And more news from the March 25 ISPA Insider
Editor’s Note: The mattress industry and the entire economy are reacting to the disruptions being caused by the COVID-19 virus. This week’s ISPA Insider provides important updates on a new federal law that could affect your employee’s leave benefits during this crisis. We also remind ISPA members of certain legal requirements that might apply to workforce changes they are considering. Finally, we close out this issue with an item for those members that want to help solve COVID-19 supply problems.
Congress Enacts Federal Families First Coronavirus Response Act
As the country reacts to the COVID-19 pandemic, President Trump has signed the Families First Coronavirus Response Act (the Act) into law, which goes into effect April 2, 2020. The new law temporarily increases leave benefits for employees and imposes new costs on small and medium size ISPA members.
The Act creates two new emergency leave benefits for eligible employees:
- Emergency paid family and medical leave (EFML), and
- Emergency paid sick leave (EPSL).
The Act generally applies to employers with fewer than 500 employees; certain exceptions are discussed in this alert. The Act imposes significant potential new costs on employers but provides them some financial relief in the form of tax credits on a dollar-for-dollar basis for EFML or EPSL payments to employees, subject to certain caps.
Key provisions of the Act that will impact employers are as follows:
Emergency Family Medical Leave: Up to 12 weeks of EFML is available to employees who have been employed a minimum of 30 days and who are unable to work (or telework) because they need to care for their child whose school is closed, or whose childcare provider is unavailable because of a public health emergency. Additionally, the Act provides that:
- The first 10 days of EFML is unpaid, but employees may elect to substitute any of the employer’s other paid leave benefits during this period, e.g., paid vacation leave.
- After the initial unpaid 10-day period, employers must pay employees at least two-thirds of their regular compensation, up to a maximum of $200 per day or $10,000 in the aggregate.
- The FMLA’s job protection rules apply to EFML (except for employers with fewer than 25 employees, it the employee’s position is eliminated because of economic slowdowns related to a public health emergency and the employer attempts to restore the employee’s employment within 1 year).
- The Secretary of Labor is permitted to exempt employers with fewer than 50 employees from the EFML requirements if the Act’s requirements would “jeopardize the viability of the business as a going concern.”
Emergency Paid Sick Leave: EPSL is available to all employees for immediate use, regardless of their length of employment. Employees may take EPSL if they cannot work or telework for the following reasons:
- The employee is subject to a federal, state, or local quarantine or isolation order due to COVID-19.
- The employee has been advised by a healthcare provider to self-quarantine because of concerns related to COVID-19.
- The employee is experiencing symptoms of COVID-19 and seeking a medical diagnosis.
- The employee is caring for an individual who is quarantined or advised by a healthcare provider to self-quarantine.
- The employee is caring for a son or daughter if the school or place of care for the child has been closed, or the childcare provider is unavailable, because of COVID-19 precautions.
- The employee is experiencing any other, substantially similar condition, as specified by the Secretary of Health and Human Services in consultation with the Secretary of the Treasury and the Secretary of Labor.
Other aspects of EPSL include:
- Full-time employees are entitled to 80 hours of EPSL, and part-time employees are entitled to EPSL in the amount equal to the average amount of hours they work over a two-week period.
- There is no carryover of EPSL into the following calendar year, and employers are not required to pay out unused leave upon an employee’s separation from employment.
- Employers must pay EPSL to employees in addition to any other leave benefits the employer offers, and employers may not require employees to use any other leave before using EPSL.
- If an employee uses EPSL to care for himself or herself for reasons (1)-(3) listed above, employers must pay the employee his or her regular compensation, up to a maximum of $511 per day or $5,110 in the aggregate.
- If an employee uses EPSL to care for a family member or for reasons (4)-(6) listed above, employers must pay the employee either two-thirds of his or her regular compensation or the minimum wage, whichever amount is greater. Employers must only pay up to a maximum of $200 per day or $2,000 in the aggregate.
- Employers must post a notice about leave entitlements in a conspicuous location within the job site; the Department of Labor is expected to publish a model notice for posting on or before March 25, 2020.
- The Secretary of Labor is permitted to exempt employers with fewer than 50 employees from the EPSL requirements if the Act’s requirements would “jeopardize the viability of the business as a going concern.”
In addition to the Act, many state and local jurisdictions are considering legislation that may supplement the Act’s leave benefits in response to COVID-19. ISPA encourages members to confer with counsel about how state and local laws may augment the leave to which their employees are entitled.
Federal or State Law May Require Your Company to Provide Advance Notice if You Are Planning a Large Layoff Due to COVID-19
The disruption and uncertainty resulting from the COVID-19 crisis is prompting many companies to consider changes in their work force. ISPA members should consider whether federal or state law requires them to provide advance notice before taking such action.
The Worker Adjustment and Retraining Notification (WARN) Act is a federal law that requires certain employers to provide 60-day notice before laying off 50 or more employees. Layoffs that result from an “unforeseeable circumstance” (which likely includes COVID-19) are exempt from the 60-day notice rule, but the employer still must provide as much notice as is practicable and explain why affected employees are receiving less than 60 days’ notice. Nevertheless, ISPA members that want to rely on this exception should proceed with caution because it is uncertain whether a court would necessarily agree that COVID-19 meets the unforeseeable circumstance exemption, and the U.S. Department of Labor has not issued guidance yet on this subject.
Note also that California, Illinois, Maryland, New Jersey, New York, Tennessee and Wisconsin have their own versions of the WARN Act, which can impose additional obligations on employers.
On a related subject, California’s Governor Gavin Newsome last week issued an executive order (which took retroactive effect beginning March 4, 2020) that suspends the 60-day advance notice requirement if the mass layoff, relocation, or termination is directly attributable to COVID-19-related “business circumstances that were not reasonably foreseeable as of the time that the notice would have been required.” California employers are still required to provide notices containing all information required by the California WARN Act as soon as practicable.
ISPA encourages members that are considering large layoffs to consult with legal counsel to determine whether the federal WARN Act or state versions of this law might impose advance notice and other obligations.
How ISPA Members Can Help Solve COVID-19 Supply Problems
This past Monday, ISPA issued a member alert announcing a new page on our website called “ISPA COVID-19 Member Resources.” This web page provides information for ISPA members that are using their manufacturing resources to help meet some of the supply challenges that U.S. hospitals and others are experiencing with critical shortages of personal protective equipment (PPE) due to COVID-19.
We will post to this page to provide other information that members can use as they and their companies respond to this pandemic. Please visit that page regularly for updates as they become available. You can also stay up-to-date on all of the industry announcements and news related to the pandemic by visiting BedTimes magazine’s dedicated page.
Weekly Unemployment Claims Expected to Soar in Coming Weeks
According to the National Association of Manufacturers’ (NAM) Monday Economic Report for this week, initial weekly unemployment claims jumped from 211,000 to 281,000 in the week ending March 14. With more businesses being forced to close or reduce activity, NAM expects this figure to soar dramatically in the coming weeks, likely approaching one million claims for this week.
Last week’s NAM data release was likely the final positive snapshot of the U.S. economy before the COVID-19 outbreak. Every prior expectation has halted or reversed since that time.