requirement applies to all individuals over the age of two who are able to medically tolerate a face-covering or a mask.

• ESSENTIAL BUSINESSES AND MANUFACTURING: Essential businesses and manufacturers will be required to provide face-coverings to all employees who are not able to maintain six-feet of social distancing, as well as follow new requirements that maximize social distancing and prioritize the well-being of employees and customers. This will include occupancy limits for essential businesses and precautions such as staggering shifts and operating only essential lines for manufacturers.

• SCHOOLS: Educational institutions may allow and establish procedures for pick-up of necessary supplies or student belongings. Dormitory move-outs must follow public health guidelines, including social distancing.

• ELECTIVE SURGERIES: The Illinois Department of Public Health will also be issuing guidance to surgery centers and hospitals to allow for certain elective surgeries beginning May 1. They will need to meet specific criteria, including providing personal protective equipment, ensuring enough overall space for COVID-19 patients remains available, and testing of elective surgery patients to ensure COVID-19 negative status.

Employers should be mindful of the new requirements for essential businesses and manufacturing as they will require careful monitoring to fully comply with the new order. Additionally, several questions still remain unanswered, such as what is an “essential line” for manufacturers? Stay tuned here for more updates as they become available regarding the extension and modification of the Stay at Home Order for Illinois, as well as modifications to orders in other states.

Having difficulty keeping up-to-date on all of the state executive-level actions taken during the COVID-19 pandemic?  In addition to reviewing the alerts published here in SmithAmundsen’s COVID-19 Task Force Resource Center, check out the Council of State Governments’ website, which has assembled a compilation of all state-level executive orders related to COVID-19. The site is accessible at: http://web.csg.org/covid19/executive-orders, and allows users to search and view executive orders sorted by state or by subject matter. 

EEOC Updates COVID-19/ADA Guidance As We Move Toward Reopening the Economy

Contributed by Carlos Arévalo and Suzanne Newcomb, April 17, 2020

Back on March 18th as we were entering the COVID-19 health crisis, we addressed EEOC guidance on the impact of the ADA on COVID-19 preventative measures.  Fast forward to today, as our collective focus shifts to talk of “re-opening the economy,” the EEOC has updated its guidance.  Uncertainty abounds as to whether it will be business as usual or a new normal.  Undoubtedly though, employers will need to be mindful to avoid ADA pitfalls as restrictions are lifted, furloughed workers return and/or as new hires are brought onboard. 

The EEOC’s updated guidance addresses the following areas (new and revised information in bold):

Disability-Related Inquiries and Medical Exams

  • Our prior guidance regarding questioning employees about COVID-19 symptoms, measuring temperature, requiring employees with symptoms to stay at home and asking them to provide doctor’s notes is unchanged.
  • Employers can still ask employees to disclose whether they are experiencing COVID-19 symptoms.  The list of symptoms has been expanded, and may continue to expand, as experts learn more (symptoms now include loss of smell/taste and gastrointestinal problems).
  • As the burden on health care providers is lightened, it will become easier to require employees to provide doctors notes and fitness-for-duty documentation.  Of course, as we recommended before, employers should follow CDC and WHO guidelines on this issue.

Confidentiality of Medical Information

  • Consistent with the ADA and our prior guidance, any medical information, including temperature checks, must be kept confidential and stored in employee’s medical files (kept separately from personnel files).
  • Information may be disclosed to local public health agencies.
  • Staffing agencies may disclose information of any affected individual to employers.

Hiring and Onboarding guidance

  • When hiring, employers may continue to screen or conduct medical examinations following a conditional offer, bearing in mind that candidates may still be asymptomatic.
  • Start dates may be delayed.
  • Offers may be withdrawn if an individual is unable to start right away as a result of a COVID-19 diagnosis or symptoms.

Reasonable Accommodation

  • Individuals might require accommodation because their disability makes them particularly vulnerable to COVID-19. This could give rise to new forms of accommodations. Examples given include one way aisles and plexiglass or other physical barriers to provide protection and/or ensure distancing.  
  • Pandemic might exacerbate some disabilities such as anxiety, OCD and PTSD.
  • The duty to provide reasonable accommodation can extend to any work environment.
  • Temporary changes prompted by the pandemic (including work from home) can give rise to (or eliminate) the need for reasonable accommodation or alter the effectiveness of an accommodation provided previously.
  • Employees can still be asked to substantiate disability and need for accommodation.
  • As always, engage with employees to assess accommodation needs and undue hardship on a case by case basis, given the particular circumstances. 

Pandemic-Related Harassment

  • Harassment based on an individual’s race or national origin, or other legally protected characteristic, must not be tolerated. Enough said.

Furloughs and Layoffs

  • Reminder that special rules apply when severance or other benefits are offered to a group of employees in exchange for a release – a reference to the OWBPA requirements for group terminations. The law here has not changed.

Return to Work

  • As stay-at-home orders or other restrictions are lifted, employers will still be able to take action pursuant to EEOC, CDC and/or state health officials’ guidance.
  • Disability-related inquiries and medical exams will be appropriate if job-related and consistent with business necessity.
  • As with any ADA analysis, employers will be able to exclude employees with medical conditions that pose a direct threat to the health or safety of others.
  • Employers will need to review CDC guidelines with respect to returning employees, including those deemed “critical workers.” 
  • Employers will need to work with returning employees about protective equipment requirements and infection control practices.
  • Employers will need to engage in the interactive process with any employees seeking ADA reasonable accommodations regarding protective equipment, i.e. non-latex gloves, modified facemasks, or religious accommodations under Title VII (modified equipment due to religious garb).

You Just Received Your PPP Loan Money. Now What?

Contributed by Rebecca Dobbs Bush, April 17, 2020

NOTE:  This is general information and should not be construed as legal advice.  New guidance is continually being published.  This information is only current through April 16, 2020.

So far, the CARES Act and related guidance published by the Treasury indicates that two general factors will be examined in determining forgiveness:

1: Were at least 75% of the funds spent on “payroll costs”?

2: Have you maintained the same headcount and salary levels for full-time equivalent (FTE) employees?

First factor to keep in mind:  AT LEAST 75% of the PPP Loan Proceeds were used on “payroll costs.”

  • Payroll cost” is referring to the same definition employers looked at when performing calculations for the amount of available loan proceeds.
    • This includes gross cash compensation up to $100k on a prorated basis
    • Employer monies spent on retirement plan funding (such as pension contribution payments or 401(k)/403(b) matching funds)
    • Employer monies spent on health plan premiums (do not include amounts charged to your employees and paid for by them)
    • Employer taxes paid to state and local government
      • This does NOT include employer portions of federal payroll taxes such as Social Security and Medicare
      • This DOES include employer payroll taxes paid to state unemployment agencies.
  • Absent fraud DO NOT be concerned if you don’t spend 75% of the funds on payroll costs.  There are multiple potential scenarios where that could innocently occur. Some examples:
    • You have a significant portion of your employee population eligible for paid leave through the FFCRA.  Since you will receive payroll tax credits to fund that paid leave, you cannot claim it as a payroll cost incurred by the Company.
    • You don’t have work to resume employment for individuals. And, depending upon an employee’s annual salary level, current unemployment levels may have provided them with an increase in compensation. You don’t have to interfere with that and disqualify them from unemployment by resuming their compensation.
  • How was the remaining percentage (of not more than 25%) spent?
    • Permissible expenses include interest on mortgages, rents, utilities.
    • Generally, the obligation or service agreement needs to have been in existence prior to 2/15/2020.

Next factor to keep in mind: Determining whether there’s a reduction in employee headcount OR in an employee’s salary.

  • Forgiveness is NOT all or nothing – it can be prorated.  Proration is based on headcount or salary levels – or both.
  • Calculation used to determine if reduction in headcount:
    • First divide A by B
      • A = 
        • Average number of full-time equivalent employees per month employed during the 8 weeks following receipt of loan proceeds
      • B =
        • the average number of full-time equivalent employees per month during 2/15/2019 through 6/30/19
        • OR, the average number of full-time equivalent employees per month during 1/1/2020 through 2/29/2020
    • Then, multiply that percentage by:
      • The total amount spent on permissible “payroll costs” and other permissible expenses such as business debt/mortgage interest and utilities during the first 8-weeks after you received loan proceeds
      • The resulting final number is the principal amount eligible for forgiveness.
  • Forgiveness can also be reduced if you reduce employee compensation:
    • Look at salaries paid during the 8 weeks following receipt of loan proceeds.
    • Loan forgiveness will be reduced by the amount of reduction in an employee’s wages.
      • Reduction is determined by looking at the total amount paid during the 8-week period after loan proceeds are received and comparing it to the total salary or wages of that employee during the most recent full quarter.
      • Factored in only where reduction greater than 25%
    • As long as a salary reduction does not cause an individual to fall below $100k prorated over the 8-week period, it should not factor into forgiveness.
      • This is a conclusion based on 2 different parts of the Act. One part allows complete disregard for any reductions made for someone making $100k or more a year, and another part of the Act which requires 75% of loan proceeds to be paid out as payroll costs (and with that same individually presumably counting for at least $100k in determining loan availability).

What about the option to fix things?

  • CARES provides an opportunity for employers to “fix” things and have headcount or salary reductions entirely disregarded in determining forgiveness.
    • Circumstances where “fix” is an option:
      • Employer reduced headcount or salary between 2/15/2020 and 4/26/2020 (30 days after CARES went into effect), but the employer fixes it by:
        • Increasing the headcount of full-time equivalent employees by 6/30/2020.
        • At least 1 employee had their salary reduced by more than 25%, and the employer eliminates that reduction by 6/30/2020.
      • There is zero clarification on what the “fixes” mean.  We presume averages of some sort will be published to eliminate the potential abuse of allowing for last minute corrections.

What documentation should I be maintaining?

  • CARES mentions the following as eligible documentation that can be provided to a lender to verify calculations for forgiveness:
    • Payroll tax filings (both state and federal)
    • Cancelled checks
    • Payment receipts
    • Transcripts of accounts verifying payments made
    • Certification from a person authorized to do so on behalf of the business that the documentation is true and correct and the amount for which forgiveness is requested was used to retain employees, make interest payments on a covered mortgage obligation, make payments on a covered rent obligation, or make covered utility payments.

Summary: Things to Do and Keep in Mind

  • Maintain a ledger of total loan principal received
    • Immediately calculate 75%:
      • This is the total minimum amount you must spend on employee payroll, unemployment taxes and employer share of costs of health and retirement benefits (including insurance premiums paid).
    • Note the remaining 25% number:
      • This is the total maximum amount you can put towards all utilities, all business interest expenses and any rental or lease obligations.
    • Keep in mind the documentation noted above.  These items may be required to verify the expenses you claim towards the required percentages.
  • The forgiveness calculations are complex with some potential implications not yet occurring and/or being outside of your control.  All you can do initially is carefully track how you spend the loan proceeds during the first 8 weeks after receipt.
  • Amounts you cannot receive forgiveness for will be subject to repayment and will be a loan on the following terms:
    • 2 – year term
    • 1% interest rate
    • No payments due for first 6 months
    • No personal guarantees
    • No collateral at-risk

Example:

TOTAL Loan received of $645,421.00

 A = ? (Possibly 14)**(Average FTE employees per month during 8 weeks following receipt of loan proceeds)
 B = 21(Average FTE employees per month for the period of 2/15/19 to 6/30/19 OR 1/1/20 to 2/29/20)
 66.7% = $430,281(Potential percentage ratio/ $ eligible for forgiveness)
 75% of  total loan amount = $484,065.75(Minimum amount of loan that must be spent on “payroll costs”)
 25% of total loan amount = $161,355.25(Maximum amount of loan that may be spent on rent, lease, utilities, and/or mortgage interest)
Amount of loan to be repaid at 1% interest —>$215,140Total loan proceeds less ratio described above

** Note that this example anticipates a scenario where wages are not paid to individuals in the event there is no work for them to perform with unemployment a better alternative for the individuals. If the estimated number for A increases, the amount of the loan available for forgiveness will also increase.

**Also note that this example does not account for any salary reductions for any individuals that earn less than $100k annually.

OSHA’s NEW Enforcement Plan re: COVID-19

Contributed by guest author Matt Horn, April 14, 2020

OSHA has released an interim enforcement plan explaining how it will prioritize and conduct COVID-related inspections. Given the high volume of COVID-related reports and complaints, OSHA intends to conduct onsite inspections for COVID-related fatalities that occur at “high risk” jobs only, such as first responders and those working in health care facilities, nursing homes, hospices, laboratories, and morgues.  For virtually all other COVID-related illnesses and reports, including those working medium risk jobs (interact with the public) and low risk jobs (no interaction with the public), OSHA intends to allow those employers to submit their investigation findings via OSHA’s self-reporting tool. 

For more OSHA updates, or to learn more about our OSHA practice, please visit www.OSHAlegal.com.

Workers’ Compensation and COVID-19: Proving Work Comp Claims are Becoming Easier (with Illinois leading the way…)

Contributed by Carlos Arévalo, Suzanne Newcomb, Brian Wacker and Peter Hansen, April 13, 2020

employment law books and a gavel on desk in the library. concept of legal education.

The question many employers have faced in recent weeks is whether or not COVID-19 could be covered by workers compensation. The answer is generally… “UNLIKELY — except those who are directly involved in dealing with the pandemic — i.e. healthcare workers.” Under workers compensation law 101, an injured or ill employee bears the burden of establishing a causal connection between the conditions under which the work is performed and the injury/illness at issue. This has been the case even for employees contracting infectious diseases such as Hepatitis-B or tuberculosis.  However, there is a current movement to try and greatly expand workers compensation protections during the COVID-19 crisis.   

In fact, today (April 13, 2020), the Illinois Workers’ Compensation Commission issued an Emergency Rule declaring that any COVID-19 injury or incapacitation suffered by certain workers will be “rebuttably presumed to have arisen out of and in the course of employment” and to be “causally connected” to the hazards and exposures of the worker’s employment. 

While first responders and those working in health care are logically impacted given their continual exposure to the virus (and, always were protected by Illinois’ work-comp law), the Emergency Rule notably expands its coverage to all “front line workers” — meaning all workers employed in any “essential business,” as identified in Governor J.B. Pritzker’s March 20, 2020 Stay At Home Executive Order, will enjoy a rebuttal presumption that should they come down with COVID-19 it would be deemed to have been contracted in the course of and connected to their employment. The new standard removes the burden from the employee and requires the employer to present evidence disputing the cause of COVID-19. In light of its broader definition, employee-friendly Illinois has made it easier for a much broader segment of employees to successfully pursue COVID-19 related work comp claims. 

By way of comparison, Indiana employees seeking coverage for COVID-19 still bear the burden of proving they contracted the illness in the course and scope of their employment. This is true even though the Indiana Worker’s Compensation Board has clearly indicated that it intends to view such claims liberally. In an April 2 notice, the Board noted that it is “well accepted” that first responders, healthcare workers and “other employees whose jobs necessarily entail close interaction with many people in a public setting” are more likely than others to contract the virus as a result of performing their work duties and “urged” employers to presume such employees are covered by the Indiana Worker’s Compensation Act if they are quarantined at the direction of the employer due to confirmed or suspected COVID-19 exposure or they are diagnosed with COVID-19 (with or without a test). However, if employers choose to dispute such claims, employees will ultimately still bear the burden of proving their case. 

In Missouri, an employee bears the burden of proving that an occupational disease was contracted as a direct result of employment or that the employment subjected the worker to a hazard that is greater than that which the employee would have been subjected in non-employment life.  However, in response to the COVID-19 pandemic, the Missouri Department of Labor and Industrial Relations issued its own Emergency Rule creating a presumption that first responders infected by or quarantined due to COVID-19 will be deemed to have contracted a compensable occupational disease arising out of or in the course of the performance of their employment. The Rule’s definition, however, is limited to first responders and includes law enforcement officers, firefighters and EMTs. 

In Wisconsin, for COVID-19 to be covered by worker’s compensation, it must be established that contracting the disease was work-related. In other words, there must be evidence to prove that contracting COVID-19 arose out of the worker’s employment while performing services incidental to employment. Thus, to date no policy changes have been implemented.  However, legislation is pending that would presume that any injury to a “first responder” during this public health emergency is caused by the individual’s employment.

Of course, as with all COVID-19 matters, readers must continue to monitor local and state developments carefully.  We expect more states to broaden worker protections in the coming days and weeks. 

With the above in mind, employers are encourage to assess their injury/illness reporting processes and procedures and give particular attention to ensuring that the latest CDC guidelines concerning a safe work environment are followed closely.

Retirement Plan Relief for Employees under the CARES Act – Expanded Distributions and Loans

Contributed by Kelly Haab-Tallitsch, April 7, 2020

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Recent legislation providing COVID-19 relief to individuals and businesses includes provisions allowing more flexibility under retirement plans for individuals impacted by COVID-19. The CARES Act permits special hardship distributions of up to $100,000 from most tax-qualified retirement plans without early-withdrawal penalty taxes, increases the maximum 401(k) loan available for participants impacted by the pandemic and allows a delay in existing loan repayments. Required minimum distributions from defined contribution plans are waived for 2020.

Coronavirus-Related Hardship Distributions and Loans

The CARES Act allows plan sponsors to adopt special provisions expanding distributions and loans for “qualified participants.” A “qualified participant” is a plan participant who: (1) is diagnosed with COVID-19, (2) has a spouse or dependent diagnosed with COVID-19, or (3) experiences adverse financial consequences as a result of being quarantined, furloughed, laid off, having work hours reduced, or being unable to work due to COVID-19.

  • Coronavirus-Related Distributions – A “qualified participant” may take a coronavirus-related distribution of up to $100,000 from an eligible retirement plan between January 1, 2020 and December 31, 2020. Eligible retirement plans include 401(k) and other profit sharing plans, 403(b) plans, government 457(b) plans and IRAs.

The 10% early withdrawal penalty does not apply to a coronavirus-related distribution. The distribution is taxable to the participant ratably over a three-year period, instead of all in the year of distribution. A participant can elect to repay the funds to the plan within three years and the taxable amount of the distribution will be reduced.

  • Increased 401(k) Loan MaximumThe maximum amount available for 401(k) plan loans taken between March 27, 2020 and September 23, 2020 by a “qualified participant” is doubled to the lesser of $100,000 or 100% of the participant’s vested account balance. The amount available is reduced by any other loans outstanding in the last twelve months.

Plan sponsors can choose to impose a lower loan maximum and may impose other limits that currently apply under a plan (minimum loan amounts, loans from only certain contribution sources, number of loans outstanding, etc.).

  • Delay in Loan Repayments – Loan repayment due dates between March 27, 2020 and December 31, 2020 may be delayed for up to one year for a “qualified participant.” Any subsequent repayment due dates may be adjusted to reflect the delay. The period of delay shall not be taken into account in determining the five-year term or repayment period of the loan.

Plans may begin taking advantage of these provisions immediately and do not need to be amended until the last day of the plan year beginning on or after January 1, 2022. 

Required Minimum Distributions NOT Required in 2020

Required Minimum Distributions (RMDs) from defined contribution plans (including 401(k), 403(b) and government 457(b) plans) and IRAs are waived for 2020 under the CARES Act.  RMDs that would otherwise been required to be made for those participants reaching age 72 during 2020 may be delayed until 2021. The delay does not apply to RMDs under defined benefit plans. Plans must be amended to reflect the waiver by the last day of the plan year beginning on or after January 1, 2022.