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What to do with Employees Who Cannot Work at Home During the Coronavirus Crisis

As more and more companies have closed their offices and asked their employees to work remotely, questions have arisen as to what companies should do with employees whose jobs simply cannot be performed from home. While many companies would like to be able to keep these employees on the payroll, it may not be financially feasible to keep non-working employees on the payroll for more than a short period of time. Here are some ways that employers might help soften the blow for these individuals:

Allow eligible employees to take paid leave under the new Families First Coronavirus Response Act (FFCRA). Since the government will ultimately reimburse many employers for costs of FFCRA leave, employers with fewer than 500 employees should seriously consider retaining employees on their payroll if those employees will be eligible for FFCRA leave.  As we explained in a recent post, employees can take up to two weeks of paid leave to comply with a government quarantine or isolation order, to self-quarantine on advice of a health care provider, or to obtain a medical diagnosis after experiencing symptoms related to COVID-19. Employees who are unable to work because they have to take care of a child whose school has closed as a result of COVID-19 are entitled up to 12 weeks of paid leave.

Allow employees to exhaust any accrued PTO or vacation pay before terminating their employment. Another way to keep employees on the payroll for some additional time is to allow the employees to exhaust any accrued PTO or vacation pay before they are laid off. Employment could be further extended if the employee is eligible to use sick pay either under the employer’s policies or any paid leave that is authorized under state law, if the employee works in a state where such benefits exist.

Keep the employees on the payroll with a reduced compensation. Reducing non-working employees’ pay (after taking into account contracts that should be amended in order to do so) is another option to assist employees. Keep in mind that there are various state laws that dictate how much advance notice must be provided before a pay change is implemented.

Maintain the employees’ health insurance benefits. Even if they cannot afford to continue to pay their non-working employees’ salaries, many employers would at least like to be able maintain these employees’ health insurance benefits. Whether an employee can continue coverage if they are no longer actively working will depend on applicable plan terms. If the plan documents do not allow this, the employer may be able to amend the plan if they are self-insured.  Or if the arrangement is insured, an employer may be able to negotiate with the insurer to expand eligibility provisions.  Where the plan is self-insured, the employer should check with its stop loss carrier to ensure that furloughed employees will be covered.

If an employee is on an unpaid leave because of an FMLA-qualifying condition, and they are eligible for FMLA leave, they should be able to continue their benefits even if they are not actively working. Alternatively, if the employee is no longer eligible to remain on an employer’s health insurance plan, the employer could also assist the employee with their COBRA expenses, either by covering the additional administrative costs or agreeing to cover the same amount that they covered while the employee was still working. Employers that decide to do this might consider treating this as a severance benefit and request a release in exchange for the benefit.

Finally, we urge our readers to read some of our recent COVID-19 posts, since there are many issues that employers need to consider when furloughing or laying off employees, including WARN Act issues, collective bargaining agreement obligations, exiting severance programs, and potential FLSA issues.

For any Coronavirus-related legal questions, please contact a member of V&E’s Coronavirus Taskforce or visit our Coronavirus: Preparation & Response site for a list of contacts and additional resources we hope will be helpful.

This information is provided by Vinson & Elkins LLP for educational and informational purposes only and is not intended, nor should it be construed, as legal advice.