Tag Archives: unemployment benefits

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.

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.

Employee Who Quits Rather Than Sign Non-Compete Is Entitled to Unemployment Benefits

Contributed by Bill Clark

The Missouri Court of Appeals for the Eastern District recently determined that an employee who refuses to sign a proffered non-compete agreement, which was required as a condition of employment, and voluntarily leaves employment was entitled to unemployment benefits.  The court determined that “good cause” existed and warranted entitlement.

David Darr began working for Roberts Marketing Group in October of 2012, selling final expense life insurance.  Shortly thereafter, on January 24, 2013, the employer announced that it was implementing a new non-compete agreement for all employees to sign.  Among the terms, the non-compete prohibited the employees from engaging in any business competing directly or indirectly with the employer for a period of thirty-six (36) months.  The geographic reach of the agreement extended to the entire United States, including Alaska and Hawaii, and all U.S. territories.  It also required that the employee represent that the non-compete as written does not impose a financial hardship and does not prevent the employee from being gainfully employed.  It required the employees to waive any defenses in future litigation.  Finally, the non-compete contained a tolling provision that stated that should the employee breach the agreement, the non-compete would be extended an additional thirty-six (36) months from the date the employee ceased violating the terms of the non-compete.

On January 29, 2013, a company-wide meeting was held, at which time employees were permitted to ask questions.  The employer required that, as a condition of employment, all employees execute the non-compete by February 1, 2013.  There was no evidence that the employees were allowed to negotiate the terms of the non-compete or consult an attorney.  Darr refused to sign the agreement and eventually voluntarily resigned.  The Missouri Labor and Industrial Relations Commission determined that Darr had voluntarily left his employment without good cause attributable to the employer and thus denied his claim.

The appeals court reversed the commission and focused its analysis on the terms of the non-compete.  The court determined that the non-compete had been presented to Darr with an ultimatum that it be signed within a very short period of time, which hindered any meaningful review of the agreement and any counsel from an attorney.  Additionally, the court determined that the agreement would also place restrictions on future employment that were not in place at the time of Darr’s hire.  The court noted that the terms of the non-compete were not minor or trifling and that any acceptance of the agreement would have constituted a substantial change in Darr’s working conditions.  As such, Darr had established “good cause” attributable to his employer for his voluntary departure.

What does this mean for employers in Missouri—and, perhaps, Illinois and other states that also allow employees to collect unemployment benefits when they voluntarily quit “with good reason attributable to the employer”?  In most states, employers may impose non-competes as a condition of continued employment.  However, the employer must be cognizant that if the agreement is so onerous as to detrimentally change the employee’s working conditions, especially if employees have no meaningful opportunity to review the agreement prior to signing, then employees may quit (in lieu of signing) and still collect unemployment benefits.  In this case, while not specifically adjudicating the enforceability of the non-compete, the court noted that this agreement might not withstand judicial scrutiny.

 

When Being Bad Is Not Enough

Contributed by Caryl Flannery

You’ve been putting up with the employee’s tardiness and mistakes for months and you finally tell him that it’s the end of the line.  You breathe a sigh of relief that you no longer have to pay someone to sleep in every day.  Or do you?  Odds are that your bad employee will be eligible for unemployment compensation and that your tax rates will rise as a result.  With the proper procedures and documentation, however, you may be able to convince your state unemployment agency that the employee’s actions disqualify him from receiving unemployment benefits.

In most states, an employee will be disqualified from receiving unemployment benefits if the employee was discharged as result of “misconduct associated with work.”  Many employers are surprised to find that a solid “for cause” termination does not necessarily support a finding of “misconduct.” Performing a job negligently, making an error in judgment, not showing up for work on a single occasion, or not getting along with co-workers are often not considered “misconduct.”  A first offense, unless particularly egregious in terms of safety or identifiable damage to the employer, seldom is the basis for a “misconduct” determination. 

To disqualify an employee on the basis of “misconduct associated with work” an employer must show that the employee engaged in a deliberate or willful act in the face of established and known rules and after a clear warning that such behavior will result in termination.  The following guidelines will assist you in establishing disciplinary procedures and maintaining records that will support a finding of misconduct:

  • Have clear policies setting out your expectations for employee conduct, attendance, and performance.  Identify offenses for which an employee is subject to immediate discharge.
  • If you have a progressive discipline policy, follow it consistently or make sure that the policy permits “skipping” steps for particularly serious offenses.
  • When an employee violates a rule: (1) give the employee notice of the violation; (2) reiterate the rule that was violated; and (3) communicate the potential consequences of any additional violations (i.e., termination).  Giving the employee a copy of the rule is also helpful.
  • Keep contemporaneous documentation of the employee’s actions and your response.  Even a verbal warning should be memorialized in a memo. 
  • Be able to articulate the reason for termination in a simple and straightforward way that can be understood by someone who doesn’t know your business.  Although employees are often terminated as the result of a number of problems, pinpoint and emphasize the “last straw.”
  • For an appeals hearing, present as few witnesses as possible.  Prepare them well.  Giving testimony in a telephone hearing is very different from explaining what really happened.  Being able to provide the key factual elements of your case in a concise and easily understandable way is crucial. 

Since laws vary from state to state and the appeals process is usually subject to many technical rules and procedures, it is always a good idea to check with your labor and employment attorney when protesting or appealing unemployment 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.