COVID-19 and Small Businesses

The COVID-19 pandemic has taken an unprecedented toll on businesses and their employees from a physical, mental and economic standpoint. While the government continues to focus on fashioning additional safety nets for those quarantined, or deemed positive or caring for family members so situated, the government has yet to offer significant relief to small business now faced with the prospect of furloughing or laying off employees due to lack of work or inability to work remotely.

For example, New York’s recently passed emergency Coronavirus paid sick leave bill, offers employees (or their family members) who are quarantined as a result of the Coronavirus/COVID-19 expanded paid sick leave. While this is certainly beneficial to those employees quarantined as a result of the Coronavirus/COVID-19, employees who are not sick but simply fired or furloughed are not afforded these benefits.

President Trump signed two bills which take effect April 2nd; The Emergency Family and Medical Leave Act as well as the Emergency Paid Sick Leave Act. Both apply to businesses with less than 500 employees, the first providing 12 weeks paid leave where the employee is unable to work remotely and must care for a minor child if the child’s school or day care is closed because of a public health emergency. The Emergency Paid Sick Leave Act provides paid sick leave where the employee cannot work due to COVID-19 illness.

Recently, Governor Cuomo has put NY State on PAUSE – requiring 100 percent of workers in non-essential businesses to stay home and work remotely, if possible.

The Executive Order creating the directive, lists those services and functions considered “essential”. A more detailed list is on the Empire State Development Corporation’s website. Esd.ny.gov. Those businesses that are not currently on the exempt list but wish to be deemed essential and, therefore, exempt from the 100 percent requirement, can request an opinion from the Empire State Development Corporation. esd.ny.gov.   Companies are encouraged to read the ESDC guidance closely before writing to ESDC, to make sure their business is Not covered by the guidance.

As of this writing, there is a proposed federal $2 trillion stimulus package designed to give an economic lifeline to businesses and Americans.  It has not garnered bi-partisan support yet with the Democrats worried that it doesn’t do enough for small businesses and Republicans arguing time is of the essence for a bill that would send $1200 relief checks to some Americans. 

Meanwhile, as smaller business owners are forced to temporarily close their businesses due to mandates or lack of business, many employers will be unable to continue to pay their employees. Accordingly, business owners will be faced with the predicament of potentially laying off their staff or reducing hours. While this is certainly not an ideal situation, employers may have no other choice and must, therefore, ensure they are protected and are acting in a compliant manner prior to making such decisions.

Workers terminated can file for NYS unemployment insurance benefits. Hopefully, the length of coverage will be increased and certain restrictions impeding easy filing have been lifted.

When reducing an employee’s hours and pay, keep in mind that you may be changing an exempt worker to non-exempt status, thus making them subject to the overtime requirements. Also, layoff over 25 people could potentially implicate WARN notice requirements, although we believe certain exemptions will apply.

Additionally, in the event an employee has an employment contract, the terms of the employment agreement must be reviewed in order to determine the employer’s rights and obligations regarding potential termination and reduction of hours, availability of severance payment and continuation of benefits. Even if an employee does not have an employment agreement, the employment terms may be modified by an employee manual which might similarly dictate the terms surrounding termination and potential hour reduction.

Unionized workforces bring their own special rules and close cooperation between management and labor is imperative before changes are made to terms and conditions of employment in the collectively bargained environments.

Finally, employers must take care to treat employees in a way that does not give rise to an inference of discrimination based on protected classifications such as race, age, disability, gender, etc. Pay close attention to how you choose which employees to furlough, reduce hours, send home, or fire.

Due to the rapid change in federal and state employment and health laws, it is imperative that each work situation be evaluated individually to avoid additional legal liabilities. We are here to help you sort through decisions surrounding your business in these difficult times.

Should you have any questions or concerns please contact us at 516-627-7000.

Weiss Zarett Brofman Sonnenklar & Levy, P.C. is a Long Island law firm providing a wide array of legal services to the members of the health care industry, including corporate and transactional matters, civil and administrative litigation, healthcare regulatory issues, bankruptcy and creditors’ rights, and commercial real estate transactions.

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