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Punching In: Virus Relief Requires Big Decisions From Employers

March 30, 2020, 10:00 AM

Monday morning musings for workplace watchers

April Fools’ Day Looms | Getting to 500 | Phase Four

Ben Penn: There won’t be anything humorous about April Fools’ Day this year for millions of workers and their employers. Some companies are targeting April 1 or shortly thereafter as the deadline to make sensitive decisions on how to reduce their workforce due to the coronavirus pandemic.

The Labor Department’s paid leave rules for coronavirus-related relief take effect Wednesday at businesses with fewer than 500 workers. Employers get full tax credit reimbursements for up to 12 weeks of paid sick leave and partially paid family leave they’ll be required to provide. But cash flow freezes caused by stay-at-home orders and a downward trending economy likely will lead some businesses to decide it’s easier to issue layoffs or furloughs than to keep workers on the payroll if they can’t do their jobs because of the virus.

Before executives choose whether to terminate staff, issue temporary furloughs with a set return date, or opt for indefinite layoffs, they’re pressuring DOL for clearer guidance on which workplace scenarios would qualify for leave. If you’re like me, you’re hitting refresh on this page and this one by the minute, because the Wage and Hour Division keeps updating the list.

“We appreciate DOL’s recent FAQs. We suspect there are many more to come. The regulated community needs direction from DOL on the definition of ‘homecare worker’ for purposes of the statute; exactly how the tax credit will be implemented; and the way” the law “relates to WARN and how WARN notices are applied,” Littler Mendelson’s Michael Lotito told me. Businesses hope to be exempted from the Workplace Reduction and Retraining Notification Act when laying off workers as a result of Covid-19, the disease caused by the new coronavirus.

Worker advocates also want more certainty. Contrary to the business community, worker rights groups are requesting that the agency apply the law as expansively as possible.

Vasu Reddy, senior policy counsel at the National Partnership for Women & Families, told me her coalition is urging DOL to specify that workers subject to all of the various forms of government stay-at-home orders be covered by the new paid sick leave and expanded family leave. That request and many others are included in a letter 158 organizations recently sent to Labor Secretary Gene Scalia.

Chris Opfer: While the DOL is crafting those new regulations, some companies are taking a headcount.

Employers with 500 or more workers are exempt from the new sick and family leave requirements. Although the department last week offered some insight on who’s in and who’s out when it comes to that count, there are still plenty of questions. That includes how to treat subsidiaries, affiliates, and other related entities.

The uncertainty could put some companies in a tough spot, Epstein Becker attorney Paul DeCamp told me. If you keep some employees out of the count and give your workers the paid leave, there’s a possibility that the Internal Revenue Service says you don’t get the new Covid-19 paid leave tax credit because you’re actually above the 500-employee threshold. Overcount and determine that you’re exempt and you could be looking at a lawsuit for failure to provide the paid leave.

“If you’re in that boat, the better story is ‘We erred on the side of the leave and we’re going to trust that the IRS is not going to want to get out there and start hammering employers,’” DeCamp said.

Jaclyn Diaz: The president Friday signed the historic CARES Act, giving workers significantly expanded unemployment assistance and similar benefits for gig workers, as well as tax breaks and direct payments for businesses. But lawmakers and lobbyists already are looking to a potential fourth virus response bill to backstop any perceived gaps in coverage and benefits for workers and businesses.

“Our next bill will lean toward recovery, how we can create good-paying jobs as we go forward, perhaps building the infrastructure of America,” House Speaker Nancy Pelosi (D-Calif.) said last week.

Pelosi will have to convince the Republican-majority Senate and the White House to get on board. Lawmakers aren’t scheduled to return until April 20.

Democratic targets for the next bill will include:

  • More paid family and sick leave: Broader paid sick and family leave provisions were left stripped down from Democrats initial plans for workers. “Family medical leave is not as inclusive as it needs to be,” Pelosi told reporters.
  • Worker safety: Democrats are pushing the DOL’s Occupational Safety and Health Administration to develop standards for medical professionals to prevent the spread of airborne viruses.
  • Workforce development grants: The CARES Act reauthorized several health workforce programs from fiscal 2021 through 2025 and provided $255 million annually for nursing workforce development programs and $48.9 million annually for primary care training and enhancement. That’s not enough for health-care and other workers, said Katie Spiker, director of government relations at National Skills Coalition. “An adequate response would be in the billions, not millions,” she said.

Chris Opfer: The shuttering of offices and shift to telework in response to the coronavirus pandemic isn’t stopping some folks from making career moves. A key member of the Labor Department’s brain trust heading for the door.

Jonathan Berry, the department’s principal deputy assistant secretary for policy, is leaving the Frances Perkins building April 10. The former Alito clerk and Jones Day Associate is headed to administrative law firm Boyden Gray & Associates.

Berry recently helped establish the DOL’s Office of Compliance Initiatives, designed to help employers understand their legal obligations to workers. His fingerprints are also on a number of big-ticket regulatory items, including new overtime pay and industry-led apprenticeship rules.

Former Labor Secretary Alex Acosta brought in Berry in 2018. Berry quickly amassed what he called his “nerd squad” of conservative lawyers with Ivy League degrees, hired to help find ways to cut regulatory red tape. If these guys were The A-Team of labor deregulation, Berry was Captain Murdock.

DOL was credited by the White House Office of Management and Budget with reducing regulatory compliance costs by $12 billion over two years, second only to the Health and Human Services Department.

“John combines keen legal acumen with the ability to manage teams, two talents that will be invaluable in the private sector” Acosta told me.

DOL spokesman Bob Bozzuto called Berry “a talented lawyer” who “helped the Department save billions of dollars in regulatory costs for the American people.”

On the other side of the ideological spectrum, Obama administration labor alum Lafe Solomon is now on Capitol Hill. Solomon is working as an adviser for Senate Health, Education, Labor and Pensions Committee ranking Democrat, Patty Murray. The career National Labor Relations Board lawyer served as the NLRB’s acting general counsel for more than three years.

We’re punching out. Daily Labor Report subscribers can check in during the week for updates. In the meantime, feel free to reach out to us. See you back here next Monday.

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To contact the reporters on this story: Ben Penn in Washington at bpenn@bloomberglaw.com; Chris Opfer in New York at copfer@bloomberglaw.com; Jaclyn Diaz in Washington at jdiaz@bloomberglaw.com

To contact the editor responsible for this story: Martha Mueller Neff at mmuellerneff@bloomberglaw.com

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