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Legal Considerations Regarding Coronavirus (COVID-19)

Posted on

by James L. Rudolph and Robert P. Rudolph

The outbreak of Coronavirus (COVID-19) has impacted all of our lives and generated numerous questions on various employment and other legal issues. We are working diligently to counsel our clients as issues arise throughout these uncertain times. This article is intended to provide answers to some of the most common legal issues related to COVID-19 to date.

Pay to Non-Exempt (hourly) Employees During Business Closures: Under the Fair Labor Standards Act (“FLSA”), employers are obligated to pay non-exempt employees for all hours actually worked. It does not require employers who are unable to provide work to non-exempt employees to pay them for hours the employees would have otherwise worked.

Pay to Exempt, Salaried Employees, Including Requiring Use of Vacation or Leave Pay During Business Closures Due to COVID-19: Under the FLSA, employers are generally required to pay exempt, salaried employees their full salary in any week in which they perform any work, subject to limited exceptions. The FLSA does not require employer-provided vacation time. Where an employer offers a bona fide benefits plan or vacation time to its employees, the employer may require salaried employees to use accrued leave or vacation time on a specific day, provided the employee still receives payment in an amount equal to the employee’s guaranteed salary. If an employee does not have enough accrued leave time to cover the absence, the employer must still pay the employee the full guaranteed compensation amount for any absence occasioned by the office closure in order for the employee to remain exempt. An employer cannot make deductions from the predetermined compensation amount for absences occasioned by the office closure during a week in which the employee performs any work. Employers are not required to pay exempt, salaried employees in weeks in which they perform no work. (The U.S. Department of Labor, Wage and Hour Division has issued additional guidance on common issues that employers may face in connection with responding to COVID-19.)

Requiring or Encouraging Teleworking as An Infection Control Strategy: An employer may encourage or require employees to telework as an infection-control or prevention strategy. Telework also may be a reasonable accommodation. Employers are still required to maintain an accurate record of hours worked for all hourly employees and must pay the employees for the hours actually worked. Employers are encouraged to work with employees to establish hours of work for employees who telework and a mechanism for recording each teleworking employee’s hours of work. Employers must not single out employees to telework or to continue reporting to the workplace on the basis of any protected class.

Other Employment Considerations: Employers should keep the following in mind when making or assessing employment decisions:

  • Under Massachusetts law, any employee who is terminated must be paid the employee’s final paycheck, any accrued, unused vacation time, and provided with a COBRA notice, if applicable, at the time of termination.
  • Does the employee have an employment agreement entitling the employee to certain wages, hours per week, or notice of any changes to the terms and conditions of employment?
  • Does the employer provide a benefit plan which requires employees to work a minimum number of hours for employees to qualify? It is best to check with your benefits provider.
  • Ensure that any decisions are legitimate business decisions and not made to use COVID-19 as a cover to terminate an otherwise difficult, unwanted or protected employee. Employment decisions should impact all similarly situated employees equally.

Unemployment Information: On March 16, 2020, Governor Baker filed emergency legislation waiving the one-week waiting period for any person making a claim for unemployment benefits who has become separated from work as a result of any circumstance relating to or resulting from the outbreak of COVID-19 or the effects of the Governor’s March 10, 2020 declaration of a state of emergency. This means that the Department of Unemployment Assistance would be authorized to pay benefits without delay to persons who become unemployed because of layoffs or business shutdown.

  • Unemployment information from the Commonwealth of Massachusetts can be found here.
  • Unemployment pamphlets are available in multiple languages and can be found here.

Business Interruption Insurance: It is recommended that you reach out to your personal broker for clarification on your eligibility. However, business interruption insurance generally requires physical loss of or damage to the insured’s property as the result of a covered cause of loss. Our understanding is that since COVID-19 is viral, it will generally not be covered by most policies.

Contract Considerations – Force Majeure, Impossibility and Frustration of Purpose: If you can no longer perform your obligations pursuant to the terms of a written contract (business, loan, lease, employment, etc.), you should have key contract terms reviewed immediately, as many contracts have strict notice requirements. Generally, Force Majeure clauses excuse performance and liability where a party cannot carry out its contractual obligations as a result of an event that is beyond that party’s control, but there are exceptions. Likewise, various other contract terms, such as “impossibility of performance”, “impracticability” and “frustration of purpose” may serve to help excuse performance of obligations pursuant to the terms of a written contract. Although it is unclear at this time how COVID-19 may trigger these terms, we are advising all clients to comply with contractual notice requirements on a timely basis.

COVID-19 Small Business Recovery Loan Fund: Governor Baker announced economic support for small businesses with a $10 million loan fund to provide financial relief to Massachusetts business that have been affected by COVID-19. It will provide emergency capital up to $75,000 to Massachusetts based businesses impacted by COVID-19 with under 50 full-and part-time employees. Loans are immediately available to eligible businesses with no payments due for the first 6 months. Massachusetts Growth Capital Corporation has capitalized the fund and will administer it. More information and applications can be found here.

Suggested Guidelines for Employers:

  • Stagger employees’ work schedules in order to limit gatherings of people.
  • Allow employees to telecommute.
  • Employees feeling sick or experiencing any respiratory or flu like symptoms should stay home.
    Engage in safe social distancing and use the telephone in lieu of face-to-face meetings.
  • Wash hands often with soap and water or use alcohol-based sanitizer, particularly after coming in contact with “high touch” areas such as door handles, banisters, railings, levers on toilets, telephones, elevator buttons, and other surfaces frequently used by the public.
  • Do not shake hands, hug, kiss or touch others. Avoid sharing office supplies such as pens, paper and working files.
  • Refrain from touching your face, particularly nose, mouth, and eyes.
    Encourage employees to use their accrued personal, vacation, and sick time.

This is an evolving pandemic and we will continue to monitor it closely. Our offices remain open and we are using remote and conferencing technology to continue to serve our clients’ needs. Please do not hesitate to reach out to us if you have any questions or concerns.

This article is meant to highlight some of the legal issues regarding COVID-19. It is not meant to provide legal advice.