On March 26, 2020, the U.S. Department of Labor (DOL) issued three new Opinion Letters, FLSA2020-3, FLSA2020-4, and FLSA2020-5 which all address various payments that may be excluded from the regular rate. This is important because the compensation that is included into the regular rate will increase the overtime rate. In a very short breakdown, here are the three clarifications:

Longevity Payments. FLSA 2020-3 clarifies that longevity payments made to employees as a part of a routine payment (i.e. you get $500 after 1 year, $5,000 after 10 years, etc.), are not excludable as gifts because the nature of the payment is non-discretionary. However, if a policy provides that a longevity payment “may” be made, in the employer’s discretion, that payment could be excluded from the regular rate as a “gift”.

Referral Bonuses. FLSA 2020-4 instructs us that a referral bonus does not need to be included in the regular rate if the referral program is voluntary, does not take significant time, and is limited to conversations as a part of employees’ social affairs outside of work hours. In other words, word-of-mouth referrals may be excluded from the regular rate (not spiffs for HR recruiters doing their job). However, if there is a referral bonus for longevity (i.e. the employee referred works for a year, the referring employee gets a bonus), then that payment would be part of the regular rate, because it is essentially a longevity bonus.

Employer Life Insurance Contributions. FLSA 2020-5 opines that employer contributions to a group term life insurance policy do not need to be included in an employee’s regular rate so long as the contributions meet the statutory and regulatory requirements (this is a lot more complicated, so if this is an issue, suggest you review the actual opinion letter and law).

 

Minnesota employers should be aware that, pursuant to Governor Walz’s Executive Order 20-29, effective April 6, 2020 until December 31, 2020, Minnesota employers “must notify separated employees that they can apply for unemployment insurance benefits.” In addition, the executive order confirms that there is no longer a waiting week for unemployment compensation, and that there will be no delays due to money received from vacation pay, sick pay, or personal time off (PTO) payouts upon termination.

Accordingly, if you are separating/termination/furloughing (whatever you want to call it) an employee, make sure you put in the termination notice or letter something to the effect of, “You may apply for unemployment insurance benefits either online at www.uimn.org, or by phone at (651)296-3644, toll free (877)898-900, or TTY (866)814-1252.”

The U.S. Department of Labor just issued its Temporary Rule regarding its interpretation of Paid Leave under the Families First Coronavirus Response Act (FFCRA). 29 C.F.R. Part 826. I’m still digesting this and the IRS guidance (I just blogged about) so stay tuned. For now, the link above will get you to the Rule.

The IRS has finally issued much-awaited FAQ on Families First Coronavirus Response Act (FFCRA). Notably, the IRS has taken a much stricter interpretation of the FFCRA than many practitioners (including me!) were when attempting to interpret the law without any guidance. I highly encourage businesses to review the website and FAQ – because the FFCRA is a tax credit act, HR may usually shy away from reading IRS guidance. However, it does provide important guidance about eligible employees, ages of children, amount of parents that can take the leave at one time, etc.

The guidance also provides that employers must retain records and documentation related to and supporting each leave request as well as Form 942, Employer’s Quarterly Federal Tax Reurn and Form 7200, Advance of Employer Credits Due To COVID-19, and any other filings made to the IRS. In order to get the news out quickly, I’m going to keep this short and sweet for now and encourage all employers (both HR and finance side) to start by reviewing the IRS FAQs on COVID-19 and FFCRA.  Combine that guidance with the DOL guidance and I think we’re starting to get a much better handle on this than a few days ago!

The DOL has finally issued the poster that employers must post notifying employee of their rights under the FFCRA in both English and Spanish. This must be posted and kept posted, “in conspicuous places on the premises of the employer where notices to employees are customarily posted.” This requirement can be met, however, by e-mailing the notice poster to employees, or by posting it on your external or internal website.

On Saturday, March 28, the U.S. Department of Labor updated its Families First Coronavirus Response Act: Questions and Answers.  While this is still not the regulations that we are all waiting for, it does provide compliance assistance to employers until the regulations are issued. I’ll write about more issues later, but probably the single most question I get asked is related to whether a small business is exempt from the Families First Coronavirus Response Act (FFCRA). Here is the DOL’s current position (and what I expect the regulations will support):

A small business (less than 50 employees) is exempt from the FFCRA when “doing so would jeopardize the viability of the small business as a going concern”. Sounds subjective right? Well, here’s where the regs will come in handy. Until then, the DOL has stated that a small business is exempt if the following conditions are met:

  1. It employs less than 50 employees;
  2. Leave is requested due to school/day care closure due to COVID-19 reasons; and
  3. An authorized officer of the business has determined that one of the following 3 conditions are met:
    1. The application of the FFCRA would result in expenses and financial obligations exceeding available business revenues and cause the business to cease operating at a minimal capacity;
    2. The absence of of employee(s) requesting leave would entail a substantial risk to the financial health or operational capabilities of the business because of their specialized skills, knowledge of the business, or responsibilities; or
    3. There are not sufficient workers who are able, willing, and qualified, and who will be available at the time and place needed, to perform the labor or services provided by the employee(s) requesting leave, and these labor or services are needed for the business to operate at a minimal capacity.

So, for now, if you are a small employer and can answer yes to the above three criteria, until we get better guidance from the DOL, the President/CFO/CEO should document that the above conditions are met prior to denying leave to employees under the FFCRA.

Additionally, keep in mind that if you determine you are exempt for one, you are exempt for all. It is a business exemption – not an individual exemption. Thus, if you determine your business is exempt, you also cannot take advantage of the tax credits. It’s the you can’t-have-your-cake-and-eat-it-too theory.

And finally, if you do continue business as usual, keep in mind that you must still follow Governor Walz’s stay-at-home order until April 10, and those that can work remotely, must.

Those that cannot work remotely, should be given social distance opportunities (i.e. skip the handshakes, open up new spaces for breaks), PPE where appropriate, sanitized work space, etc. however possible. Per the EEOC’s guidance, yes, you can take temperatures of those reporting to work during a pandemic, so long as you follow appropriate guidelines.

Wow – how fast things can change in a day! Following up to my post yesterday, as all of Minnesota is well aware now, Governor Walz issued his Stay-At-Home Executive Order 20-20 effective March 27 at 11:59 pm to April 10, 2020. I’ve barely had time to write this post as I’ve been on the phone constantly helping employers navigate whether they are exempt from the order as a critical business. So, apologize for the delay, but here you go…

  1. Read the order.  If your business is listed there as exempt – you’re good to go.
  2. Check the CISA list. As I blogged about yesterday, if your business is on the list, it is exempt.
  3. Check DEED’s NAICS list. Minnesota Department of Employment and Economic Development (DEED) issued a list by NAICS code as to whether a business is considered “critical”. Note – the list changed between last night and this morning, so if you were “NO” before you may be “YES” – so if you are a “NO” today, keep checking it.
  4. Ask for an Exemption Clarification. If you are unsure, you may send a request for clarification to DEED for your business.

Finally, I’m being asked a lot about providing employees “proof” of their work status to get to and from work during the shutdown.  I’m not aware of any such requirement. However, I am aware that employers are voluntarily providing each employee with a letter that confirms they are exempt and need to travel to work – while not necessary this is not a bad idea for employers to confirm to employees that they are exempt and need to come to work.

And finally, don’t forget that even exempt businesses do not have carte blanche to continue to operate as normal – it is only the jobs that cannot be done remotely that are exempt; if employees can work remotely, they must. If employees must come to work, to the extent possible, provide for social distancing (if possible, add staggered break and lunch times, multiple shifts, reduce workforce presence, etc.).

As Wisconsin’s Governor Evers has issued a “Safer At Home Order“, Minnesota businesses are scrambling to determine whether, in the event Governor Walz issues a similar executive order, their employees will be exempt from such order. Why does this matter? It allows employers to keep employees working (to an extent) and require that they maintain their normal work schedule. The DHS CISA guidance specifically notes President Trump’s Coronavirus Guidance for America which states:

If you work in a critical infrastructure industry…you have a special responsibility to maintain your normal work schedule

As expected, Gov. Evers included all businesses on the Department of Homeland Security’s Cybersecurity & Infrastructure Security Agency (CISA)list of 16 critical infrastructure sectors during COVID-19. This is a list that most states (that I’ve seen) have included in their list of businesses that may remain open in the event of a shut-down. Below is the list and a few sub-items for businesses:

  1. Chemical Sector
  2. Commercial Facilities Sector
  3. Critical Manufacturing Sector
    1. Primary metals manufacturing
    2. Machinery manufacturing
    3. Electrical equipment, appliance, and component manufacturing
    4. Transportation equipment manufacturing
  4. Dams Sector
  5. Defense Industrial Base Sector (note, if your business is a supplier/subcontract within this sector, you will likely get a letter from the government contractor confirming this – I have seen several already sent to MN employers)
  6. Emergency Services Sector
  7. Energy Sector
  8. Financial Services Sector
  9. Food and Agriculture Sector
  10. Government Facilities Sector
  11. Healthcare and Public Sector
    1. Workers such as plumbers, electricians, exterminators, and other service providers who provide services that are necessary to maintaining the safety, sanitation, and essential operation of residences.
    2. Support to ensure the effective removal, storage, and disposal of residential and commercial solid waste and hazardous waste
  12. Information and Technology Sector
  13. Nuclear Reactors, Materials, and Waste Sector
  14. Transportation System Sector
    1. Employees who repair and maintain vehicles
    2. Automotive repair and maintenance facilities
    3. Manufacturers and distributors of packaging materials, pallets, crates, containers, and other supplies needed to support manufacturing, packaging staging and distribution operations.
  15. Water and Wastewater Systems Sector

If Minnesota gets to this point, I will certainly expand upon this in another post.

Update: To determine whether your business is a critical business under the Minnesota Stay-At-Home Order, read my next blog here.

Minneapolis has issued a FAQ regarding COVID-19 and the Minneapolis Sick and Safe Time Ordinance. In short, the document outlines how the city of Minneapolis is “interpreting” the ordinance as it relates to earned sick and safe time (ESST). While I believe they are taking some liberties with their interpretation of the ordinance, employers should know what guidance the city is providing…

ESST Should Be Approved For:

  • Coronavirus symptoms, testing or infection for both themselves and care of a covered family member.
  • Covered family members’ school or place-of-care closure.
  • Workplace closure by order of public official.
  • Quarantine following close personal contact with Coronavirus infected or symptomatic person.

Other Guidance:

  • Employers may expand the reasons they allow use of ESST (for example, if work hours reduced).
  • Employers are “encouraged to be flexible with employees wherever possible” (translated: you cannot err by allowing the use of ESST – remember once it is used it is gone).
  • Preemptive self-quarantine is not covered (i.e. if they have no reason to believe they are sick).

Finally, despite the ordinance, employers should not forget about FMLA, EFMLA, emergency paid sick leave and other possible leaves that may apply.

 

When navigating the Families First Coronavirus Response Act (“FFCRA”), Minnesota employers should not forget about Governor Walz’s Executive Order 20-02. This order states that district schools must provide care to, at a minimum, district-enrolled students 12 and younger of emergency workers. The state has classified (so far) workers into “Tier 1” and “Tier 2” in this guidance.

What does this mean? Tier I workers will not need the 12 weeks of EFMLA (I hesitate to say exempt), as they do not need leave to care for a minor child (unless the child is 13-17 and their parent is unwilling to leave their child alone). Similarly, Tier I workers would not need emergency paid sick leave (see my other blog) for reason #5 (to care for child whose school closed).

TIER 1 WORKERS

  • Healthcare personnel (PCAs, pharmacy, mental health)
  • Emergency medical services personnel (full-time)
  • Law enforcement / firefighter personnel
  • Correctional services
  • Courts (full-time employees)
  • Public Health

TIER 2 WORKERS

Minnesota has further clarified (though not an order from the Governor) that schools “should make every effort” to provide care to “school-aged children” of Tier 2 workers (not the actual guidance expands upon each of the below which I’m not going to specifically post). Thus, if an employee has a school district that is willing/able to provide care for Tier 2 workers they also should not need EFMLA:

  • Educators, child care workers
  • State and local essential IT personnel
  • State workers essential for continuance of unemployment insurance
  • Substance disorder treatment workers
  • Medical examiners
  • National Guard (if activated)
  • MNDoT employees
  • Public works
  • Water treatment, wastewater
  • Solid waste and infectious and hazardous waste management
  • Day-to-day operations/emergency response for gas and electric utilities
  • Food distributions workers
  • Other shelter staff and outreach workers
  • Telecommunication network operations

In short, if you are a Tier I business, it is unlikely that your employee should need EFMLA. If you are a Tier I business, it would depend on whether your employee(s) can get school coverage at their district for their child(ren).