Seyfarth Synopsis:  On April 29, 2020, Alameda, Contra Costa, Marin, San Francisco, San Mateo, and Santa Clara Counties, as well as the City of Berkeley, issued updated shelter-in-place orders. These orders take effect May 4 and run through May 31, 2020. They nominally adjust the restrictions that have been in effect since March 17, mostly by allowing some additional outdoor businesses and outdoor activities to open. Sacramento County also issued an amended order, which will be in effect from May 1 through May 22, 2020. Like the Bay Area orders, it makes only nominal changes to which businesses may operate in Sacramento County.

Bay Area Counties

Since March 17, six San Francisco Bay Area counties have largely coordinated their efforts to combat the coronavirus, and ordered all but essential businesses closed. After renewed orders were set to expire on May 3, some businesses hoped that the force would be with them, and May the 4th would mark more than just Star Wars Day. Alas, this “new hope” has not manifested into reality.

On April 29, the Bay Area counties and City of Berkeley issued amended shelter-in-place orders that largely maintain the status quo. Non-essential businesses must remain closed, and the orders do little to broaden the definition of what is “essential.” Aside from Essential Businesses and Minimum Basic Operations, the orders allow the following to resume so long as physical distancing and industry-specific requirements are followed:

  • All construction projects that follow the Construction Project Safety Protocols appended to the orders;
  • All real estate transactions, with restrictions on open houses and limited tours;
  • Childcare, camps, and educational/recreational programs that provide care for small, unchanging groups of children, whose guardians are permitted to work under the orders;
  • Use of certain shared outdoor recreational facilities (these differ slightly across jurisdictions, but include facilities such as golf courses and athletic fields); and
  • “Outdoor Businesses” such as nurseries, landscaping, and agriculture that normally operated outdoors prior to the shelter-in-place orders.

The orders continue to require businesses to prepare, post, and distribute social distancing protocols. Appendix A to the new orders is a (very slightly) revised version of the template protocol attached to the prior orders. The most significant change is incorporating the mandate from prior health orders that employees and customers must wear face coverings. Per the orders, businesses must update their protocols to reflect this change.

The orders have different social distancing protocols for construction businesses. These businesses must instead comply with the appended Construction Project Safety Protocols.

Sacramento County

Sacramento’s new order is similar, but not identical to the Bay Area orders. It continues to require individuals to stay home except to perform Essential Activities, and all but Essential Businesses must continue to cease physical operations, aside from Minimum Basic Operations. The order, does, however make some different changes to what it deems “essential.” The key differences are:

  • Health care facilities can reschedule appointments for care that was considered non-urgent and canceled when the stay-at-home order was first issued;
  • Non-contact recreational facilities that involve shared equipment may open provided social distancing is followed and shared items are disinfected. These facilities include golf courses, shooting and archery ranges, and tennis courts;
  • Food trucks are now included as Essential Businesses; and
  • Residential real estate brokers can conduct in-person showings, provided they are limited to no more than two visitors, in addition to the realtor.

Unlike the Bay Area counties, Sacramento does not have a face covering mandate. The County still requires, however, that businesses continue to prepare, post, and distribute a social distancing protocol in a form substantially similar to the one attached to the order.

Workplace Solutions

It’s not too early to prepare for the future. Although the amended shelter-in-place orders do not lift most restrictions on businesses, companies should still start preparing to reopen. Each county indicated that it could revise the orders earlier if certain metrics were met. Seyfarth has developed a number of resources to help with post-pandemic renewal and recovery, and our deep bench of talent is always available to help plan for the day the Jedi return and sheltering-in-place is no more.

Seyfarth Synopsis: On April 28, 2020, Mayor London Breed announced a plan to allow employees working in San Francisco to use funds from the Healthcare Security Ordinance (“HCSO”) contributions to buy “necessary expenditures,” including food, rent, and utilities during the COVID-19 pandemic. Previously, use of these funds were limited to eligible health care expenses. Now, Mayor Breed’s announcement unlocks over $138 million for disbursement to employees who may now use the funds to meet their essential needs.

San Francisco’s Healthcare Security Ordinance

Employers with employees working in San Francisco likely are already aware of San Francisco’s many peculiarities, including the HCSO, which requires most employers to make healthcare expenditures on behalf of certain employees based on the number of hours the employee works in the City. As an alternative to contributing to health insurance coverage, employers may instead contribute healthcare expenditures to Medical Reimbursement Accounts (MRAs), through the SF City Option Program. Employees then can withdrawal funds from their MRA to cover medical expenses and other healthcare needs. According to the Mayor’s announcement, the MRAs currently have $138 million in available, unused funds that employers have contributed over the years.

Mayor Breed’s Plan To Expand Use Of MRA Funds To Pay For Basic Expenses

Citing the need to “protect public health” and “making sure people have enough to eat, have a roof over their head, and have the peace of mind that they’ll be able to pay their bills,” Mayor Breed’s declaration permits employees to withdraw funds deposited in their name to use for basic expenses, including food, rent and mortgage payments, and utilities during the COVID-19 pandemic.

Workplace Solutions

While the announcement says the SF City Option Program will contact eligible employees about how to withdraw funds, employers may also inform their employees that they may be eligible to request a disbursement of funds that were previously made in their name.  This can be done by providing a copy of the announcement, or pointing employees to the SF City Option’s website.

Regardless of how the expenditures may be used, the announcement nonetheless confirms the HCSO, along with every other San Francisco labor law, remains in effect during San Francisco’s shelter-in-place. Employers still must contribute the appropriate amount of healthcare expenditures on behalf of their covered employees. Likewise, employers are not likely to receive any leniency from the City in failing to make these expenditures during the emergency.

The HCSO is a particularly tricky ordinance to satisfy and there are a number of pitfalls that can trip up even the most diligent employer, leading to a costly audit and potential assessment of penalties from the Office of Labor Standards Enforcement. If you would like assistance with a review of your compliance with the HCSO or representation in audit proceedings, please feel free to contact one of Seyfarth’s attorneys.

Edited by Coby Turner

Seyfarth Synopsis: Last week, the San Francisco Board of Supervisors and the San Jose City Council enacted emergency ordinances to expand paid sick leave beyond that provided under the federal Families First Coronavirus Response Act. While San Francisco’s Public Health Emergency Leave ordinance awaits Mayor London Breed’s signature, Mayor Sam Liccardo has signed the San Jose COVID-19 Paid Sick Leave Ordinance, which became effective on April 7, 2020.

The Families First Coronavirus Response Act (FFCRA) Focuses on Smaller Employers

As we’ve noted (here, here, and here), the FFCRA requires employers with fewer than 500 employees to provide up to 80 hours of emergency paid sick leave to certain employees who are unable to work due to COVID-19 related reasons. As part of a growing trend, San Francisco and San Jose’s emergency ordinances attempt to close FFCRA coverage gaps by providing additional paid sick leave to employees not covered by the FFCRA.

The San Francisco and San Jose Ordinances Apply To Employers with 500 or More Employees And Permit Offsets

Covered Employers. The ordinances by the two Cities (the San Jose ordinance now effective and the San Francisco ordinance expected to be effective soon) require private employers with 500 or more employees to provide up to 80 hours of supplemental paid sick leave to employees who are unable to work as a result of the COVID-19 public health emergency. This supplemental leave will be available to eligible employees for immediate use. San Jose’s ordinance, however, deviates from San Francisco’s ordinance by also covering private employers with fewer than 50 employees.

What Can The Paid Sick Leave Be Used For. Generally, an eligible employee may use the supplemental leave granted by either ordinance if the employee cannot work because of one of these reasons:

  • The employee is experiencing symptoms of COVID-19 and seeking medical diagnosis.
  • The employee is subject to COVID-19 related quarantine or isolation by a government order, or is caring for someone subject to the same (including, in San Francisco, vulnerable populations who are recommended to self-isolate).
  • The employee has been advised by a health care provider to self-quarantine due to COVID-19, or is caring for someone subject to the same.
  • The employee is caring for a family member because school or day care is closed due to COVID-19.

Although both ordinances delineate similar situations for use of supplemental leave, San Francisco specifically limits an employee’s caring of other individuals to family members. However, San Francisco expands care to a family member (not necessarily a child) whose  caregiver becomes unavailable due to the public health emergency.

No Carryover. The ordinances disallow employees from carrying over any unused paid sick leave at the ordinances’ sunset dates, or from being paid for unused amounts of sick leave.

Offsets. Both ordinances allow offsets for paid time off that an employer already provided to its employees. Under the San Francisco ordinance, the amount of emergency paid sick leave an employer must pay will be reduced for every hour the employer allowed the employee to take paid leave or paid time off for COVID-19 related reasons, over and above the employee’s existing sick, vacation, and PTO banks, between February 25, 2020, and the ordinance’s enactment. Similarly, the San Jose ordinance provides an offset for some combination of paid personal leave available to employees as of the effective date of its ordinance on April 7, 2020.

The Cities Differ In Defining Eligible Employees, Calculating Payment, Setting Notice Requirements, and Providing Exemptions. 

Covered Employees. San Francisco construes “Employee” broadly as any employee—full-time, part-time, or temporary—who worked 56 or more hours in San Francisco, including telework, during the 365 days immediately preceding the effective date of the ordinance. On the other hand, San Jose broadly includes those who have worked at least two hours for their employers within the City.

San Jose Remote Workers Excluded. If employees can work from home, San Jose does not provide them these additional COVID sick leave benefits. San Jose further specifies that only employees who must leave their residences to perform Essential Work are covered.

Payment. San Francisco employers may calculate this additional COVID paid sick in the same manner they calculate sick time under the San Francisco paid sick leave laws. Meanwhile, San Jose models payment calculation after the FFCRA.

Notice Requirements. Employers doing business in San Francisco must closely observe the notice requirements set forth in the City’s ordinance. The San Francisco’s Office of Labor Standards Enforcement (“OLSE”) will post a notice on its website within seven days of the ordinance’s enactment. Thereafter, within three days, employers must provide the OLSE’s notice to its employees. To ensure the Notice can be reached by all employees, employers should

  • post the Notice in a conspicuous place at workplace, via electronic communications,
  • post the Notice on an employer’s web-based or app-based platform, and
  • provide the Notice in English, Spanish, Chinese, and any language spoken by at least 5% of the employees.

In addition, the Notice must include the amount of ordinance-provided paid sick leave that is available to the employee.

Meanwhile, San Jose, while not laying out specific notice requirements, asks employers to comply with any notice requirement established by the City’s Office of Equality Assurance.

Health Care and First Responder Exemptions. Under the San Francisco ordinance, employers of health care providers or emergency responders, as defined under the FFCRA, may elect to exclude eligible employees from receiving the ordinance-provided leave. Hospital employers may be exempted from the San Jose’s ordinance only if, between April 7, 2020 and April 21, 2020, the hospital operators provide their employees some form of paid personal leave at least equivalent to the paid sick time as required by the ordinance.

Other Considerations. Both Cities prohibit employers from conditioning leave upon employees finding replacement workers. San Francisco has a few more explicit limitations, including prohibiting employers from requiring employees to use other accrued time off before using the supplemental leave, and from asking employees for doctor’s notes or other documentation substantiating absences. San Francisco employers also cannot modify their PTO policies during the pendency of the emergency ordinance.

Sunset Dates. The San Francisco ordinance sunsets 61 days after enactment, unless the ordinance is extended. San Jose’s ordinance sunsets on December 31, 2020.

Penalties for Non-Compliance. The San Francisco ordinance specifically prohibits retaliation, discrimination, or any interference with the exercise of employees’ rights. A rebuttable presumption of retaliation arises if an employer takes an adverse action against an employee within 90 days of the employee engaging in a protected act or filing a complaint for violation of this ordinance. San Jose’s ordinance can be enforced in the same manner as its Minimum Wage Ordinance.

Seyfarth Synopsis: Employers offering bonuses to workers during the COVID-19 crisis must beware the famous saying that “wisdom comes to us when it can no longer do any good.” Some bonuses trigger special rules that employers must follow to avoid unexpected liabilities in the time of COVID.

Readers of this blog know that California creates peculiar challenges for companies that choose to provide their employees with certain benefits and incentives. A classic example is vacation pay. While employers need not provide paid vacations, employers that do so may face unexpected liability because of Cal-peculiar rules that treat unused vacation pay as a vested wage.

Like vacation pay, bonuses are optional, but quite common. Many employers find bonuses useful to motivate employees and reward special service. Bonuses may be particularly helpful in the time of COVID: essential businesses that remain open know that work can be especially stressful for employees.

Recognizing this reality, businesses may institute short-term bonuses for employees who answer the call of duty during these challenging times. A bonus might provide for an extra $X per week of service or an extra $Y per hour. These amounts are paid in lump sums at designated intervals. The employer thus does the right thing while the loyal employee is duly rewarded. What could possibly go wrong?

Enter here the labyrinth of California employment law. Well-meaning employers initiating bonus programs may face a triple whammy in the form of (1) wage-payment penalties, (2) overtime-pay liabilities, and (3) wage-statement liabilities. But don’t give up! Here are a few pitfalls endangering the well-intentioned California employer and some thoughts on how to avoid them.

Wage Payment Penalties. California employers that willfully fail to pay wages earned through the last day of employment owe penalties for every day that payment is delayed—up to 30 working days—measured by the amount of the daily wage. And other penalties apply to late payments of wages.

But what’s that got to do with bonuses? A bonus is a form of wage. A worker who leaves the company during a bonus program may claim entitlement to bonus money allegedly earned through the last day of employment, and argue that a pro rata bonus must be paid, along with all other wages, by the last day of employment. Employers who are not prepared to honor such a claim should have their bonus program specify that employees must remain employed on designated dates to be bonus-eligible. Employers thus have specified that the bonus is in part a reward for remaining employed through the pay date, or that the bonus is not calculable until a designated date, to preempt any mistaken notion that the bonus somehow was due earlier than when the employer is prepared to pay it. In the absence of an express eligibility requirement, California courts have held that employees who terminate employment may be entitled to a portion of a bonus. Even with such a requirement, courts might hold that an employee may be entitled to a pro rata portion of a bonus if the employee was fired without cause.

Retroactive Bonus Pay. As faithful readers know, both federal and California law require employers to include nondiscretionary bonuses in the “regular rate of pay” used to calculate overtime premium pay. Accordingly, the bonus paid to a nonexempt employee should include retroactive premium pay for overtime hours worked during the bonus period. Consider a biweekly bonus of $180 earned during a period in which the employee worked 80 regular hours and 10 overtime hours. Under the federal method—and also under the California method for “production” bonuses—the overtime formula would divide the $180 bonus by the 90 hours worked, yielding a regular bonus rate of $2. The employer must add $2/hour * 0.5 * 10 hours, or $10 in retroactive overtime pay, to augment the $180 base bonus.

Failure to pay these overtime wages can trigger penalties—both in the form of waiting-time penalties for employees who leave the company and for all employees in the form of penalties for the late payment of wages. What’s more, any bonus that California considers a “flat sum” bonus would require a special overtime formula. In our example, the $180 bonus would be divided by only the regular hours of 80, to yield a regular bonus rate of $2.25. That rate would then be multiplied by 1.5 (not 0.50) to yield retroactive overtime pay in the amount of $2.25/hour * 1.5 * 10 hours, or $33.75. Accordingly, California employers may seek to structure bonuses as production bonuses (e.g., $x per hour) as opposed to flat sum bonuses (e.g., $y per period).

But employers need not fall into an abyss of disenchantment and abandon such incentives or bonuses altogether. Wise employers can seek to navigate around overtime-pay issues by structuring bonuses in the form of a stated percentage of all earnings (including overtime earnings) that an employee achieves during the bonus measurement period.

Wage Statements. Under Labor Code section 226, employers must furnish itemized wage statements to record various items of information, including “all applicable hourly rates in effect during the pay period and the corresponding number of hours worked at each hourly rate by the employee.” Reporting bonus payments accurately can be a challenge. Employers reporting bonuses on the wage statement as simply a lump sum have incurred large wage-statement penalties, in the amount of statutory penalties of $50 per employee and civil penalties of $250 per employee. One California case held that a wage statement need not record hourly rates and hours worked for a bonus where the bonus hours were worked during a prior pay period, meaning that there were no “applicable hourly rates in effect during the pay period” covered by the wage statement. But that case is unpublished and not precedential. Absent more authoritative assurance, California employers are best advised to report, on the wage statement corresponding to the bonus payment, as much detail as is practicable with respect to calculation of the bonus.

Workplace Solutions. Employers that initiate bonus programs to meet the COVID moment have nothing but admirable intentions, and deserve commendation, not condemnation. But California employers who create bonuses create correlative obligations. In structuring a bonus program with those obligations in mind, and in ensuring that the obligations are met as they come due, please don’t hesitate to contact your favorite Seyfarth lawyer. And for any other COVID related questions or concerns, feel free to visit Seyfarth’s COVID-19 Resource Center.

By: Chantelle C. Egan, Jaclyn A. Gross, and Timothy M. Hoppe

Seyfarth Synopsis.  Eight California counties—San Francisco, Alameda, Contra Costa, San Mateo, Santa Clara, Marin, Sonoma, and Santa Cruz—along with the City of Berkeley, issued revised shelter-in-place orders on March 31st. The new orders add clarifying language around essential businesses and prohibited activities, as well as create a new affirmative obligation for employers to create and post a Social Distancing Protocol.

Revised County and City Orders.

Citing the success of local shelter-in-place orders in helping flatten the curve of COVID-19 cases, Bay Area officials in the Counties of San Francisco, Alameda, Contra Costa, San Mateo, Santa Clara, Marin, Sonoma, and Santa Cruz, along with the City of Berkeley (which has its own public health department), signed updated orders extending the shelter-in-place through at least May 3, 2020.

The orders, which went in effect at 11:59 p.m. yesterday, March 31, are all substantively the same. Like the previous orders, the revised orders require people to stay at home except for doing essential activities, such as grocery shopping, and non-essential businesses will remain closed. However, the updated orders also add clarifying language around essential businesses and prohibited activities as well as new obligations for employers.

Updates and New Obligations for Essential Businesses.

The updated orders expanded the list of essential businesses to include:

  • Service providers that enable residential transactions (notaries, title companies, realtors, etc.);
  • Funeral homes and cemeteries; and
  • Moving companies, rental car companies, and rideshare services that specifically enable essential activities.

That said, all essential businesses that continue to operate facilities must scale down operations to their essential components only.

Perhaps most important for employers operating essential businesses, however, is the requirement to develop, post, and distribute a “Social Distancing Protocol” no later than midnight this Thursday, April 2, 2020. The Protocol must be substantially the same as Appendix A attached to the orders, and must be posted in facilities frequented by employees or the public. It must be displayed at or near the entrance of the relevant facility and be easily viewable. A copy of the Protocol must also be provided to each employee performing work at the facility.  Santa Cruz County is the only order not officially requiring implementation of a Social Distancing Protocol, but essential businesses are still encouraged to do so.

Guidance Regarding Prohibited Activities.

The new order not only focuses on what the community must or can do, but also what is prohibited.

  • Most construction—residential and commercial—is prohibited. However, there are exceptions for projects to help keep people safe and housed, including:

–  Health care projects directly related to addressing the pandemic;

–  Projects immediately necessary to the maintenance, operation, or repair of Essential Infrastructure;

–  Construction of shelters and temporary housing (excluding hotels and motels);

–  Affordable housing and multi-unit or mixed-use developments containing at least 10% income-restricted units;

–  Public works projects designated as essential by the lead governmental agency;

–  Projects necessary to provide critical services to certain vulnerable individuals;

–  Construction necessary to ensure existing construction sites that must be shut down under the orders are left in a safe and secure manner, but only to the extent necessary to do so; and

–  Construction or repair necessary to ensure residences and buildings containing Essential Businesses are safe, sanitary, or habitable to the extent such construction or repair cannot reasonably be delayed.

  • Use of playgrounds, dog parks, public picnic areas, and similar recreational areas is prohibited. These areas must be closed to public use.
  • Use of shared public recreational facilities such as golf courses, tennis and basketball courts, pools, and rock walls is prohibited. These facilities must be closed for recreational use.
  • Sports requiring people to share a ball or other equipment must be limited to people in the same household.
  • Funerals limited to no more than 10 people attending.

We are following developments closely, so stay tuned for updates as they come.

Seyfarth Synopsis: California Governor Gavin Newsom issued an Executive Order suspending some Cal-WARN Act obligations, attempting to ease struggling employers’ obligations in the face of COVID-19; but note that employers must still comply with critical remaining obligations.

Executive Order N-31-20

Employers struggling with tough layoff decisions and confusing legal obligations might have breathed a small sigh of relief upon learning that Governor Newsom, on March 17, 2020, signed Executive Order N-31-20 suspending certain employer obligations under the California WARN Act. But the Order does not give California employers a free pass, so read the rest of this blog (and the Order) very carefully to see what Cal-WARN obligations remain in place.

Cal-WARN requires employers to provide 60 days’ notice to employees and other individuals before the employer causes a mass layoff, relocation, or termination. Acknowledging that COVID-19 has forced some employers to close rapidly without providing the required notice, the Order suspends notice provisions as of March 4, 2020 through the (as yet undetermined) end of the current emergency. The Order also suspends Cal-WARN’s noncompliance remedies of backpay, other damages, and civil penalties. Note that these suspensions apply only to employment actions that are caused by COVID-19-related “business circumstances that were not reasonably foreseeable as of the time that notice would have been required.”

The Order requires that employers still issue the required Cal-WARN notice, with as much advance notice “as is practicable” under the circumstances.

Employers must provide the notice to all of the following:
(1)        Affected employees
(2)        California Employment Development Department
(3)        Local workforce investment board
(4)       Chief elected official of each city and county government within which the termination, relocation or mass layoff occurs.

The notice must include:
(1)        All of the information required by the federal WARN Act
(2)        A brief statement of the basis for reducing the notification period
(3)        The following statement: “If you have lost your job or been laid off temporarily, you may be eligible for Unemployment Insurance (UI). More information on UI and other resources available for workers is available at labor.ca.gov/coronavirus2019.”

The Order requires, by March 23, 2020, the California Labor and Workforce Development Agency to provide additional guidance regarding how Executive Order N-31-20 will be implemented.

As a result, employers may want to consider a brief garden leave to cover the time between notices and actual separations, if their financial resources so allow. And if the employer believes its actions may be covered by Cal-WARN, send out notices as soon as possible, invoking both the unforeseeable business circumstances application of the Order as well as the physical calamity exception of Cal-WARN, which may apply to the COVID-19 scenario.

If you’ve read this far and still are asking, “What is Cal-WARN again? And how does it differ from federal WARN?,” read on. If you already know the basics, and just need to be kept up to date on COVID-19 obligations, continue to visit this space and our resource page.

Cal-WARN Basics

California is peculiar in that the scope of its Cal-WARN exceeds the scope of federal WARN in two major respects: (1) Cal-WARN applies to companies that are too small to be covered by the federal WARN Act, and (2) Cal-WARN applies to business decisions affecting groups of employees that are too small to be covered by federal WARN.

Cal-WARN is triggered by

  • the layoff of at least 50 employees (who worked for at least 6 out of the 12 months prior to when a California WARN notice would be due) at a “covered establishment” over a rolling 30-day period due to “lack of funds or lack of work,”
  • a “termination,” defined as the “cessation or substantial cessation of industrial or commercial operations in a covered establishment,” or
  • a “relocation,” defined as the removal of all or substantially all of the operations at the facility to a different location 100 miles or more away.

A “covered establishment” is “any industrial or commercial facility or part thereof that employs, or has employed within the preceding 12 months, 75 or more persons.” There is no authority clarifying whether this definition of “covered establishment” refers to 75 persons at any single point in time over the 12 month period, or 75 separate persons over the course of the 12 months.

Unlike federal WARN and most other state mini-WARN laws, the California law contains no express minimum length of layoff that can trigger the notice obligations. At least one California court, in International Bd. of Boilermakers v. NASSCO Holdings Inc. 17 Cal. App. 5th 1105, 1122–25 (2017), has stated that it would not read the federal WARN’s six-month layoff standard into California WARN law, and, while not committing to any particular standard, indicated that even a “brief” layoff was sufficient. Thus, under Cal-WARN, a furlough of at least 50 employees at a “covered location” even of a short duration (e.g., 7-10 days) could trigger notice obligations.

If  the above did not sufficiently “WARN” you, you would not be alone. Compliance with federal and state WARN acts is complex to say the least. Where any doubts arise as to whether a state or federal WARN statute might be triggered by a potential furlough or any other employment action, employers are strongly advised to consult their favorite Seyfarth attorney.

By Emily Schroeder

Seyfarth Synopsis: With COVID 19 responses rapidly evolving, employers of all sizes—from major airlines to small restaurants—are experiencing dramatic declines in business, and a lack of work for employees. In this time of need the government is here to help. A word here on California Unemployment Insurance.

An employer facing business challenges that affect its workforce might consider California’s Employment Development Department Work Sharing Unemployment Insurance Program. The EDD describes this program as a “practical alternative to layoffs.” For example, instead of laying off 20% of a workforce, an employer could reduce payroll by 20% and Unemployment Insurance would pay part of the difference in wages to employees. This approach also could help employers by reducing the need to re-hire and re-train employees when business improves.

Employer Qualification Requirements

The employer must have experienced a reduction in production, services, or other conditions that cause it to seek an alternative to layoffs. As with any generous offer, certain terms and conditions apply:

  • A minimum of two employees, comprising at least 10% of the regular workforce or a unit of the workforce, must be affected by a reduction in wages and hours worked.
  • The reduction in weekly wages and hours worked must be at least 10%, not to exceed 60%.
  • The employer must maintain employee health and retirement benefits under the same terms and conditions as prior to the reduction in hours and wages or to the same extent as for employees not participating in the plan.
  • Corporate officers and major stock holders may not participate.

Other specifics appear at https://www.edd.ca.gov/unemployment/Work_Sharing_Program.htm

Employee Qualification Requirements

Participating employees must meet these requirements:

  • Be a part of the employer’s permanent regular workforce and not a leased, intermittent, temporary, or seasonal employee.
  • Have qualifying wages in the base quarters used to establish a regular California UI claim, calculated by one of two alternative methods: the Standard Base Period and the Alternative Base Period. The Standard Base Period is the first four of the last five calendar quarters prior to filing the claim. The Alternative Base Period is the most recently completed four calendar quarters prior to filing the claim. If the employee has earned at least $1,300 in one quarter of either type of Base Period, or $900 in one quarter of either type of Base Period and total base period earnings are 1.25 times the highest quarter’s earnings, then the employee would qualify. For more, see https://www.edd.ca.gov/pdf_pub_ctr/de8714ab.pdf
  • Have completed a normal work week (with no hour or wage reductions) before participating in Work Sharing.

How do I sign up, and what comes next?

Fill out the Work Sharing Plan Application, DE 8686, and submit to the EDD. These instructions and the Form can be found online here: https://www.edd.ca.gov/pdf_pub_ctr/de8686.pdf

The EDD Special Claims Office will send a letter of approval, one mail claim packet for each participating employee, and a ten-week supply of weekly certifications for each employee. You’ll need to issue these certifications to affected employees each week for the duration of the program. These forms must be mailed in weekly.

Benefits will also be paid weekly, proportionate to the percentage of reduction in hours and wages. This example from the EDD is instructive: An employee who normally works five days a week for $500 is reduced to four days a week for $400. The Work Sharing benefits for this employee would be 20% of the benefits the employee would receive if unemployed. If maximum UI benefits for this employee would be $300, the employee would qualify for $60 in Work Sharing Benefits, bringing their weekly pay to $460.

The employer will be charged for Work Sharing Unemployment Insurance in the same manner as for regular UI benefits.

Can exempt employees participate?

California’s Department of Labor Standard Enforcement in 2002 expressly opined that having exempt employees participate in the EDD Work Sharing Program destroyed pay on a “salary basis,” meaning, in the DLSE’s opinion, exempt employees could not participate. But that February 27, 2002 opinion letter was disapproved in 2009. The most current DLSE opinion letter appears to permit a bona fide reduction in both hours and salary for exempt employees (even if somewhat temporary, as long as it is not fluctuating), though it does not mention EDD Work Sharing. We do not know how courts would come down on this issue. It is possible that courts would consider exempt employees participating in Work Sharing to have been converted to non-exempt employees, subject to overtime and other non-exempt wage and hour requirements.

This sounds too good to be true, so what’s the downside?

This program can be administratively burdensome, because of the application and weekly certifications. And employers must periodically re-apply. There is also a potential increase in your unemployment insurance tax rate, but layoffs would have the same result if laid-off employees seek unemployment insurance.

If you have additional questions, contact your favorite Seyfarth attorney or Seyfarth’s COVID 19 Task Force or COVID 19 Resource Center.

Seyfarth Synopsis. Progressive elected officials in Los Angeles and Sacramento have proposed laws that may soon require certain retail and other employers to provide employees with predictive scheduling or pay a price. To our blog authors, these impending developments bring to mind the adventures of Buddy in the 2003 Christmas comedy entitled “Elf.” See https://en.wikipedia.org/wiki/Elf_(film).

Faithful readers will recall our November 2017 piece on local predictive scheduling ordinances. There we noted that since Buddy the Elf’s time in retail, three local municipalities in California—San Francisco, Emeryville, and San Jose—passed predictive scheduling ordinances. Los Angeles now seeks to join the fray. Our prior piece also noted that we have yet to see a state-wide predictive scheduling requirement. That soon could change with the introduction of Senate Bill 850 by Senator Connie Levya.

Los Angeles City Council Moves for Fair Workweek Ordinance

Los Angeles City Councilmember Curren Price recently introduced a motion instructing the city attorney’s office to draft an ordinance (the “Ordinance”) that would require Los Angeles employers to provide employees with more stable and foreseeable hours. The measure was co-sponsored by City Council President Herb J. Wesson, Jr. and Councilmember Paul Koretz. Jessica Duboff of the Los Angeles Area Chamber of Commerce signaled that the Chamber will oppose the measure, stating that “[p]redictive scheduling is often actually restrictive scheduling, imposing a one-size-fits-all system that threatens the flexibility of employees and employers.”

Which employers would be covered? The motion directs that the Ordinance apply to all retail employers in Los Angeles with 300 or more employees globally, not just in Los Angeles. According to the LA Times, this ordinance would affect operations of numerous major retailers doing business in the expansive Los Angeles area. While other, similar ordinances cover fast food outlets, this Ordinance would be relegated to the retail world. (We know what you’re thinking, and no: this ordinance would not cover establishments serving the four main elf food groups—candy, candy canes, candy corns, and syrup.)

What is required under the law? Employers covered by the proposed Ordinance would be required to

  • provide employees with 14 days’ notice of their schedules,
  • provide employees the right to rest at least ten hours between shifts, a measure targeting so-called “clopening,” in which an employee closes the establishment and must return to open the same,
  • a good faith estimate of work hours at the time of hiring, including opportunities for full-time work and predictability pay or compensation for canceled shifts, and
  • provide employees a right to request schedule changes and ability to decline hours before and after schedule posting.

The proposed Ordinance would also forbid retaliation against workers exercising their rights under the Ordinance.

SB 850

SB 850, the so-called “Fair Scheduling Act of 2020,” was introduced by Senator Connie Levya on January 13, 2020.

Which employers would be covered? Grocery store establishments, restaurants, and retail stores would all be covered.

  • The bill defines “Grocery store establishment” as a physical store within the state that sells primarily household foodstuffs for offsite consumption.
  • “Restaurant” means any retail establishment serving food or beverages for onsite consumption.
  • “Retail store establishment” means a physical store within the state with more than 50 percent of its revenue generated from merchandise subject to the state’s sales and use tax.

What would be required under the law? As with the 2016 version, this bill would add Section 510.5 to the Labor Code to require employers to provide all employees with a work schedule at least seven calendar days prior to the employee’s first shift. The work schedule must be in written or electronic form and list all scheduled shifts (with start and ending times) for all employees in a specific department for at least 21 consecutive calendar days.

The bill would additionally require employers to provide “modification pay” to an employee (1) for each previously scheduled shift that the employer cancels or moves, (2) for each on-call shift where the worker is not called in, and (3) for previously unscheduled shifts that the employer requires an employee to work. The bill also proposes a number of exemptions to the modification pay requirement, such as where an establishment is rendered non-operational because of an uncontrollable natural force. Finally, SB 850 contains other, less substantive requirements, such as workplace posting, recordkeeping for at least three years, anti-retaliation provisions, and penalty provisions.

SB 850 closely resembles Senator Levya’s previous “predictive scheduling” bill—SB 878, the “Reliable Scheduling Act of 2016”—which died in committee. SB 878 in turn resembled AB 357—the “Fair Scheduling Act of 2015”—which died on the Assembly floor. SB 850 has been assigned to the Senate Committee on Labor, Employment, and Retirement and also to the Committee on the Judiciary. During 2020, the Legislature and Governor are more likely to ever adopt to adoptive invasive regulation of this nature. Consider, as an example, the lawmakers’ recent enthusiastic embrace of AB 5, which codifies revolutionary changes in the traditional nature of independent contracting.

While SB 850 is still only a bill—sitting on Sacramento’s Capitol hill like Buddy the giant Elf on his undersized father’s knees—the potential implication for employers are gigantic. As such, should SB 850 pass, employers should brace for potentially difficult compliance requirements. It is still very early in the legislative year, but we will maintain a focused eye on the legislation and will continue to write on this issue.

Workplace Solutions—I Like to Comply, Complying’s My Favorite

Employers have a lot to comply with in California. Should the Los Angeles and California measures pass, they would impose stringent new scheduling requirements, with concomitant potential statutory penalties. One important thing to do is to take the time think about best practices for compliance with any predictive scheduling law. Don’t hesitate to reach out to Seyfarth to help you determine whether you are a covered employer under any state or municipal predictive scheduling laws.

By Shireen Wetmore, Kerry M. Friedrichs, Benjamin D. Briggs, and Ilana R. Morady

Seyfarth Synopsis: The Department of Labor Standards and Enforcement, the Employment Development Department, and CalOSHA now have FAQs addressing how the COVID-19. coronavirus affects California businesses.

Perhaps you, like an author of this post, enjoy reading updates on COVID-19 (the shorthand for “coronavirus disease 2019”) while wearing a mask on airplane flights. Or maybe you’re not a coronavirus nerd but are just curious. How long does it take to properly wash my hands? Should I wear a mask? Is the coronavirus in my county? My neighborhood? If I feel a cold coming on, should I go to the doctor or call in sick? Or should I keep coming to work unless I get more serious symptoms? For these kind of questions, your best online source is the CDC website.

But what if you’re that most beleaguered of entities, a California employer? Where can you turn?

Below we have collected guidance issued to date by various California administrative agencies.  We also highlight some of the potential inconsistencies between the guidance from these agencies.  Take a dollop of hand sanitizer (if you can find any) and read on…

DLSE Issues Guidance for Employers

The Labor Commissioner’s Office has released FAQs on Laws Enforced by the Labor Commissioner and the intersection with COVID-19, addressing key topics including sick leave and reporting time pay.

What about sick leave for employees who are quarantined? The guidance from the Division of Fair Labor Standards and Enforcement opines that employees are entitled to use available California Paid Sick Leave not only for illness due to COVID-19, but also for “preventative care.” Time spent in self-quarantine may qualify as preventative care if ordered by civil authorities.

Once sick leave is exhausted, employees may be able to use vacation or other paid time off if the employer’s policies would otherwise permit it.

Employers must not require that quarantined employees use their paid sick leave, but may set a two-hour minimum for each use of paid sick leave.

Employers must not ask about medical information, but may ask about recent travel to high-risk countries and may require that employees report such travel.

Shutdowns and Supply Chain Disruptions

Supply chain disruptions caused by quarantines in China, Italy and elsewhere may curtail operations by California businesses. Telling employees to stay home may trigger certain obligations for employers. For example, reporting time pay requirements may apply even if the reason for sending employees home relates to COVID-19 exposure, with certain exceptions when a quarantine is ordered by civil authorities.

If exempt salaried employees perform any work during a week in which the company is shut down, they may still be entitled to a full week’s salary, if they were ready and able to work but did not do so because the employer did not make work available.

EDD Guidance On Wage Replacement and Payroll Disruptions

The Employment Development Department (“EDD”) has also issued guidance for employees, in line with the DLSE guidelines, discussing how employees can replace wages lost due to coronavirus-related absences, through short term disability or unemployment insurance.

Employees may be able to claim short term disability while sick or quarantined, or paid family leave while caring for a sick or quarantined family member. In the event of a layoff or hours reduction, employees may also be entitled to UI payments as well.

Employers considering layoffs or work reductions because of COVID-19 should consult programs such as the EDD’s Work Sharing Program, which permits employers to reduce hours for employees, while providing wage replacement through UI, without laying off workers or removing them from the payroll.

The EDD also offers tax assistance to employers affected by COVID-19, including 60-day extensions to file state payroll reports or to deposit state payroll taxes without penalty or interest.

CalOSHA Advice on Making A Plan to Protect Workers

Last month we blogged about CalOSHA’s guidance on protecting workers from COVID-19 under the Aerosol Transmissible Diseases (ATD) standard, which applies to the healthcare industry and other establishments where risk of exposure to aerosol transmissible diseases may be higher, such as laboratories, correctional facilities, homeless shelters, and drug treatment programs.

Now, CalOSHA has issued interim guidance to general industry employers on how to protect workers from COVID-19. The guidance confirms the Division’s position that even employers not covered by the ATD standard must, under the CalOSHA regulatory scheme, protect employees from COVID-19 to the extent the disease is a hazard in the workplace. CalOSHA does not indicate whether employers should currently consider COVID-19 a hazard, but the analysis is essentially based on reasonable anticipation. In other words, can you reasonably anticipate that your employees are at risk of being exposed to the virus? Given the current state of affairs, CalOSHA appears to believe the answer is likely yes for most employers. So, what to do?

CalOSHA opines that general industry employers should implement measures to prevent or reduce infection hazards, such as implementing CDC recommendations, and also provide training to employees on their COVID-19 infection prevention methods.

The CDC’s infection prevention measures include:

  • Actively encouraging sick employees to stay home
  • Sending sick employees, particularly those with respiratory illness symptoms, home immediately
  • Training employees on important topics such as:
    • Hand hygiene,
    • Cough and sneeze etiquette,
    • Avoiding close contact with sick persons
    • Avoiding touching eyes, nose, and mouth with unwashed hands
    • Avoiding sharing personal items with coworkers
    • Checking the CDC’s Traveler’s Health Notices
  • Providing tissues, no-touch disposal trash cans, and hand sanitizer for use by employees
  • Performing routine environmental cleaning of shared workplace equipment and furniture

CalOSHA also encourages employers to implement the CDC’s recommendation for creating an infectious disease outbreak response plan. Such plans may include canceling group activities or events, increasing telecommuting opportunities, and other methods of minimizing exposure among employees (and with the public).

The guidance notes that employer responsibility for addressing the COVID-19 hazard arises from the CalOSHA Injury Illness Prevention Plan standard (8 CCR 3203). Thus, CalOSHA will argue that an employer’s failure to address the potential COVID-19 hazard could result in liability. The guidance also suggests that certain employers may be required to provide Personal Protection Equipment (PPE) under the CalOSHA PPE standard (8 CCR 3380) or to implement administrative and engineering controls under the Control of Harmful Exposures standard (8 CCR 5141).

This CalOSHA stance is significant, because CalOSHA is suggesting that some general industry employers may have to provide respirators, such as N95 masks. Yet employers cannot distribute these masks without implementing procedures such as medical clearance and fit testing. If you are considering the use of respirators in the workplace, or have employees who wish to wear them voluntarily, contact your favorite Seyfarth attorney for further guidance. Note that surgical masks are not considered respirators and hence are not subject to CalOSHA regulatory requirements, but the guidance reminds employers that surgical masks do not protect persons from airborne infectious diseases and cannot be relied upon for novel pathogens.

The guidance also highlights some risks for employers. For example, the CDC guidance encourages employers to inform fellow employees when an employee has been exposed to COVID-19. Yet employers must be cautious and maintain confidentiality consistent with the requirements of the Americans with Disability Act (“ADA”) and California laws. As highlighted by the DLSE guidance above, employers must not ask about medical information and should be careful in addressing concerns (and suspicions) about an employee’s health, symptoms, or potential exposure to COVID-19.

Legislation in the Pipeline

Assemblywoman Lorena Gonzalez of San Diego (of AB5 fame) has authored Assembly Bill 3123, a bill seeking to protect workers facing quarantine because of COVID-19. Her bill aims to provide job protection for quarantined employees who miss work, allow employees to use sick leave while quarantined, and to provide additional protection for parents whose children’s schools are closed. This latter provision may become increasingly important as many schools across California, including the entire Elk Grove School District, the fifth largest in the state, are closing their doors in an effort to prevent spread of COVID-19.

Just the Beginning

Politicians and health experts alike are warning that the outbreak is likely to expand, with school closures, supply chain disruptions, and related economic upheaval continuing in the coming weeks and months. Other California agencies are working to provide guidance for employers, as well as various federal and local agencies. We anticipate that these guidelines will evolve and be updated over the course of coming weeks. We will continue to update this blog with new developments. Check back for updates and consider reaching out to your employment counsel as you prepare to address the impacts of the novel coronavirus on your company and workers.

Stay safe, wash your hands, and feel free to contact the authors or any other member of our dedicated Coronavirus Task Force with any questions or to let us know what your company is doing about COVID-19.

For more information on this or any related topic, please contact the authors, your Seyfarth attorney, or any member of the Workplace Counseling & Solutions Team, Workplace Policies and Handbooks Team, or the Workplace Safety and Health (OSHA/MSHA) Team.

 

Seyfarth Synopsis: Judge Dale Drozd in the Eastern District of California issued a standing order establishing procedures limiting the access of civil litigants as an emergency measure to deal with an onerous judicial workload amid reports of severe under-funding of judicial resources.

As you may have noticed, Washington, D.C. has not earned a reputation as the place where “things get done.” The political gridlock there is having deleterious effects on the California litigating public. For years, the Eastern District of California (EDCA) has valiantly coped with one of the highest judicial caseloads in the nation. With the EDCA’s population growing by 5.5 million people during the last 40 years, the Administrative Office of the United States Courts has recommended the creation of at least six additional EDCA judgeships. Yet Congress has declined to fund a single new judgeship, leaving the EDCA with just four full-time District Judges and four Senior District Judges (with significantly decreased caseloads). Meanwhile, the Northern District of California, with about the same population, has 14 full-time judges. Go figure.

And it gets still worse. Two full-time EDCA district judges recently took senior status, and thus have lower caseload expectations. One Senior Judge assumed senior inactive status, lowering his caseload to zero. The EDCA, already grossly overburdened, now has two vacant, full-time judgeships, waiting for Congress to act.

Sensing that enough is enough, Judge Dale A. Drozd of the EDCA’s Fresno division has taken drastic action. On February 4, 2020, he issued a remarkable standing order. While the EDCA’s judicial vacancies remain unfilled, he will follow special procedures to deal with the “ongoing judicial emergency”: (1) All new civil cases will proceed without assignment of a district judge, and will be assigned only a magistrate judge. (2) All civil motions will be decided without oral argument. (3) No new trial dates will be set in civil cases. This order supersedes EDCA Local Rule 230(g), and assigns to the designated magistrate all motions for class certification and all motions seeking approval of collective or class action settlements. Judge Drozd implemented these emergency procedures “reluctantly,” while recognizing that they are not “conducive to the fair administration of justice.”

Judge Drozd was not the first judicial officer to respond to the EDCA’s ongoing caseload crisis. Previously, the EDCA convinced the Administrative Office of the United States Courts to apportion additional magistrates to the EDCA, and to begin a court clerk program to provide each judge an additional clerk. And on June 19, 2018, then Chief Judge Lawrence O’Neill wrote the White House Counsel and California’s Senators to warn that a continuing failure to address the EDCA’s caseload crisis would result in catastrophic consequences.

Judge O’Neill’s letter, predicting dire consequences from continued inaction from Washington, D.C., was prophetic. The catastrophic consequences foretold are now laid out in Judge Drozd’s order. The people who pay for the national government’s failure to provide adequate judiciary resources are the members of the California litigating public. Here’s our note of hope that Judge Drozd’s remarkable stance will reach the ear of our national leaders.