COVID19 Small Employer HR Planning

PRES EN TED BY:

C HRI ST I N E K I T T I N GER

A S S ETS UN L I MI TED, I N C .

MA RC H 3 0 , 2020

Employee Privacy

• Instruct employees to tell HR if they are sick, diagnosed with COVID19, or have a known exposure to Coronavirus

• Privacy protections still in place

• Notify employees and others who may have been in contact with individual • Do not mention the employee’s name

Work-From-Home Guidelines• Develop a Work From Home Policy

• Stay in communication and be available at all times during regular business hours as if you were in the office

• Stay logged in to email, GHangouts, Slack, etc.• Respond promptly to all work communications• Use only company-approved devices for remote access. Have IT get remote workers set up• Keep company information confidential

• Home Office Expenses• Reasonable percentage of:

• Cell phone• Home internet

Compensation• While working from home

• Non-exempt (hourly) employees are paid for actual hours worked• Exempt (salaried) employees must be paid for the entire week if they do any work at all

during the workweek

• Reduced work schedules• Pay hourly employees for actual hours worked• Change salaried employee status to hourly for the duration of the health emergency and pay

for actual hours worked if a pay cut will drop them below the exempt threshold:• $54,080 annually ($4,506.67/mo) 25+ employees• $49,920 annually ($4,160.67/mo) less than 25 employees• $46.55 per hour or an annual salary of at least $96,968.33 annually for computer

professionals

• Make sure formerly exempt employees are given overtime and rest/meal break guidelines

Compensation• Pay Reductions

• Do not reduce pay below minimum wage for hourly employees• Watch exempt thresholds for salaried employees• Fair and equitable – document decision process

Compensation• California Paid Sick Leave

• Can be used for absences due to COVID-19 illness;• Diagnosis, care, or treatment of an existing health condition; or • Preventative care for employee or their family member, including: Self-quarantine as a result

of potential or actual exposure to COVID-19 if quarantine recommended by civil authorities• Self-quarantine where workers have traveled to a high-risk area

• California Vacation and PTO v. Sick Leave• Employees may use sick leave or vacation/PTO for COVID-related issues• Employees may choose to take such leave and be compensated provided that terms of the

vacation or paid time off policy allow for leave in this circumstance• Workers cannot be required to exhaust paid sick leave before using vacation or PTO• Employees cannot be required to use PTO for business closure without 90 days notice

Benefits• Benefits Continuation

• Employees may lose eligibility if on furlough (no work hours), or if work hours drop to part-time• COBRA notices may have to be generated• Employer option to pay COBRA• Confirm if there is extended coverage with your broker or carrier• Some carriers offering Special Open Enrollment period

Benefits• Alternatives to COBRA:

• Spouse/partner employer plan (enroll within 30 days of loss of coverage)• Covered California (Exchange Program)

• Special enrollment period extended to June 30• Subsidies may be available

• Medi-Cal• Income based/Immediately available

Benefits

• If employees contribute to premiums but are on furlough• Require payment on monthly basis• Pre-tax repayment after return to work

Furloughs and Layoffs• Furlough

• No work performed/unpaid• Provide a definite return to work date• Salaried employees must be paid a full week of pay if any hours worked. Furlough for full

weeks.• May allow for continuation of benefits• Eligible for unemployment benefits

• Not required to seek other employment while receiving UI benefits

• Layoff• Document selection process and criteria• Final pay on date employee is notified• COBRA notices for benefits. Coverage may run through the end of the month

Unemployment• Available to employees who are:

• Laid off

• Furloughed

• Reduced Hours

• EDD Workshare Program• Pays more than reduced hours claims

• Employer must apply

• Affects 10% of workforce or work unit and at least two employees

• Hours and wages must be reduced by at least 10 percent and not exceed 60 percent.

• Health and retirement benefits must remain the same as before, or they must meet the same standards as other employees who are not participating in Work Sharing

Unemployment• COVID-19 has been added to application as reason for lay off, furlough or reduction in hours

• Waives one week waiting period for benefits

• Waives requirement to seek other employment if furlough or reduced hours

• Required documents• Notice of Change of Relationship

• Indicate if reason for action is COVID-19 related• For Your Benefit booklet

• Resources for unemployed• America's Job Centers (AJC) of California

• NOVA

Unemployment• Federal Unemployment

• $600/week

• 39 weeks

• Administered through State UI programs

Families First Coronavirus Response Act (FFCRA)The FFCRA expands paid leave benefits in two ways:

• Up to two weeks of paid sick leave for illness, quarantine, or school closures related to COVID-19 (EPSL)

• Up to 12 weeks of Family and Medical Leave Act leave to employees for school closures related to COVID-19 (EFMLA), most of which must be paid

• Effective date: April 1, 2020

• DOL issued notice must be posted, e-mailed, posted on intranet by April 1

• These emergency laws also provide employers with tax breaks designed to offset the costs of providing paid leave.

Families First Coronavirus Response Act (FFCRA)• Covered Employers

• All private employers with 500 or fewer employees, as well as all public employers• Determination date: Date when the employee’s leave is taken

• Exemptions – Must be requested from DOL:• Less than 50 employees• When the imposition of leave for child care would jeopardize the viability of the business as a

going concern• Employers of “health care providers and emergency responders”• Exemption request process has not been released

• Covered Employees• All employees are entitled to EPSL (sick leave)• Employees working 30 + days are entitled for EFMLA (family leave for child care)

Families First Coronavirus Response Act (FFCRA)

• Must require and keep appropriate documentation in support of the reason for leave, including:• Employee Name• Reason for leave• Statement that the employee is unable to work, including telework, for that reason• Dates of requested leave• Documentation of reason for leave, such as:

• Quarantine or isolation order• Name of health care provider advising employee to self- quarantine• Posted notice of closure on website of school or child care provider, or mailed notice or e-

mail notice of such closure

Emergency Paid Sick Leave (EPSL)• Covered Reasons

• Employee is unable to work or telework due to any of the six qualifying reason:

Who is eligible? All employees are entitled to COVID-PSL.

For what purposes? If any employee is unable to work or telework due to any of the six qualifying reasons:

1. The employee is subject to a Federal, State, or local quarantine or isolation order related to COVID–19

Does not apply to worksite closure “pursuant to a Federal, State or local directive.”

4. The employee is caring for an individual subject to an order described in (1) or self-quarantine as described in (2);

2. The employee has been advised by a health care provider to self-quarantine due to concerns related to COVID–19

5. The employee is caring for a child if the school or place of care of the child has been closed, or the child care provider of such child is unavailable, due to COVID–19 precautions

3. The employee is experiencing symptoms of COVID–19 and seeking a medical diagnosis

6. The employee is experiencing any other substantially similar condition specified by the Secretary of Health and Human Services in consultation with the Secretary of the Treasury and the Secretary of Labor.

Emergency Paid Sick Leave (EPSL)Number of Paid Leave Hours

• Full-time employees are entitled to 80 hours of EPSL• Part-time employees are entitled to the number of hours they work on average over a two-

week period• If the part-time employee’s schedule varies: use six-month average to calculate the average

daily hours• If part-time employee has not been employed for at least six months, use the average of

the employee’s regular rate of pay for each week the employee has worked for the employer

Emergency Paid Sick Leave (EPSL)

Pay Rate

• Employees must be paid at their regular rate of pay, subject to the following caps:• $511/workday ($5,110 total) for reasons (1), (2) and (3)• $200/workday ($2,000) for reasons (4), (5) and (6)

Emergency Paid Sick Leave (EPSL)Pay Rate

•Exempt Employees• EPSL will be paid at their base salary rate

• Non-Exempt Employees

• Employees with varying rates of pay, bonuses, or commissions, or who regularly work overtime:

• For employees who have worked more than 6 months: Add all compensation that is part of the regular rate of pay over the prior six months and divide that sum by all hours actually worked in the same period.

• For employees who have worked less than 6 months: The average of the employee’s regular rate of pay for each week the employee has worked for the employer.

• If do not work overtime or earn varying rates of pay, bonuses, or commissions, EPSL will be paid at their straight hourly rate

Emergency Paid Sick Leave (EPSL)More EPSL Rules

• Employees must “use it or lose it” by December 31, 2020

• Unused time does not have to be paid out on termination of employment

• The employer cannot require the employee to use other paid leave banks before using EPSL

• The employer cannot require the employee to cover his or her workload or shift before using EPSL

• Similar protections apply to use of EPSL as would apply to California Paid Sick Leave, such as no retaliation for using EPSL

• Line item for sick leave balance required on wage statements

Extended Family Medical Leave(EFML)Eligible Employees

• All employees who have been employed by a covered employer for at least 30 calendar days • Small businesses and healthcare employers may seek an exemption from the DOL

Duration and Reasons for Leave

• 12 weeks of leave if the employee is unable to work or telework due to the following: • Need for leave to care for the son or daughter under 18 years of age of such employee if the

school or place of care has been closed, or the child care provider of such son or daughter is unavailable, due to a public health emergency.

• If employees have already exhausted 12 weeks of FMLA leave before April 1, they do not qualify for an additional 12 weeks of EFML

• Intermittent leave allowed if employer agrees (differs from Federal FMLA)

Extended Family Medical Leave(EFML)Pay During Leave

• The first two weeks are unpaid, although the employee may choose to use any available paid leave banks (including EPSL), but the employer may not require it.

• The remaining ten weeks are paid at 2/3 regular rate of pay

Hours Paid

• Eligible employees are entitled to the number of hours they are “normally scheduled to work” which includes overtime hours

Rate of Pay

• Employees must be paid at 2/3 of their regular rate of pay, subject to the following cap:• $200/workday ($10,000 total)

© 2020 Procopio, Cory, Hargreaves & Savitch LLP

Weeks 1-2: EPSLFor EPSL Qualifying Reason No. 5: Up to 80 hours paid at2/3 of Employee’s regular rate of pay, with a daily cap of$200 and aggregate cap of $2,000

*Full-Time: up to 80 hours; Part-Time: Average number of hours over a 2-week period. If PT hours vary, specialcalculation.

Weeks 3-12: EFMLAPay at 2/3 of Employee’s regular rate of pay with daily cap of $200 per day / $10,000 in theaggregate

Pay For Childcare Leave under FFCRAWeek

1*Week

2*Week

3Week

4Week

5Week

6Week

7Week

8Week

9Week

10Week

11Week

12

EPSLX X

EFMLAX X X X X X X X X X

FFCRA Tax Credits• IRS allows businesses to retain and access funds that they would otherwise pay to the IRS in

payroll taxes to take immediate advantage of the paid leave credits.

• Per guidance released by the IRS, eligible employers who pay qualifying EPSL or EFMLA will be able to immediately retain an amount of the payroll taxes equal to the amount of qualifying EPSL and EFMLA benefits that they paid, rather than deposit those amounts with the IRS.

• The payroll taxes that are available for retention include withheld federal income taxes, the employee share of Social Security and Medicare taxes, and the employer share of Social Security and Medicare taxes with respect to all employees.

• IRS Example: If an employer owes a total of $8,000 in payroll taxes but paid $5,000 to pay EPSL or EFMLA leave for employees, the employer will have to remit only $3,000 to the IRS.

FFCRA Tax Credits• If the amount of EPSL or EFMLA benefits paid to employeesexceeds the amount of payroll tax

owed by the employer, employer will not have to remit any payroll tax, and can file for an expedited refund of the difference.• The expedited refund is to be issued in two weeks

• Consult tax advisor on claiming credit

CARES Act – Small Business LoansCoronavirus Aid, Relief, and Economic Security Act - CARES

• Designed to help prevent workers from losing their jobs and small businesses from going under due to economic losses caused by the COVID-19 pandemic.

• Provides cash-flow assistance through 100 percent federally guaranteed loans to employers who maintain their payroll during this emergency.

• If employers maintain their payroll, the loans would be forgiven, which would help workers to remain employed and affected small businesses and our economy to recover quickly after the crisis

• Retroactive to February 15, 2020, to help bring workers who may have already been laid off back onto payrolls

CARES Act – Small Business LoansPaycheck Protection Program (PPP)

• Loan of up to $10 million per applicant to be used on payroll, benefits, rent and other costs from February 15, 2020 through June 30, 2020. Amount based on formula related to payroll costs

• Small employers with less than 500 employees• Sole proprietors, independent contractors, and other self-employed individuals are eligible

• A substantial portion of the loan principal may be forgiven, but loan forgiveness is subject to reduction if staffing and salary levels are reduced and not restored.

• With some exceptions, such as restaurants and hotels, loan eligibility requires an aggregate employee headcount for the applicant and its "affiliates" of fewer than 500 employees.

• No personal guarantees or collateral is required for PPP loans. The formula for determining the size of the loan is tied to payrolls costs of the particular business.

• Contact your financial/tax advisor for this and other small business loan options

Resources - FFCRAMandatory FFCRA Posting: Distribute by April 1, 2020

https://www.dol.gov/sites/dolgov/files/WHD/posters/FFCRA_Poster_WH1422_Non-Federal.pdf

FFCRA Posting FAQhttps://www.dol.gov/agencies/whd/pandemic/ffcra-poster-questions

Department of Labor FFCRA FAQhttps://www.dol.gov/agencies/whd/pandemic/ffcra-questions

IRS Guidance on FFRCA Tax Credit: https://www.irs.gov/newsroom/treasury-irs-and-labor-announce-plan-to-implement-coronavirus-related-paid-leave-for-workers-and-tax-credits-for-small-and-midsize-businesses-to-swiftly-recover-the-cost-of-providing-coronavirus

Resources – Wage & Hour / UnemploymentEDD Unemployment

https://edd.ca.gov/Unemployment/

EDD Workshare Programhttps://edd.ca.gov/Unemployment/Work_Sharing_Program.htm

US Department of Labor (Wage and Hour FAQs) https://www.dol.gov/agencies/whd/flsa/pandemic

California Labor Commissioner (Wage and Hour FAQs) https://www.dir.ca.gov/dlse/2019-Novel-Coronavirus.htm

California Labor and Workforce DevelopmentAgency https://www.labor.ca.gov/coronavirus2019/

Resources – Health & Executive OrdersCenters for Disease Control – Interim Guidance for Businesses and Employers https://www.cdc.gov/coronavirus/2019-ncov/community/guidance-business-response.html

California Governor’s Executive Orders https://www.gov.ca.gov/category/executive-orders https://covid19.ca.gov/stay-home-except-for-essential-needs/

Department of Public Health Guidance Documents https://www.cdph.ca.gov/Programs/CID/DCDC/Pages/Guidance.aspx

• Check local county’s department of public health for current versions of local orders

Resources – Job SearchLocal Job Search Resources

• America's Job Centers (AJC) of California

• Your local AJC offers many free career transition services, including resume assistance, job-search workshops, career advising, networking opportunities, and training information in a friendly, supportive environment. AJCs also have information on community resources. Services may vary by location, so call ahead to schedule an appointment to explore which Job Center will best meet your needs.

• NOVA has locations in San Mateo and Sunnyvale and broadly serves the northern Santa Clara Valley and all of San Mateo County:

• novaworks.org / (650) 581-0058, San Mateo, (408) 730-7232, Sunnyvale

• work2future has locations in Gilroy and San Jose and broadly serves the southern Santa Clara Valley:

• work2future.org / (408) 794-1100

• For other local AJC locations, americasjobcenter.ca.gov

Legal DisclaimerNot Legal or Tax Advice

This presentation is designed to provide accurate information in regard to the subject matter covered. It is provided with the understanding that Christine Kittinger and Assets Unlimited, Inc. arenot engaged in rendering legal or tax services. If legal advice orotherexpert assistance is required, theservices of a competent attorney orother professional person should be sought. Dueto thenumerousfactual issues which arise in any humanresource, leave of absence, oremploymentquestion, each specific matter should be discussed with your attorney.