Paying Employees During COVID-19

By: Chana Anderson & Megan Coen

Counties all over the country have instituted mandatory “shelter-in-place” orders for residents. Only businesses considered “essential services” may remain open. With millions of Americans forced to stay home, employers must understand what pay employees are entitled to during these quarantine orders.

Below are strategies our clients are utilizing, as well as available government programs and requirements.

Continuing Pay Unrelated to Childcare Needs or Confirmed COVID-19 Diagnosis

Some businesses impacted by social distancing guidelines are choosing to pay employees all (100%) or a portion (as low as 25%) of their regular salary or wages for a defined period.  The period has ranged from 2 to 4 weeks. Decisions about length of compensation were driven by shelter-in-place guidance and employer estimates of how long they could financially sustain pay continuation.

Wage Replacement for Employees with Reduced Hours or Laid Off

Businesses unable to sustain operations may reduce employee hours or temporarily shut down – some or all their operations. If this happens, as a result of COVID-19, impacted employees may be eligible for state unemployment insurance (UI). In several states, including California, employees may file for UI and receive partial wage replacement if their hours have been reduced, or they have become temporarily unemployed. Bonus: Employees are not required to seek work while unemployed, if they will return to work for their original employer after COVID-19 restrictions are lifted.

A unique program of unemployment is called Work Sharing. It provides partial UI to employees whose hours and wages have been reduced through no fault of their own. Work Share is paid for by the employer in the same manner as regular unemployment. The benefit is employees can earn slightly more under this program than regular UI.

Paid Sick Leave Related to COVID-19 Symptoms and Diagnosis

Over the past years, several cities and states enacted employer paid sick leave regulations.  If your business is in one of those locales paid sick leave can be used for symptoms of and confirmed cases of COVID-19.  On March 18, 2020, the President signed into law the Families First Coronavirus Response Act (FFCRA). This law requires private employers with fewer than 500 employees to provide up to 80 hours of paid sick time, depending on full-time status.

  • An employee subject to a Federal, State, or local quarantine or isolation order related to COVID–19.
  • An employee advised by a health care provider to self-quarantine due to COVID–19.
  • An employee experiencing symptoms of COVID–19 and seeking a medical diagnosis.
  • An employee caring for an individual who is subject to an isolation order or advised by a health-care provider to self-quarantine.
  • An employee caring for a son or daughter if the care provider or school has closed due to COVID–19 precautions.

Note: The federal government established maximum payment thresholds dependent on why the employee is off work. For the employee’s self-care: Employers must pay the regular rate of pay up to a maximum of $511 per day and $5,110 in total. For the care of family members: Employers must pay at least two-thirds of the employee’s regular rate of pay, up to a maximum of $200 per day and $2,000 in total.

It’s also important to call out, states like California and New York have expanded eligibility and access to wage replacement programs such as paid family leave and disability insurance. California recently waived the 1-week waiting period, so disability payments begin the first week employees are unable to work. These programs can provide additional wage replacement after paid sick leave is exhausted.

Paid Family and Medical Leave to Meet Childcare Needs

Another component of the FFCRA worth noting is the expansion of the Family and Medical Leave Act.  This expansion applies to private sector employers with fewer than 500 employees and provides up to 12 weeks of job-protected leave. Below are highlights.

  • Available for an employee who has been employed for at least 30 calendar days.
  • Available if the employee is unable to work (or telework) due to a need to care for their child under 18 years of age, if the school or place of care has closed due to COVID-19.
  • The first 10 days of leave may be unpaid.
  • An employee may elect to use accrued vacation leave, personal leave, or sick leave during the unpaid period.
  • Employer must pay for leave after day 10, at least two-thirds of the employee’s regular rate of pay, up to a pay maximum of $200 per day and $10,000 in total.

During this unusual time employers are faced with difficult challenges on how to assist employees. There is no one size fits all policy for pay continuation. Rather it’s finding the right balance of organizational policies and government requirements.  It’s best to ensure polices are fair and equitable for all employees.

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