Legal requirements for employers continue to proliferate and change in response to the COVID-19 pandemic. New York businesses should be mindful of three recent developments regarding employee leaves of absence and PPP loan forgiveness rules.
1. New York State COVID-19 Leave Restrictions Due to Employee Travel
As we explained in a prior alert, New York State requires employers to provide paid sick leave to employees who are subject to mandatory or precautionary orders of quarantine or isolation and are showing COVID-19 symptoms or are physically unable to work remotely. However, the statute provides an exception for employees who traveled to a country for which the Centers for Disease Control and Prevention (CDC) issued a Level 2 or 3 Travel Health Notice prior to the employees’ travel, provided that the travel was not work-related.
Gov. Andrew Cuomo recently issued an executive order providing that, in addition to the above exception, employees are not eligible for paid leave pursuant to New York’s COVID-19 leave law if, after June 25, 2020, they voluntarily travel to a state with a COVID-19 positive test rate higher than 10 per 100,000 residents, or higher than a 10% test positivity rate, over a seven-day rolling average, as determined by the Commissioner of the Department of Health. This exception similarly applies so long as that the travel was not work- related. Further information about New York’s COVID-19 Travel Advisory and the states at issue is available here.
2. FFCRA Leave Eligibility Based on the Closure of Summer Camps and Programs
U.S. employers with fewer than 500 employees are required to provide eligible employees with up to two weeks of paid sick leave pursuant to the Families First Coronavirus Response Act (FFCRA) if employees are unable to work (or telework) due to a need to care for their child whose place of care is closed due to COVID-19, among other reasons. Covered employers also are required to provide eligible employees with up to 10 additional weeks of paid expanded family and medical leave for this reason.
The U.S. Department of Labor (DOL) recently issued guidance regarding how and when employees may take leave under the FFCRA to care for their child due to the closure of their child’s summer camp or program for COVID-19 related reasons. Employees requesting such leave must provide their employer with the following information orally or in writing:
- An explanation of the reason for the leave;
- A statement that the employee is unable to work because of that reason;
- The name of the child;
- The name of the specific summer camp or program; and
- A statement that no other suitable person is available to care for the child.
Notably, if the child is unable to attend the summer camp or program because it is operating at a reduced capacity, the employee still may be eligible for FFCRA leave based on the “partial” closure of the summer camp or program.
Importantly, there should be some indication that the child would have attended the summer camp or program if it did not close in response to COVID-19. For example, the child applied to or was enrolled in the summer camp or program before it closed or the child attended the summer camp or program in prior years and was eligible to attend this summer.
However, such facts are not necessarily required and the DOJ cautions against a “one- size-fits-all” rule. Accordingly, employers are encouraged to review the DOJ’s guidance and consult with counsel before denying any employee FFCRA leave due to the employee’s need to care for his or her child.
3. Revisions to Paycheck Protection Program Regulations for Loan Forgiveness
Employers who received PPP loans should be aware that the U.S. Small Business Administration (SBA) issued revisions to its interim final rule in response to the recently enacted PPP Flexibility Act. These revisions include additional information regarding how loan proceeds should be used to maximize the amount of loan forgiveness that may be available.
The PPP Flexibility Act reduced the portion of PPP loan proceeds that must be used for payroll costs from 75% to 60% for the full amount of the PPP loan to be eligible for forgiveness. The SBA’s revised interim final rule provides further guidance regarding when an employer may submit an application for loan forgiveness as well as when payroll and non-payroll costs must be incurred and/or paid to be eligible for forgiveness.
Prior to the PPP Flexibility Act, a reduction in full-time equivalent (FTE) employees generally resulted in a reduction in the loan forgiveness amount available to the employer. However, the PPP Flexibility Act established two new exemptions based on employee availability and business activity. Accordingly, the number of FTE employees does not affect the amount of loan forgiveness under the following two circumstances:
- The employer is able to document an inability to rehire individuals who were employees on Feb. 15, 2020 and an inability to hire similarly qualified employees for unfilled positions on or before Dec. 31, 2020; or
The employer is able to document an inability to return to the same level of business activity as it had before Feb. 15, 2020, due to compliance with requirements established or guidance issued by the Secretary of Health and Human Services, the Director of the CDC or the Occupational Safety and Health Administration during the period beginning on March 1, 2020 and ending Dec. 31, 2020, related to the maintenance of standards for sanitation, social distancing or any other worker or customer safety requirement related to COVID-19.
To take advantage of the first exemption above, employers are required to inform the applicable state unemployment insurance office of any employee’s rejection of the employer’s rehire offer within 30 days of the employee’s
rejection. Employers should maintain copies of the written rehire offer, a written record of the employee’s rejection of the offer, and a written record of efforts to hire a similarly qualified individual.
To take advantage of the second exemption above, employers are required to document and certify that their reduction in business activity is the direct or indirect result of their compliance with the specified COVID-19 requirements or guidance. For example, reduction in business activity may be the result of a local government shutdown order that is based upon guidance issued by the CDC.
In addition to these exemptions, a prior issued exemption for employers that have reduced the hours of an employee and offered to restore the reduction in hours, but the employee declined the offer, remains in effect. To take advantage of this exemption, the employer must make a good faith, written offer to restore the reduced hours of the employee for the same salary or wages and the same number of hours as earned in the last pay period prior to the reduction in hours. The employer is required to maintain records documenting this offer and the employee’s rejection of it.
For more information about this alert, please contact Jason B. Jendrewski at email@example.com or 212.878.7952, or any member of the firm’s New York Labor & Employment Group.