***What follows below is not legal advice, and should not be relied upon as such. All employers should consult with qualified counsel regarding these issues and their applicability to each unique set of circumstances. This is not exhaustive or comprehensive guidance. We will continue to update this page throughout this process.***
Employers are facing many challenges as a result of the COVID-19 outbreak, and the reduction of business and the impact that has on benefits programs should be considered.
Employers maintaining operations as-is:
- – Your benefits package continues as-is.
Employers deploying Work-From-Home (WFH) strategies:
- – Confirm that your Worker’s Compensation policy covers WFH.
- – Health and Welfare benefits continue uninterrupted.
Employers using furloughs:
A furlough is still an employed position, and can still maintain insurance eligibility. Check with your insurance carriers to see how they cover furloughed employees.
- – If the carrier does not cover furloughed employees, this would be a “reduction in hours of service” that causes a loss of coverage under COBRA, and COBRA continuation would be available for groups subject to COBRA.
- – If the carrier does cover furloughed employees, consider how premium contributions will be collected if there are no wages. Consider changing the contribution strategy for furloughed employees.
A best practice for a furloughed employee would be treat the period as if it were FMLA. Determine which of the following strategies or combination of strategies that would best work for your employees:
- – Pay before you go – employees pay their premiums in advance of the furlough
- – Pay as you go – employees make contributions to the employer during the furlough
- – Pay when you get back – employees catch up their contributions upon returning to work full-time.
Employers terminating employees:
A termination of an employee affords the employee the opportunity to continue under COBRA if the group is subject to COBRA, or State Continuation depending on state rules. Employers are advised to consult with their carrier for guidance on state continuation practices as they affect their populations.
Employers have the ability to subsidize COBRA continuation for employees, but should keep in mind that an employee who elects COBRA continuation will not be eligible to enroll in individual coverage under normal rules until the COBRA coverage period has expired, or an open enrollment occurs. What this means in practice is that an employee who takes an employer subsidy for the first few months of COBRA, but then drops COBRA when the subsidy ends is unable to enroll in individual coverage at that time, unless there has been a separate qualifying event that would entitle them to a Special Enrollment Period or an Open Enrollment.
Employers should be very clear about this possibility when offering COBRA subsidies.
If the employer terminates the plan entirely, COBRA coverage terminates as well. State continuation rules may differ, and in NJ, state continuation may continue even if the plan is terminated. Employers should consult with their insurance carriers and brokers if they are considering a total plan termination.
Commuter benefits can only be used to pay for expenses to commute to and from work. If your office is closed, and your employees are working from home, they cannot expense there are no commuting expenses to reimburse. In this case, contributions should be reviewed as the monthly limits for these benefits could mean that the employee is not able to be reimbursed for the dollars contributed without a future reduction in contribution to offset the program. If an employee is terminated, any funds remaining in the account after any run-out claims are processed are forfeited.
Dependent Care expenses are similar to Commuter benefits, in that they are very likely reduced during this period. The IRS allows for a prospective election change based on a change in the cost of care. If an employee’s circumstances reflect a change in the cost of care, they can and should consider changing their election to avoid an over-contribution. If an employee is terminated, any funds remaining in the account after any run-out claims are processed are forfeited.
Flexible Spending Accounts
If an employee remains eligible for the FSA, their FSA contributions and expenses remain the same as they were before the COVID-19 outbreak. There is nothing in the regulations that would allow a change as a result of working from home. If the employee is no longer eligible for the FSA due to a reduction in hours or termination, they would be subject to FSA COBRA.
An FSA is subject to COBRA if the group is subject to COBRA, and if, at the time of termination, the employee has contributed more than they’ve spent. If that is the case, they can continue the plan with their full maximum election through the end of the plan year as long as they elect COBRA continuation and make their regular contribution as a COBRA premium equivalent. If the employee has spent more than they have contributed at the time of termination, there is no continuation afforded.
Health Reimbursement Arrangements
HRAs are not subject to state continuation, but they are subject to COBRA as a self-funded health plan. While COBRA sets the floor of the minimum benefits that must be offered to qualified beneficiaries, employers can provide more generous continuation, even if the employer is not subject to
Family Medical Leave
Employers and employees alike may ask if they are eligible for any leave protections in the event they or a family member gets sick. While gente encourages a deeper dive into an employer’s requirements per state, the federal government has provided the following guidance. Please reference the following link for additional information. Before offering information to your employees a great business practice is to partner with your site human resources practitioner for additional information.
Reduction in Force
Employers are cautioned that there are other employment laws they must consider before making a reduction in force. For example the federal government has Worker Adjustment and Retraining Notification (WARN) protections in place and New Jersey’s Warn Act has different regulations than that of the Federal government. For additional information regarding both federal and state WARN, please reference the attached website and always partner with your Human Resources provider. (Each state may have specific requirements and it is for this reason that readers are also encouraged to do additional fact findingabout their state regulations before making these tough decisions).
Federal Government Resources on Layoffs and the WARN Act – https://www.dol.gov/agencies/eta/layoffs/warn
Federal unemployment provisions have been modified to address situations where individuals may not be able to work due to impact of Covid-19. There are several scenarios where employees may be eligible for unemployment and gente encourages that employers access the following link for additional information. We would also encourage that you visit your respective states as each state may have varying stipulations.
Occupational Safety and Health Act of 1970
Under the federal Occupational Safety and Health Act of 1970 (the OSH Act), employers have a general duty to provide employees with safe workplace conditions that are “free from recognized hazards that are causing or are likely to cause death or serious physical harm.” Workers also have the right to receive information and training about workplace hazards, and to exercise their rights as employees without retaliation.
There is no specific Occupational Safety and Health Administration (OSHA) standard covering COVID-19. However, some OSHA requirements may apply to preventing occupational exposure to COVID-19. In addition to the General Duty clause, OSHA’s Personal Protective Equipment (PPE) standards and Bloodborne Pathogens standard may apply to certain workplaces, such as those in the healthcare industry.
Employers should continue to monitor the development of COVID-19 and analyze whether employees could be at risk of exposure. It is also important for employers to consider what preventative measures they can take to maintain safety and protect their employees from potentially contracting COVID-19.
Also, OSHA requires many employers to record certain work-related injuries and illnesses on their OSHA Form 300 (OSHA Log of Work-Related Injuries and Illnesses). OSHA has determined that COVID-19 is a recordable illness when a worker is infected on the job. Establishments that are required to complete an OSHA 300 log should be sure to include all COVID-19 infections that are work related.
The Americans with Disabilities Act
The Americans with Disabilities Act (“ADA”) protects applicants and employees from disability discrimination. It is relevant to COVID-19 because it prohibits employee disability-related inquiries or medical examinations unless:
- – They are job related and consistent with business necessity; or
- – The employer has a reasonable belief that the employee poses a direct threat to the health or safety of him-or herself or others (i.e., a significant risk of substantial harm even with reasonable accommodation).
According to the Equal Employment Opportunity Commission (EEOC), whether a particular outbreak rises to the level of a “direct threat” depends on the severity of the illness. Employers are expected to make their best efforts to obtain public health advice that is contemporaneous and appropriate for their location, and to make reasonable assessments of conditions in their workplace based on this information.
The EEOC has said that sending an employee home who displays symptoms of contagious illness would not violate the ADA’s restrictions on disability-related actions because advising such workers to go home is not a disability-related action if the illness ends up being mild, such as a seasonal influenza. On the other hand, if the illness were serious enough, the action would be permitted under the ADA as the illness would pose a “direct threat.” In either case, an employer may send employees home, or allow employees to work from home, if they are displaying symptoms of contagious illness.
The ADA requires that information about the medical condition or history of an employee, obtained through disability-related inquiries or medical examination, be collected and maintained on separate forms and in separate medical files and treated as a confidential medical record. Employers should refrain from announcing to employees that a coworker is at risk of or actually has a disease. Instead, employers should focus on educating employees on best practices for illness prevention.
Employee Leave Requirements
If an employee, or an employee’s family member, contracts COVID-19, the employee may be entitled to time off from work under federal or state leave laws. For example, an employee who is experiencing a serious health condition or who requires time to care for a family member with such a condition may be entitled to take leave under the Family and Medical Leave Act (FMLA). An illness like COVID-19 may qualify as a serious health condition under the FMLA if it involves inpatient care or continuing treatment by a health care provider. Employees may also be entitled to FMLA leave when taking time off for medical examinations to determine whether a serious health condition exists.
Many states and localities also have employee leave laws that could apply in a situation where the employee or family member contracts COVID-19. Some of these laws require employees to be given paid time off, while other laws require unpaid leave. Employers should become familiar with the laws in their jurisdiction to ensure that they are compliant.
Some employees may wish to stay home from work out of fear of becoming ill. Whether employers must accommodate these requests will depend on whether there is evidence that the employee may be at risk of contracting the disease. A refusal to work may violate an employer’s attendance policy, but employers should consult with legal counsel prior to disciplining such an employee. However, if there is no reasonable basis to believe that the employee will be exposed to the illness at work, the employee may not have to be paid for any time that is missed.
Compensation and Benefits
If employees miss work due to COVID-19, whether they are compensated for their time off will depend on the circumstances. As noted above, employees may be entitled to paid time off under certain state laws if they (or a family member) contract the illness. In other cases, non-exempt employees generally do not have to be paid for time they are not working. Exempt employees must be paid if they work for part of a workweek, but do not have to be paid if they are off work for the entire week. Note that special rules may apply to union employees, depending on the terms of their collective bargaining agreement.
Employees may be entitled to workers’ compensation benefits if they contract the disease during the course of their employment. For example, employees in the healthcare industry may contract the disease from a patient who is ill. Whether an employee is eligible for other benefits, such as short-term disability benefits, will depend on the terms of the policy and the severity of the employee’s illness.
Communicating with Employees
As part of their efforts to prevent the spread of COVID-19 in the workplace, employers should consider communicating information about the illness to employees. The CDC, WHO and OSHA have all created informational material on the virus and its symptoms, prevention and treatment that can be helpful for employees.