This post addresses several related personnel issues, including furloughs, unemployment insurance, paid time off, compensation options, and health benefits.
The past two days have brought several developments in the overlap of covid-19 and personnel issues. On Monday, March 16, Minnesota’s Governor Walz issued an executive order closing many places of public accommodation.
Tuesday, March 17, Governor Walz issued another executive order, concerning unemployment insurance and covid-19.
This brief post is intended to answer a few frequently asked questions with reference to the March 17 E.O. and related information. First, the order.
The Governor’s March 17 executive order results in the following changes to remain in effect during the current peacetime emergency. (These are simplified summaries; the text of the order and related law should be reviewed before relying on these bullet points.)
- Strict compliance with the unemployment statutes will not be required
- For unemployment insurance benefit applications between March 1 and December 31 of this year, there will be no waiting week
- Benefit recipients are required to search for “suitable employment.” “Suitable employment” does not include jobs that present a safety or health risks for the applicant or others
- Suspensions from employment—such as leaves of absence, inactive status, furloughs—due to Covid-19 will not disqualify applicants for unemployment insurance benefits
- Unemployment insurance payouts related to Covid-19 will not be considered when determining a business’s future unemployment insurance tax
- Business owners will not be subject to the prior five-week limit on benefits
Layoffs: Employees who have been terminated because the Governor has ordered their place of employment to close or to reduce operations substantially should be entitled to unemployment insurance benefits (assuming no other, disqualifying circumstances). Some people are referring to this as being laid off.
Furloughs: Employees who have been placed on inactive status because the Governor has ordered their place of employment to close or to reduce operations substantially should be similarly entitled to unemployment insurance benefits (assuming no other, disqualifying circumstances). Some people are referring to this as being furloughed.
Furloughed employees may be allowed to retain their employer-sponsored group health insurance, and employers may be allowed to continue funding the health benefits for their employees on inactive status, depending on the terms of the insurance plan (or self-funded benefits plan). The summary plan description might provide guidance, but a definitive answer can come only from the plan documents. At least one health insurer doing business in Minnesota will allow furloughed employees to retain their group health benefits while on inactive status. Check with your insurer to learn more about your situation.
Sick and Safe Time
In Minneapolis, “an employee may use accrued sick and safe time for … the closure of the employee’s place of business by order of a public official to limit exposure to an infectious agent, biological toxin or hazardous material or other public health emergency.” If an employee has been terminated because their employer has closed due to the covid-19-related peacetime emergency order in Minnesota, they would be entitled to their accrued sick and safe time. For employers who have included S.S.T. in a broader Paid Time Off plan, the employee would be entitled to their accrued P.T.O. (or such portion of their P.T.O. as may have been designated previously as sick leave).
Nothing would prevent an employer from asking to negotiate (a) the timing of the payment(s) or (b) the retention of a furloughed employee’s accrued P.T.O. until the employer reopens, if resuming operations is a reasonable likelihood. The decision, however, of whether to receive or to defer the payment of P.T.O. remains the employee’s.
Outside of Minneapolis, St. Paul, and other locations with local sick/safe time ordinances, paid time off is considered a component of wages. And like wages, the timing, amount, and circumstances in which P.T.O. (or sick/vacation) is payable depends in part on the arrangement struck between the employer and employee (or union). If the funds are clearly payable, then, as above, employers might be able to negotiate the timing; but unless there is a lawful basis for withholding any of the accrued leave time, employees are entitled to payment.
Irregular hours: Employers who will be staying open with reduced operations and whose employees will be working fewer and potentially irregular hours have a few options on how to pay those workers. Nonexempt workers could continue to be paid on an hourly basis or on a fixed salary for fluctuating hours (but note that the latter option has particular overtime compliance requirements). Exempt workers whose hours will be reduced could have their salary reduced accordingly, but note that exempt employees must be paid a week’s salary for any workweek in which they do any work. (Note also that some exemptions require the employee to supervise others, and some exemptions do not have that requirement; since January 1, 2020, an employee must also be paid at least $684 per week in order to retain the exemption.) A previously exempt worker might also be reclassified as nonexempt in order to manage workload uncertainty; the primary differences are entitlement to overtime and, for some, pride. In any event, please be aware that remote work and required availability are compensable.
This post is intended to be a summary of key points that have been raised frequently over the past two days. This is not intended to be a comprehensive treatment of the topics addressed. This is only a starting point; nothing here should be relied upon without further research or consultation. There are always details that spell the difference between compliance and liability. Additionally, legal requirements and best practices are changing daily as the situation evolves.