Emergency Coronaviurs Bill – What Employers Need to Know

On March 14, 2020, the U.S. House of Representatives passed the Families First Coronavirus Response Act (H.R. 6201). The bill now heads to the Senate where it is expected to pass sometime early next week.  The bill contains several provisions that will directly impact employers, including paid family medical leave and paid sick leave.

A summary of the leave provisions in their current form is set forth below.  More details can be found here:  https://appropriations.house.gov/sites/democrats.appropriations.house.gov/files/Families%20First%20summary.pdf

Paid Family Medical Leave

  • Applies to employers with less than 500 employees.  Employers with less than 50 employees can apply for a hardship exemption with the Secretary of Labor.
  • Provides 12 weeks of job-protected Family and Medical Leave Act (FMLA) leave for employees with at least 30-days seniority for COVID-19 related reasons.
  • The first 14 days of the leave may be unpaid.  Employees may use accrued personal or sick leave during the first 14 days, but employers may not require employees to do so.
  • After the first 14 days, employers must compensate employees in an amount that is not less than two-thirds of the employee’s average monthly earnings, up to a cap of $4,000.
  • Among other uses, employees may use the leave to respond to quarantine requirements or recommendations, to care for family members who are responding to quarantine requirements or recommendations, and to care for a child whose school has been closed as a result of the COVID-19 pandemic.
  • The benefit will go into effect within 15 days after enactment and expire one year after the bill’s enactment.

Paid Sick Leave

  • Applies to employers with fewer than 500 employees.
  • Provides 2 weeks of paid sick leave at the employee’s regular rate of pay for specific circumstances related to COVID-19 (e.g., illness, self-isolating, doctors’ visits).
  • Leave is paid at two-thirds of the employee’s regular rate if taken to care for a family member for a COVID-19 related reason, including to care for a child due to school/daycare closures.
  • Small employers (those with 50 employees or less) will be reimbursed for providing this benefit.
  • The provisions will go into effect immediately and expire on December 31, 2020.

The bill includes tax credit relief for employers equal to the full costs of the payments made by the employer to comply with the law.

Until the bill is passed by the Senate and signed by the President, the specific requirements are subject to change.   Therefore, we encourage your organization to wait until the bill is passed to issue communications to your staff about these benefits.  We will, of course, keep you updated as events unfold and provide compliance guidance once the bill is passed.

Non-Compete Agreements are on Life Support

Courts have long disfavored employee non-compete agreements, regularly striking them down as an unlawful restraint on an individual’s right to engage in his/her chosen profession.  State legislatures have largely left it to the courts to determine the enforceability of these agreements on a case-by-case basis.  That is changing.  With increasing regularity, state legislatures are passing  laws either banning non-compete agreements altogether (i.e., CA, MT, OK), or significantly restricting their enforceability (i.e., MA, WA, RI, OR, MD, ME, NH).  Most states still permit customer non-solicitation and employee anti-poaching restrictions, provided they are narrowly tailored in scope and time.  Although non-compete agreements are not per se unenforceable in Arizona (except as to a few professions), there is no reason to believe the Arizona legislature won’t join the growing chorus of state legislatures that have codified restrictions on these agreements.     

Given these legal developments, if your organization has non-compete agreements in place, or plans to issue them, it would be prudent to have the agreement reviewed by counsel to maximize the enforceability of these agreements.        

DOL Set to Raise Salary Level to Qualify as Exempt Under the FLSA

The Department of Labor (DOL) is poised to implement revised regulations that will make it more difficult for a worker to qualify as an exempt employee under the Fair Labor Standards Act.  The DOL’s final rule will go into effect on January 1, 2020 and does the following:

  • raises the “standard salary level” from the currently enforced level of $455 per week to $684 per week (equivalent to $35,568 per year for a full-year worker);
  • raises the total annual compensation requirement for “highly compensated employees” from the currently enforced level of $100,000 per year to $107,432 per year; and
  • allows employers to use nondiscretionary bonuses and incentive payments (including commissions) paid at least annually to satisfy up to 10% of the standard salary level

More information can be found at the following DOL link:  https://www.dol.gov/whd/overtime2019/.

What should you do?   First, you should assess the salary  level of your organization’s exempt employees to determine if anyone will lose their exempt status because of these new regulations.  If that scenario exists, you should consider raising the worker’s salary to meet the new test or reclassify that worker as non-exempt.

 

We are available to assist in your analysis and/or implementation of adjustments necessitated by these new regulations.

New EEO-1 Reporting Requirements

The EEO-1 is an annual survey mandated by federal law that requires all private employers with 100 or more employees and federal government contractors/subcontractors with 50 or more employees and a federal contract, sub­contract or purchase order of $50,000 or more to file the EEO-1 Component 1 employee demographic report in March of each year (although in 2019, the deadline was extended to May 31).

In addition, the EEOC is now requiring covered employers, including federal government contractors, with 100 or more employees, to submit EEO-1 Component 2 employee compensation and hours worked data, by job category, for 2017 and 2018 by September 30, 2019.

Filers should refer to the EEOC website at https://eeoccomp2.norc.org/info  and https://eeoccomp2.norc.org/Faq for guidance on filing requirements for Component 2 data. We can also be of assistance if needed.

EEO-1 Surveys for 2018

Due to the government shutdown, the opening of the EEO-1 Survey has been postponed until early March 2019. The deadline to submit EEO-1 data will be extended until May 31, 2019. The EEO-1 is an annual survey mandated by federal law that requires all private employers with 100 or more employees and federal government contractors or first-tier subcontractors with 50 or more employees and a federal contract, sub­contract or purchase order amounting to $50,000 or more to file the EEO-1 report.

Filers should refer to the EEO-1 website at (https://www.eeoc.gov/employers/eeo1survey/index.cfm) in the coming weeks for updates on the new schedule and filing instructions. We can also be of assistance as needed.