Coronavirus / COVID-91 and employers with over 500 employees

Yesterday's post concerned the Families First Coronavirus Response Act (FFCRA), i.e, the paid leave bill that mandates employers with less than 500 employees provide some type of paid leave.  

But what about employers with 500 employees or more?

One thing to remember is that employers who have 500 or more employees are likely (depending on the number of employees at specific locations) already covered by FMLA.  So if they have someone who has tested positive or has symptoms of the Coronavirus – or has a close relative who has it and the employee needs to care for them, the employee likely has a “serious health condition” which would trigger FMLA leave and restoration rights.  

The Department of Labor is sadly non-committal on whether having Coronavirus symptoms or testing positive is FMLA covered.  The DOL issued a webpage on the issue a few days ago, https://www.dol.gov/agencies/whd/fmla/pandemic, but the page does not say whether testing positive or having COVID-19 symptoms is a serious health condition.  

The criteria for having a serious health condition are not all that high.  For conditions such as COVID-19 it can mean hospitalization or an incapacity for three days with “continuing treatment by a health care provider.” The latter is broadly defined to meant at least one in person visit to a doctor with a follow up.  But even here, there is an “extenuating circumstances” exception to the in person follow up visit requirement.  I would think the Coronavirus would unquestionably qualify as an “extenuating circumstance.”   In short, I would think an employer could and should designate the leave as FMLA covered and protected. 

But, to be clear, the DOL webpage also states that “[l]eave taken by an employee for the purpose of avoiding exposure to the flu would not be protected under the FMLA.”  I'll assume this is correct (though I expect an impacted employee will at some point argue they are due FMLA for avoiding exposure).  So, unlike the FFCRA, the FMLA does not cover employees who need to stay home because a child’s school or day care is closed. Of course, if the child or close family member has a serious health condition, the leave would very likely then be FMLA covered.

Paid Sick and FMLA Leave for the Coronavirus / COVID-19

While I'm told there are likely to be changes, my partners at Kramer Rayson LLP have put together a short summary of the paid leave provisions in the Families First Coronavirus Response Act (FFCRA).  I'll post what we've developed below.

As always, this is not legal advice and you should always consult qualified counsel before taking any action.

On March 18, 2020, Congress passed the Families First Coronavirus Response Act  (FFCRA). The president signed the bill the same evening. This new law addresses a number of topics related to Coronavirus such as funding for certain benefits, this  alert will focus on the FFCRA’s major impact on employers by requiring paid sick leave in light of the COVID-19 pandemic. This new law goes into effect on April 2, 2020, so employers should not delay in making plans to comply with new paid leave requirements.

FFCRA provides employees with paid sick leave through the use of two new laws: (1) the Emergency Family and Medical Leave Expansion Act and (2) the Emergency Paid Sick Leave Act. Additionally, the new law includes refundable tax credits for employers who are required to provide Emergency FMLA or Emergency Paid Sick Leave.

The Emergency Family and Medical Leave Expansion Act

Employers Covered: All government employers; and all employers with fewer than 500 employees. However, the Secretary of Labor may later exempt businesses with fewer than 50 employees when providing such leave “would jeopardize the viability of the business.” The Department of Labor is expected to issue regulations in the near future that will, among other things, clarify the process to request an exemption.

Employee Eligibility: Those who have been employed for at least 30 calendar days. Does the new law require those days to be consecutive? At this point, that is unclear.

Qualifying Reason: An employee who is unable to work (or telework) due to a need for leave to care for their child if the child’s school or place of care has been closed or the childcare provider is unavailable due to a “public health emergency.” “Public health emergency” has been defined as “an emergency with respect to COVID-19 declared by a federal, state or local authority.” Note: earlier versions of the FFCRA had additional qualifying reasons, but in the version that passed, this is the only qualifying reason.

Amount of Leave: 12 weeks, just like any other kind of FMLA.

Paid and Unpaid Leave: The first ten days of leave is unpaid. However, employees may elect to substitute an accrued vacation leave, personal leave, or sick leave during this ten-day period. After the initial ten-day period, the employer is required to provide ten weeks of paid leave, paid at two-thirds (2/3) of the employee’s regular rate of pay. The law limits the dollar amount of paid leave to $200 per day and $10,000 in the aggregate.

Notice Requirement: As much as is practicable for the employee.

Intermittent Leave: The law does not specifically mention intermittent leave.

Reinstatement Rights: The default FMLA rules apply. However, there is an exemption for businesses with less than 25 employees, if certain conditions are met.

Effective Date: April 2, 2020.

Expires: December 31, 2020.

The Emergency Paid Sick Leave Act

Employers Covered: Once again, only government employers and companies with fewer than 500 employees. Businesses with fewer than 50 employees can request an exemption (same as above).
Employee Eligibility: All employees are immediately eligible (regardless of days of service).

Qualifying Reasons: The Emergency FMLA was limited in this regard. The Emergency Paid Sick Leave Act provides that employees may qualify for leave under several scenarios if the employee is unable to work (or telework):

1. the employee is subject to a Federal, State, or local quarantine or isolation order related to COVID-19;
2. the employee has been advised by a health care provider to self-quarantine due to concerns related to COVID-19; 
3. the employee is experiencing symptoms of COVID-19 and is seeking a medical diagnosis; 
4. the employee is caring for an individual who is subject to quarantine or isolation order, or who has been advised to self-quarantine due to COVID-19; 
5. the employee is caring for a son or daughter whose school or place of care is closed, or the childcare provider is unavailable, due to COVID-19 precautions; or
6. the employee is experiencing substantially similar conditions as specified by the Secretary of Health and Human Services, in consultation with the Secretaries of Labor and Treasury.

Amount of Leave: Full-time employees are entitled to 80 hours (two weeks) of paid sick leave. Part-time employees are entitled to leave equaling the number of hours the employee works, on average, over a 2-week period.

Paid Leave: This depends on if the employee takes leave under the first three scenarios (1-3) or the last three scenarios (4-6). If the employee takes leave under scenarios 1-3, then the employee is to receive his or her regular rate of pay. This is limited to $511 per day and $5,110 in the aggregate.  If the employee takes leave under scenarios 4-6, then the employee is to receive 2/3 of his or her regular rate of pay. This is limited to $200 per day and $2,000 in the aggregate.

Employer Limitations: Employers cannot require employees to find a replacement or require employees to use “other paid leave provided by the employer” instead of the Emergency Paid Sick Leave. Presumably, this means the employee gets paid sick time under the new law in addition to any PTO he or she has already accrued.

Penalties for Violations: Same as a minimum wage violation under the Fair Labor Standards Act. This includes fines, imprisonment, damages to the employee amounting to double the unpaid wages and reasonable attorney fees and court costs.

Poster: Within 7 days, there should be a model poster available from the Department of Labor notifying employees of their rights under the Emergency Paid Sick Leave Act. Employers will be required to post that notice in a conspicuous place in the workplace.

Effective Date: April 2, 2020.

Expires: December 31, 2020

TAX CREDITS The new law provides a refundable payroll tax credit equal to 100 percent of qualified paid sick and family leave wages an employer pays for each calendar quarter. It also provides for tax credits for self-employed individuals, as well.

UNCERTAINTIES exist with the current law, such as:

• What is the interplay between the two paid leave provisions?
• How does intermittent leave play a part, if any, in this new law?
• How is the process for seeking exemptions supposed to work? Who decides whether an employee is unable to work or telework?
• If an employee is unable to work or telework because the employee is experiencing COVID-19 symptoms, can an employer designate that leave as a serious health condition under the FMLA?
• How will the joint employer rules in the Fair Labor Standards Act apply to employers who have more than 500 employees?

We will be sure to keep you up to date as these regulations are implemented.

Again, please be sure to consult with your own counsel before taking any action.  We have tried to summarize key points in the Act but the situation is changing daily and your own situation is unique.

The honest-belief rule kicks in even when the reason for firing an employee turns out to be factually mistaken.

Most employment discrimination claims require the employee to prove that the employer's stated reasons for the adverse action are a pretext. By statute claims based on Tennessee discrimination and retaliation claims require employees “demonstrate that the reason given by the defendant was not the true reason for the challenged employment action and that he stated reason was a pretext for illegal discrimination or retaliation. Tenn. Code Ann. § 4-21-311(e); Tenn. Code Ann. § 50-1-304(g).

Courts define pretext to mean a "lie", more specifically, a lie designed to hide the real reason for a decision. In discrimination claims, the "real reason" needs to be discrimination, of course, so a lie alone won't suffice. St. Mary's Honor Ctr. v. Hicks, 509 U.S. 502, 511 (1993).

What's hard for folks who are not familiar with employment law to understand is that showing the facts that led to an employee's termination were incorrect does not necessarily mean the employer lied. An employee must show "more than a dispute over the facts upon which the discharge was based." Braithwaite v. The Timken Co., 258 F.3d 488, 494 (6th Cir. 2001). So, a factual dispute about whether the fired employee shoved a co-worker doesn't make the employer's stated reason pretextual. Same for when the employee denies having made the payroll data errors the employer cited as the basis for his termination. Majewski v. Automatic Data Processing, Inc., 274 F.3d 1106, 1117 (6th Cir. 2001) ("Majewski's assertion that he did not delete the payroll wrap is insufficient to call into question ADP's honest belief that he did.").

An employer's honest mistake can itself be a legitimate nonpretextual reason for firing an employee. Today's unpublished decision in Smith v. Towne Properties Asset Management Co. Inc. demonstrates this. Smith worked for Towne, an Ohio apartment management company. She lived in one of the apartments rent free. A co-worker accused Smith of theft in the form of not paying for gas, electricity and parking. Towne investigated, even talked to one of the prior owners (who had employed Smith before them) and asked if the prior owners had agreed to free utilities and parking for Smith (he said no). Shortly after Towne fired Smith, one of the other owners said she believed Smith was entitled to the free utilities and parking.

So, it turns out that Smith probably had not stolen utilities (at least not intentionally). She sued Towne under the ADA and FMLA. Towne won. It prevailed because while it was mistaken, its investigation was reasonably informed and established Towne honestly believed, at the time it made the decision, Smith had misappropriated utilities.

Smith argued Towne's mistake was too obvious to be unintentional, that is, if an employer's "mistakes in its investigation" are so "blatant," that can raise doubts about the honesty of the employer's reasons. But blatant mistakes are hard to prove, especially when the employer carefully documents the steps it took to investigate the employee's misconduct.

Here, Smith argued Towne made a blatant mistake by not talking to her before firing her. But it is settled precedent that an employer ordinarily does not have to interview an employee before a termination decision. Of course, there may be times it is a good idea to talk to an employee, this case shows why. On the other hand, in a theft investigation, giving an employee the opportunity to deny stealing is often a pointless exercise.

Towne did not reconsider its position when it learned there may be doubts about the reason why Smith wasn't paying for utilities. The court said this didn't matter because there was no evidence Smith ever asked for her job back after being fired. Had she, Towne might have had a more difficult time in the litigation. It didn't necessarily have to take her back if she had asked, but Towne would have needed to come up with a legitimate reason for the refusal that was based on more than its prior mistake.

Reading between the lines, there was more to this story than Towne being mistaken. Towne went with theft as a stated reason but Smith was apparently a manager, so Towne could have justified the decision on less sensational grounds. Employers can rightly expect managers to adhere to a higher standard. So when Smith asked Towne for a letter itemizing her compensation and the letter she received did not mention free utilities and parking, Towne could have justified later firing her for continuing to receive the "free" perks even if Smith believed she was entitled to them. As long as it treated nondisabled managers the same, Towne can expect managers to be proactive and forthright.

Employers don't always have to go with the most sensation reason for terminating an employee. Sometimes, particularly with a manager, going with the simplest explanation - we've lost trust in you - and explaining why - is better.

CA6 clarifies disparate treatment (similarly situated) Issues

One of the published CA6 decisions from today (Straser v. City of Athens) while not an employment decision, exemplifies the principal that in comparing who is similarly situated, the first question is disparity. The disparity issue is usually obvious when the employees are of different races or sexes.  The disparities are less obvious when religion and retaliation are involved. The question there starts with the principle that the comparators (those who are being compared too) must have been more favorably treated because they were of a different religion or they had not engaged in protected activity.

Here, an Athens citizen didn’t like being told his carport violated the city’s 30 foot setback requirement.  The city's attorney said they would not permit a variance because they "had had trouble with a Muslim” who too had violated the setback requirement.  This was a disparity, the employee argued, because he was a Christian and being used as an example. 

The Sixth Circuit disagreed, holding equal enforcement – being treated the same – is not a disparity.   "It’s equal treatment, indeed the epitome of equal treatment."