Category Archives: Compensation

COVID-19 Wildfire in the Texas Panhandle

COVID-19 infections in the Texas Panhandle are raging like a wildfire, so what is an employer’s duty to prevent its spread and what procedures should be followed with COVID-positive employees, quarantines, and employees whose off-duty behavior is pyromaniacal?

As of Friday, October 30, Amarillo’s hospitals are alarmingly full of patients suffering from COVID-19. Our hospitalization rate yesterday was 27.4%, meaning that our area has exceeded the governor’s 15% threshold (to shut down bars, stop elective surgeries and reduce occupancy of businesses and restaurants to 50%) for 13 days. El Paso is the only spot in Texas faced with worse effects of the pandemic at this time.

Our local officials and physicians are exceedingly alarmed about our overburdened hospitals, begging Panhandle citizens to stay home as much as possible and wear a mask when in public, along with practicing social distancing, hand-washing, etc. We all have to “decrease our social calendars and increase our COVID-consciousness,” Amarillo Mayor Ginger Nelson said, because our infections are not arising from large hotspots like prisons or meatpacking plants, but from birthday parties, baby showers and other small community-spreading events. And city officials are saying that the next six weeks of holiday celebrations could make a bad situation even worse.

Despite COVID fatigue, it is clear that hoping for “herd immunity” to COVID-19 in our area is not an option because our hospitals are already overwhelmed. Waiting for everyone to develop immunity to this disease is like passively watching a wildfire burn thousands of acres today and believing that if 2021 turns out to be a wet year, that future precipitation will help extinguish the current blaze.

City leaders are begging employers to take the lead to educate and monitor their employees. Some employers are returning to remote work options that were common in the spring of 2020. If employees are to remain in the workplace, your business should be enforcing Governor Abbott’s mask order, GA-29, which requires masks be worn inside commercial establishments whenever employees are less than six feet apart. It only makes good business sense to follow these mandates to try to reduce the absenteeism of your employees and lost productivity, not to mention avoiding the cost of providing paid time off to your sick and quarantined employees. I’ve already counseled some small employers who did not have enough healthy employees, so they had to close the business for several days.

But while enforcing good health and safety practices inside your business is important right now to prevent as much spread of COVID-19 as possible, you are still going to have to deal with some employees who become infected or have had direct exposure to the virus. I’ve previously addressed the six steps for dealing with these infections and exposure. However, there has been an avalanche of new information and protocols since I last wrote about employer COVID procedures, so here is an updated summary:

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Employees and Covid-19

Ten Ways to Get Sued by Employees During a Pandemic

Even though the idea has been in the news recently, at the current time there is no absolute liability immunity for Texas employers from COVID-19-related claims made by employees who are exposed to the virus in your workplace or otherwise harmed during the pandemic. You can be sued for many different legal failures as an employer during this crisis, so you should know what the law expects of you right now.

The law firm of Fisher Phillips is maintaining a fascinating database of COVID-19-related cases filed so far in 2020. Their database shows that 38 COVID lawsuits have been filed in Texas for claims such as unsafe workplaces, discrimination, paid leave violations, retaliation and even wrongful death. I have no doubt those claims will continue to increase as employers struggle with all of the safety guidance and other rules burying them during this crisis.

I’ve narrowed the possibilities of a Texas employer getting sued during this global pandemic down to these ten mistakes:

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Six Steps for Responding to COVID-positive or COVID-exposed Employees

Almost every day I get a call from a different employer asking how their company should respond to the news that an employee is either symptomatic, COVID-positive or has had direct exposure to a person who has the virus. Now that the coronavirus is spreading through community contact rather than just in certain workplace hot spots like the meatpacking plants, many more employers are experiencing the workplace dilemmas caused by ill or exposed employees.

What are the recommended steps that a company needs to take to respond well to that employee and to keep its other employees safe?

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PPPFA Reboots Forgiveness Rules

On Friday, June 5, the PPP Flexibility Act (“PPPFA”) was signed, which amends the CARES Act and helps small businesses with additional options for spending and seeking forgiveness of their Paycheck Protection Program loans. Rather than write a whole new post on the changes under the PPPFA, including my rants about how late this legislation arrived to help my clients who borrowed PPP money in early April,  I’ve just edited my May 27 post to incorporate the changes.

Two weeks ago, the Small Business Administration posted interim rules and the application for employers to complete when seeking forgiveness of their Paycheck Protection Program (“PPP”) loan. This guidance provided employers with many of the answers we have been waiting for since the CARES Act was passed in March. But then the PPPFA was passed and much of that guidance is already obsolete.

But here are the current forgiveness tips based on blending what the PPPFA states and the guidance issued by the SBA two weeks ago. I summarize these for you with the disclaimer that these could change as the SBA issues new interim rules and a new application for PPPFA forgiveness.

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SBA Finally Provides PPP Forgiveness Guidance

Late last week, the Small Business Administration posted interim rules and the application for employers to complete when seeking forgiveness of their Paycheck Protection Program (“PPP”) loan. This guidance, which for many businesses comes almost at the end of the 8-week covered period for spending PPP funds, provides employers with many of the answers we have been waiting for since the CARES Act was passed in March.

Of course, that means that this guidance may be too late for some of us to correct actions we already took when we first received the PPP funds. But there are some strategic decisions that you can still make if you act quickly.

The basics of the loan forgiveness have been explained in more detail and in layman’s language in the U.S. Chamber of Commerce’s Guide to PPP Loan Forgiveness, which I highly recommend that you download. But here are some basic forgiveness criteria that we have been waiting on:

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Whew! Your PPP Loan Was “Necessary”

The Small Business Administration and the Treasury Department finally have eased the minds of many Paycheck Protection Program borrowers who borrowed less than $2 million about whether the funds had to be returned because they might not have been borrowed in good faith. Nothing like having the government wait until the last minute, since borrowers who were considering returning their funds had a deadline of today (May 14) to return them (now extended to Monday, May 18).

This all started because publicly-traded chain restaurants like Shake Shack and Ruth’s Chris Steak House were excoriated when it became known by the American public that they borrowed PPP money that was promoted as helping small businesses. Facing scorn and public outcry, Treasury Secretary Stephen Mnuchin and SBA Administrator Jovita Carranza promulgated a scary and overly-broad FAQ #31, which said in part:

Although the CARES Act suspends the ordinary requirement that borrowers must be unable to obtain credit elsewhere (as defined in section 3(h) of the Small Business Act), borrowers still must certify in good faith that their PPP loan request is necessary. Specifically, before submitting a PPP application, all borrowers should review carefully the required certification that “[c]urrent economic uncertainty makes this loan request necessary to support the ongoing operations of the Applicant.” Borrowers must make this certification in good faith, taking into account their current business activity and their ability to access other sources of liquidity sufficient to support their ongoing operations in a manner that is not significantly detrimental to the business. For example, it is unlikely that a public company with substantial market value and access to capital markets will be able to make the required certification in good faith, and such a company should be prepared to demonstrate to SBA, upon request, the basis for its certification.

Mnuchin promised that every business that borrowed more than $2 million would be audited, but he didn’t say that smaller borrowers would not be audited. On top of that, he also threatened criminal action against borrowers whose loans weren’t “necessary”.

He also established a safe harbor date by which companies who now believed their loans might not be absolutely “necessary” could return the money and avoid jail. That date was May 7. Then it was extended to May 14 (today). And then extended again to Monday, May 18.

These pronouncements terrified many small business owners who were now second-guessing whether they should have borrowed PPP funds at all.

Continue reading Whew! Your PPP Loan Was “Necessary”
Loan Approval

PPP Loan Tips for Texas Employers

So your Texas Panhandle company has received Paycheck Protection Program (“PPP”) funds, hopefully, and now you are wondering how to use those funds to maximize your loan forgiveness.

Local banks moved very quickly to assure that more than $750 million of the stimulus funds will help small businesses in our area. We all have 8 weeks to spend these funds legally and wisely to hopefully avoid any repayment of these federal loans, effectively turning them into government grants.

In the end, all of us want to use the funds to keep our employees and our businesses going in these challenging times. But there is little guidance from the Small Business Administration on how to do that. As things stand today (things are changing rapidly, so check with your employment lawyer before you make any final decisions), here are the important tips for small Texas employers about spending your PPP money:

When do I spend this PPP money?

The actual CARES act says that you must spend your PPP funds in the 8-week “covered period” after “the origination date” of your loan. The SBA has decided that the 8 weeks starts running the day that your loan was funded. That means that the date that the loans hit your account is when the clock starts running. For example, if you received your funds on April 6, 2020, you have until June 1, 2020 to spend the money.

How do I spend this PPP money?

The SBA (not the actual statute) requires that 75% of your PPP funds be spent on “payroll costs.” The CARES act defines “payroll costs” this way:

  • Salary, wage, commission, or similar compensation;
  • Payment of cash tip or equivalent;
  • Payment for vacation, parental, family, medical, or sick leave;
  • Allowance for dismissal or separation;
  • Payment required for the provisions of group health care benefits, including insurance premiums;
  • Payment of any retirement benefits; or
  • Payment of state or local tax assessed on the compensation of employees.

The CARES act goes on to point out that the following items will not be considered “payroll costs”, meaning that you cannot claim any forgiveness for these amounts, so they should not be paid out of designated PPP funds:

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Webinar for Texas Employers on CARES and FFCRA

Today, Texas employment attorney Vicki Wilmarth and health insurance benefits expert, Josh Butler, presented a webinar entitled Texas Employer’s Guide to Coronavirus Legal Issues.

Even if you missed the webinar live, you can watch the free 1-hour presentation for an overview about the Families First Coronavirus Response Act (“FFCRA”) (paid leave law) and Coronavirus Aid, Relief and Economic Security Act (“CARES”) (stimulus bill) on your own time. https://youtu.be/BGJCnHOJp18

You can also view the slides from the webinar here.

COVID-19 Paid Leave Laws Affect Small Employers

Congress has passed and President Trump has signed a new law that requires small employers to provide paid leave to employees for two weeks of sick leave and as many as 10 weeks of leave to take care of kids whose schools have closed.

This Families First Coronavirus Response Act (“FFCRA”) goes into effect on April 1, 2020. It requires all employers with less than 500 employees, including very small employers and nonprofits, to pay employees whose absences are caused by the COVID-19 epidemic. The DOL has created a fact sheet and an FAQ to help employers understand these laws better.

Here are a few highlights of the FFCRA law:

Paid sick leave for two weeks is available to all full-time, part-time, temporary, seasonal, and other kind of employee if the employee has to miss work for one of the following reasons:

  1. Employee is subject to government quarantine; or
  2. Employee has been advised by healthcare provider to self-quarantine; or
  3. Employee is experiencing symptoms and seeking a diagnosis; or
  4. Employee is caring for an individual subject to quarantine or self-quarantine as advised by healthcare provider; or
  5. Employee is caring for children under 18 because schools or “caregivers” are unavailable; or
  6. Employee is experiencing any other condition that is substantially similar to COVID-19, as specified in HHS regulations to come.

Paid Family and Medical Leave is available for up to 10 more weeks (after using up 2 weeks of unpaid time or 2 weeks of Emergency Paid Sick Leave as spelled out above) to all full-time, part-time, temporary, seasonal or other kind of employee if the employee has worked for the employer for at least 30 days and then has to miss work for this one reason:

  • The employee is unavailable to work or telework because the employee is caring for a child under the age of 18 because that child’s school or childcare facility is closed because of the coronavirus.

The paid sick leave has to be paid at the employees’ regular hourly rate (including commissions, tips and piece rates, but not overtime rates) if the employee is absent for reasons #1-3, above. The paid sick leave and the paid family and medical leave have to be paid at 2/3 of the employee’s regular hourly rate if the employee is absent for reasons #4-6, above. There are also daily and total caps on the amounts you have to pay the employees for these absences.

Employers with less than 50 employees are subject to these FFCRA paid leave laws, even though you have never before been required to comply with Family and Medical Leave Act or any paid leave law. There is a provision that the Secretary of Labor can exempt a business when giving the leave would “jeopardize the vitality of the business.” In other words, if granting this paid leave could make your company go out of business, and you can prove that in your financials, you might not have to provide this paid leave. You don’t have to get the Secretary of Labor’s permission for this exemption by filing anything, but you will have to be able to document the correctness of your decision after the fact.

This law is not retroactive, meaning you don’t have to pay for leave taken before April 1, 2020, if it wasn’t your company policy to pay employee absences.

However, you also can’t make employees apply your paid time off policy before using this emergency paid sick leave or family leave. It is the employee’s choice alone on how to coordinate their PTO and these paid leave laws.

The good news for employers is that the employer gets a tax credit on payroll taxes for 100% of these amounts paid to employees for emergency sick leave and paid Family and Medical Leave. On the next Form 941 that will be due by July 31, 2020, the IRS will add a line for the employer to take the tax credit. If the amount you paid out to your employees for these paid leave laws exceeds the payroll taxes that you owe, then you are supposed to be able to get a refund from the IRS within 2 weeks after filing your Form 941.

We are still waiting for the Secretary of Labor to provide more guidance through regulations. He should also be providing us with notices, posters and other explanations to give to your employees.

There are also other employment laws that a company has to consider in this crisis, which are summarized here.

Texas Employer’s Legal Guide to COVID-19 Issues

Note: Some of these laws are changing rapidly as the federal government responds to the crisis. For example, paid sick leave and paid family leave are required of small employers beginning April 1, 2020. That’s why some of the information below has been deleted. Be sure to call an employment lawyer for the latest information and advice.

As COVID-19 dominates the headlines, Texas employers still have businesses to run and employees to supervise. The novel coronavirus, which causes the disease “COVID-19”, is creating all kinds of questions for these businesses, and most of those are best answered by medical and governmental resources.

But there are also employment law issues arising that a Texas employer may wrestle with. I wouldn’t even think about giving medical advice, but 32 years of practicing law has given me some insight that you may find helpful about the legal issues you are facing with your employees.

While there are some companies that can and should practice social isolation and allow employees to work from home, many businesses require employees to show up to perform work—think grocery stores, pharmacies, restaurants, retail, medical offices, hospitals, construction, feedlots, landscapers, agriculture, trucking companies, banks, childcare facilities, etc.

In those businesses, employers must walk the tightrope between compassion for those who are sick and the reality of needing your employees to be present in the workplace. There may also be tension between wanting to pay your employees even while they are absent and a possible huge decrease in your revenue during this time.

So there are no easy answers, but here are the laws you need to consider and discuss with your human resources professionals and your employment attorney BEFORE you take any action involving your employees:

Continue reading Texas Employer’s Legal Guide to COVID-19 Issues