As the rapidly spreading coronavirus expands across the nation, businesses are faced with many unknowns, including how can they keep their doors open and for how long? And if they do strive to hold on amidst this growing economic crisis, the looming question is likely to be who stays on?
In recent days, these concerns may be amplified for those small business owners, particularly in the construction industry, because of new mandates including those under the “Families First Coronavirus Response Act”, which requires paid leave to all employees.
This new law goes into effect on April 1, 2020, so for those employers that are planning to try and weather this storm, but are also considering the need to cut down on staffing in order to survive, it’s important they understand that those decisions should be made carefully. The reason is clear. The changes that are mandated by this new law will impact both employer and employee benefits.
Who qualifies under the Act and what is the employer required to do.
Any employee that has been employed for 30 days can request paid leave under the Act. They are entitled to receive paid leave if they are unable to work because a) they are subject to quarantine; b) they are sick with coronavirus, c) they are taking care of someone who is sick with coronavirus, or d) they are caring for a child and no childcare is available because of issues related to the coronavirus (i.e. school closures). If any of these qualifications are met, the employer is required to pay that employee an amount depending on the reason for the leave up to $500 per day for a number of weeks. A specific review of the circumstances is in order with a human resources expert.
Small businesses with fewer than 50 employees could be exempt from the Act’s requirements, especially if compliance would jeopardize the ability of the business to continue as a going concern.
Each employer impacted by the Act must post a notice on the premises. Failure to adhere to the Act’s requirements or any retaliatory action against the employee can expose an employer to legal action.
Furlough versus Termination
Some benefit plans, including relief acts being enacted by the government in the face of the COVID-19 pandemic, do not clearly differentiate between an employee who is terminated and one who is furloughed.
One who is furloughed is someone who is required to take time off, a mandatory suspension, generally with limited or no pay, but with the expectation that the job will be available at some point in the future. A furlough is generally temporary in nature and furloughed employees typically retain their benefits.
A more severe option is termination. One who is terminated is let go permanently, not going to be paid, and isn’t going to be able to return to his or her job.
Employers use a furlough if they wish to retain staff and hope to have them available on short notice to return to their same position when economic conditions improve. When those options are just not in the cards, a termination may be the only, albeit, more drastic, alternative.