Robert A. Boonin & Andrea Frailey: A COVID-19 Flash Survey of What Employers Are Thinking and Doing

Robert A. Boonin	Andrea Frailey

Wednesday, May 27, 2020

Employers are experiencing an influx of challenges related to their rights, obligations, and best practices at issue due to the global pandemic. In late April 2020, Dykema polled employers using a short “flash survey” asking how they are responding to various return-to-work issues in light of their obligations under the Paycheck Protection Program (PPP),^[1] the Families First Coronavirus Response Act (FFCRA),^[2] the Americans with Disabilities Act (ADA),^[3] and related concerns. The results provide a glimpse of what many employers were doing just as the first round of PPP loans were funded and as many were considering recalling laid-off employees due to those loans or the loosening of state orders limiting operations.^[4]

PPP-related considerations

Of the employers responding to the survey, 60 percent—the majority of which had 51 to 500 employees—had applied for PPP loans. Of those who had applied for PPP loans, 61 percent reported that they had received their loans by the close of the survey. Of those who did not apply, it appears that many were not qualified for those loans either because they employed more than 500 employees or perhaps their liquidity positions were too strong per the PPP’s guidelines. About half of the respondents indicated that they were also interested in taking advantage of the Employee Retention Credit, a CARES Act benefit that is available to employers without regard to size or liquidity, although PPP loan recipients are not eligible for this tax credit.^[5] Thus, it appears that employers welcome the relief these programs offer.^[6]

Layoff trends

Although 78 percent of responding employers indicated that they were “essential” businesses within the meaning of state/local closure orders, approximately half of those surveyed had reduced staff. Most employers responding to the survey reduced through furloughs as opposed to permanent layoffs. Only 10 percent of the employees laid off by respondents were permanent layoffs. Those employers with the largest employee reductions have between 51 and 500 employees.^[7]

Employee recall challenges

The survey also shed light on the fact that even with both the requirement that PPP loan recipients restore their payrolls to what they were during the loan pre-pandemic look-back period and the loosening stay-at-home orders, employers were experiencing some challenges as they were recalling employees.^[8] For those employers who were already recalling employees at the time of the survey, only about a third witnessed considerable cooperation from their employees. Other survey participants are experiencing significant difficulty. About 20 percent reported that some employees were unable to accept recall due to reasons protected under the paid leave provisions of the FFCRA,^[9] particularly those providing for paid child-care leave. Half of the respondents identified that employees were resisting recalls for two other reasons, though, such as a desire to continue their furlough status and collect unemployment benefits—specifically, the $600 per week federal supplement^[10]—or a fear to return to work while the coronavirus is still active.^[11]

These results strongly suggest that employers must carefully prepare communications to employees regarding recall, both with respect to the potential impact on unemployment benefits if employees refuse the request to return to work and to precautionary measures to be implemented upon the return of employees. As to employees who refuse to return, employers must then weigh their options to terminate employment relationships, allow employees to be skipped over for recall when feasible, place employees on unpaid leaves, or place employees on FFCRA paid leaves. For employers trying to restore their payrolls to pre-pandemic levels due to their PPP loan obligations, having employees refuse to return could jeopardize their PPP loan forgiveness.^[12] The Small Business Administration has recently indicated its awareness of this concern and will, on a limited basis and then only if properly documented, allow those employees to be counted as “employed” for PPP loan purposes.^[13]

Ramping-up considerations

Each option for responding to recall resistance presents its own set of issues; no cookie-cutter response works. In any event, it is important that recall communications describe precautionary measures being taken and best practices being implemented, such as the use of personal protective equipment (PPE) and COVID-related questionnaires, training related to PPE and hygiene, the potentially daily process of requiring all employees to complete questionnaires before beginning work and the location of such pre-shift process (so as to avoid possible exposure in the workplace), and the protection of any health-related information learned during pre-shift procedures. All of these issues (and more) must be carefully considered before recalling employees, especially where coworkers and customers face the risk of exposure as the result of what may later be second-guessed as inadequate protective measures by the employer.

How fast recalls will happen and choosing whom to recall and when is presenting employers with challenges as well. Interestingly, despite reporting of a near-term desire to reopen businesses, 58 percent of the responding employers said they planned phased reopenings over a one-month period, 21 percent plan to delay reopening until all of the Centers for Disease Control (CDC) guidelines are satisfied, and only 21 percent indicated an intention to return to normal operations quickly.^[14]

With respect to the reopening of businesses, only half of those responding as of late April had established objective criteria to determine the order employees will be recalled to work. Establishing such nondiscriminatory criteria is an important step in protecting employers from future liability. Employers should establish and document those objective criteria now, so that they are not trying to remember why one employee was selected over another if a discrimination claim is later filed. Employers may be tempted as part of this process to factor in concerns regarding employees perceived as being vulnerable to infection, such as those over age 65 and those with various health conditions. Acting on such concerns without the issue being first raised by the employee is contrary to EEOC guidance and should be avoided.^[15]

Because the regulatory environment in which we live is changing rapidly—and often without notice of what was changed—employers should bookmark key materials from the CDC, the Occupational Safety and Health Administration, the Department of Labor (DOL), and the IRS related to best practices and mandated leaves of absence, and employers should refresh the link at each decision point during the planning process. This will prevent employers from making decisions based on outdated materials that may only be days old. That said, during this period and until regulatory materials are approved in more final form, employers would be wise to print and retain materials upon which decisions were made; in doing so, decisions that may later be challenged as being noncompliant with subsequent guidance can be explained by the production of the guidance in effect at the time those decision were made.

FFCRA paid leave considerations

In what is likely to change dramatically as businesses reopen and employees are recalled, the relevance of the paid leaves available under the FFCRA will likely exponentially increase. As of the end of April, though, only 30 percent of the survey’s respondents indicated that they had granted any paid family leave under the act; of those who have granted such leaves, 77 percent had done so for fewer than five employees. Almost half of the respondents reported that they granted some paid sick leaves under the act, but also only to a handful of employees.^[16]

Although the end of the school year is near for most employees, the prospect of returning to work while childcare providers are not yet open or are operating at reduced capacity will likely result in an increase in the number of employees requesting paid FFCRA family leave (at least through December 31, 2020, when the FFCRA’s paid leaves are set to sunset). This expectation is supported by the increasing number of client calls regarding employee requests for and inquiries regarding both paid sick leave and family leave under the FFCRA.

With this in mind, employers should act now to prepare documentation to be required of employees requesting such leave—documentation that the IRS has indicated will be required for those requesting tax credits related to the payments made for such leaves.^[17] Additionally, employers with fewer than 500 employees who are generally required to provide the FFCRA’s paid leaves are required to post a DOL poster advising employees of their rights to the leave and providing contact information for the DOL in the event of questions or complaints.^[18] The feasibility of publishing new policies for FFCRA leave administration should also be considered.

Conclusion

Many employers may feel as if they have lived a lifetime in just the past two months, working long hours trying to keep businesses open while taking steps to care for the employees who allow the businesses to operate. What the survey results indicate, though, is that much work remains to be done. Such work is certainly required for the reopening that is to take place over the next few months, but the playbook being developed may prove just as necessary in the fall should the forecasts for a return of COVID-19 prove true. As the saying goes, “Hope for the best, but expect the worst.”

Robert A. Boonin is a member in Dykema’s Detroit and Ann Arbor offices where he concentrates his practice on labor and employment litigation and counseling.

Andrea Frailey is an associate in Dykema’s Detroit office where she focuses her practice on labor and employment and litigation matters.

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