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July 6, 2020 |
Law360 Names Five Gibson Dunn Lawyers as 2020 Rising Stars

Five Gibson Dunn lawyers were named among Law360’s Rising Stars for 2020, featuring “attorneys under 40 whose legal accomplishments transcend their age.”  The following lawyers were recognized: New York partner Brian Ascher in Media & Entertainment, Dallas partner Krista Hanvey in Benefits, New York partner Saee Muzumdar in Mergers & Acquisitions, New York associate Lindsey Schmidt in International Arbitration, and Washington, D.C. of counsel Molly Senger in Employment. The list of Rising Stars was published on July 5, 2020.

July 1, 2020 |
California Supreme Court Answers Critical Questions on Jurisdictional Scope of Certain Labor Laws and Minimum Wage Compliance for Employers Utilizing Non-Hourly Wage Units

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On June 29, 2020, in response to a request from the Ninth Circuit, the California Supreme Court provided guidance on pressing questions of California employment law in Oman v. Delta Airlines, Inc., No. S248726, ___Cal.5th___ (Oman). The Court issued a unanimous opinion on (1) the scope and applicability of California Labor Code Sections 204 and 226, which respectively govern the timing of wage payments and the content of wage statements, and (2) compliance with state minimum wage laws for employers who pay their employees on a non-hourly basis. The Court held that Labor Code Sections 204 and 226 apply to employees only if California is the principal place of their work, meaning the employee either works primarily in this state during the pay period, or does not work primarily in any state but has his or her base of operations in California. (Id. at [pp. 10, 13].) The Court then held that although employers who pay on a non-hourly basis may “average” wages across the unit of payment to determine minimum wage compliance, they may not engage in “wage borrowing,” meaning, “borrowing compensation contractually owed for one set of hours or tasks to rectify compensation below the minimum wage for a second set of hours or tasks.” (Id. at [p. 19].) The decision provides both local and multi-state employers with long-awaited guidance on two important issues of California wage-and-hour law.

A. Flight Attendants Sue Airlines Claiming That Their Wage Statements and the Timing of Their Wage Payments Violated California Law and That They Were Not Paid Minimum Wage for All Hours Worked

Plaintiffs Dev Anand Oman, Todd Eichmann, Michael Lehr, and Albert Flores are current or former flight attendants for Delta Airlines, Inc (“Delta”). In 2015, they filed a putative class action in federal court alleging that Delta violated several California labor laws. Plaintiffs alleged that Delta failed to pay its flight attendants in accordance with the state’s minimum wage laws, provide comprehensive wage statements required under California Labor Code Section 226, and timely pay wages within the semimonthly schedule provided in Labor Code Section 204. The district court ultimately granted summary judgment to Delta on all issues. First, the district court concluded that Delta’s compensation plan—which involved a complex, multi-factor formula intended to compensate for a “rotation” of work—did not violate California’s minimum wage laws. It then determined the Labor Code provisions governing pay periods and wage statements did not apply to Plaintiffs because the multi-jurisdictional nature of their work and the short duration of their time in California were insufficient to warrant application of California law.

Plaintiffs appealed the decisions to the Ninth Circuit. Before deciding the appeal, the Ninth Circuit certified the following three questions of California state law to the California Supreme Court (id. at [p. 4]):

(1) Do sections 204 and 226 apply to wage payments and wage statements provided by an out-of-state employer to an employee who, in the relevant pay period, works in California only episodically and for less than a day at a time?

(2) Does California minimum wage law apply to all work performed in California for an out-of-state employer by an employee who works in California only episodically and for less than a day at a time?

(3) Does the Armenta/Gonzalez bar on averaging wages apply to a pay formula that generally awards credit for all hours on duty, but which, in certain situations resulting in higher pay, does not award credit for all hours on duty?

The California Supreme Court accepted the request, continuing its recent pattern of accepting certified-question appeals from the Ninth Circuit, particularly on labor and employment issues. Oman was decided alongside two companion cases, Ward v. United Airlines, Inc., and Vidrio v. United Airlines, Inc., No. S248702, ___ Cal.5th ___ (together, Ward), which similarly concerned the applicability of state labor laws to flight attendants primarily based outside the state’s territorial jurisdiction.

B. The Court’s Opinion in Oman Offers Clarity on the Geographical Scope of Certain California Labor Laws and Compliance with State Minimum Wage Requirements

Justice Kruger authored the opinion of the Court, in which Chief Justice Cantil-Sakauye and Justices Chin, Corrigan, Liu, Cuéllar, and Groban concurred. The Court addressed the first and third questions certified by the Ninth Circuit, commencing with the question concerning the reach of Labor Code Sections 226 and 204, which respectively address the content of wage statements and the mandatory timing of wage payments. The Court, relying on its decision in the companion Ward case, unanimously held that an employee was not entitled to the protection of either section unless California was the principal place of that employee’s work during the relevant pay period. (Oman, supra,___ Cal.5th ___ at [pp. 10, 13].) The Court clarified that California would be the principal place of an employee’s work if the employee either (1) works primarily in California during the pay period, or (2) does not work primarily in any state but has his or her base of operations in California. The Court reasoned that any other conclusion would lead to impractical and burdensome results for multi-state employers and, importantly, lacked any reasonable policy justification. Because the proposed class of Delta employees included individuals like Plaintiff Dev Oman who neither performed their work predominantly in California nor were based in the state for work purposes, they were not entitled to the protections of Sections 204 and 226. (Id. at [p. 7].) The Court also clarified for the Ninth Circuit that the location or residence of the employer is irrelevant to the analysis of the applicability of Section 226 (and by implication, irrelevant to the applicability of Section 204 as well). (Ibid.)

The remainder of the Court’s opinion addressed the Ninth Circuit’s questions regarding the permissibility of Delta’s compensation scheme in light of California’s minimum wage laws, with the Court ultimately determining that Delta complied with California’s minimum wage requirements. The Court, however, chose not to resolve the Ninth Circuit’s question of whether California minimum wage laws applied under the factual circumstances of the case.[1] (Id. at [pp. 13–14].) Instead, the Court’s analysis centered on the substance of California’s minimum wage laws themselves, specifically the issues involved in determining if a compensation scheme that does not pay employees an hourly wage, but instead pays per task or other “method of compensation,” complies with such laws.

In analyzing that issue, Justice Kruger focused on the nature of the contractual obligation between the employer and employee with respect to pay. (Id. at [pp. 19–20].) Her premise was simple: the employer’s first obligation is to pay all employees at least the hourly minimum wage for those units compensated under the contract, whether those units are day, task, piece, or some other metric. (Id. at [pp. 20–21].) The Court held that determining whether the employer had satisfied its contractual obligation could be done by “translat[ing] the contractual compensation into an hourly rate by averaging pay across those tasks or periods.” (Id. at [p. 21].) For example, an employer that pays in daily units can average pay across all hours worked in a day to determine if the resulting hourly wage meets the minimum required. Delta easily satisfied this obligation; the parties did not contest that Delta’s flight compensation rates, when averaged, far exceeded the minimum wage requirements. (Id. at [pp. 24–25].)

Justice Kruger, however, emphasized that this was not the end of the inquiry. The employer must meet its minimum wage obligations while also paying for each task, day, or other unit at the contractually promised rate. The Court used the seminal case of Armenta v. Osmose, Inc. (2005) 135 Cal.App.4th 314 (Armenta), to illustrate this concept. (Oman, supra,___ Cal.5th ___ at [pp. 21–22].) In Armenta, the employer agreed to compensate employees for hours engaged in specified “productive tasks” at a rate well above the minimum wage threshold, but did not compensate for work that was not captured by the “productive tasks” category. (Ibid.) The employer there argued that there was no minimum wage violation because the employees’ total wages, when averaged across the total amount of time spent on productive and non-productive tasks, exceeded the minimum wage. (Id. at [pp. 18–19].) The Court of Appeal rejected that argument and held that wages for productive tasks could not be averaged, or “borrowed,” in Justice Kruger’s words, to satisfy the employer’s minimum wage obligations for the non-productive tasks, because to do so would essentially provide the employer a discount on the rate it agreed to pay the employee for contractually-covered work. (Ibid.)

The Court ultimately distinguished Armenta in analyzing Delta’s compensation scheme. Unlike Armenta, Delta’s payment scheme, although based on a complex formula with particular inputs, did not provide specific compensation for any particular hour of work; instead it offered a guaranteed level of compensation for each rotation. (Id. at [p. 28].) Justice Kruger reasoned that there were “no on-duty hours for which Delta contractually guarantees certain pay—but from which compensation must be borrowed to cover other un- or undercompensated on-duty hours,” and as such, “the concerns presented by the compensation scheme in Armenta . . . are absent here.” (Ibid.)

This holding serves as an important clarification for employers: Averaging wages across hours worked is not a per se improper way to determine minimum wage compliance, provided the averaging is done across the contractually agreed-upon unit of payment. What is impermissible is wage borrowing—using wages in excess of the minimum wage for the contracted-for hours to meet minimum wage requirements for other hours worked that are not covered by the contractual arrangement.

C. Justice Liu’s Concurrence Reiterates the Importance of Contractual Interpretation

Justice Liu’s concurring opinion, joined by Justice Cuéllar, addressed only the third question certified by the Ninth Circuit and centered on the first step in the Court’s analysis—identifying the nature of the contractual commitment between the employer and employee. (Oman, supra, ___Cal.5th___[conc. opn. of Liu, J.], at [p. 1].) Justice Liu directed courts to give adequate attention to interpreting the parties’ mutually-understood contractual obligations, as those obligations are key to determining whether wages have been unlawfully borrowed. (Id. at [p. 3].) He further cautioned against allowing employers to circumvent their wage obligations by simply inserting minimum wage floors into their employment contracts. (Ibid.)

D. Implications of the Court’s Decision for Employers

The Court’s decision resolves open questions with respect to the extraterritorial reach of Sections 226 and 204, but does not address those same issues with respect to California’s minimum wage provisions. Still, the Court’s decision does clarify that what was once perceived as an outright prohibition on averaging wages in determining minimum wage compliance is now more precisely understood as a bar on borrowing wages in a manner that contractually undercompensates an employee. Further, the Court’s emphasis on contractual interpretation underscores the importance of clear contractual drafting: going forward, employers with California operations should stay current on court decisions involving the interpretation of the scope of contractual employment terms, including for pay plans with so-called hourly backstops, which have become increasingly common in industries where the dominant unit of pay is something other than hourly pay.

_______________________

   [1]   The Court did not resolve the Ninth Circuit’s certified question concerning the applicability of California’s minimum wage laws to all work performed in California for an out-of-state employer by an employee with limited working hours in California. (Id. at [pp. 13– 14].) The Court determined that the question of applicability was immaterial based on its preliminary determination that, regardless, Delta would have been in compliance with those laws. (Ibid.)


For more information, please feel free to contact the Gibson Dunn lawyer with whom you usually work or any of the following attorneys listed below.

Theodore J. Boutrous, Jr. - Co-Chair, Litigation Practice, Los Angeles (+1 213-229-7000, tboutrous@gibsondunn.com) Catherine A. Conway - Co-Chair, Labor and Employment Practice, Los Angeles (+1 213-229-7822, cconway@gibsondunn.com) Julian W. Poon - Los Angeles (+1 213-229-7758, jpoon@gibsondunn.com) Michael Holecek - Los Angeles (+1 213-229-7018, mholecek@gibsondunn.com) Lauren M. Blas - Los Angeles (+1 213-229-7503, lblas@gibsondunn.com)

© 2020 Gibson, Dunn & Crutcher LLP Attorney Advertising:  The enclosed materials have been prepared for general informational purposes only and are not intended as legal advice.

June 26, 2020 |
Best Lawyers in Germany 2021 Recognizes 19 Gibson Dunn Attorneys

Best Lawyers in Germany 2021 has recognized 19 Gibson Dunn attorneys as leading lawyers in their respective practice areas. Frankfurt attorneys recognized include: Alexander Klein – Banking and Finance Law; Jens-Olrik Murach – Competition/Antitrust Law, and Litigation; Dirk Oberbracht – Corporate Law, Mergers and Acquisitions Law, and Private Equity Law; Wilhelm Reinhardt – Corporate Law, and Mergers and Acquisitions Law; Sebastian Schoon – Banking and Finance Law; and Finn Zeidler – Arbitration and Mediation, Criminal Defense, and Litigation. Munich attorneys recognized include: Silke Beiter – Corporate Governance and Compliance Practice; Peter Decker – Banking & Finance, Private Equity Law, and Real Estate Law; Lutz Englisch – Corporate Governance and Compliance Practice, Corporate Law, Mergers and Acquisitions Law, and Private Equity Law; Ralf van Ermingen-Marbach – Criminal Tax Practice; Birgit Friedl – Restructuring and Insolvency Law; Ferdinand Fromholzer – Corporate Law, Mergers and Acquisitions Law, and Private Equity Law; Kai Gesing – Litigation; Markus Nauheim – Arbitration and Mediation, Corporate Law, Litigation, and Mergers and Acquisitions Law; Markus Rieder – Arbitration and Mediation, Corporate Governance and Compliance Practice, International Arbitration, and Litigation; Hans Martin Schmid – Real Estate Law; Benno Schwarz – Corporate Governance and Compliance Practice, Corporate Law, Criminal Defense, and Mergers and Acquisitions Law; Michael Walther – Competition/Antitrust Law; and Mark Zimmer – Corporate Governance and Compliance Practice, Criminal Defense, Labor and Employment, and Litigation. The list was published on June 26, 2020.

June 15, 2020 |
Supreme Court Holds That Title VII’s Prohibition On Discrimination Because Of Sex Includes Sexual Orientation And Transgender Status Discrimination

Click for PDF Decided June 15, 2020 Bostock v. Clayton County, Georgia, No. 17-1618; Altitude Express, Inc. v. Zarda, No. 17-1623; and R.G. & G.R. Harris Funeral Homes, Inc. v. Equal Employment Opportunity Commission, No. 18-107

Today, the Supreme Court held 6-3 that the prohibition on sex discrimination in Title VII of the Civil Rights Act of 1964 encompasses employment discrimination because of a person’s sexual orientation or transgender status. 

Background: Title VII of the Civil Rights Act of 1964 prohibits employers from discriminating against employees “because of . . . sex.” 42 U.S.C. § 2000e-2(a)(1). Donald Zarda was a former skydiving instructor at Altitude Express. Gerald Bostock worked as a child welfare services coordinator for Clayton County, Georgia. Aimee Stephens worked at R. G. & G. R. Harris Funeral Homes and originally presented as a male, but later told her employer that she planned to live and work as a woman. All three were fired allegedly because of their sexual orientation or transgender status, and they initiated sex discrimination claims against their former employers under Title VII. In Zarda’s case, the Second Circuit held that discrimination based on sexual orientation is a “subset of sex discrimination.” In Bostock’s case, the Eleventh Circuit held that Title VII does not apply to discrimination based on sexual orientation and affirmed the dismissal of Bostock’s Title VII claim. And in Stephens’ case, the Sixth Circuit held that Title VII applies to discrimination on the basis of transgender status.

Issue: Whether discrimination against an employee because of sexual orientation or transgender status constitutes prohibited discrimination within the meaning of Title VII.

Court's Holding: Yes. Title VII’s prohibition on discrimination based on sex encompasses sexual orientation and transgender status. An employer violates Title VII when it discharges an employee in part because of sexual orientation or transgender status.

“[I]t is impossible to discriminate against a person for being homosexual or transgender without discriminating against that individual based on sex.

Justice Gorsuch, writing for the majority

What It Means:
  • Justice Gorsuch’s majority opinion, which was joined by Chief Justice Roberts and Justices Ginsburg, Breyer, Sotomayor, and Kagan, was grounded in the text and the ordinary public meaning of the statutory terms at the time of enactment. Justice Gorsuch reasoned that Title VII’s prohibition on employment discrimination “because of . . . sex” necessarily encompasses discrimination on the basis of sexual orientation or transgender status because “it is impossible to discriminate against a person for being homosexual or transgender without discriminating against that individual based on sex,” slip op. 9, and therefore an employer who fires an employee based on sexual orientation and transgender status “inescapably intends to rely on sex in its decisionmaking,” id. at 11.
  • Justice Gorsuch acknowledged that Title VII’s prohibition on discrimination “because of . . . sex” may have been originally intended to cover only gender-based discrimination, not discrimination based on sexual orientation or transgender status. Echoing the late Justice Scalia’s reasoning in Oncale v. Sundowner Offshore Services, Inc., 523 U.S. 75 (1998), where the Court held that same-sex sexual harassment can violate Title VII, Justice Gorsuch explained that even if Title VII’s application in these cases reaches “beyond the principal evil” legislators may have intended or expected to address, the fact that a statute is applied in a new context does not render its meaning ambiguous.
  • In dissent, Justice Alito, joined by Justice Thomas, emphasized that there is no evidence that the members of Congress who voted for Title VII in 1964 would have contemplated that it prohibited discrimination based on sexual orientation or transgender status. In a separate dissent, Justice Kavanaugh stated that he believed the majority’s interpretation violated the separation of powers because the responsibility to amend Title VII belongs to Congress and the President in the legislative process, not the courts.
  • The Court’s opinion expressly cabins its reach to Title VII, perhaps reducing the likelihood that the decision will have an impact in other areas involving different statutes, such as Title IX or the Americans with Disabilities Act. The Court also noted that it was not addressing questions about “sex-segregated bathrooms, locker rooms, and dress codes.” Slip op. 31. And the Court acknowledged that the Religious Freedom Restoration Act of 1993 “might supersede Title VII’s commands in appropriate cases.” Id. at 32. These issues are likely to arise in future cases.

The Court's opinion is available here.

Gibson Dunn’s lawyers are available to assist in addressing any questions you may have regarding developments at the Supreme Court.  Please feel free to contact the following practice leaders:

Appellate and Constitutional Law Practice

Allyson N. Ho +1 214.698.3233 aho@gibsondunn.com Mark A. Perry +1 202.887.3667 mperry@gibsondunn.com

Related Practice: Labor and Employment

Catherine A. Conway +1 213.229.7822 cconway@gibsondunn.com Jason C. Schwartz +1 202.955.8242 jschwartz@gibsondunn.com
© 2020 Gibson, Dunn & Crutcher LLP Attorney Advertising:  The enclosed materials have been prepared for general informational purposes only and are not intended as legal advice.

June 12, 2020 |
Best Lawyers in the United Kingdom 2021 Recognizes 12 Gibson Dunn Attorneys

Best Lawyers in the United Kingdom 2021 has recognized 12 Gibson Dunn attorneys as leading lawyers in their respective practice areas: Cyrus Benson – International Arbitration; Thomas Budd – Real Estate Finance; Gregory Campbell – Private Equity Law; James Cox – Employment Law; Patrick Doris – International Arbitration; Charlie Geffen – Mergers and Acquisitions Law, and Private Equity Law; Penny Madden – International Arbitration; Mitri Najjar – Corporate Law; Philip Rocher – Litigation; Alan Samson – Financial Services, Real Estate Finance, and Real Estate Law; Jeffrey Sullivan – International Arbitration; and Steve Thierbach – Capital Markets Law. The list was published on June 9, 2020.

June 2, 2020 |
UK government announces important changes to the Coronavirus Job Retention Scheme and Self-Employment Income Support Scheme

Click for PDF The UK government announces the closure of the Coronavirus Job Retention Scheme from 1 July 2020 to those not previously furloughed on or before 10 June 2020 along with other updates in relation to next and final stages of the Coronavirus Job Retention Scheme and Self-Employment Income Support Scheme. On 29 May 2020, the Chancellor announced how the Coronavirus Job Retention Scheme (“CJRS”) and Self-Employment Income Support Scheme will operate over the next five months and eventually terminate on 31 October 2020. Further guidance on the flexible furlough and how employers should calculate claims will be published on 12 June and we will accordingly publish further information. Closure of CJRS to new entrants A key takeaway from the Chancellor’s announcement is that, from 1 July onwards, employers will only be able to furlough employees that they have previously furloughed for a full three-week period prior to 30 June. Accordingly, any employer who has not already done so but wishes to place an employee on the CJRS must do so by 10 June 2020. Employers will have until 31 July to make any claims in respect of the period to 30 June. Further, from 1 July claim periods will no longer be able to overlap months: employers who previously had submitted claims which had periods which overlapped calendar months will no longer be able to do this going forwards. Employer costs going forwards The level of grant available to employers under CJRS will be slowly tapered to reflect that the fact that people will be returning to work from August 2020.

July August September October
Responsibility for Employer NICs and pensions contributions Government Employer Employer Employer
Responsibility for wages[1] Government (80% up to £2,500) Employer – N/A Government (80% up to £2,500) Employer – N/A Government (70% up to £2,187.50) Employer (10% up to £312.50) Government (60% up to £1,875) Employer (20% up to £625)
Employee Receives[2] 80% up to £2,500 per month 80% up to £2,500 per month 80% up to £2,500 per month 80% up to £2,500 per month
  Flexible Furlough in practice What does ‘flexible furlough’ mean? At present, employees on furlough are not permitted to do any work for their employer’s business. However, from 1 July 2020 businesses will be given the flexibility to bring furloughed employees back to work part-time. Employers can agree with their employees the hours and shifts their employees will work on their return. Employers can still claim under the CJRS for the hours the employee is not working. Employees can still continue on full furlough and there is no requirement to provide employees with work, if the employer is not in a position to do so. What should an employer pay an employee on flexible furlough for the hours they are working? Employers will be responsible for paying full wages in respect of those hours when the employee is working but will be able to claim under the scheme in respect of that part of their normal working hours on which the employee is not working. Employers will need to submit information on the usual versus actual hours worked by an employee in a claim period. The cap will be proportional to the hours not worked. Further detailed guidance on how to calculate claims following the introduction of flexible furlough will be released on 12 June. How should flexible furlough be agreed? Employers will have to agree any new flexible furloughing arrangement with their employees and confirm that agreement in writing. A well drafted furlough agreement should currently prohibit employees from carrying out any work for the employer during their furlough period. Hence, it may be necessary for any furlough agreement to be amended by a side letter, or for a fresh furlough agreement to be entered into, which permits an employee to work during the furlough period commencing 1 July. Amendments to the Self-Employment Income Support Scheme The self-employed grant, which we reported on previously, is being extended, with applications opening in August for a second and final grant.  There will be parity with the reducing furlough scheme, paying 70% (and not 80%) of average earnings in a single instalment covering three months’ worth of profit, and capped at £6,570 in total. The eligibility criteria remains the same for the second grant, as it did for the first with individuals needing to confirm that their business has been adversely affected by COVID-19. ________________________    [1]   Capped at 80% of wages, or employers are able to choose to top up employee wages above the CJRS grant at their own expense if they wish.    [2]   As above.
Gibson Dunn attorneys regularly counsel clients on the compliance issues raised by this pandemic, and we are working with many of our clients on their response to COVID-19.  Please contact the Gibson Dunn attorney with whom you work in the Employment Group, or the following members of the UK employment team: James Cox – London (+44 (0)20 7071 4250, jcox@gibsondunn.com) Sarika Rabheru – London (+44 (0) 20 7071 4267, srabheru@gibsondunn.com) Heather Gibbons – London (+44 (0)20 7071 4127, hgibbons@gibsondunn.com) Georgia Derbyshire – London (+44 (0)20 7071 4013, gderbyshire@gibsondunn.com) Charlotte Fuscone – London (+44 (0)20 7071 4036, cfuscone@gibsondunn.com) © 2020 Gibson, Dunn & Crutcher LLP Attorney Advertising:  The enclosed materials have been prepared for general informational purposes only and are not intended as legal advice.

May 27, 2020 |
Gibson Dunn Named Labor & Employment Winner for 2020 D.C. Litigation Department of the Year

In its 2020 D.C. Litigation Department of the Year contest, The National Law Journal named Gibson Dunn as the winner in the Labor & Employment category.  This is the firm’s fourth consecutive win in this category.  The winners were announced on May 26, 2020. Gibson Dunn’s Labor and Employment Practice Group covers a complete range of matters, and we are known for our unsurpassed ability to help the world’s preeminent companies tackle their most challenging labor and employment matters.  Our practice covers the full range of labor and employment matters, including wage and hour class actions; employment discrimination class actions; whistleblower litigation; non-compete agreements and trade secrets; appeals, post-trial briefings and litigation management; labor-management relations; ERISA and employee benefits; and occupational safety and health issues.

May 18, 2020 |
U.K. Employment Law Considerations for Companies Responding to COVID-19 and Planning for a Return to the Workplace

Click for PDF On 10 May 2020, the UK government announced a provisional roadmap for the phased relaxation of the current COVID-19 lockdown restrictions, including those restrictions which have impacted businesses across the UK. While the UK government continues to require those who can work from home to do so, employees who are not able to work from home are now being actively encouraged to return to the workplace provided that their workplace is permitted to open and can be operated within government guidelines. In recent client alerts, we have considered in detail the law regarding: (i) the options for reducing the risk of employee exposure to COVID-19, including (a) instituting work-from-home/telecommuting policies and (b) instructing employees not to work; (ii) what to do if an employee tests positive or needs to care for an ill family member and (iii) the Coronavirus Job Retention Scheme (“CJRS”). Below, we identify some of the key considerations for UK-based businesses when taking steps to comply with their health and safety obligations once certain groups of employees return to the workplace.  We also outline key amendments to the CJRS. The UK government response to the outbreak continues to evolve daily, and we encourage employers in the UK to monitor UK government and National Health Service guidance and legislative developments over the coming weeks. Return-To-Work, Screening, and Safety New Government Guidance and Return to Work Plans On 11 May 2020, the UK government published both new and updated guidance to reflect the focus on getting workers back to work where possible. The guidance has been produced with the aim of helping employers ensure employees work safely during coronavirus, and includes measures to assist employers in making the workplace “COVID-19 secure”. The UK government has produced general guidance comprising of five key points, which we detail below, and eight workplace-specific guidance notes, formulated with the objective of meeting these five key points. We are available to guide clients through the specific guidance applying to their industry. Five Key Points in the COVID-19 Secure Guidance

  1. Work from home, if you can
Individuals should work from home if they can, and “all reasonable steps” should be taken by employers to enable individuals to work from home. However, the guidance now clearly states that those who cannot work from home and whose workplaces are permitted to operate, should go to work. To ensure readiness for staff returning to work, employers must devise a return to work plan with employees and those who represent them. When devising a return to work plan, employers should consult employees, listen to their concerns and be mindful of their personal circumstances including childcare responsibilities. Employers should also think about identifying vulnerable employees and how they will be treated when the workplace reopens. If an employer requires certain roles or numbers of people to return, they should be mindful of how selection will be carried out to avoid any discrimination or other issues of unfairness which could lead to claims.
  1. Carry out a COVID-19 risk assessment, in consultation with workers or trade unions
Employers must carry out COVID-19 risk assessments in consultation with their trade unions or workers in order to establish what guidelines should be put in place,  and identify sensible measures to control the risks in the workplace. Employers with over 50 employees should publish their workplace risk assessments on their website, with smaller employers being advised to do so. Employers should share the results of risk assessments with their workforce. Once a risk assessment has been carried out, an employer should update appropriate policies and procedures accordingly. Employers should also consider providing appropriate training for managers and employees and deliver this training before or upon their return to the workplace. Communications should be displayed around the workplace in prominent places such as handwashing points, entrances and exits. A downloadable notice is provided in each of the workplace-specific guidance documents. Employers should monitor the effectiveness of their policies and review their plans regularly, ideally each time the government updates its guidance.
  1. Maintain two metres social distancing, wherever possible
Employers may need to consider changing the layout of workspaces to maintain a two metre distance between individuals in compliance with social distancing advice. Employers should consider designating a one way system for entry and exit into the building; limiting the number of people allowed in confined spaces at any one time (e.g. lifts, meeting rooms, toilets); reducing face to face interactions, for example by introducing delivered desk-based lunch orders and restricting or prohibiting the use of communal areas such as kitchens and lunchrooms; encouraging non-public means of getting to work (e.g. bicycles or walking); and reducing non-essential work travel.
  1. Where people cannot be 2 metres apart, manage transmission risk
Employers are also encouraged to change the way work is organised in order to  reduce the number of people with whom each employee interacts face to face as well as minimizing those interactions. Employers should consider limiting the number people in the workplace at any one time, by adjusting working hours or dividing employees into groups and rotating their attendance in the office, introducing protective screens into the workplace and encouraging video-conference meetings.
  1. Reinforcing cleaning processes
Workplaces should be cleaned more frequently than usual, focusing on high touch points like door handles or keyboards, ensuring access to hygiene facilities such as hand sanitizer, providing anti-bacterial wipes for equipment and disposing of waste frequently. Risks of Failing to Implement the COVID-19 Secure Guidance Employers who fail to comply with the COVID-19 secure guidance may find themselves in breach of health and safety obligations towards workers and visitors to their premises. Such breaches may attract criminal penalties and/or enforcement notices. To encourage compliance with the COVID-19 secure guidance, the Prime Minister has asked employees to report their employers’ failures to implement the guidance to the Health and Safety Executive (“HSE”), the organisation responsible for enforcing health and safety laws in the UK, and the UK government has made available up to an extra £14 million for the HSE for additional compliance-monitoring resources. Screening Employees for COVID-19 Employers who wish to carry out COVID-19 screening, such as temperature checks, on their employees, workers or visitors will need their consent to do so. The results of any screening would need to be handled appropriately in accordance with the GDPR and Data Protection Act 2018 to the extent that it is stored or processed: a data protection impact assessment is likely to be required and employers will need to ensure any individuals it screens are provided an appropriate privacy notice detailing what personal data will be required, how their personal data will be used, who it will be shared with, the implications of the results and how long it will be kept for. Employers should also ensure any screening is applied consistently across their workforce to mitigate any risk of discrimination claims, which could arise upon the screening of a specific group of employees perceived to be at a higher risk of having contracted the virus. Finally, employers should seek to adopt the least intrusive means of protecting the health and safety of their employees and making the workplace safe. If Employees Become Ill Employers must follow government guidelines in respect of COVID-19 related illness. If anyone becomes unwell with a new, continuous cough or a high temperature, they should be advised to follow the stay at home guidance. If these symptoms develop whilst at work, the employee should be sent home immediately and advised not to use public transport if possible. Government policy currently states that it is not necessary to close the business or workplace or send any staff home in these circumstances. Please refer to our alert of 17 March 2020 for sick pay implications. Employees who require shielding and those at high risk Employees who have been informed by their GP or an NHS letter that they are clinically extremely vulnerable, because for example they suffer from severe respiratory conditions or are undergoing immunosuppression therapies sufficient to significantly increase risk of infection, are required to shield i.e. stay at home at all times and avoid all non-essential face to face contact. Employers should support members of staff who are clinically extremely vulnerable, as well as individuals with whom they live, as they follow the recommendations set out in the shielding guidance. In particular, they should be supported to stay at home, until UK government guidance suggests otherwise. Employees who are not clinically extremely vulnerable but have medical conditions which place them at an increased risk of severe illness from COVID-19, such as pregnant women and those with diabetes, have been advised to take particular care to minimise contact with others outside their households, but do not need to be shielded. Employers should listen to such employees’ concerns and be flexible to their needs where practicable. Employees who are unable to return to the workplace due to childcare commitments The UK government's plan for a phased reopening of nurseries and schools is not due to begin until 1 June at the earliest, with only certain year groups eligible to return in the early stages. As such, some employees may be unable to return to the workplace due to childcare commitments. The Prime Minister has encouraged employers to regard childcare commitments as an obvious barrier to an employee's ability to return to the workplace. Employers should encourage open communication with employees with childcare commitments and endeavour to reach an agreement on flexible working arrangements where possible. If Employees Hesitate or Refuse to Return to Work Employees may also be reluctant to return to the workplace if they have to take public transport to get to work, if they do not feel the measures their employer has taken go far enough to ensure their health and safety, or if they live with a vulnerable person who requires shielding. Employers will have the best chance of identifying these issues at an early stage if they are able to engage in early consultation and ongoing communication with their employees. If employees refuse to return to work, employers will need to consider whether they can be more flexible in the arrangements they have put in place taking into account the employees’ circumstances, or whether ultimately they wish to take further steps to require their employees to comply with the instruction to return to work, or treat a refusal to return to work as an unauthorised absence and consider disciplinary action. Employers will need to ensure any such steps are taken in a fair, rational and non-discriminatory way to avoid potential liability in this area. It would also be advisable for employers to record their decisions and steps they take to be flexible to the needs of their employees where appropriate or necessary. Update: Coronavirus Job Retention Scheme General:  We reported on the CJRS when it was first introduced in March 2020. On 12 May 2020, the Chancellor announced that the CJRS will be extended by a further four months until the end of October 2020, with no changes until the end of July 2020. From August 2020: (i) employees will be able to return to work on a part-time basis; (ii) employers will be required to pay a percentage towards the salaries of their furloughed employees and (iii) the employer's payments will substitute at least part of the government's contribution under the CJRS, ensuring that any furloughed workers continue to receive 80% of their salary (up to the maximum of £2,500 a month). From August 2020 employers will have to start sharing, with the UK government, the cost of paying people’s furloughed salaries. The UK government has committed to provide further details  before the end of May 2020. Holiday:  On 13 May 2020, the UK government published guidance on workers’ entitlement to holiday, holiday pay and the right to carry over of holiday during coronavirus. The guidance confirms that furloughed workers continue to accrue holiday, including any contractual holiday they receive above the statutory minimum of 5.6 weeks (subject to any furlough agreement to the contrary), and may take holiday without it interrupting their period of furlough. It also confirms that a furloughed worker’s entitlement to holiday pay remains unchanged and is to be calculated in the normal way. This means that where the calculated holiday pay rate is above the pay the worker receives whilst on furlough, the employer may continue to claim the 80% CJRS grant, but must pay the worker the difference unless they have agreed that the employee’s pay is to be reduced to the furlough limit for the period of furlough. This applies to bank holidays where they fall within a worker’s furlough period. As reported in our alert of 27 March 2020, the UK government previously introduced the Working Time (Coronavirus) (Amendment) Regulations 2020 (the “Regulations”) which allow up to 4 weeks of unused holiday to be carried over into the next two leave years if it has not all been taken due to COVID-19. The latest guidance advises that when determining whether it was not reasonably practicable for a worker to take holiday, employers should consider various factors, including: (i) increased demand for the business’ services due to COVID-19 that require the worker to continue working; (ii) the extent to which the business’ workforce is disrupted by COVID-19 and the ability to provide temporary cover of essential activities including the availability of the remaining workforce to cover the worker whilst they are on holiday; (iii) the worker’s health and the speed at which they need a period of rest and relaxation; (iv) the length of time left in the worker’s holiday year to enable them to take holiday later in the year; and (v) the impact of the worker’s holiday on society’s response and recovery from COVID-19. The guidance states that employers should do everything reasonably practicable to ensure workers take as much of their holiday in the year to which it relates and notes that furloughed workers will be unlikely to need to carry forward their holiday as they can take it during furlough. As reported in our alert of 27 March 2020, employers have the right to require workers to take or cancel holiday subject to providing a certain amount of notice, a right which continues to apply to furloughed workers under the latest guidance.  This tool should assist employers in ensuring holiday is taken within the applicable year and also prevent employers facing unmanageable holiday requests from workers later in the year when restrictions are lifted However, if an employer is unable to fund the difference between furlough pay and holiday pay, this may result it in not being reasonably practicable for the worker to take holiday whilst on furlough and enable them to carry their entitlement forward under the Regulations. Employers should also consider whether a worker’s individual circumstances allow them to enjoy holiday whilst on furlough in the fundamental sense, taking into account any social distance or self-isolation restrictions they may be under which would prevent them from resting and relaxing, before requiring them to take holiday. _______________________ Gibson Dunn attorneys regularly counsel clients on the compliance issues raised by this pandemic, and we are working with many of our clients on their response to COVID-19.  Please contact the Gibson Dunn attorney with whom you work in the Employment Group, or the following authors: James Cox – London (+44 (0)20 7071 4250, jcox@gibsondunn.com) Sarika Rabheru – London (+44 (0) 20 7071 4267, srabheru@gibsondunn.com) Heather Gibbons – London (+44 (0)20 7071 4127, hgibbons@gibsondunn.com) Georgia Derbyshire – London (+44 (0)20 7071 4013, gderbyshire@gibsondunn.com)   © 2020 Gibson, Dunn & Crutcher LLP Attorney Advertising:  The enclosed materials have been prepared for general informational purposes only and are not intended as legal advice.

May 4, 2020 |
Employer Liability and Defenses from Suit for COVID-19-Related Exposures in the Workplace

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I. Overview

In recent weeks, legal commentators have predicted that employers will face an “explosion” of employee lawsuits for tort claims relating to the COVID-19 pandemic.[1]  As non-essential businesses begin to develop plans for reopening—and essential businesses continue to navigate the unprecedented challenge of remaining operational during a pandemic—employers worry that one wrong step might expose them to sweeping legal liability.  Perhaps most concerning for employers is the specter of class action lawsuits alleging that unsafe workplaces have caused employees to contract COVID-19 or left them at heightened risk of exposure, which the U.S. Chamber of Commerce considers to be possibly the “largest area of concern for the overall business community.”[2] While many employee lawsuits can be expected, employers likely have statutory defenses that mitigate the risk of liability in these lawsuits.  Specifically, assuming COVID-19 is a covered occupational disease or injury, most tort claims for monetary damages filed by employees against their employers should be barred by applicable workers’ compensation statutes.  Employers should, however, be aware of the limitations and exceptions under applicable workers’ compensation statutes.  Those statutes vary state by state, and while a 50-state survey is beyond the scope of this alert, we focus here on relevant principles from the workers’ compensation statutory schemes in three of the most populous states:  New York, California and Texas. In addition, while beyond the scope of this alert, there are many inherent challenges for employees to adequately allege or prove causation in these COVID-19 exposure cases.[3]  Proof of causation will necessarily require an individualized examination of workplace interactions and alternative sources of exposure; in light of the risks of contraction virtually anywhere—from restaurants, to elevators, to mass transit—the employee’s ability to sufficiently identify the  workplace as the source of exposure defies credulity in most circumstances.  And, that individualized assessment of causation and the myriad sources of exposure to COVID-19 likely would doom any putative class action as well.[4]  It is important to note that, given these causation challenges, some states have already proposed or enacted legislation providing a presumption of causation that certain first responders contracted COVID-19 if exposed in the course of their employment. Any “explosion” of COVID-19 exposure suits will impose substantial costs on employers in defending these lawsuits, even if they are meritless.  For that reason, both the U.S. Chamber of Commerce and Senate Majority Leader Mitch McConnell have called for federal legislation to shield businesses from exposure liability.[5]

II. Recently Filed Workplace Safety Lawsuits

A number of lawsuits seeking relief for alleged exposure to COVID-19 have already been filed by employees against employer-defendants.[6]  Wrongful death claims have also been filed against decedents’ employers for deaths related to COVID-19 infections allegedly contracted in the workplace.  In another suit, a group of employees seeks to recover damages against a temporary staffing agency for allegedly misleading nurses to work in unsafe environments and providing negligent care.[7]  While many of these suits allege negligence and breaches of various standards of care, some employees, such as unionized employees, seek damages or injunctive relief based on breach of contract theories.[8] In addition, a number of suits do not seek compensatory damages, but instead seek injunctive relief from employers to ensure a safe working environment.[9]  While such cases may not raise the same financial exposure for employers, they can be disruptive and burdensome to businesses, which could be forced to defend company policies in court or be subjected to injunctions mandating specific and expensive workplace protocols. Based on a survey of these and other recently filed cases, the potential theories of liability against employers include: (1) failure to properly screen employees for COVID-19; (2) failure to protect employees from other symptomatic (or asymptomatic) persons; (3) failure to cleanse and sanitize the workspace; (4) failure to provide personal protective equipment; (5) failure to implement a social distancing policy; (6) failure to implement a telework or work-from-home policy; and/or (7) failure to implement various government guidelines.[10] While some complaints allege that employers have a freestanding duty to take some or all of the above steps, the tort claims are often tied to alleged violations by the employer of federal and state recommendations, mandates, guidelines, and regulations regarding employee safety.  For example, the Occupational Safety and Health Administration (“OSHA”), like many other government agencies, has posted recommendations and guidance applicable in certain settings to the COVID-19 health crisis.  OSHA has also identified what it considers to be relevant pre-existing OSHA standards and regulations applicable to the COVID-19 pandemic on its website.[11]  These standards include:  (1) OSHA’s Personal Protective Equipment (PPE) standards; (2) the General Duty Clause, requiring employers to furnish “employment and a place of employment, which are free from recognized hazards that are causing or are likely to cause death or serious physical harm”; and (3) the Recordkeeping and Reporting Occupational Injuries and Illness Requirement.[12]  Employers should pay careful attention to applicable federal and state standards and recommendations as appropriate to best protect their employees, to avoid the risk of regulatory investigations or actions, and to minimize the risk that violations of these standards be used as evidence of negligence.[13]

III. Protections for Employers Under Workers’ Compensation Statutes

A. Scope of Workers’ Compensation

Although a number of lawsuits have been filed against employers for exposure to COVID-19, most lawsuits for monetary damages relating to workplace-contracted illness should be barred by the applicable state’s workers’ compensation statute if COVID-19 is considered an occupational injury or illness.  Even if it meets this definition, however, plaintiffs in recent suits are exploring a variety of creative approaches in an effort to circumvent the usual workers’ compensation bar on such claims. Workers’ compensation is a state-operated insurance scheme designed to allow workers to be compensated for injuries suffered in the course of employment through an administrative process without regard to fault.  In New York, employees can receive workers’ compensation for “accidental injuries arising out of and in the course of employment and such disease or infection as may naturally and unavoidably result therefrom,”[14] or for occupational diseases, which are diseases “resulting from the nature of employment and contracted therein.”[15]  Thus, mere exposure to the COVID-19 virus without infection would not result in a compensable workers’ compensation claim.  However, a mental injury caused by psychic trauma “is generally compensable to the same extent as a physical injury,”[16] and plaintiffs may claim that the risk from exposure resulted in such trauma. But even a disease that is not considered to be an occupational disease under New York law may constitute an accidental injury covered by workers’ compensation if the “inception of the disease [is] assignable to a determinate or single act, identified in space or time” and is also “assignable to something catastrophic or extraordinary.”[17]  The New York Court of Appeals has upheld compensation awards for a tuberculosis infection based on a correctional officer’s exposure to a sick inmate[18] and aggravated bronchial asthma based on exposure to excessive amounts of secondhand cigarette smoke.[19] In contrast to New York, some workers’ compensation statutes define occupational diseases to exclude ailments like the flu or common cold.  In Texas, for example, an occupational disease includes  “a disease or infection that naturally results from the work-related disease,” but “does not include an ordinary disease of life to which the general public is exposed outside of employment unless that disease is an incident to a compensable injury or occupational disease.”[20]  It remains to be seen whether COVID-19 will be considered an ordinary disease of life.  Moreover, despite this ordinary disease exception, Texas courts have allowed “recovery for pneumonia, tuberculosis, and other respiratory diseases which follow as the result of sudden, accidental inhalation of heavy volumes and concentrations of noxious gases . . . or other foreign substances which cause damage to the lungs,” even as they have rejected recovery for “illnesses like cold, sore throat, and pneumonia” from exposure to the elements clearly traceable to work conditions.[21]  And to the extent that an employee attempts to avoid the workers’ compensation bar by arguing that COVID-19 is a common disease of life, such an argument would make causation difficult to establish in a lawsuit attempting to hold an employer liable for an infection. In California, an illness is not an occupational disease solely because it was contracted after exposure at work; the illness “must be one commonly regarded as natural to, inhering in, an incident and concomitant of, the work in question.”[22]  While not a model of clarity, it is generally understood that “if the employment subjects the employee to an increased risk [of contracting the disease] compared to that of the general public, the injury is compensable.”[23] These are fact-specific standards, and courts have yet to decide whether COVID-19 is covered by applicable workers’ compensation statutes.  Employers should be mindful of the possibility that, as a result, states may issue more specific guidance or legislate with respect to the availability of workers’ compensation to employees who contract COVID-19. Some states have already proposed or enacted legislation providing a presumption of workers’ compensation coverage for certain categories of workers who contract COVID-19.  For example, Alaska has passed a law stating that infected firefighters, medical first responders, and peace officers are “conclusively presumed to have contracted an occupational disease” if exposed to COVID-19 in the course of their employment.[24]  Minnesota has similarly passed a presumptive occupational disease law for COVID-19 infections by health care workers, law enforcement officers, and child care providers to first responders and health care workers.[25]  Wisconsin has passed a law stating that a first responder’s injury caused by COVID-19 after the employee was exposed to someone with a confirmed case of COVID-19 in the course of employment is presumed to be an injury caused by employment.[26] On the administrative front, some state agencies have issued sweeping pronouncements ensuring that first responders who contract COVID-19 are presumptively covered by workers’ compensation.[27]  By contrast, some states like New York have been more incremental in their guidance.  The Chair of New York’s Workers’ Compensation Board has issued guidance encouraging employees who develop COVID-19 during the course of their employment to file claims, and further encouraging insurance carriers to issue payments pursuant to New York Workers Compensation Law § 21-a—which allows payment of a claim without an initial admission of liability—instead of disputing the claim. [28]  The California Department of Insurance, meanwhile, has scheduled a public hearing to entertain a regulatory filing from the Workers’ Compensation Insurance Rating Bureau of California (WCIRB), a nonprofit association of insurers, that would exclude COVID-19 claims from an employer’s experience rating.[29]

B. The Workers’ Compensation Bar

To the extent that COVID-19 is considered an occupational injury covered by the workers’ compensation statutes, any tort claim for compensatory damages asserted directly by an employee against her employer, either in an individual capacity or on behalf of a class of employees, is likely to be barred. Designed to ease the process for dealing with workplace injuries by providing compensation without a liability finding, workers’ compensation is generally the exclusive remedy to an injured employee—meaning that the employee cannot maintain a separate, private tort suit against an employer based on a workplace injury.  With some limited exceptions, most employers are required to provide their employees with workers’ compensation coverage.[30] Texas, however, does not require employers to provide workers’ compensation coverage.[31]  Texas employers who do not provide coverage, “non-subscribers,” are subject to personal injury lawsuits for workplace injuries and do not benefit from typical tort defenses such as assumption of the risk, contributory negligence, and co-worker negligence.[32] In New York, an employer’s liability under the workers’ compensation law is “exclusive and in place of any other liability” to an employee, the employee’s representative, or any person otherwise entitled to recover damages, contribution, or indemnity on account of an employee’s injury or death.[33]  This exclusive remedy bar also applies when an “employee is injured or killed by the negligence or wrong of another in the same employ . . . .”[34]  The exclusive remedy bar also prevents recovery by an employee who has received workers’ compensation benefits from a general employer, but then seeks to recover from a special employer to whom the employee was assigned to work by the general employer.[35]  This might be relevant, for example, where a business (the special employer) retains dedicated contractors (such as a cleaning staff) that the business controls but are procured through a separate company (the general employer) in charge of hiring and payroll.  The exclusive remedy bar can also be raised as a defense to claims brought on behalf of a putative class of employees.[36] Some plaintiffs may attempt to avoid the workers’ compensation bar by asserting claims on behalf of the public at large, such as the public nuisance claim asserted in one recent COVID-19-exposure lawsuit.[37]  Some courts, however, have concluded that such a claim is an improper effort to circumvent the workers’ compensation bar.[38] And there are other challenges employees would face in asserting a public nuisance claim.  “A public nuisance is a violation against the State,”[39] so to bring a private action to abate a public nuisance, the person seeking relief must suffer special injury beyond that suffered by the community at large; this injury must be different in kind, rather than different only in degree.[40]  An employee may have difficulty in showing such special injury distinct from the risk to the community in a COVID-19-related lawsuit.[41]

IV. Limits of the Workers’ Compensation Bar

Although workers’ compensation schemes generally establish exclusive remedies for employee injury and illness claims against employers, each jurisdiction has particular exceptions that allow workers to maintain individual tort suits against employers.  For example, a common exception to the exclusive remedy rule is an employer’s intentional conduct toward employees.  In addition, while the bar generally protects employers from liability for direct employee claims, employers may face exposure from claims brought by third parties whom the employee sues, as well as from nonemployees (such as independent contractors and vendors) or customers who enter the workplace.

A. Exceptions for Intentional Torts/Fraudulent Concealment

In New York, the “exclusive remedy doctrine bars an employee from bringing a negligence- or gross negligence-based claim against an employer and the employer's agent.”[42]  One narrow exception to the workers’ compensation bar applies when an employer commits an intentional tort:  “[w]hen it has been determined that a plaintiff’s injury is the result of an intentional and deliberate act by the defendant or someone acting on his behalf, the defendant is not entitled to such immunity.”[43]  To establish an intentional tort, “the conduct must be engaged in with the desire to bring about the consequences of the act; a mere knowledge and appreciation of a risk is not the same as the intent to cause injury[.]”[44]  As such, an employer’s failure to warn of dangers in the workplace will not be considered an intentional tort,[45] and it will be very difficult for an employee to establish that an employer deliberately exposed him or her to COVID-19 with an intention to infect the employee. While New York has a narrow exception to the exclusive remedy doctrine, other states have broader exceptions that may be implicated in COVID-19 lawsuits.  In California, for example, an employee may overcome the exclusive remedy bar where “the employee’s injury is aggravated by the employer’s fraudulent concealment of the existence of the injury and its connection with the employment[.]”[46]  This exception refers to an employer’s concealment of knowledge that an employee has contracted a disease from conditions of work.[47]  However, “conflating knowledge of exposure with knowledge of injury . . . is insufficient to support a [concealment] claim as a matter of law.”[48] And in Texas, gross negligence is an exception to the worker’s compensation bar where suit is brought by the surviving spouse or heirs of an employee who suffers a fatal workplace injury.[49]  But gross negligence is not sufficient to allow an employee himself to maintain a separate tort suit.[50]  As a result, there is the possibility of tort suits being brought by surviving spouses in Texas, even if COVID-19 were considered an occupational injury covered by Texas’s workers’ compensation statutes.

B. Lack of Coverage for Third-Party Suits

Although New York’s exclusive remedy provision prevents direct tort suits by employees against their employers, there are additional litigation risks involving third parties of which employers must be aware. An employer may be liable for contribution or indemnity to a third party for any “grave injuries” sustained by an employee for which the third party is held liable, with “grave injury” defined as death, permanent loss of use or amputation of a body part, blindness, and deafness.[51]  This may arise where, for example, an employee sues the owner of the property where the employer’s offices are located and then the property owner impleads the employer for indemnity or contribution.[52]  Workers’ compensation laws would not bar tenants’ employees from asserting tort claims against the property owners; in the COVID-19 context, such lawsuits may attempt to impose liability for a property owner’s failure to inspect, clean, or sterilize a building and failure to implement procedures to prevent the spread of COVID-19.  Property owners that are or should be aware of dangerous conditions in communal spaces such as lobbies, stairwells, or elevators, but fail to exercise reasonable care to prevent injuries in those spaces, may be subject to suit.[53] Additionally, non-employees, such as independent contractors,[54] are not covered by workers’ compensation and would thus not be subject to the workers’ compensation bar.  But, as noted previously, certain workers who are loaned to a “special” employer from a separate “general” employer to perform on behalf of the special employer and subject to the special employer’s control are covered by workers’ compensation and are barred from asserting tort suits against whichever employer was not responsible for workers’ compensation coverage.[55]  Employers should evaluate whether dedicated contractors, such as a cleaning staff retained from another employer, are special employees subject to the exclusive remedy bar.

* * *

In sum, while the applicability of workers’ compensation statutes to COVID-19-related claims varies from state to state—and can quickly change even within those states, as legislators and regulators continue to respond to the pandemic—there is good reason to believe that, assuming COVID-19 is a covered occupational disease, most employers will be able to rely on workers’ compensation statutes to avoid direct liability to employees for monetary damages. Employers should nevertheless take affirmative steps now to protect their employees and minimize their potential liability.  To that end, the best factual defense to any potential employee or class action lawsuit alleging claims related to COVID-19 exposure is to develop appropriate procedures to address the risk of COVID-19 in the workplace,[56] paying attention to applicable guidance from OSHA, the CDC and state or local officials.  Such preventative steps may help evidence that an employer satisfied any alleged duty of reasonable care,[57] and may also help discourage lawsuits seeking prospective relief.  Moreover, alleged failures to address COVID-19-related risks can subject employers to scrutiny by regulators.[58] ____________________    [1]   See, e.g., Amanda Bronstad, Lawyers Predict a ‘Huge Explosion’ in Worker Class Actions Over COVID-19, Law.com (Apr. 16, 2020), https://www.law.com/2020/04/16/lawyers-predict-a-huge-explosion-in-worker-class-actions-over-covid-19/.    [2]   U.S. Chamber of Commerce, “Implementing a National Return to Work Plan” (Apr. 13, 2020), available at https://www.uschamber.com/coronavirus/implementing-national-return-to-work-plan?utm_source=email&utm_medium=enl&utm_campaign=laboroflaw&utm_‌content‌=20200416&utm_term=law#liability.    [3]   Gibson Dunn has discussed standard of care and causation issues related to COVID-19-based lawsuits in more depth in a separate Client Alert.  See Gibson Dunn’s May 4, 2020 Client Alert, COVID-19 and Personal Injury Tort Liability: Preliminary Considerations for Businesses, available at https://www.gibsondunn.com/covid-19-and-personal-injury-tort-liability-preliminary-considerations-for-businesses.    [4]   See, e.g., In re Methyl Tertiary Butyl Ether (“MTBE”) Prods. Liab. Litig., 209 F.R.D. 323, 349 (S.D.N.Y. 2002) (noting that “[Federal Rule of Civil Procedure] 23(b)(3) requires that common issues predominate,” and aggregating examples where courts denied class certification because of individualized issues of fact).    [5]   Andrew Kragie, McConnell Wants Broad Liability Shield in Next COVID-19 Bill, Law360 (Apr. 27, 2020), https://www.law360.com/articles/1267837/; U.S. Chamber of Commerce, “Implementing a National Return to Work Plan” (Apr. 13, 2020), available at https://www.uschamber.com/coronavirus/implementing-national-return-to-work-plan?utm_source=email&utm_medium=enl&utm_campaign=laboroflaw&utm_‌content‌=20200416&utm_term=law#liability.    [6]   In addition to COVID-19 exposure claims, employers are facing and will likely continue to face claims under the WARN Act and wage and hour, discrimination, leave, whistleblower protection and other laws relating to actions taken in response to the pandemic.    [7]   Allen v. Krucial Staffing, LLC, No. 20-cv-2859 (S.D.N.Y. Apr. 6, 2020).    [8]   N.Y. State Nurses Ass’n v. Montefiore Med. Ctr., No. 20-cv-03122 (S.D.N.Y. Apr. 20, 2020). On May 1, 2020, the district court dismissed the New York State Nurses Association’s claim, finding that the court did not have subject-matter jurisdiction to grant injunctive relief pending the parties’ arbitration.  See id. at ECF No. 33.    [9]   See, e.g., Rural Cmty. Workers Ass’n v. Smithfield Foods, Inc., No. 5:20-cv-06063 (W.D. Mo. Apr. 23, 2020) (asserting a public nuisance claim and seeking declaratory and injunctive relief against an essential business for alleged failure to comply with basic health and safety standards); Corr. Officers’ Benevolent Ass’n, Inc. v. City of New York, No. 704991/2020 (N.Y. Sup. Ct. Queens Cty. Apr. 2, 2020) (correction officers’ seeking injunctive relief); N.Y. State Nurses Ass’n v. Montefiore Med. Ctr., No. 20-cv-03122 (S.D.N.Y. Apr. 20, 2020) (nurses’ union seeking injunctive relief). [10]   See supra notes 7–10. [11]   See OSHA, COVID-19 Standards, https://www.osha.gov/SLTC/covid-19/standards.html; Guidance on Preparing Workplaces for COVID-19, OSHA 3990-03 2020, https://www.osha.gov/Publications/OSHA3990.pdf. [12]   See, e.g., OSHA, Enforcement Guidance for Recording Cases of Coronavirus Disease 2019 (COVID-19), https://www.osha.gov/memos/2020-04-10/enforcement-guidance-recording-cases-coronavirus-disease-2019-covid-19. [13]   See, e.g., Albrecht v. Balt. & Ohio R. Co., 808 F.2d 329, 332 (4th Cir. 1987) (“In a negligence action, regulations promulgated under . . . [OSHA] provide evidence of the standard of care exacted of employers, but they neither create an implied cause of action nor establish negligence per se.”); Ries v. Nat'l RR Passenger Corp., 960 F.2d 1156, 1164 (3d Cir. 1992) (“[V]iolation of the OSHA regulation was properly admissible as evidence of Amtrak's negligence”). [14]   N.Y. Workers’ Comp. § 2(7). [15]   N.Y. Workers’ Comp. §§ 2(15), 3(2-30). [16]   DePaoli v. Great A & P Tea Co., 725 N.E.2d 1089, 1090 (N.Y. 2000) (citing Wolfe v. Sibley, Lindsay & Curr Co., 330 N.E.2d 603, 606 (N.Y. 1975) (“[P]sychological or nervous injury precipitated by psychic trauma is compensable to the same extent as physical injury.”); see also Kraus v. Wegmans Food Mkts., Inc., 67 N.Y.S.3d 702, 706 (3d Dep’t 2017) (“For a mental injury premised on work-related stress to be compensable, ‘a claimant must demonstrate that the stress that caused the claimed mental injury was greater than that which other similarly situated workers experienced in the normal work environment.’”) (citation omitted). [17]   Lerner v. Rump Bros., 149 N.E. 334, 335 (N.Y. 1925). [18]   Middleton v. Coxsackie Corr. Facility, 341 N.E.2d 527, 531 (N.Y. 1975). [19]   Johannesen v. New York City Dep't of Hous. Pres. & Dev., 638 N.E.2d 981 (N.Y. 1994). [20]   Tex. Lab. Code Ann. § 401.011(34). [21]   Bewley v. Texas Employers Ins. Ass'n, 568 S.W.2d 208, 210 (Tex. Civ. App. 1978). [22]   See LaTourette v. W.C.A.B., 951 P.2d 1184, 1189 (Cal. 1998) (citation omitted). [23]   Id. at 654 (citation omitted); see also S. Coast Framing, Inc. v. Workers' Comp. Appeals Bd., 61 Cal. 4th 291, 301, 349 P.3d 141, 148 (2015) (“[I]t [is] enough that ‘ the employee’s risk of contracting the disease by virtue of the employment must be materially greater than that of the general public.’”) (citation omitted). [24]   Alaska Enrolled SB241 § 15, akleg.gov/PDF/31/Bills/SB0241Z.pdf. [25]   Minn. Stats. § 176.011(15)(f), https://www.revisor.mn.gov/laws/2020/0/72/laws.0.1.0#laws.0.1.0. [26]   Wis. Stat. § 102.03(6), https://docs.legis.wisconsin.gov/statutes/statutes/102.pdf. [27]   For example, the Illinois Workers Compensation Commission issued an Emergency Amendment that provides that an occupational disease or incapacity from exposure to COVID-19 “will be rebuttably presumed” to have arisen out of and in the course of a COVID-19 first responder or front-line worker’s employment and will be “rebuttably presumed” to be causally connected to that employment.  50 Ill. Adm. Code 9030, Amended by emergency rulemaking at 44 Ill. Reg. ______, effective April 16, 2020, for a maximum of 150 days, https://www2.illinois.gov/sites/iwcc/news/Documents/15APR20-Notice_of_Emergency_Amendments_CORRECTED-clean-50IAC9030_70.pdf [28]   Letter from Chair Rodriguez to Carriers and Payers of Workers’ Compensation, Apr. 15, 2020, http://www.wcb.ny.gov/content/main/TheBoard/WCB_COVID19_LtrtoCarriers.pdf. [29]   See Workers’ Compensation Insurance Rating Board, Hearing Date Set for July 1, 2020 Special Regulatory Filing (Apr. 21, 2020), https://www.wcirb.com/news/hearing-date-set-july-1-2020-special-regulatory-filing. [30]   For example, domestic workers working fewer than forty hours a week, members of the clergy, and municipal employees whose municipalities have not elected to participate in workers’ compensation are not covered.  See N.Y. Workers’ Comp. § 3. [31]   Office of the Commissioner Representing Employers, Texas Workforce Commission, Especially for Texas Employers, Workers’ Compensation, available at https://www.twc.texas.gov/news/efte/workers_compensation.html. [32]   Id. [33]   N.Y. Workers’ Comp. § 11. [34]   N.Y. Workers’ Comp. § 29(6). [35]   Thompson v. Grumman Aerospace Corp., 585 N.E.2d 355 (N.Y. 1991). [36]   See In re Agent Orange Prod. Liab. Litig., 818 F.2d 210, 214 (2d Cir. 1987) (“Dismissal of all personal injury and related wrongful death claims against the Regents was required because the Hawaiian compensation statute provides the exclusive remedy against fellow employees for work-related injuries.”). [37]   See Rural Cmty. Workers Ass’n, supra note 10. [38]   Acevedo v. Consol. Edison Co. of New York, 596 N.Y.S.2d 68, 71 (1st Dep’t 1993). [39]   532 Madison Ave. Gourmet Foods, Inc. v. Finlandia Ctr., Inc., 750 N.E.2d 1097, 1104 (N.Y. 2001). [40]   Agoglia v. Benepe, 924 N.Y.S.2d 428, 432 (2d Dep’t 2011); see also Trujillo v. Ametek, Inc., No. 3:15-CV-1394-GPC-BGS, 2015 WL 7313408, at *7 (S.D. Cal. Nov. 18, 2015) (“The general rule is that public nuisance actions must be brought by government officials. . . . However, a private party may bring a public nuisance action where the nuisance is ‘specially injurious’ to the private party, beyond the harm caused by the nuisance to the general public.”). [41]    See, e.g., Burns Jackson Miller Summit & Spitzer v. Lindner, 451 N.E.2d 459, 468–69 (N.Y. 1983) (dismissing nuisance claim by law firms seeking lost profit damages resulting from closure of transit system because harms caused by closure were so widespread all businesses suffered similar damage); Venuto v. Owens-Corning Fiberglass Corp., 22 Cal. App. 3d 116, 123–24 (1971) (rejecting public nuisance claim brought by plaintiffs who claimed that air pollution from a fiberglass manufacturing plant aggravated their respiratory disorders). [42]   Lauria v. Donahue, 438 F. Supp. 2d 131, 141 (E.D.N.Y. 2006). [43]   Id.; see also Gagliardi v. Trapp, 633 N.Y.S.2d 387, 388 (2d Dep’t 1995) (“[T]he defendants’ conduct amounted, at most, to gross negligence or reckless conduct.  The plaintiff’s remedy for such a wrong is that provided in the Workers’ Compensation Law.”). [44]   Pereira v. St. Joseph's Cemetery, 864 N.Y.S.2d 491, 492 (2d Dep’t 2008) (citations omitted). [45]   Forjan v. Leprino Foods, Inc., 209 F. App’x 8, 10 (2d Cir. 2006) (citing Acevedo, N.Y.S.2d at 68 (exception did not apply where employer had sent workers to clean up after an explosion without warning them of toxic asbestos); Briggs v. Pymm Thermometer Corp., 537 N.Y.S.2d 553 (2d Dep’t 1989) (exception did not apply where employer concealed and/or misrepresented the risk of toxic exposure to mercury, cleaning fluids and solvents). [46]   Cal. Lab. Code § 3602. [47]   Foster v. Xerox Corp., 707 P.2d 858 (Cal. 1985); see also Johns-Manville Prod. Corp. v. Superior Court, 612 P.2d 948 (Cal. 1980) (pre-dating the enactment of Cal Lab. Code § 3602) (“[I]f the complaint alleged only that plaintiff contracted the disease because defendant knew and concealed from him that his health was endangered by asbestos in the work environment, failed to supply adequate protective devices to avoid disease, and violated governmental regulations relating to dust levels at the plant, plaintiff's only remedy would be to prosecute his claim under the workers' compensation law.”). [48]   Rodriguez v. United Airlines, Inc., 5 F. Supp. 3d 1131, 1138-39 (N.D. Cal. 2013). [49]   Tex. Lab. Code Ann. § 408.001(b). [50]   Arnold v. Renken & Kuentz Transp. Co., 936 S.W.2d 57, 58 (Tex. App. 1996). [51]   N.Y. Workers’ Comp. § 11. [52]   See, e.g., Rubeis v. Aqua Club Inc., 821 N.E.2d 530 (N.Y. 2004) (allowing impleaded third-party complaints and awards against employers upon determining that plaintiffs had suffered from grave injuries). [53]   See, e.g., DiVetri v. ABM Janitorial Serv., Inc., 990 N.Y.S.2d 496, 496 (1st Dep’t 2014) (finding that owner of office building and the janitorial company contracted by the office building could be liable for the dangerous condition in the lobby that caused the plaintiff to slip and injure herself); Pintor v. 122 Water Realty, LLC, 933 N.Y.S.2d 679, 679 (1st Dep’t 2011). [54]   Commissioners of State Ins. Fund v. Fox Run Farms, Inc., 600 N.Y.S.2d 239, 239 (1st Dep’t 1993) (“[I]independent contractors are not employees covered by the Workers’ Compensation Law.”). [55]   Thompson v. Grumman Aerospace Corp., 585 N.E.2d 355 (N.Y. 1991). [56]   In a previous alert, Gibson Dunn outlined issues for companies to consider in implementing responses to COVID-19.  See Gibson Dunn’s March 16, 2020 Client Alert, U.S. Employment Law Considerations for Companies Responding to COVID-19, available at https://www.gibsondunn.com/us-employment-law-considerations-for-companies-responding-to-covid-19/.  Gibson Dunn has also outlined issues for companies to consider in planning how to bring employees back to work.  See Gibson Dunn’s April 30, 2020 Webcast, Returning to Work: Health, Employment and Privacy Considerations and Constraints as Businesses Resume Post-Quarantine Operations in the U.S., available at https://www.gibsondunn.com/webcast-returning-to-work-health-employment-and-privacy-considerations-and-constraints-as-businesses-resume-post-quarantine-operations-in-the-u-s/. [57]   See supra Section II.  There have also been calls to create specific safe-harbor provisions for businesses that comply with such guidelines.  See, e.g., U.S. Chamber of Commerce, “Implementing a National Return to Work Plan” (Apr. 13, 2020), available at https://www.uschamber.com/coronavirus/implementing-national-return-to-work-plan?utm_source=email&utm_medium=enl&utm_campaign=laboroflaw&utm_‌content‌=20200416&utm_term=law#liability. [58]   See Rachel Abrams, Spectrum Employees Are Getting Sick Amid Debate Over Working From Home, The New York Times (Apr. 21, 2020), https://www.nytimes.com/2020/04/21/business/spectrum-employees-coronavirus.html.
This client update was prepared by Avi Weitzman, Lauren Elliot, Gabrielle Levin, Steven Spriggs*, Declan Conroy, Nina Meyer and Clifford Hwang. Gibson Dunn’s lawyers are available to assist with any questions you may have regarding these developments.  For additional information, please contact the Gibson Dunn lawyer with whom you usually work, any member of the firm’s Coronavirus (COVID-19) Response Team or its Labor and Employment Group, or the following authors: Avi Weitzman – New York (+1 212-351-2465, aweitzman@gibsondunn.com) Lauren Elliot – New York (+1 212-351-3848, lelliot@gibsondunn.com) Gabrielle Levin – New York (+1 212-351-3901, glevin@gibsondunn.com) * Not admitted to practice in New York; currently practicing under the supervision of Gibson, Dunn & Crutcher LLP. © 2020 Gibson, Dunn & Crutcher LLP Attorney Advertising:  The enclosed materials have been prepared for general informational purposes only and are not intended as legal advice.

April 30, 2020 |
Webcast: Returning to Work: Health, Employment, and Privacy Considerations and Constraints as Businesses Resume Post-Quarantine Operations in the U.S.

As businesses plan to resume or expand operations in a post-quarantine COVID-19 world, they face a complex, and sometimes conflicting, patchwork of public health, employment, and privacy considerations requiring them simultaneously to:

  • Develop, implement, and continue to evaluate infection control programs—including PPE use, cleaning and disinfection protocols, social distancing and hand hygiene programs, and return to work policies—to reduce illness and transmission risk and keep up with evolving community health and industry standards.
  • Evaluate, implement, and document enhanced worker screening and contact tracing programs to identify, respond to, and understand the root cause of worker illnesses.
  • Implement screening and other programs with an eye to privacy, balancing the need to collect information with applicable and potentially conflicting privacy obligations arising under state constitutional and common law; statutes including the California Consumer Privacy Act, California’s Confidentiality of Medical Information Act, the Illinois Biometric Information Privacy Act, and various tracking and data breach statutes; and evolving general privacy principles of transparency, data minimization, confidentiality, and data security.
  • Remain compliant with wage and hour obligations in a “new normal” of altered work schedules and arrangements and new activities ancillary to workers’ regular shifts that may include PPE use, additional personal hygiene steps, or employee screening requirements.
  • Navigate the framework of federal and state employment law protecting employee rights, including those protecting potentially higher risk workers based on age or disability, worker health and safety obligations, and paid and unpaid leave rights, and be prepared to respond to employee concerns (and potential reluctance to work) while remaining sensitive to whistle-blower, anti-retaliation, worker speech.
View Slides (PDF)

PANELISTS: Karl Nelson is a Gibson Dunn partner who advises and represents employers across the country in connection with employment law compliance and litigation, including with respect to fair employment practices, benefits issues, worker health and safety, whistle-blower claims, and collective bargaining rights and obligations.  He has been actively involved as part of the firm’s COVID-19 Response Team in guiding clients across a range of industries in responding to the recent health crisis. Katherine V.A. Smith is a partner in Gibson Dunn’s Los Angeles office whose practice focuses on high stakes employment litigation matters such as wage and hour class actions, representative actions brought under the California Private Attorney General Act (“PAGA”), whistleblower retaliation cases, and executive disputes.  In addition to litigation, Ms. Smith also dedicates a significant portion of her practice to advising employers on nearly all aspects of employment law, including those arising from the COVID-19 crisis. Alexander H. Southwell is a nationally-recognized technology investigations lawyer and counselor, serving as global Co-Chair of Gibson, Dunn & Crutcher’s Privacy, Cybersecurity, and Consumer Protection Practice Group.   He represents a wide-range of leading companies, counseling on privacy, information technology, data breach, theft of trade secrets and intellectual property, computer fraud, national security, and network and data security issues, including handling investigations, enforcement defense, and litigation.  Recently, he has focused on advising clients on cybersecurity and privacy issues relating to COVID-19 crisis management programs and has led a number of COVID-related pro bono projects. Cassandra Gaedt-Sheckter is a senior associate in Gibson Dunn’s Palo Alto office who focuses on cutting-edge privacy law compliance concerns for clients in a broad range of industries, including relating to federal, state, and international privacy and cybersecurity laws, and representing companies in technology-related privacy class action and IP litigation matters.   She is a leader of the firm’s CCPA Task Force, and has been particularly dedicated in recent months to advising clients on privacy and cybersecurity issues relating to businesses’ implementation of COVID-19 crisis management and prevention programs. Dr. Christopher Kuhlman is a board certified toxicologist (DABT) and industrial hygienist (CIH) with CTEH. Dr. Kuhlman specializes in toxicology, risk assessment, toxicity evaluations, and emergency response toxicology. Recently, he has been working with employers around to globe to meet the ongoing challenges of the outbreak of COVID-19.
MCLE CREDIT INFORMATION: This program has been approved for credit in accordance with the requirements of the New York State Continuing Legal Education Board for a maximum of 1.0 credit hour, of which 1.0 credit hour may be applied toward the areas of professional practice requirement.  This course is approved for transitional/non-transitional credit. Attorneys seeking New York credit must obtain an Affirmation Form prior to watching the archived version of this webcast. Please contact Victoria Chan (Attorney Training Manager) at vchan@gibsondunn.com to request the MCLE form. Gibson, Dunn & Crutcher LLP certifies that this activity has been approved for MCLE credit by the State Bar of California in the amount of 1.0 hour. California attorneys may claim “self-study” credit for viewing the archived version of this webcast.  No certificate of attendance is required for California “self-study” credit.

April 28, 2020 |
Preparing For A Surge In Virus-Related Whistleblower Claims

New York partner Lee Dunst, Denver partner Jessica Brown and Los Angeles associate Daniel Weiss are the authors of "Preparing For A Surge In Virus-Related Whistleblower Claims," [PDF] published by Law360 on April 23, 2020.

April 24, 2020 |
Gibson Dunn Earns 84 Top-Tier Rankings in Chambers USA 2020

In its 2020 edition, Chambers USA: America’s Leading Lawyers for Business awarded Gibson Dunn 84 first-tier rankings, of which 31 were firm practice group rankings and 53 were individual lawyer rankings. Overall, the firm earned 302 rankings – 84 firm practice group rankings and 218 individual lawyer rankings. Gibson Dunn earned top-tier rankings in the following practice group categories: National – Antitrust National – Antitrust: Cartel National – Appellate Law National – Corporate Crime & Investigations National – FCPA National – Outsourcing National – Product Liability: Consumer Class Actions National – Real Estate National – Retail: Corporate & Transactional National – Securities: Regulation CA – Antitrust CA – IT & Outsourcing CA – Litigation: Appellate CA – Litigation: General Commercial CA – Litigation: Securities CA – Litigation: White-Collar Crime & Government Investigations CA – Real Estate: Zoning/Land Use CA (Los Angeles & Surrounds) – Employee Benefits & Executive Compensation CA – Real Estate: Northern California CA – Real Estate: Southern California CO – Litigation: White-Collar Crime & Government Investigations CO – Natural Resources & Energy DC – Corporate/M&A & Private Equity DC – Labor & Employment DC – Litigation: General Commercial DC – Litigation: White-Collar Crime & Government Investigations NY – Litigation: General Commercial: The Elite NY – Real Estate: Mainly Corporate & Finance NY – Technology & Outsourcing TX – Antitrust This year, 156 Gibson Dunn attorneys were identified as leading lawyers in their respective practice areas, with some ranked in more than one category. The following lawyers achieved top-tier rankings:  D. Jarrett Arp, Michael Bopp, Theodore Boutrous, Jessica Brown, Jeffrey Chapman, Linda Curtis, Michael P. Darden, Patrick Dennis, Mark Director, Thomas Dupree, Scott Edelman, Miguel Estrada, Stephen Fackler, Sean Feller, Eric Feuerstein, Amy Forbes, Stephen Glover, Richard Grime, Peter Hanlon, Hillary Holmes, Daniel Kolkey, Brian Lane, Jonathan Layne, Ray Ludwiszewski, Karen Manos, Randy Mastro, Cromwell Montgomery, Stephen Nordahl, Theodore Olson, Richard Parker, William Peters, Tomer Pinkusiewicz, Jesse Sharf, Orin Snyder, George Stamas, Beau Stark, Charles Stevens, Daniel Swanson, Steven Talley, Helgi Walker, Robert Walters, F. Joseph Warin, Debra Wong Yang, and Meryl Young.

April 10, 2020 |
New York Empire State Development Corporation Further Updates Guidance on Businesses Deemed Essential Under Governor Andrew Cuomo’s “New York State on PAUSE” Executive Order

Click for PDF On April 9, 2020, the New York Empire State Development Corporation (“ESD”) further updated its guidance for determining whether businesses are “essential” and therefore exempt from the in-person workforce restrictions established in Governor Cuomo’s March 20, 2020 “New York State on PAUSE” Executive Order (EO 202.8).  That March 20 order required all non-essential businesses keep 100 percent of their workforce at home.  These updates, which we review in this alert, demonstrate that ESD is continuing to evolve the breadth and depth of its guidance on what constitutes an essential business.  It is therefore critical that businesses continue to stay apprised of the latest developments. The ESD’s April 9 version of the guidance contains four primary updates to its previous guidance, which was last updated on April 8.[1]

  • First, the new guidance adds two new essential business categories—“Recreation” and “Professional services with extensive restrictions”—which together set forth social distancing and workplace restrictions regarding parks and open public spaces, legal and real estate services, and houses of worship.
  • Second, the updated guidance provides further detail on what constitutes essential construction in the context of affordable housing and the energy industry, and clarifies that essential construction also includes construction necessary to protect the health and safety of occupants of a structure as well as construction for existing projects of an essential business.
  • Third, the updated guidance incorporates new examples of essential businesses in the preexisting healthcare, manufacturing, retail, and essential services industry categories.
  • Fourth, the updated guidance broadens the list of businesses deemed non-essential and therefore prohibited from requesting a designation as an essential business under the guidance.
These four primary updates to the guidance are reviewed below in further detail.  

I.  The Updated Guidance Incorporates Two New Essential Business Categories

The updated guidance now includes two additional essential business categories:  “Recreation” and “Professional services with extensive restrictions.”  According to the guidance, recreation includes parks and other open public spaces—except for golf courses, the use of boat launches and marinas for recreational vessels, and “playgrounds and other areas of congregation where social distancing cannot be abided.” The new professional services category is largely directed to legal and real estate services, as well as houses of worship.  With respect to legal services, the guidance clarifies that lawyers may provide in-person services, but only in support of essential businesses.  Even so, the guidance recommends that such work be conducted “as remotely as possible,” while mandating that the remainder of all legal work shall be performed remotely.  With respect to real estate services, the guidance permits services necessary to complete a transfer of real property to occur in person “only to the extent legally necessary and in accordance with appropriate social distancing and cleaning/disinfecting protocols.”  Otherwise, all real estate transactions should be conducted remotely.  Finally, with respect to houses of worship, the revised guidance allows individuals to enter them only where six feet of distance can be maintained between persons.  That permission notwithstanding, the guidance cautions that individuals should not be gathering in houses of worship until the end of the COVID-19 public health emergency, and encourages religious leaders to hold virtual religious services.

II.  The Updated Guidance Provides Further Detail Concerning What Constitutes Essential Construction

The ESD’s prior guidance on construction, which Gibson Dunn reviewed in a prior alert, provided that all non-essential construction must cease, except for emergency construction such as projects “necessary to protect health and safety of the occupants” or projects for which it would be unsafe to allow them to remain incomplete.  The prior guidance also noted that essential construction included that of roads, bridges, transit facilities, utilities, hospitals or health care facilities, affordable housing, and homeless shelters.  And it provided that essential and non-essential emergency construction must adhere to social distancing and safety best practices, to be enforced by state and local authorities, with up to $10,000 fines for a violation.  All that remains in effect in the updated guidance. The updated guidance, however, affords new detail on what constitutes “essential” construction with respect to affordable housing and the energy industry.  Construction of affordable housing is now defined as construction work where: “either (i) a minimum 20% of the residential units are or will be deemed affordable and are or will be subject to a regulatory agreement and/or a declaration from a local, state, or federal government agency or (ii) where the project is being undertaken by, or on behalf of, a public housing authority.”  And certain construction in the energy industry is now expressly included as “essential” construction which may continue, as set forth in greater detail in the response to Question 14 of the ESD’s FAQs.[2]  The updated guidance also categorizes as essential construction that which is “necessary to protect the health and safety of occupants of a structure” and construction for “existing (i.e. currently underway) projects of an essential business.”

III.  The Updated Guidance Incorporates New Examples into Several Other Essential Business Categories

The revised guidance sets forth additional examples of essential businesses among several of the original 12 categories of businesses provided in the prior guidance and narrows the scope of one example in the financial institutions category.  These essential business categories and their new examples are set forth below.
  • Essential Health Care Operations: Emergency chiropractic services; physical therapy, prescribed by a medical professional; occupational therapy, prescribed by a medical professional.
  • Essential Manufacturing: Any parts or components necessary for essential products that are referenced within the guidance, such as sanitary and personal care products regulated by the Food and Drug Administration.
  • Essential Retail: Telecommunications to service existing customers and accounts; and delivery for orders placed remotely via phone or online at non-essential retail establishments—provided that only one employee is physically present at the business location to fulfill orders.
  • Essential Services: Marine vessel repair and marinas, but only to support government or essential commercial operations, and not for recreational purposes; landscaping, but only for maintenance or pest control and not cosmetic purposes; designing, printing, publishing and signage companies to the extent that they support essential businesses or services; remote instruction or streaming of classes from public or private schools or health/fitness centers—provided that no in-person congregate classes are permitted.
  • Financial Institutions: The prior example of “services related to financial markets” has been narrowed to exclude debt collection services.

IV.  The Updated Guidance Provides Further Examples of Businesses Deemed Non-Essential

The ESD’s updated guidance broadens the types of businesses deemed non-essential and therefore ineligible to request a designation as an essential business. The prior guidance provided that non-essential businesses included those that were previously ordered to close due to prior restrictions on gatherings with 50 or more participants, such as bars, restaurants, gyms, movie theatres, casinos, auditoriums, concerts, conferences, worship services, sporting events, and any physical fitness centers.[3] The revised guidance now also specifically enumerates certain additional businesses as “non-essential.”  These include “[a]ny indoor common portions of retail shopping malls with 100,000 or more square feet of retail space available for lease,”; “[a]ll places of public amusement, whether indoors or outdoors,” such as amusement rides, aquariums, bowling alleys, and children’s play centers, among others; and barbershops, hair salons, tattoo or piercing parlors, and related personal care services like nail technicians, and laser hair removal services.  The new restrictions further note that restaurant take-out or delivery for off-premise consumption do not fall within the scope of restaurants deemed non-essential, which are now more clearly specified as those offering dine-in restaurant or bar services.

* * *

In sum, as ESD continues to help businesses navigate the effects of Governor Cuomo’s “New York State on PAUSE” Executive Order, its guidance on what constitutes essential businesses continues evolving as to the breadth and depth of the types of business and activities covered.  Gibson Dunn will continue to track these updates and will report on important developments. Prior client alerts providing an overview of the Governor Cuomo’s “New York State on PAUSE” executive order’s in-person workforce restrictions and ESD’s guidance on essential businesses exempt from the order may be accessed here, here, and here.  As noted in Gibson Dunn’s March 24, 2020 alert, New York Attorney General Letitia James has urged employees who believe their employers to be acting in violation of Governor Cuomo’s executive order to file a complaint with the New York State Office of the Attorney General’s Labor Bureau.
[1]  The April 8 guidance removed the following sentence that was present in earlier versions:  “Houses of worship are not ordered closed however it is strongly recommended not to hold congregate services. If held, social distance must be maintained and compliance with DOH guidance, which can be found at https://coronavirus.health.ny.gov/ information-providers.” [2]  The answer to Question 14 in the ESD’s FAQs explains (among other things) that utility operations and maintenance for existing power generation, fuel supply, and “[t]ransmission and distribution infrastructure,” are examples of essential construction “necessary to respond to the COVID-19 state emergency or to provide basic human services” like food, shelter, and safety. [3] See Governor Andrew M. Cuomo, E.O. 202.3 (March 16, 2020).
Gibson Dunn’s lawyers are available to assist with any questions you may have regarding developments related to the COVID-19 outbreak. For additional information, please contact any member of the firm’s Coronavirus (COVID-19) Response Team. Mylan Denerstein – New York (+1 212.351.3850, mdenerstein@gibsondunn.com) Lauren Elliot – New York (+1 212.351.3848, lelliot@gibsondunn.com) Stella Cernak – New York (+1 212.351.3898, scernak@gibsondunn.com) Lee Crain – New York (+1 212.351.2454, lcrain@gibsondunn.com) Doran Satanove – New York (+1 212.351.4098, dsatanove@gibsondunn.com)

© 2020 Gibson, Dunn & Crutcher LLP

Attorney Advertising:  The enclosed materials have been prepared for general informational purposes only and are not intended as legal advice.

April 7, 2020 |
COVID-19: Short-Term Reduction of Personnel Costs under German Labor Law

Click for PDF The COVID-19 crisis is in full progress. Most companies are extremely burdened by the crisis and looking for easements. This newsletter shall give you an overview of various possibilities to reduce personnel costs in the short term under German law. Next to a hiring freeze, which many companies have already implemented by now, using accrued overtime and vacation entitlement is the easiest and least intrusive option to respond to the situation. However, these measures do not directly reduce personnel costs. Therefore, the following further measures should be considered: A. Cut bonuses Most bonus schemes have a clause, which allows the employer to reduce or entirely cut the bonus due to exceptional circumstances and/or financial distress. The COVID-19 crisis with its tremendous economic implications and government-induced shop closures[1] can be regarded as such an exceptional circumstance. Therefore, reducing or cutting bonuses should be the first measure, which can protect employer liquidity. B. Short-time work ("Kurzarbeit") Another useful tool to counteract the initial drop in orders and labor surpluses is government-subsidized, short-time work, which already proved helpful during the 2008/2009 financial crisis. In a nutshell, short-time work means that the employer may reduce work time (even down to zero) and that, in the ultimate result, the state pays 60 %[2] of the net[3] income lost by the affected employees. After a limited period of short-time work (up to twelve months[4]), the original schedule is taken up again, thereby retaining a skilled workforce. In response to the COVID-19 crisis, the German Federal government has introduced facilitated conditions with regard to short-time work with retroactive effect from March 1, 2020. For at least the rest of the year, short-time money will be granted under the following requirements:

  • At least 10% of employees[5] suffer a loss of more than 10% of their remuneration due to an inevitable event (such as a state prohibition to temporarily operate one’s business) or due to economic causes (e.g., reduced demand or limited supply of goods as a result of the crisis);
  • The loss of work must be of a temporary nature and inevitable. The company must adopt measures to counteract the reduction of work (e.g., assigning other remaining tasks to employees, cutting accrued overtime, using remaining vacation days for 2019 and before);
  • The loss of work must be notified to the employment agency and shown in a convincing fashion (glaubhaft machen); and
  • The option of short-time work must be provided for either in individual agreements with the respective employees or collective agreement (Tarifvertrag) or company agreement (Betriebsvereinbarung).
Short-time work might become the predominant tool to tackle the economic impacts of the crisis throughout Europe. The European Union has recently set up a program to support short-time working schemes across Europe. This new instrument for temporary Support to mitigate Unemployment Risks in an Emergency (“SURE”) provides financial assistance in the form of loans of up to €100 billion to EU Member States. C. Voluntary salary reduction In addition to the measures named above, a voluntary reduction of the salary or parts of it can be considered to protect the company’s liquidity regarding personnel costs. Absent any collective agreements to that effect, such a step generally requires the consent of each affected employee. While such consent is usually very difficult to obtain under normal circumstances, we have seen cases in which companies used crises of different natures to create a common conviction among their workforce to facilitate such intrusive measures. D. Reducing the workforce Some companies will also consider reducing their workforce. As a principle, German labor law is extremely strict with regard to dismissals. There are only limited acknowledged reasons for dismissals, and the employer has the burden of proof as to their existence, if the employee challenges the dismissal, which happens quite often. In particular, a mere reference to the “corona crisis” does not justify a dismissal. A termination for operational reasons (betriebsbedingte Kündigung) requires a permanent loss of the possibility to employ further. The burden of proof lies with the employer. As the COVID-19 crisis is—hopefully—of a temporary nature, this requirement would be hard to be upheld in court. The burden of proof with regard to the final loss of the job is even increased if the employee to be dismissed is working on a short-work scheme which is, by its nature, an instrument for covering a temporary loss of work. Thus, while an ordinary dismissal during short-time work is generally conceivable, the reasons for a termination due to operational reasons must necessarily go beyond the reasons that were originally given to justify an application for (temporary) short-time work.[6] Yet, the strict dismissal protection provisions in general do not apply to (i) small shops with less than ten employees and (ii) to employees in their first six months of employment. __________________________    [1]   See also, https://www.gibsondunn.com/covid-19-german-infectious-diseases-protection-act-what-makes-you-stay-at-home/ (last visited April 7, 2020).    [2]   Sixty-seven percent, if the employee has at least one child. According to media reports, the coalition parties forming the German Federal government are allegedly considering to increase the short-time money. While one suggestion put forward by the Social Democrats contains a general increase of the percent share to 80% and 87% respectively, the Christian Democrats are said to favor a sort of minimum amount of short-time money targeted at low-income beneficiaries. For further details, see Frankfurter Allgemeine Zeitung, dated April 4, 2020.    [3]   Social security contributions are compensated by the employment agency.    [4]   The Federal Ministry of Labor may, by way of regulation, extend the maximum period to 24 months.    [5]   To be able to file a motion for short-time money, it is sufficient that a company retains a single employee. Thus, also small businesses may profit from a short-time work scheme.    [6]   See Federal Labor Court, Judgment of February 23, 2012, 2 AZR 548/10, para. 21 = NZA 2012, 852, 854 et seq. __________________________ Gibson Dunn’s lawyers are available to assist with any questions you may have regarding these developments.  For further information, please contact the Gibson Dunn lawyer with whom you usually work, or the following authors in Germany. Authors:  Mark Zimmer and Andreas Dürr

April 6, 2020 |
Important Considerations in Implementing Workforce Furloughs

Click for PDF In the current environment, many businesses have faced a precipitous drop in demand for their goods and services.  At the same time, economic and public health circumstances continue to change and legal frameworks continue to evolve in response.  In this rapidly changing environment, many employers are weighing employee furloughs as a means to conserve resources while remaining positioned for eventual recovery.  Employee furloughs can, however, implicate a variety of considerations and employment law obligations, many of which are changing in response to the current crisis and can vary by jurisdiction and employer specifics.  This Update highlights some of the common issues that employers must keep in mind when considering and implementing employee furloughs during the current health crisis.[1]

1. Is an Employee Furlough the Right Response for Your Business?

While the term “furlough” is not one that derives from any law or statute, it is generally recognized as a temporary cessation of employment, with the expectation that the employee will resume work for the employer at a later time.  A furloughed employee is usually, but not always, unpaid, although many employers will continue to provide benefits such as health and dental insurance to furloughed employees. Given its temporary nature, the furlough has become a common response to the COVID-19 crisis, where many employers intend to restore employees to their full positions once the circumstances safely and legally permit.  Whether a furlough is right for a particular business in the face of this uncharted crisis, however, will depend on that business’s particular circumstances.

a. Employee Furlough Business Considerations

A starting point for assessing a potential furlough is a business’s likely near-term operational needs.  This will often turn on two factors:  (1) whether the business is legally and safely able to operate, and (2) whether there is demand for the business in light of the current crisis.   As to the first, whether the business can operate, except where employees can work from home, this factor will often turn on whether the business qualifies as “essential” or “critical” under the current patchwork quilt of state and local “stay at home” and shelter-in-place orders.  In general, many states have adopted in whole or in part the guidance regarding what businesses may qualify as critical infrastructure issued by the U.S. Department of Homeland Security’s Cybersecurity and Infrastructure Security Agency, although local orders vary and should be consulted.[2]  Notably, even where some of a company’s workforce may qualify as essential under the applicable orders, other employees may not.   Moreover, during the current health crisis, some employers have transitioned their activity to products and services that may more clearly qualify under controlling orders as essential.  And, under many (but not all) state and local orders, maintenance, information technology, or other activities necessary to preserve the operational viability of a non-essential business or to allow other employees to work from home during a shut-down may be considered essential. As to the second factor, even where an employer can operate its business safely and legally under the applicable orders, demand may have fallen due to the physical limitations on the population, or even due to financial insecurity of consumers.  Thus, even businesses that qualify as “essential” under the applicable orders and can operate at this time may not find it profitable to do so due to lack of demand.  In such cases, employers may consider reducing cash expenditures through employee furloughs.

b. Potential Alternatives to Employee Furloughs

Of course, furloughs are not the only option for reducing the costs of payroll.  Employers should also carefully consider potential alternatives, including offsetting payroll costs with financial incentives available to businesses that continue to operate during this difficult time.  In particular, the federal CARES Act may offer financial incentives to such businesses, including tax credits, tax deferrals, and forgivable loans for small businesses that retain workers.  Several key provisions of the CARES Act warrant particular consideration. First, the CARES Act authorized the Small Business Administration (“SBA”) to provide loan guarantees for up to $349 billion in loan commitments under the SBA’s 7(a) program, through a new “paycheck protection” program under which loans may be forgiven.  For further information on eligibility, loan terms, and loan forgiveness under the program, please see Gibson Dunn’s March 27, 2020 Client Alert, “SBA Paycheck Protection Loan Program under the CARES Act.” Second, the CARES Act enacted the Coronavirus Economic Stabilization Act of 2020 (CESA), which authorizes up to $500 billion in loans, loan guarantees, and other investments by the Secretary of the U.S. Department of Treasury for businesses that do not qualify for other assistance under the CARES Act.  Approximately $46 billion in funds are allocated to passenger air carriers and certain allied businesses, cargo air carriers, and businesses critical to maintaining national security.  The remaining $454 billion may be used for loans, loan guarantees, and other investments for programs of facilities established by the Board of Governors of the Federal Reserve System for eligible businesses, States, and municipalities.  Also under CESA, the Secretary must implement a program to provide for direct, low interest loans to mid-sized businesses.  Additionally, $32 billion of financial assistance is available to air carriers and certain  related contractors under the CARES Act.  There are, however, certain restrictions under CESA and other provisions of the CARES Act to consider.  For example, a company that receives a federal loan or loan guarantee under CESA must maintain the company’s employment levels as of March 24, 2020 through September 2020 to the extent practicable, and if it must reduce such levels, it may not do so by more than 10%.  Similarly, mid-sized businesses who receive direct loans under the Secretary’s program must, among other requirements, retain 90% of their workforce at full compensation and benefits until September 30, 2020, restore 90% of their workforce as of February 1, 2020 (with full compensation and benefits) within four months following the end of the public health emergency, not outsource or offshore jobs, and remain neutral in any union organizing effort.  Additionally, air carriers and certain related contractors that receive financial assistance must refrain from conducting involuntary furloughs or reducing pay rates or benefits through September 30, 2020. Third, the CARES Act provides for a number of temporary and permanent changes to the Internal Revenue Code of 1986.  These changes allow for certain tax relief including, but not limited to: modifications to the rules applicable to the use of business losses (including net operating losses); an increased limit of a taxpayer’s business interest expense deduction from 30% to 50%; the ability for certain employers to defer payment of the 6.2% employer share of Social Security payroll tax on wages paid from March 27, 2020 through December 31, 2020—with 50% of the deferred tax due December 31, 2021, and the remaining 50% due by December 31, 2022; a federal excise tax holiday applicable to aviation kerosene (including at refineries, terminals, and importation facilities) and alcohol and distilled spirits in the production of hand sanitizer; and SBA loan forgiveness income exclusion.  For further information on these changes, please see Gibson Dunn’s March 29, 2020 Client Alert, “Tax Relief in the CARES Act.” Finally, states and cities have also announced economic aid packages for certain businesses and individuals.[3] As a potential alternative to employee furloughs, both federal and state laws generally permit companies to make downward pay adjustments to employees, subject to certain wage and salary thresholds and certain state-specific notice requirements.  Where pay adjustments are made, non-exempt employees must continue to be paid hourly wages and overtime in compliance with applicable federal, state, and municipality minimum wage requirements, and wages must never drop below the applicable minimum wage.  Employees who are covered by the Fair Labor Standards Act (“FLSA”) and qualify as exempt from the FLSA’s minimum wage and overtime requirements must continue to be paid a salary of at least $35,568 per year, or $684 per week, or else be transitioned to hourly positions.  Businesses should confirm that salary adjustments also comply with any state-specific exemption requirements.  While some states rely on the FLSA requirements, or have lower requirements or none at all, others, including California and New York, have higher salary thresholds.  Employers must also take care to avoid impairing the exempt status of salaried employees by adjusting their weekly pay based on hours worked.  Generally, salaried employees are entitled to their agreed weekly salary in full for any weeks in which they perform compensable work for an employer, although there are certain provisions for pro rata adjustment of salary for long-term changes in schedule.[4] Employers implementing pay reductions should also consider state-imposed notice requirements.  Some states, including California, Connecticut, Idaho, Illinois, Kansas, Kentucky, Michigan, New Jersey, Oregon, Tennessee, and Texas, require employers to provide advance notice to employees regarding pay adjustments, but do not specify a fixed statutory time period for issuing such notice.[5]  Other states like New York, North Carolina, and Missouri require advance notice ranging from 1 to 30 days.  Employers who fail to comply with these notice requirements may incur penalties.  Employers should also be cognizant of the form of notice provided; written notice is often required and may need to be posted at the workplace.  And employers are typically prohibited from imposing retroactive wage reductions for hours already worked.  As a result, employers should assume that any wage changes will only apply to hours worked after effective notice is provided. Union employees, and those with individual employment agreements, may have additional rights.

2. Important Furlough Considerations

For those employers who choose to move forward with furloughs, there are several legal aspects of a furlough that employers should consider.

a. Is WARN Act Notice Required?

Employers considering furloughs in response to the current health crisis must assess whether advance notice to affected employees may be required.  Under the Federal Worker Adjustment and Retraining Notification (“WARN”) Act, employers who employ 100 or more full time workers must provide at least sixty days’ advance notice of a “plant closing” or “mass layoff.”[6]  A “mass layoff” occurs when a reduction in force “results in an employment loss at the single site of employment during any 30-day period for: (i) at least 33 percent of the active employees, excluding part-time employees, and (ii) at least 50 employees, excluding part-time employees.”[7]  “Where 500 or more employees (excluding part-time employees) are affected,” however, “the 33% requirement does not apply.”[8]  A covered “plant closing” means “the permanent or temporary shutdown of a ‘single site of employment’ or one or more ‘facilities or operating units’ within a single site of employment if the shutdown results in an ‘employment loss’ during any 30–day period at the single site of employment for 50 or more employees, excluding any part-time employees.”[9]  Both of these triggers turn on the number of employees who are expected to experience an “employment loss,” which is defined as “a layoff exceeding 6 months” or “a reduction in hours of work of individual employees of more than 50% during each month of any 6-month period.”[10] This means that, under federal law, employers must provide advance notice if they employ at least 100 full time employees and are planning to furlough or reduce by at least 50% the hours of:
  • More than 50 employees at a single site during any 30-day period;
  • Comprising at least 33 percent of its active workforce (or 500 or more full-time employees) at the single site or compromising the complete shutdown of one or more facilities or operating units.
The Federal WARN Act includes an exception for layoffs or furloughs “caused by business circumstances that were not reasonably foreseeable as of the time that the notice would have been required.”[11]  Under these circumstances, which likely encompass many of the challenges employers are facing in the wake of the COVID-19 crisis, the employer is only required to provide “as much notice as is practicable.”[12] Understandably, it may be difficult for employers to predict the duration of necessary layoffs or furloughs during this unprecedented crisis.  Thankfully, the law does not require employers to be omniscient.  Instead, it requires employers to issue notice only when it becomes “reasonably foreseeable” that one of the Federal WARN triggers will be met.[13]  Accordingly, “[a]n employer who has previously announced and carried out a short-term layoff (6 months or less) which is being extended beyond 6 months due to business circumstances (including unforeseeable changes in price or cost) not reasonably foreseeable at the time of the initial layoff is required to give notice when it becomes reasonably foreseeable that the extension is required.”[14]  In such circumstances, “[t]he employer must exercise such commercially reasonable business judgment as would a similarly situated employer in predicting the demands of its particular market.  The employer is not required, however, to accurately predict general economic conditions that also may affect demand for its products or services.”[15] Where required, WARN notices must be provided to:
  • The affected employees, defined as those who will suffer an employment loss;
  • The dislocated worker unit (or Governor) in the State in which the furloughs will occur; and
  • The chief elected official of the unit of local government in which the furloughs will occur.[16]
If the furloughed workers are represented by a union, notice must be provided to the chief elected officer of the affected employees’ bargaining agent or representative.[17] Alongside the Federal WARN Act, many states have adopted so-called “Mini-WARN Acts” which reinforce and sometimes augment the federal scheme.  Importantly, some states require WARN notices to be sent in a broader set of circumstances than required under federal law.  As a result, it is important to consider state notice requirements as well.  To assist in this process, we have grouped the various state laws into three broad categories:  (1) states where the Mini-WARN Act imposes additional substantive obligations on employers beyond the Federal WARN Act; (2) states where the Mini-WARN Act expands coverage to smaller employers; and (3) states that currently either do not have a Mini-WARN Act or where the Mini-WARN Act currently does not impose significantly more stringent requirements than required under the Federal Act. In particular, at least six states have enacted Mini-WARN Acts that impose greater obligations on employers than does the Federal WARN Act.[18]  Most notably, in California an employer has “a duty to provide statutory notice . . . even if the layoffs [a]re not permanent and [a]re for less than six months.”  Int’l Bhd. of Boilermakers v. NASSCO Holdings Inc., 17 Cal. App. 5th 1105, 1118 (2017). Like the Federal WARN Act, several of those states have exceptions that may relax these notice requirements in the current crisis.  However, as under the Federal WARN Act, in most cases these exceptions continue to require an employer to provide as much notice as is feasible under the circumstances.  For example, New York’s Mini-WARN Act includes an exception for “business circumstances that were not reasonably foreseeable when the 90-day notice would have otherwise been required.”[19]  The regulations further explain that such circumstances include “an unanticipated and dramatic major economic downturn.”[20]  While New York has not issued a blanket declaration that the COVID-19 crisis qualifies for this exception,[21] other states, including Vermont, have made clear that the COVID-19 crisis qualifies for similar exceptions.[22] Furthermore, states without these “business circumstances” exceptions are already taking steps to address the mass layoffs triggered by the COVID-19 crisis.  Most notably, Governor Gavin Newsom of California issued an Executive Order officially suspending the 60-day notice requirement under California’s Mini-WARN Act for mass layoffs “caused by COVID-19-related ‘business circumstances that were not reasonably foreseeable as of the time that notice would have been required.’”[23]  The Executive Order still requires California employers to provide “as much notice as is practicable,” as well as a “brief statement of the basis for reducing the notification period.”[24] Beyond these states with substantively more demanding state Mini-WARN Acts, at least five states have adopted the Federal WARN Act’s framework but applied it to smaller employers or lower thresholds in their states.  For example, in Iowa, the Mini-WARN Act is similar to the Federal Act but applies to employers with more than 25 employees, essentially extending the Federal Act to employers with between 25 and 100 employees.[25] Finally, at present, 39 states and the District of Columbia either do not have a Mini-WARN Act or have a Mini-WARN Act that does not impose significantly greater requirements on employers beyond those in the Federal Act.  In these states, employers should primarily follow the Federal WARN Act in assessing whether planned furloughs trigger WARN Act notice requirements.[26]  Even in these states, however, some statutes may require (or encourage) employers to provide supplemental information to the state in the employer’s WARN notice,[27] while others may require notice to the state following the initiation of layoffs.[28]  Employers should also remain aware that the current health crisis is spurring rapid change in this and related areas.[29]

b. Is Other Notice Required?

Employers implementing furloughs must also consider potential notice and other obligations under state unemployment insurance systems.  In particular, a number of states and the federal government have taken steps in response to the current health crisis to increase eligibility for unemployment benefits, including among employees who have been temporarily furloughed or who may continue to receive limited pay or benefits from their employers during a furlough.[30] In conjunction with these increased opportunities for unemployment benefits, states have taken divergent approaches to enhanced employer obligations under state unemployment schemes in light of the crisis.  To date, approximately half of the states—including Illinois, New York, and Texas—have not addressed enhanced employer responsibilities as pertaining to furloughs or temporary layoffs in response to the current health crisis.  In contrast, some states—such as California, Kansas, and Michigan—have instituted notice requirements.  California, for example, requires employers who trigger the state’s WARN Act by furloughing employees due to COVID-19 to provide specific language in notices to those employees regarding eligibility for unemployment insurance.  In Kansas, employers must notify employees at the time of separation of the availability of unemployment benefits.  And in Michigan, employers are required to provide employees with a formal unemployment compensation notice and communicate to employees their eligibility for unemployment benefits.  Other states that have addressed employer responsibilities take different approaches to, for example, charging an employer’s account when an employee files for unemployment.  Some states have postponed employer tax increases until 2021, while others have indicated tax rates could rise sooner. One area in which the states take a similar approach is in their recommendation that an employer considering furloughs or temporary layoffs work with state shared work (or similar) programs.  These programs generally provide an alternative to furloughs or layoffs by allowing an employer to reduce employees’ hours while allowing the employees to receive a limited unemployment benefit.  Many states have also recommended that employers implementing furloughs or temporary layoffs submit a “mass claim” on behalf of their employees to the state unemployment insurance division.

c. How Does a Furlough Impact Accrued Vacation, Paid Time Off (“PTO”) and Other Paid Leave Rights?

Employers considering furloughs should be aware that some states may view even temporary furloughs as a termination of employment, thereby triggering final pay obligations.  For example, the California Division of Labor Standards Enforcement (“DLSE”) issued two advisory letters in the 1990s, taking the position that a temporary lay-off will constitute a termination except where the lay-off does not exceed 10 days and there is a definite date given for return to work within the normal pay period.[31]  Because California law requires that all accrued vacation be paid at the time of “termination,”[32] these DLSE letters suggest that a temporary lay-off extending beyond the then-current pay period will trigger an obligation to pay final wages, including accrued vacation.  Such a rule could have significant implications for California businesses, as an employer’s willful failure to timely pay final wages can result in waiting time penalties under Labor Code Section 203, which are calculated as a day’s wage for every day final wages are not paid, up to 30 days. Whether this DLSE guidance will apply in the time of COVID-19 is unknown.  The DLSE has provided no additional direction on whether final wages, including accrued vacation, must be paid out to employees furloughed in response to recent state and local orders.  Moreover, the two DLSE letters are not binding on courts, and are persuasive authority at best.[33]  Regardless, the DLSE’s guidance plainly did not contemplate a situation like the one employers face today, where employers are temporarily furloughing employees due to government-mandated closures and public health concerns, rather than solely business needs.  Notably, current furloughs share few of the markers of traditional temporary lay-offs, where the expectation is that the employees may seek and find other work during the lay-off (this may of course happen here—with employees obtaining other temporary or even permanent work—but this may be less likely).  By contrast, here, employers generally hope and expect to resume the employment relationship as soon as is legally and safely possible; many employers are providing assistance to employees such as partial pay or continued healthcare which would not typically accompany a temporary lay-off; and employees may want and expect to have their accrued vacation waiting for them when they return.  None of these circumstances indicate an intent to terminate the employer/employee relationship.  As a result, employers in California will want to carefully consider, in consultation with counsel, whether final wages including accrued vacation should be paid out to furloughed employees. Employers outside California should similarly consider applicable state laws which may require the payment of final wages including accrued vacation when employees are furloughed.  For example, Colorado requires the pay-out of accrued vacation upon “interruption in the employer-employee relationship by volition of the employer.”[34]  A state- or locality-mandated shutdown would presumably not be “by the volition of the employer,” but employers should carefully consider this issue with counsel as well as whether the furlough of any employees who can work under the applicable orders (such as essential or work-from-home employees) prompted by reduced business demand for the employer’s goods or services would trigger final pay obligations.[35]

d. Other important employment considerations

Employee furloughs frequently raise a host of other issues employers must consider.  One frequent question is whether furloughed employees will continue to participate in employer-provided health benefit plans.  Typically, the ability to do so will turn on whether the plan’s terms and any underlying insurance policy (including any stop-loss policy associated with an otherwise employer funded plan) permit coverage of individuals who continue to be considered “employees” but who are performing no services and receiving no pay.  If workers will not continue to participate in employer health plans while on furloughed status, the furlough will likely trigger an employer’s obligation to provide timely notice of continuation coverage under COBRA. Employers must also take care to avoid unintended wage and hour violations as a consequence of employee furloughs.  For example, because federal and state laws typically require an employer to compensate its employees for any work performed, employees should be clearly instructed not to perform any work for the benefit of the employer while on furlough, and the employer should be prepared to compensate employees for any job related activities by employees of which it becomes aware.  Employers who partially furlough their workforce should also be alert to unintended consequences the furloughs may have on those workers who remain on the job.  For example, in a small retail setting, staff reductions may result in formerly overtime-exempt managers supervising fewer workers or performing a larger share of operational (as opposed to managerial) tasks, either of which may impact their continuing status as overtime-exempt.[36] Likewise in a partial furlough, the process by which employees are selected for furlough (or selected for recall if some but not all employees are called back) should be carefully considered to minimize potential claims of discrimination or retaliation.  Employers should ensure that the methodology for selecting employees for furlough can be clearly articulated and defended and is consistently followed.  Employers should also remain sensitive to potential adverse impact in the selection process on workers in legally protected groups, including employees who may have voiced concerns over workplace health and safety.  And employers should work to ensure that managers do not use the furlough selection process as an indirect means of addressing neglected employee performance or conduct issues (although performance, conduct, and skill set may, in appropriate cases, be relevant criteria for consideration). Although temporary employee furloughs historically have not been coupled with employee releases of claims, during the current unsettled and rapidly changing environment employers may also want to consider whether, to the extent they are providing furloughed employees with voluntary compensation or benefits during the furlough period, to link such voluntary benefits to an employee release.  To the extent an employer does so—or should temporary furloughs evolve over time into permanent separations due to changed circumstances—an employer must keep in mind the requirements that may apply to such a release under the Federal Older Workers Benefit Protection Act and possible state laws as well as employee rights under any existing employer severance plans or agreements. Apart from these and other employment law considerations, employers implementing a furlough should also consider how they will implement the change.  Where employees are not already required to remain home due to state or local “safer at home” or shelter-in-place orders, an employer should provide a safe, orderly, and humane plan to allow employees to gather necessary personal items and transition from work to furlough status.  As in all cases, such plans should give proper consideration to employee health and safety, including providing for appropriate hygiene and social distancing.

3. Post-Furlough Communications With Employees

Employers will be well-served to maintain open channels of communication with employees while on furlough.  At a minimum, an employer should have a clear and well-publicized point of contact for employee questions or issues that may arise during the furlough and maintain current contact information for furloughed employees.  Employers may also find it beneficial to provide employees with periodic updates on status and the business’s recovery planning.  Such updates may aid morale and help improve the employer’s opportunities to recall and quickly re-engage furloughed workers when the business is ready to resume operations.  Employers should remain sensitive, however, to the need to avoid employees engaging in uncompensated “work” while on furlough; accordingly, any updates should be brief and passive in nature, not requiring any action or follow-up on the part of employees. Employers should also remain vigilant to changing circumstances that may impact the status of employees on furlough.  As noted earlier, if it appears that some or all furloughed employees may not be recalled due to evolving business conditions, the employer should immediately evaluate whether additional obligations, including potentially WARN Act notification, may be triggered. Conclusion Employers must weigh not only the legal implications of a potential furlough but also whether—in light of these and other considerations—a furlough is the best course under the circumstances to balance immediate staffing and financial needs against the longer term ability to retain a ready workforce and to be best positioned for a rapid recovery post-crisis.  The proper balance among those considerations will depend in part on the legal obligations and burdens triggered by a furlough under applicable federal and state law.  As events and governmental responses to them continue to rapidly evolve, employers should work closely with legal counsel in developing and implementing an appropriate plan for their particular circumstances and workforce. _____________________    [1]   These considerations assume a non-union workforce.  Where collective bargaining exists, additional considerations will come into play and must be included in any furlough planning.    [2]   The Department of Homeland Security’s Cybersecurity and Infrastructure Security Agency’s revised guidance on “Essential Critical Infrastructure Workers” is available at https://www.cisa.gov/sites/default/files/publications/CISA_Guidance_on_the_Essential_Critical_Infrastructure_Workforce_Version_2.0_Updated.pdf, and our April 1, 2020 Client Alert “The Cybersecurity and Infrastructure Security Agency of the Department of Homeland Security Updates Essential Critical Infrastructure Workforce Guidance” is available here.    [3]   E.g., Florida Small Business Emergency Bridge Loan Program; Maryland Small Business COVID-19 Emergency Grant Relief Fund; City of Los Angeles Small Business Emergency Microloan Program; New York City Small Business Continuity Loan Fund.    [4]   According to the DOL, a prospective and “fixed reduction in salary effective during a period when a company operates a shortened workweek due to economic conditions would be a bona fide reduction not designed to circumvent the salary basis payment.  Therefore, the exemption would remain in effect as long as the employee receives the minimum salary required by the regulations and meets all the other requirements for the exemption.”  Wage and Hour Opinion Letter, FLSA2009-14 (January 15, 2009); Wage and Hour Opinion Letter, FLSA2009-18 (January 16, 2009).  By contrast, “deductions from salary due to day-to-day or week-to-week determinations of the operating requirements of the business are . . . preclude[d].”  Wage and Hour Opinion Letter, FLSA2009-14 (quoting § 541.602(a)(2)).    [5]   In addition, some jurisdictions including the District of Columbia generally require employers to provide information regarding employee wage rates without specifying the timing of such notices.    [6]   20 C.F.R. § 639.2.    [7]   20 C.F.R. § 639.3(c)(1).    [8]   20 C.F.R. § 639.3(c)(1)(ii).    [9]   20 C.F.R. § 639.3(b). [10]   20 C.F.R. § 639.3(f)(1). [11]   29 U.S.C. § 2102 § 2102(b)(2)(A). [12]   20 C.F.R. § 639.9(b). [13]   20 C.F.R. § 639.4(b). [14]   Id. [15]   20 C.F.R. § 639.9(b)(2). [16]   29 C.F.R. § 639.6. [17]   Id. [18]   Those states are:  California (requires notice of any “separation from a position for lack of funds or lack of work,” regardless of duration and expands WARN Act to cover employers with between 75 and 100 employees); Maine (requires 90 days’ notice); New Jersey (starting July 19, 2020, requires 90 days’ notice); New York (requires 90 days’ notice and expands WARN Act to cover employers with between 50 and 100 employees); Tennessee (requires notice when employer will “permanently or indefinitely” reduce the workforce by 50 or more employees for at least three months and expands coverage to employers with between 50 and 100 employees); and Vermont (requires notice of permanent employment loss for at least 50 employees during a 90-day period and expands coverage to employers with between 50 and 100 employees). [19]   N.Y. Comp. Codes R. & Regs. tit. 12, § 921-6.3. [20]   Id. [21]   New York Department of Labor, Worker Adjustment and Retraining Notification, https://labor.ny.gov/workforcenypartners/warn/warnportal.shtm (“The WARN Act requirement to provide 90 days’ advanced notice has not been suspended because the WARN Act already recognizes that businesses cannot predict sudden and unexpected circumstances beyond an employer’s control, such as government-mandated closures, the loss of your workforce due to school closings, or other specific circumstances due to the coronavirus pandemic. If an unexpected event caused your business to close, please provide as much information as possible to the Department of Labor when you file your notice about the circumstances of your closure so we can determine if an exception to the WARN Act applies to your situation.”). [22]   See Vermont Department of Labor, WARN Act and Notice of Potential Layoffs Act – COVID-19 Update, https://labor.vermont.gov/warn-act-and-notice-potential-layoffs-act (“[T]he Department of Labor does not intend to enforce the provisions of the Act against businesses who are forced to lay off employees due to the effects of the COVID-19 pandemic.”). [23]   https://www.gov.ca.gov/wp-content/uploads/2020/03/3.17.20-EO-motor.pdf. [24]   Id.  See also https://www.edd.ca.gov/About_EDD/coronavirus-2019/faqs/Warn.htm. [25]   These states include:  Delaware (expands the definition of how part-time employees are counted for meeting the 100-employee threshold); Illinois (covers employers with 75 or more employees); Iowa (covers employers with 25 or more employees); New Hampshire expands definition of how part-time employees are counted for meeting the 100-employee threshold); and Wisconsin (covers employers with 50 or more employees). [26]   At the time of writing, these states include:  Alabama, Alaska, Arizona, Arkansas, Colorado, Connecticut, Florida, Georgia, Hawaii, Idaho, Indiana, Kansas, Kentucky, Louisiana, Maryland, Massachusetts, Michigan, Minnesota, Mississippi, Missouri, Montana, Nebraska, Nevada, New Mexico, North Carolina, North Dakota, Ohio, Oklahoma, Oregon, Pennsylvania, Rhode Island, South Carolina, South Dakota, Texas, Utah, Virginia, Washington, Washington, D.C., West Virginia, and Wyoming. [27]   For example, Michigan and Minnesota. [28]   For example, Georgia, Maryland, and North Dakota. [29]   State WARN Act requirements, as well as other valuable state-level developments, are tracked and regularly updated in our separate 50-State Survey of COVID-19 Responses.  To subscribe to that update, contact any member of the Gibson Dunn COVID-19 Response Team identified at the end of this Update. [30]   Expanded opportunities for unemployment benefits under the federal CARES Act are summarized in our March 26, 2020 Client Alert, “Senate Advances the CARES Act, the Largest Stimulus Package in History, to Stabilize the Economic Sector During the Coronavirus Pandemic.” [31]   DLSE Op. Ltr. (May 4, 1993); DLSE Op. Ltr. (May 30, 1996). [32]   Cal. Lab. Code, § 201. [33]   See Brinker Restaurant Corp. v. Sup. Ct. (2012) 53 Cal.4th 1004, 1029 (noting that DLSE opinion letters are not controlling upon the courts); see also Alvarado v. Dart Container Corp. of California (2018) 4 Cal.5th 542; Tidewater Marine Western, Inc. v. Bradshaw (1996) 14 Cal.4th 557. [34]   Co. Rev. Stat. § 8–4-109. [35]   Similarly, other states such as Illinois, Louisiana, Massachussetts, Montana, and Nebraska require payout of accrued vacation upon termination.  See, e.g., Mass. Gen. Laws ch. 149, § 148; Mont. Att’y Gen. Op. 56, vol. 23; Nebraska Stat. 48-1229(4), 48-1230(4)(a).  While none of these states offer specific guidance on whether a furlough or temporary lay-off would require payout of accrued vacation, employers should consider whether their particular employment decisions trigger such obligations. [36]   Federal and state wage laws may provide some allowance for the performance of non-exempt work by managers during an emergency.  See 29 C.F.R. § 541.706.  The extent to which this would apply will of course depend on the facts of your situation.
Gibson Dunn’s lawyers are available to assist with any questions you may have regarding developments related to the COVID-19 outbreak. For additional information, please contact any member of the firm’s Coronavirus (COVID-19) Response Team. Gibson Dunn attorneys regularly counsel clients on the array of employment issues raised by this pandemic, and we are working with many of our clients on their response to COVID-19. Please also feel free to contact the Gibson Dunn attorney with whom you work in the Labor and Employment Group, or the following authors: Catherine A. Conway – Co-Chair, Labor & Employment Practice Group, Los Angeles Jesse Cripps – Los Angeles Gabrielle Levin – New York Amanda C. Machin – Washington, D.C. Jesenka Mrdjenovic – Washington, D.C. Karl G. Nelson – Dallas Katherine Smith – Los Angeles Jason C. Schwartz – Co-Chair, Labor & Employment Practice Group, Washington, D.C. © 2020 Gibson, Dunn & Crutcher LLP Attorney Advertising:  The enclosed materials have been prepared for general informational purposes only and are not intended as legal advice.

April 2, 2020 |
Department of Labor Issues Temporary Regulations for Families First Coronavirus Response Act

Click for PDF On April 1, 2020, the Wage and Hour Division (the “Division”) of the U.S. Department of Labor posted a temporary rule relating to the paid leave provisions of the Families First Coronavirus Response Act (the “FFCRA”), which was enacted to provide additional paid leave to employees in light of the novel coronavirus (“COVID-19”) pandemic.[1]  These temporary regulations expand on the additional guidance provided by the Division over the weekend, which took the form of additional questions and answers on the Division’s FFCRA Q&A website.[2]  Below, we provide an overview of the Division’s temporary regulations and additional guidance.  For a summary of the Division’s prior guidance on the FFCRA paid leave provisions—the Emergency Paid Sick Leave Act and the Emergency Family and Medical Leave Expansion Act (the “Emergency FMLA Expansion Act”)—see Gibson Dunn’s March 26, 2020 update here. Application of FFCRA Paid Leave to Furloughed Employees and Closed Worksites As we noted in our March 26 update, the Division’s initial March 24 guidance left open the question of whether employers who are covered under the paid leave provisions of the FFCRA—those with fewer than 500 employees—were required to provide paid leave under the FFCRA to employees on furlough or lay off status who had not been terminated.  The Division has now clarified that employers are not required to provide paid sick leave or expanded family and medical leave to furloughed employees or employees whose worksites have closed, even if the employees were furloughed or the worksites were closed after the FFCRA’s April 1, 2020 effective date.[3]  If an employer closes a worksite while an employee is on paid sick leave or expanded family and medical leave, the employer must pay for any such leave that the employee used before the worksite closed, but the employer is not required to provide any further paid sick leave or expanded family and medical leave as of the date of the worksite closure.  Further, if the employer closes a worksite but later reopens it, the employer is not required to provide paid sick leave and expanded family and medical leave to employees for the period that the worksite was closed.  The Division’s further guidance notes that employees who are furloughed or subject to worksite closures may be eligible for unemployment insurance benefits and refers employees to https://www.careeronestop.org/LocalHelp/service-locator.aspx for further information.[4] The Division also clarified that employees who have been laid off or furloughed and have not subsequently been reemployed do not count toward the 500-employee threshold for determining employer eligibility under the FFCRA.[5] Qualifying Reasons Under the Emergency Paid Sick Leave Act The temporary regulations provide additional detail as to what constitutes a qualifying reason to take paid sick leave under the Emergency Paid Sick Leave Act. First, employees may take paid sick leave under the Emergency Paid Sick Leave Act if the employee “is subject to a Federal, State, or local quarantine or isolation order related to COVID-19.”[6]  The temporary regulations clarify that a “quarantine or isolation order” can include a broad range of governmental orders, including “quarantine, isolation, containment, shelter-in-place, or stay-at-home orders issued by any Federal, State, or local government authority that cause the Employee to be unable to work.”[7] Second, employees can take paid sick leave under the Emergency Paid Sick Leave Act if they have been advised by a health care provider to self-quarantine due to concerns related to COVID-19.  The advice to self-quarantine must be based on the health care provider’s belief that the employee has COVID-19, may have COVID-19, or is particularly vulnerable to COVID-19.  Further, the self-quarantine must prevent the employee from working—that is, if employees can telework during the self-quarantine, they are not eligible for paid sick leave.  An employee is able to telework if (a) the employer has work for the employee to perform; (b) the employer permits the employee to perform that work from home; and (c) there are no extenuating circumstances, such as serious COVID-19 symptoms, that prevent the employee from performing that work.[8] Third, paid sick leave is available to employees who are experiencing symptoms of COVID-19 and who are seeking a medical diagnosis.  The temporary regulations explain that qualifying symptoms are fever, dry cough, shortness of breath, or other COVID-19 symptoms identified by the U.S. Centers for Disease Control and Prevention.  Additionally, the paid sick leave taken for this reason must be limited to the time the employee is unable to work because he or she is taking affirmative steps to obtain a medical diagnosis, such as making, waiting for, or attending an appointment for a test for COVID-19.  An employee waiting for the results of a test who is able to telework may not take paid sick leave under this provision unless there are extenuating circumstances, such as serious COVID-19 symptoms, that prevent the employee from teleworking.  An employee who is not able to telework while awaiting a test result may continue to take paid sick leave under this provision.[9] Fourth, an employee can take paid sick leave where the employee is unable to work because he or she needs to care for an individual who is either subject to a quarantine or isolation order or who has been advised by a health care provider to self-quarantine.  To qualify under this provision, the “individual” must be the employee’s immediate family member, a person who regularly resides in the employee’s home, or a similar person with whom the employee has a relationship that creates an expectation that the employee would care for the person if he or she were quarantined or self-quarantined.[10] Fifth, paid sick leave is available to an employee who is caring for his child if the child’s school or place of care has been closed, or the child care provider is unavailable, due to COVID-19 precautions.  Employees are eligible for paid sick leave under this provision only if no other suitable person is available to care for the child.[11] Finally, an employee is eligible for paid sick leave if the employee is unable to work because the employee is experiencing any other substantially similar condition specified by the Secretary of Health and Human Services in consultation with the Secretary of Treasury and the Secretary of Labor.[12]  Neither the temporary regulations nor the updated Q&As provide additional detail about what constitutes a “substantially similar condition” under this provision. Interaction with FMLA Leave An employee’s eligibility for expanded family and medical leave under the Emergency FMLA Expansion Act depends on how much FMLA leave the employee has already taken during the 12-month period used by the employer for FMLA leave. Under the FMLA, eligible employees are entitled to 12 workweeks of unpaid leave during a 12-month period due to (1) the birth of a child or placement of a child with the employee for adoption or foster care; (2) the need to care for a spouse, son, daughter, or parent who has a serious health condition; (3) a serious health condition that makes the employee unable to perform the essential functions of his or her job; or (4) any qualifying exigency arising out of the fact that a spouse, son, daughter, or parent is a military member on covered active duty.[13] Under the Emergency FMLA Expansion Act, eligible employees—those who are unable to work due to the need to care for children because the children’s school or place of care has been closed or child care provider is unavailable—are entitled to a total of 12 workweeks of expanded family and medical leave between April 1, 2020 and December 31, 2020.[14]  The first two weeks of leave under the Emergency FMLA Expansion Act are unpaid, while the remainder of the 12 weeks of leave must be paid at a rate of two-thirds of the employee’s regular rate of pay for 40 hours per week for full-time employees, or, for part-time employees, the number of hours the employee is normally scheduled to work over that period.[15] The Division has clarified that the Emergency FMLA Expansion Act provisions do not change the overall amount of FMLA leave employees can take during an applicable FMLA 12‑month period.  For example, if an employee took four weeks of FMLA leave in February 2020 to recover from a surgical procedure, the employee would be entitled to take up to eight weeks of expanded family and medical leave under the Emergency FMLA Expansion Act, rather than the full 12 weeks.  Conversely, if an employee has not taken any FMLA leave in the 12-month period used by the employer for FMLA leave and elects to take all 12 weeks of expanded family and medical leave to care for his children who are out of school due to COVID-19, that employee would not be entitled to any additional FMLA leave for the remainder of the 12-month period.[16]  In addition, employees are limited to a total of 12 weeks of expanded family and medical leave under the Emergency FMLA Expansion Act even if the applicable time period (April 1 to December 31, 2020) spans two 12-month leave periods under the FMLA.  For example, if an employer’s 12-month period begins on July 1 and an eligible employee took seven weeks of expanded family and medical leave in May and June 2020, the employee could only take up to five additional weeks of expanded family and medical leave between July 1 and December 31, 2020, even though the first seven weeks of expanded family and medical leave fell in the prior 12-month period.[17] Unlike with expanded family and medical leave, eligible employees under the Emergency Paid Sick Leave Act—for example, employees who are subject to a Federal, State, or local quarantine or isolation order related to COVID-19 or who have been advised by a health care provider to self-quarantine due to concerns related to COVID-19—are entitled to paid sick leave regardless of how much leave they have taken under the FMLA.  However, if an employee takes paid sick leave concurrently with the first two weeks of expanded family and medical leave (which would otherwise be unpaid), then those two weeks do count toward the 12 workweeks to which eligible employees are entitled under the FMLA. Telework and the FFCRA In response to the COVID-19 pandemic, many employees are now working from home, or “teleworking.”  The temporary regulations clarify that telework is work for which normal wages must be paid and is not compensated under the paid leave provisions of the FFCRA.  In addition, under federal law as interpreted by these rules, employees who are teleworking must be compensated for all hours actually worked and which the employer knew or should have known were worked.[18] The temporary regulations also clarify that the FLSA’s continuous workday rule does not apply to teleworking under the FFCRA.  The continuous workday rule generally provides that all time between performance of the first and last principal activities is compensable worktime.[19]  However, the Department of Labor has determined that an employer allowing employees to telework during the COVID-19 pandemic will not be required to count as hours worked all time between the first and last principal activity the employee performed while teleworking.  This means that if an employee teleworks from 9:00 am to 12:00 pm and then again from 3:00 pm to 5:00 pm, the employer must compensate the employee for the hours actually worked (five hours) but not for all eight hours between the employee’s first principal activity at 9:00 am and her last principal activity at 5:00 pm.[20] The Division further clarified that if an employer permits teleworking but an employee is unable to telework for a qualifying reason under the FFCRA (if, for example, the employee who is teleworking is caring for a child whose school or place of care is closed), then the employee is entitled to take leave under the FFCRA.  However, if the employee is able to telework while caring for a child, paid sick leave and expanded family and medical leave are not available.[21] Intermittent Work While an employee is teleworking, the employer and employee may agree to allow the employee to take intermittent paid sick leave or expanded family and medical leave.  Employees may take intermittent leave in any increment agreed upon by the employer and employee.[22] However, to discourage conditions that may exacerbate the spread of COVID-19, the Division notes that the ability of an employee to take intermittent leave while working at the employee’s usual worksite is more limited.  Once the employee begins taking paid sick leave for any qualifying reason other than caring for a child whose school or place of care is closed, the employee must continue taking paid sick leave each day until (1) the employee uses the full amount of paid sick leave, or (2) the employee no longer has a qualifying reason for taking paid sick leave.  But if an employee is taking paid sick leave to care for a child whose school or place of care is closed, the employee and employer may agree that the employee can take paid sick leave intermittently, in any increment.  The Division provides the following example:  if any employee’s child is at home because his place of care is closed or his child care provider is unavailable, the employee may take paid sick leave on Mondays, Wednesdays, and Fridays, but work at the employee’s normal worksite on Tuesdays and Thursdays.[23] The Division encourages employers and employees to memorialize in writing any agreement relating to intermittent leave arrangements, but notes that this is not a requirement and that “a clear and mutual understanding between the parties is sufficient.”[24] Recordkeeping The temporary regulations provide that employees taking paid sick leave under the Emergency Paid Sick Leave Act must provide their employers with documentation in support of their sick leave.  Employees must provide written requests for paid leave under the FFCRA that include (1) the employee’s name; (2) the date or dates for which leave is requested; (3) a statement of the COVID-19 related reason for which the employee is requesting leave; and (4) a statement that the employee is unable to work (or telework) for that reason.[25]  In the case of a leave request based on a quarantine order or self-quarantine advice, the employee must include the name of the governmental entity ordering quarantine or the name of the health care professional advising self-quarantine.[26] If an employee takes paid sick leave or expanded family and medical leave to care for a child whose school or place of care is closed, the statement from the employee should include the name of the child to be cared for, the name of the school that has closed or place of care that is unavailable, and a representation that no other person will be providing care for the child during the period for which the employee is receiving leave.[27]  The employer may request that an employee provide additional material as needed for the employer to support a request for tax credits pursuant to the FFCRA.[28] An employer may require an employee to follow reasonable notice procedures to inform the employer of the employee’s need to take paid sick leave or expanded family and medical leave.  The employer may require notice after the first workday or portion thereof for which an employee takes such leave, but may not require notice in advance.  Whether a notice procedure is reasonable is determined under the facts and circumstances of each particular case.  If an employee fails to give proper notice, the employer should provide notice of the failure to the employee and an opportunity to provide required documentation prior to denying the request for leave.[29] Employers must retain all documentation provided by employees for four years, regardless of whether leave was granted or denied.  Employers also must document any oral statements provided by an employee to support his or her request for leave.  If an employer denies an employee’s request for leave pursuant to the small business exemption, the employer must document its authorized officer’s determination that the prerequisite criteria for the exemption are satisfied and retain such documentation for four years.[30] Private employers providing paid leave under the FFCRA are eligible for reimbursement of the costs of that leave through refundable tax credits, and should retain appropriate documentation in order to claim those tax credits.  Additional information about these requirements can be found on the Department of Treasury website here. All existing certification requirements under the FMLA remain in effect if an employee is taking leave for one of the existing qualifying reasons under the FMLA. Returning to Work After FFCRA Leave The temporary regulations clarify that the FFCRA requires that employers provide the same or equivalent job to an employee who returns to work following paid sick leave or expanded family and medical leave under the FFCRA.  However, employees are not protected from employment actions that would have affected them regardless of whether they took leave.  For example, an employee who is on leave under the FFCRA can be laid off for legitimate business reasons, such as closure of a worksite.  The employer must be able to demonstrate that the employee would have been laid off even if the employee had not taken leave.[31] An employer may also refuse to return an employee who took leave under the FFCRA to work in his or her same position under the following circumstances:

(1)       the employer has fewer than 25 employees;

(2)       the employee took leave to care for his or her child whose school or place of care was closed; and

(3)       all of the following hardship conditions exist:

(a)        the employee’s position no longer exists due to economic or operating conditions that affect employment and that are caused by the COVID-19 emergency;

(b)        the employer made “reasonable efforts” to restore the employee to the same or an equivalent position;

(c)        the employer makes “reasonable efforts” to contact the employee if an equivalent position becomes available; and

(d)       the employer continues to make “reasonable efforts” to contact the employee for one year beginning either on the date the leave related to COVID-19 reasons concludes or the date 12 weeks after the employee’s leave began, whichever is earlier.[32]

In addition, an employer may refuse to return an employee who took leave under the FFCRA to work in his or her same position if the employee is a highly compensated “key” employee as defined in the FMLA (which requires, among other things, specific advance notice to that employee) and if such denial is necessary to prevent “substantial and grievous economic injury to the operations” of the employer.[33] Supplementing Paid Leave Provided by the FFCRA As discussed previously, the first two weeks of expanded family and medical leave are unpaid, but employees may choose to take paid sick leave under the Emergency Paid Sick Leave Act during those two weeks.  The Division’s initial guidance did not address whether employees may simultaneously take paid sick leave under the Emergency Paid Sick Leave Act concurrently with any paid leave he or she might have under the employer’s paid leave policy, such as personal leave or paid time off.  The temporary regulations now clarify that, during the first two weeks of unpaid expanded family and medical leave, an employee may not simultaneously take paid sick leave under the Emergency Paid Sick Leave Act and other paid leave to which the employee is entitled under the employer’s policies, unless the employer allows the employee to supplement the amount received from paid sick leave with the employee’s preexisting leave, up to the employee’s normal earnings.[34] After the first two weeks of expanded family and medical leave, however, employees may elect to take—or employers may require the employee to take—the remaining expanded family and medical leave at the same time as any existing paid leave that would be available to the employee under the employer’s preexisting policies.  If any employer requires an employee to take existing leave concurrently with the expanded family and medical leave, the employer must pay the employee the full amount to which the employee is entitled under the employer’s existing paid leave policy for the period of leave taken, and the employer is not entitled to a tax credit for payment of any leave that exceeds the limits set forth in the Emergency FMLA Expansion Act.[35] Exclusions Both the Emergency Paid Sick Leave Act and the Emergency FMLA Expansion Act contain exclusions for certain health care providers and emergency responders, as well as for employees of small businesses (defined as businesses with fewer than 50 employees).[36]  The temporary regulations contain some additional parameters detailing when small businesses and employers of health care providers and emergency responders may avail themselves of these exclusions. Health Care Providers and Emergency Responders Employers who employ “health care providers” or “emergency responders” may exclude such employees from being able to take paid leave under the Emergency Paid Sick Leave Act or the Emergency FMLA Expansion Act.  The temporary regulations clarify who qualifies as a “health care provider” and an “emergency responder.” For purposes of this exclusion, a “health care provider” is “anyone employed at any doctor’s office, hospital, health care center, clinic, post-secondary educational institution offering health care instruction, medical school, local health department or agency, nursing facility, retirement facility, nursing home, home health care provider, any facility that performs laboratory or medical testing, pharmacy, or any similar institution, employer, or entity.”[37]  This includes any permanent or temporary institution, facility, location, or site where medical services are provided that are similar to such institutions.  This definition also includes any individual employed by an entity that contracts with any of the above institutions, employers, or entities to provide services or to maintain the operation of the facility.  Further, the definition includes anyone employed by any entity that provides medical services, produces medical products, or is otherwise involved in the making of COVID-19-related medical equipment, tests, drugs, vaccines, diagnostic vehicles, or treatments.  Finally, the highest official of a state or territory may determine that additional individuals fall within the definition of “health care provider” if those individuals are necessary for that state’s or territory’s response to COVID-19.[38] An “emergency responder” is an employee who is necessary for the provision of transport, care, health care, comfort, and nutrition of patients, or whose services are otherwise needed to limit the spread of COVID-19.  This includes but is not limited to military or national guard, law enforcement officers, correctional institution personnel, fire fighters, emergency medical services personnel, physicians, nurses, public health personnel, emergency medical technicians, paramedics, emergency management personnel, 911 operators, public works personnel, and persons with skills or training in operating specialized equipment or other skills needed to provide aid in a declared emergency as well as individuals who work for such facilities employing these individuals and whose work is necessary to maintain the operation of the facility.  Again, the highest official of a state or territory may determine that additional individuals fall within the definition of “emergency responder” if those individuals are necessary for that state’s or territory’s response to COVID-19.[39] The Division encourages employers to be “judicious” when using these definitions to exempt health care providers and emergency responders from the provisions of the FFCRA. Small Businesses The FFCRA authorized the Department of Labor to outline an exemption to the paid leave requirements for employers with fewer than 50 employees when providing leave would jeopardize the viability of the small business as a going concern.[40]  In outlining the requirements for this exemption, the Department of Labor guidance states that it may apply only if the employee seeks to use such leave to care for a child whose school or place of care is closed and doing so would jeopardize the viability of the small business as a going concern.  If an employee of a small business seeks to use paid sick leave under the Emergency Paid Sick Leave Act for one of the other qualifying reasons (such as if the employee is subject to a Federal, State, or local quarantine or isolation order related to COVID-19), the employer is not exempt from providing such leave.  Furthermore, a small business may only claim the exemption if an authorized officer of the business makes certain determinations (outlined in the regulations) about the effect of the leave on the business.[41] Other Guidance Health Insurance Coverage If an employer provides group health coverage, employees are entitled to continue such coverage during FFCRA leave.  Employees must continue to make any normal contributions to the cost of their health coverage during this time.[42] Employment for 30 Calendar Days Employees are eligible for expanded family and medical leave under the Emergency FMLA Expansion Act only if they have worked for the employer for at least 30 calendar days.  The Division has clarified that employees are considered to have been employed for at least 30 calendar days if the employer has had the employee on its payroll for the 30 calendar days immediately prior to the day the employee’s leave would begin.[43]  As an example, an employee who wants to take leave on April 1, 2020 would need to have been on the employer’s payroll as of March 2, 2020.  If an employee has been working for an employer as a temporary employee and is subsequently hired on a full-time basis, the employee may count any days he or she previously worked as a temporary employee toward this 30-day eligibility period.[44]  Further, an employee who is laid off or otherwise terminated by an employer on or after March 1, 2020, is nevertheless also considered to have been employed for at least 30 calendar days, and therefore eligible for expanded family and medical leave, provided (1) the employer rehires or otherwise reemploys the employee on or before December 31, 2020, and (2) the employee had been on the employer’s payroll for 30 or more of the 60 calendar days prior to the date the employee was terminated.[45] Definition of “Son or Daughter” Under the FFCRA, a “son or daughter” is the employee’s own child, which includes biological, adopted, or foster children, stepchildren, legal wards, or children for whom the employee is standing in loco parentis (someone with day-to-day responsibilities to care for or financially support the child).  The Division has clarified that a “son or daughter” is also an adult son or daughter (i.e., one who is 18 years of age or older) who has a mental or physical disability and who is incapable of self-care because of that disability.[46] Maximum Amount of Paid Sick Leave Each individual is entitled to a maximum of 80 hours of paid sick leave regardless of whether he or she changes employers during the time in which the Emergency Paid Sick Leave Act is in effect.[47]  In other words, if an employee takes 80 hours of paid sick leave while working for Employer A and then resigns and begins working for Employer B, the employee is not entitled to any paid sick leave from Employer B under the Emergency Paid Sick Leave Act. FLSA Exemption Status The temporary regulations clarify that an employee’s use of paid sick leave or expanded family and medical leave will not impact the employee’s status or eligibility for any exemption from the requirements of sections 6 or 7 of the FLSA.[48]  For example, an employee’s use of intermittent leave combined with paid sick leave should not be construed as undermining the employee’s salary basis for purposes of the FLSA. Multiemployer Collective Bargaining Agreements Employers that are part of a multiemployer collective bargaining agreement may satisfy their obligations through the Emergency Paid Sick Leave Act and the Emergency FMLA Expansion Act by making contributions to a multiemployer fund, plan, or other program in accordance with the employer’s existing collective bargaining obligations.  These contributions must be based on the amount of leave to which each of the employer’s employees is entitled based on each employee’s work under the multiemployer collective bargaining agreement.  Such a fund, plan, or other program must allow employees to secure or obtain their pay for the related leave they take under the Emergency Paid Sick Leave Act or the Emergency FMLA Expansion Act.  Alternatively, employers may also choose to satisfy their obligations under the Act by other means, provided they are consistent with the bargaining obligations and collective bargaining agreement.[49] Redress for Refusal to Provide Leave An administrative complaint alleging any violation of the Emergency Paid Sick Leave Act or the Emergency FMLA Expansion Act may be filed in person, by mail, or by telephone with the Division or any local office of the Division.[50]  The Secretary of Labor has the investigative authority and subpoena authority set forth in the FLSA and FMLA with respect to enforcing these laws.[51]  The temporary regulations provide that employees may file a private action to enforce the Emergency FMLA Expansion Act only if the employer is otherwise subject to the FMLA.[52] In its updated guidance, the Division also provided a phone number and website for employees who believe their employers are improperly refusing to provide paid leave under the FFCRA.  Employees contacting the Division will be directed to the nearest Division office for assistance with answering questions or filing a complaint.  If the employer employs 50 or more employees, the Division notes that an employee may also file a lawsuit against the employer directly without contacting the Division.[53] _____________________    [1]   See Department of Labor, U.S. Department of Labor Announces New Paid Sick Leave and Expanded Family and Medical Leave Implementation, https://www.dol.gov/newsroom/releases/whd/whd20200401.    [2]   See Department of Labor, Families First Coronavirus Response Act: Questions and Answers, https://www.dol.gov/agencies/whd/pandemic/ffcra-questions.    [3]   29 C.F.R. § 826.40(a)(1)(iii); Department of Labor, Families First Coronavirus Response Act: Questions and Answers, https://www.dol.gov/agencies/whd/pandemic/ffcra-questions, at Questions 23-27.    [4]   See Department of Labor, Families First Coronavirus Response Act: Questions and Answers, https://www.dol.gov/agencies/whd/pandemic/ffcra-questions, at Questions 23-27.    [5]   29 C.F.R. § 826.40(a)(1)(iii).  For more information about which employees count toward the 500-employee threshold, see Gibson Dunn’s March 26 update.    [6]   H.R. 6201, Division E, § 5102(a)(1).    [7]   29 C.F.R. § 826.10(a).    [8]   29 C.F.R. § 826.20(a)(3).  For purposes of this provision, the Division has adopted the definition of “health care provider” contained in the FMLA, which includes medical professionals who are capable of diagnosing serious health conditions.  This definition is narrower than the definition of “health care provider” used in sections 3105 and 5102(a) of the FFCRA, which are the provisions that allow employers to exempt health care providers and emergency responders from paid leave under the Act.    [9]   29 C.F.R. § 826.20(a)(4). [10]   29 C.F.R. § 826.20(a)(5). [11]   29 C.F.R. § 826.20(a)(6). [12]   29 C.F.R. § 826.20(a)(1)(vi). [13]   29 U.S.C. § 2612(a)(1).  Additionally, an eligible employee who is the spouse, son, daughter, parent, or next of kin of a covered servicemember with a serious injury or illness is entitled to 26 workweeks of leave during a single 12-month period to care for the servicemember.  29 U.S.C. § 2612(a)(3). [14]   H.R. 6201, Division C, § 3102; 29 C.F.R. § 826.23. [15]   Id.  For both full-time and part-time employees, the amount of pay to which employees are entitled under the Emergency FMLA Expansion Act is capped at $200 per day and $10,000 in the aggregate.  29 C.F.R. § 826.24(a). [16]   Expanded family and medical leave under the Emergency FMLA Expansion Act is only available until December 31, 2020.  After that date, employees may only take FMLA leave. [17]   29 C.F.R. § 826.70(e). [18]   29 C.F.R § 826.10(a). [19]   See 29 C.F.R. § 790.6(a). [20]   29 C.F.R § 826.10(a). [21]   29 C.F.R § 826.20.  In separate guidance relating to the notice requirements under the FFCRA, the Division clarified that employers may satisfy the notice-posting requirement for employees who are teleworking by emailing or direct mailing the notice to employees, or posting it on an employee information internal or external website.  See Department of Labor, Families First Coronavirus Response Act Notice – Frequently Asked Questions, https://www.dol.gov/agencies/whd/pandemic/ffcra-poster-questions. [22]   29 C.F.R. § 826.50. [23]   See Department of Labor, Families First Coronavirus Response Act: Questions and Answers, https://www.dol.gov/agencies/whd/pandemic/ffcra-questions, at Question 21. [24]   29 C.F.R. § 826.50(a). [25]   29 C.F.R. § 826.100(a). [26]   29 C.F.R. § 826.100(b)-(c). [27]   29 C.F.R. § 826.100(e). [28]   29 C.F.R. § 826.100(f). [29]   29 C.F.R. § 826.90. [30]   29 C.F.R. § 826.140. [31]   29 C.F.R. § 826.130. [32]   The regulations do not elaborate on what constitutes the “reasonable efforts” employers need to undertake to restore an employee to the same or similar position or to contact the employee if an equivalent position becomes available. [33]   29 C.F.R. § 826.130(2). [34]   29 C.F.R. § 826.70(f). [35]   29 C.F.R. § 826.160(c). [36]   H.R. 6201, Division C, §§ 3102, 3105, Division E, §§ 5102, 5111. [37]   29 C.F.R. § 826.30(c)(1). [38]   Id. [39]   29 C.F.R. § 826.30(c)(2). [40]   See 29 C.F.R. § 826.40(b) for a more detailed discussion of how this determination should be made. [41]   Id. [42]   29 C.F.R. § 826.110.  For additional information about employee health insurance coverage under the FMLA, see Department of Labor, Fact Sheet #28A: Employee Protections under the Family and Medical Leave Act, https://www.dol.gov/agencies/whd/fact-sheets/28a-fmla-employee-protections. [43]   29 C.F.R § 826.30(b). [44]   Id. [45]   29 C.F.R. § 826.30(b)(1)(ii). [46]   29 C.F.R § 826.10(a). [47]   29 C.F.R. § 826.160(f). [48]   29 C.F.R. § 826.20(c). [49]   29 C.F.R. § 826.120. [50]   29 C.F.R. § 826.152. [51]   29 C.F.R. § 826.153. [52]   29 C.F.R. § 826.151. [53]   See Department of Labor, Families First Coronavirus Response Act: Questions and Answers, https://www.dol.gov/agencies/whd/pandemic/ffcra-questions, at Question 41-42.
Gibson Dunn’s lawyers are available to assist with any questions you may have regarding legal developments related to the COVID-19 outbreak.  For additional information, please contact any member of the firm’s Coronavirus (COVID-19) Response Team. Gibson Dunn attorneys regularly counsel clients on the compliance issues raised by this pandemic, and we are working with many of our clients on their response to COVID-19.  Please also feel free to contact the Gibson Dunn attorney with whom you work in the Labor and Employment Group, or the following authors: Catherine A. Conway – Co-Chair, Labor & Employment Practice Group Amanda C. Machin – Washington, D.C. Karl G. Nelson – Dallas Jason C. Schwartz – Co-Chair, Labor & Employment Practice Group Greta B. Williams – Washington, D.C. Zoë A. Klein – Washington, D.C. Charlotte A. Lawson – Washington, D.C. © 2020 Gibson, Dunn & Crutcher LLP Attorney Advertising:  The enclosed materials have been prepared for general informational purposes only and are not intended as legal advice.

March 27, 2020 |
U.K. Employment Law Considerations for Companies Responding to COVID-19 – Update

Click for PDF In this alert we summarise key developments in UK employment law over the past week in response to the novel coronavirus (COVID-19). The UK government response to the outbreak evolves daily, and we encourage employers in the UK to monitor UK government and National Health Service guidance and legislative developments over the coming days and weeks. In our alert of 17 March 2020, we identified some of the key considerations for UK-based businesses working to reduce the risk of employee exposure. We also outlined key steps to take when an employee tests positive for COVID-19 or must care for someone with the virus. In our alert of 20 March 2020, we summarised the UK government’s Coronavirus Job Retention Scheme which will remain in place for a minimum of three months, covering wages backdated, from 1 March 2020. Further clarity on Coronavirus Job Retention Scheme The UK government has provided further practical guidance in relation to the Coronavirus Job Retention Scheme. This guidance states that employers can use a portal to claim for 80% of furloughed employees’ usual monthly wage costs, up to £2,500 a month, plus the associated Employer National Insurance contributions and minimum automatic enrolment employer pension contributions. Employees hired after 28 February 2020 cannot be furloughed in accordance with this scheme. Further, in order to qualify for the payment, an employee must be furloughed for a minimum period of three weeks. The guidance states that employees must be paid the lower of 80% of their regular wage or £2,500 a month, and employers can choose to “top up” the pay of a furloughed employee to 100% of their contractual pay, but are not obliged to under the scheme. Separate guidance to employees indicates that employers will “discuss” with employees placing them on furlough, then accessing the scheme. This  calls into question whether an employer can unilaterally place employees on furlough and reduce pay to the amount recoverable by way of grant.  Employers should therefore seek to agree with employees their placement onto, and how they will be paid during,  furlough.  In the absence of agreement, an employer may be forced to make those employees, who would otherwise be furloughed, redundant instead. Emergency Volunteering Leave The Coronavirus Act 2020 contains a new statutory right for workers to take emergency volunteering leave (“EVL”) in blocks of two, three or four weeks during government-designated “volunteering periods”. The initial volunteering period will be 16 weeks beginning on the day the legislation comes into force, which will be achieved by regulations made by a government Minister. EVL will be unpaid, but a UK-wide compensation fund will compensate volunteers for loss of earnings, travel and subsistence. To take EVL, the worker must give their employer three working days' notice and produce a certificate confirming that they have been approved as an emergency volunteer by a local authority, the NHS Commissioning Board or the Department of Health. Employers cannot refuse EVL; however, certain workers will be ineligible (for example, workers engaged by businesses with fewer than 10 staff and employees in the police service).  Employees taking EVL remain entitled to all employee benefits other than remuneration and will be entitled to return from leave into their former job on terms and conditions which are no less favourable than those which applied before leave commenced. Proposed Protection for Self-Employed and Freelancers In a television address on 26 March 2020, the UK government has outlined details of new Self-Employment Income Support Scheme. The scheme will pay self-employed people a taxable grant worth 80% of average monthly income taken over the last three years, capped at £2,500 per month. The scheme is only open to anyone with trading profits less than £50,000 and to those who earn the majority of their income from self-employment. The scheme is unlikely to be up and running before the start of June 2020, so it will not help self-employed individuals with immediate cash flow issues. Unlike the Coronavirus Job Retention Scheme, an eligible self-employed person can continue to work while claiming the grant. Travelling To and From Work During the Lockdown In a television address on 23 March 2020, Prime Minister Boris Johnson announced a minimum three-week lockdown in the UK to curb the spread of COVID-19.  Government guidance states that it is important for business to carry on where possible, with the exception of certain non-essential businesses. The vast majority of individuals should be able to work from home and employers should take every step to facilitate employees to do so. Guidance has confirmed that individuals should only be travelling to a workplace if the work cannot be done at home, provided that individuals are well and neither the individual nor any of their household are self-isolating, and if the workplace is permitted to remain open. Cabinet Office guidance which is somewhat ambiguous suggests that “Businesses that continue to contravene the measures will be forced to close down.” It is not clear whether this statement is intended to refer only to those businesses which have been ordered to close, or extends to cover businesses that require people to attend the workplace unnecessarily. Managing vacation Employees in the UK are entitled to a minimum of 5.6 weeks paid vacation, to be taken in each holiday year.  Many employees have seen their usual vacation plans disrupted by the COVID-19 pandemic and associated travel restrictions.  As a consequence, many employees are not utilizing their annual vacation allowance as they usually would. Left unchecked, UK employers may face unmanageable requests from employees wishing to take substantial periods of paid vacation once the current restrictions have been lifted, and at a time when businesses are seeking to recover from the crisis.  In order to avoid this situation, employers may wish to agree and, if necessary and appropriate, require employees who are not being furloughed to take periods of paid vacation before the restrictions are lifted. At the time of publication, it has been announced that the Government will bring out regulations to allow up to 4 weeks of unused holiday to be carried over into the next two leave years if it has not all been taken due to COVID-19. Off-payroll Working Rules Change Postponed to April 2021 We have reported previously on changes proposed to UK legislation known as IR35 which governs the payroll tax arrangements for certain individuals who supply services through an intermediary, usually a personal service company (“PSC”).  These changes, which were due to take place in April 2020, have now been postponed until April 2021 in recognition of the disruption caused by  the COVID-19 outbreak. Gender Pay Gap Reporting Suspended for April 2020 The Government Equalities Office and the Equality and Human Rights Commission (EHRC)  has announced the suspension of the enforcement of the gender pay gap deadlines for this reporting year, which had required reporting of organisations’ April 2019 data by 4 April 2020.

***

Gibson Dunn attorneys regularly counsel clients on the compliance issues raised by this pandemic, and we are working with many of our clients on their response to COVID-19.  Please contact the Gibson Dunn attorney with whom you work in the Employment Group, or the following members of the UK employment team: James Cox – London (+44 (0)20 7071 4250, jcox@gibsondunn.com) Sarika Rabheru – London (+44 (0) 20 7071 4267, srabheru@gibsondunn.com) Heather Gibbons – London (+44 (0)20 7071 4127, hgibbons@gibsondunn.com) Georgia Derbyshire – London (+44 (0)20 7071 4013, gderbyshire@gibsondunn.com) Charlotte Fuscone – London (+44 (0)20 7071 4036, cfuscone@gibsondunn.com)

March 26, 2020 |
Department of Labor Issues Guidance on Families First Coronavirus Response Act

Click for PDF In an ongoing effort to address the challenges presented by the novel coronavirus (“COVID-19”) pandemic, the federal government enacted the Families First Coronavirus Response Act (the “FFCRA”) on March 18, 2020. Among other things, the FFCRA, which applies to private employers with fewer than 500 employees, expands paid leave for covered employees in certain circumstances related to COVID-19 and creates corresponding tax credits. On March 24, 2020, the Wage and Hour Division (the “Division”) of the U.S. Department of Labor issued additional guidance for employers and employees relating to the two paid leave provisions of the FFCRA: the Emergency Paid Sick Leave Act and the Emergency Family and Medical Leave Expansion Act.[1] These provisions will become effective on April 1, 2020, and will apply to leave taken between April 1, 2020 and December 31, 2020. Leave provided before April 1, 2020 will not count toward the requirements.[2] Below, we provide an overview of the two leave provisions, along with a discussion of which employers they cover. The Emergency Paid Sick Leave Act The Emergency Paid Sick Leave Act requires that covered employers provide employees two weeks of paid sick leave at the employee’s regular rate of pay (up to $511 per day and $5,110 in the aggregate) if the employee is unable to work (or telework) because:

(1) the employee is subject to a Federal, State, or local quarantine or isolation order related to COVID-19; (2) the employee has been advised by a health care provider to self-quarantine due to concerns related to COVID-19; or (3) the employee is experiencing symptoms of COVID-19 and seeking a medical diagnosis.[3]
The Act also entitles employees to two weeks of paid sick time at two-thirds of the employee’s regular rate of pay (up to $200 per day and $2,000 in the aggregate) if the employee is unable to work (or telework) because:
(1) the employee is caring for an individual who is subject to a Federal, State, or local quarantine order or who has been advised by a health care provider to self-quarantine due to concerns related to COVID-19; (2) the employee is caring for his or her child (under 18 years old) because the child’s school or place of care has been closed, or the child care provider is unavailable, due to COVID-19 precautions; or (3) the employee is experiencing any other condition “substantially similar” to those described above, as specified by the Secretary of Health and Human Services in consultation with the Secretary of the Treasury and the Secretary of Labor.[4]
Full-time employees are entitled to up to 80 hours of paid leave, while part-time employees are eligible for leave equal to the number of hours that the employee works on average over a two-week period.[5] For hourly employees whose schedules vary, employers may use a six-month average of the employees’ working hours to calculate the average daily hours. If the employee did not work in the preceding six-month period, e.g., if the employee just began working for the employer, employers may use the number of hours the employer and employee agreed the employee would work upon hiring.[6] If no such agreement exists, employers may calculate the appropriate number of hours of leave based on the average hours per day the employee was scheduled to work over the entire term of his or her employment. Paid sick time under the Emergency Paid Sick Leave Act must be granted in addition to any pre-existing paid leave benefits the employer provides, and must be made available for immediate use by employees, regardless of the length of the employees’ employment.[7] Employers are also prohibited from requiring employees to exhaust other paid leave benefits before using the benefits available under Emergency Paid Sick Leave Act.[8] Benefits under the Emergency Paid Sick Leave Act are not retroactive, and employees may not carry over paid sick time under the Act from one year to the next.[9] Employers may not discharge, discipline, or otherwise discriminate against any employee for taking leave under the Emergency Paid Sick Leave Act, or for filing a complaint related to the Act. Employers who violate any provision of the Emergency Paid Sick Leave Act will be subject to the penalties and enforcement described in Sections 16 and 17 of the Fair Labor Standards Act, 29 U.S.C. 216, 217, including payment of back wages, liquidated damages, and attorneys’ fees and costs.[10] The Emergency Family and Medical Leave Expansion Act (the “Emergency FMLA Expansion Act”) The Emergency FMLA Expansion Act amends the existing Family and Medical Leave Act (the “FMLA”) to provide covered employees with the ability to take up to 12 weeks of job-protected leave if the employees have a “qualifying need related to a public health emergency.”[11] A “qualifying need” is when an employee “is unable to work (or telework) due to a need for leave to care for the son or daughter under 18 years of age of such employee if the school or place of care has been closed, or the child care provider of such son or daughter is unavailable,” due to an emergency related to COVID-19.[12] This provision applies only to the need to care for a minor child; employees cannot utilize leave under the Emergency FMLA Expansion Act to care for other family members who may be affected by COVID-19, such as spouses or parents. (Note, however, that regular FMLA leave may be available if the employee or his or her family member has COVID-19 symptoms that rise to the level of a serious health condition.) The first 10 days of leave under the Emergency FMLA Expansion Act may consist of unpaid leave, but employees can choose to substitute any accrued vacation leave, personal leave, or sick leave (including paid sick leave provided by the Emergency Paid Sick Leave Act) for these 10 days of unpaid leave. The remainder of the 12 weeks of leave must be paid at a rate of two-thirds of the employee’s regular rate of pay for 40 hours per week for full-time employees, or, for part-time employees, the number of hours the employee is normally scheduled to work over that period.[13] However, for both full-time and part-time employees, the amount is capped at $200 per day and $10,000 in the aggregate. Eligible employees who take leave under the Emergency FMLA Expansion Act are entitled to be restored to the position they held when the leave commenced, or to an equivalent position, subject to certain exceptions outlined in the FMLA. However, employers with fewer than 25 employees may not need to return employees to their same or similar positions if (1) the position does not exist due to changes in the employer’s economic or operating conditions caused by the COVID-19 emergency; (2) the employer makes reasonable efforts to restore the employee to an equivalent position; and (3) if those efforts fail, the employer makes a reasonable effort to contact the employee if an equivalent position becomes available within a one-year period after the employee’s leave ends.[14] Employees must have worked for the employer for at least 30 days to be eligible for benefits under the Emergency FMLA Expansion Act, which is significantly lower than the normal FMLA threshold. In addition, the FMLA’s normal requirement that the employee must work at an employment site with at least 50 employees within a 75-mile radius does not apply. Because the Emergency FMLA Expansion Act is an amendment to the FMLA, the language of the FMLA that is unchanged, including prohibitions on discrimination and retaliation against employees for taking FMLA leave, will apply to any leave taken under this provision. Special Considerations when Employees Could Seek Multiple Types of Leave In its guidance, the Division addresses the common question of whether an employee may take multiple types of FFCRA leave. For the types of leave covered by the Emergency Paid Sick Leave Act, an employee may take a total of 80 hours paid sick leave (or the part-time equivalent) “for any combination of qualifying reasons,” but that does not increase the cap on leave.[15] Furthermore, parents who qualify for leave under both the Emergency Paid Sick Leave Act and the Emergency FMLA Expansion Act “may be eligible for both types of leave, but only for a total of twelve weeks of paid leave.” In other words, the employee may elect to use the Emergency Paid Sick Leave Act to cover the first ten days of leave that would otherwise be unpaid under the Emergency Family and Medical Leave Expansion Act.[16] Employers Covered by the Emergency Paid Sick Leave Act and the Emergency FMLA Expansion Act The Emergency Paid Sick Leave Act and the Emergency FMLA Expansion Act apply only to private employers with fewer than 500 employees in the United States, to certain public employers, and to certain self-employed individuals. The Division’s guidelines clarify that the number of employees is measured as of the time the leave is to be taken: “You have fewer than 500 employees if, at the time your employee’s leave is to be taken, you employ fewer than 500 full-time and part-time employees within the United States . . . .”[17] In counting employees to determine coverage under the Acts, employers should include full-time and part-time employees and employees who are on leave. Employers should also count day laborers supplied by a temporary agency. Independent contractors are not considered employees for purposes of the 500-employee threshold although, as self-employed individuals, they may be able to seek tax relief under the act. Neither the Emergency Paid Sick Leave Act nor the Emergency FMLA Expansion Act specifies whether employees on furlough or layoff who have not been terminated should count toward the 500-employee threshold, or whether such employees would be entitled to leave. Unfortunately, the guidelines issued by the Division do not shed any light on this question. We expect the regulations that the Division anticipates issuing in April may provide additional guidance on this issue. In considering whether they are covered by the Acts, employers should pay particular attention to whether they may be considered “joint employers” or “integrated employers,” as this can have a significant impact on the number of employees that the employer must count. According to the Division guidance, “two corporations are separate employers unless they are joint employers under the FLSA with respect to certain employees,” in which case all “common employees must be counted in determining whether sick leave must be provided . . . .”[18] Separately, “[i]f two entities are an integrated employer under the FMLA, then employees of all entities making up the integrated employer will be counted in determining employer coverage” under the FFCRA.[19] Joint Employers: If an employer is a joint employer under the FLSA, all of the employees it holds in common with the other joint employer must be counted toward 500-employee threshold for purposes of the Emergency Paid Sick Leave Act and the Emergency FMLA Expansion Act. This includes temporary employees who are jointly employed by the employer and another employer (regardless of whether the jointly-employed employees are maintained on another employer’s payroll). In January 2020, the Department of Labor announced a final rule revising its regulations interpreting joint employer status under the Fair Labor Standards Act (the “FLSA”).[20] The final rule continued to recognize two scenarios where an employee may have two or more joint employers: (1) where one company or individual has an employment relationship with the worker, but another company or individual simultaneously benefits from that work (such as a company who uses a staffing agency); and (2) where one employer employs a worker for one set of hours in a workweek, and another employer employs the same worker for a separate set of hours in the same workweek (for example, two restaurants with the same owner who employ the same line chef). In the first scenario, joint employer status turns on whether the potential joint employer is directly or indirectly controlling the employee. This is evaluated using a four-factor balancing test that assesses whether the joint employer (1) hires or fires the employee; (2) supervises and controls the employee’s work schedule or conditions of employment to a substantial degree; (3) determines the employee’s rate and method of payment; and (4) maintains the employee’s employment records. No single factor is determinative, and joint employer status will depend on the facts of each particular case. In the second scenario, joint employer status turns on how closely associated the two employers are. Employers will generally be sufficiently associated to establish a joint employment relationship if there is an arrangement between them to share the employee’s services; the employer is acting directly or indirectly in the interest of the other employer in relation to the employee; or they share control of the employee, directly or indirectly, because one employer controls, is controlled by, or is under common control with the other employer. Again, no single factor is determinative in evaluating joint employer status under this second scenario. Integrated Employers: Under the FMLA, companies can be considered so interrelated that they constitute a single employer. The factors generally considered in evaluating integrated employer status include (1) common management; (2) interrelation between operations; (3) centralized control of labor relations; and (4) degree of common ownership or financial control. No single factor is determinative; rather, the entire relationship between the entities is considered. As with joint employers, if two or more entities are considered an integrated employer under the FMLA, employees of each of the entities making up the integrated employer will be counted in determining employer coverage under the Emergency Paid Sick Leave Act and the Emergency FMLA Expansion Act. Employers may be weighing whether to rely on the joint employer theory or the integrated employer theory to argue they are not subject to the Emergency Paid Sick Leave Act or the Emergency FMLA Expansion Act. Employers should carefully consider this option before invoking it, as relying on these theories could have ripple effects across a host of federal and state laws, including the FMLA, FLSA, ERISA, and state workers compensation and unemployment compensation rules. It may also affect eligibility for benefits under future COVID-19 relief legislation. Therefore, employers should conduct a detailed assessment of their operations and consult with counsel regarding any attendant risks before relying on these theories. Exemptions Both the Emergency Paid Sick Leave Act and the Emergency FMLA Expansion Act give the Secretary of Labor the ability to exclude certain health care providers and emergency responders from being eligible for benefits under the Acts.[21] The Acts also allow employers of health care providers or emergency responders to elect to exclude such employees from the paid leave provisions. The guidelines issued by the Division do not provide additional parameters for how or when employers of health care providers or emergency responders may avail themselves of this exclusion. The Secretary is also empowered to exempt small businesses with fewer than 50 employees from the paid leave requirements if compliance would jeopardize the viability of the business as a going concern.[22] The guidance issued by the Division directs businesses wishing to utilize this small business exemption to document why the business “meets the criteria set forth by the Department, which will be addressed in more detail in forthcoming regulations.”[23] However, businesses are not supposed to send any of this documentation to the Division at the current time.[24] Tax Credits Covered employers will qualify for a dollar-for-dollar reimbursement through tax credits for all qualifying wages paid under the FFCRA. Employers may also take a tax credit for the amount of the employers’ qualified health plan expenses that may be properly allocated to employees’ COVID-19-related leaves. In its recently-issued guidance, the Division noted that “every dollar of expanded family and medical leave (plus the cost of the employer’s health insurance premiums during leave) will be 100% covered by a dollar-for-dollar refundable tax credit available to the employer.”[25] Notice Each covered employer must post in a conspicuous place on its premises a notice of the requirements of the FFCRA, including the Emergency Paid Sick Leave Act and the Emergency FMLA Expansion Act. A model notice issued by the Department of Labor is available here. In separate guidance regarding the notice, the Department has stated that, “[a]n employer may satisfy th[e notice-posting] requirement by emailing or direct mailing this notice to employees, or posting this notice on an employee information internal or external website.”[26] Stakeholders Dialogue The Division is hosting a “national online dialogue” to provide an opportunity for employers and workers to “play a key role in shaping the development of the Department of Labor’s compliance assistance materials and outreach strategies related to the implementation of the FFCRA.”[27]  The Division stated that it will use the comments gathered from this dialogue to “develop compliance assistance guidance, resources and tools” and to help employers and workers understand their responsibilities and rights under the paid leave provisions of the FFCRA.[28]  The public can participate in this national online dialogue through Sunday, March 29, 2020.  Those wishing to participate in the online dialogue can register here. _______________________    [1]   See Department of Labor, Families First Coronavirus Response Act: Questions and Answers, https://www.dol.gov/agencies/whd/pandemic/ffcra-questions; Families First Coronavirus Response Act: Employer Expanded Family and Medical Leave Requirements, https://www.dol.gov/agencies/whd/pandemic/ffcra-employer-paid-leave; Families First Coronavirus Response Act: Employee Expanded Family and Medical Leave Rights, https://www.dol.gov/agencies/whd/pandemic/ffcra-employee-paid-leave.    [2]   See Department of Labor, Families First Coronavirus Response Act: Questions and Answers, https://www.dol.gov/agencies/whd/pandemic/ffcra-questions.    [3]   H.R. 6201, Division E, §§ 5102, 5110(5).    [4]   Id. § 5102. The Division’s current guidance does not elaborate on what circumstances would qualify as “substantially similar” to those described in the Emergency Paid Sick Leave Act. As the pandemic develops, there may be joint guidance on this topic from Departments of Health and Human Services, Labor, and Treasury.    [5]   Id.    [6]   Id. § 5110(5)(C).    [7]   Id. § 5102(e).    [8]   Id.    [9]   Id. § 5102(b). [10]   Id. §§ 5104, 5105. [11]   H.R. 6201, Division C, §3102. [12]   Id. [13]   Id. If an employee’s schedule varies from week to week, employers may calculate an employee’s average number of hours using the same methods as those used to calculate average employee hours under the Emergency Paid Sick Leave Act. [14]   Id. [15]   See Department of Labor, Families First Coronavirus Response Act: Questions and Answers, https://www.dol.gov/agencies/whd/pandemic/ffcra-questions. [16]   Id. [17]   Id. [18]   Id. [19]   Id. [20]   85 Fed. Reg. 2858 (Jan. 16, 2020). [21]   H.R. 6201, Division C, §§ 3102, 3105, Division E, §§ 5102, 5111. [22]   Id. Division C, § 3102, Division E, § 5111. [23] See Department of Labor, Families First Coronavirus Response Act: Questions and Answers, https://www.dol.gov/agencies/whd/pandemic/ffcra-questions. [24]   Id. [25]   See Department of Labor, Families First Coronavirus Response Act: Employer Expanded Family and Medical Leave Requirements, https://www.dol.gov/agencies/whd/pandemic/ffcra-employer-paid-leave. The Department of Treasury, IRS, and the Department of Labor have also issued joint guidance regarding the tax credit component of FFCRA, and further guidance is expected this week from the Department of Treasury. See U.S. Department of the Treasury, IRS and the U.S. Department of Labor Announce Plan to Implement Coronavirus-Related Paid Leave for Workers and Tax Credits for Small and Midsize Businesses to Swiftly Recover the Cost of Providing Coronavirus-Related Leave, https://www.dol.gov/newsroom/releases/osec/osec20200320. [26]   See Department of Labor, Families First Coronavirus Response Act Notice – Frequently Asked Questions, https://www.dol.gov/agencies/whd/pandemic/ffcra-poster-questions. [27]   See Department of Labor, Updated: U.S. Department of Labor Invites Stakeholders to a National Online Dialogue on Paid Family and Medical Leave and Paid Sick Leave Under the Families First Coronavirus Response Act, https://www.dol.gov/newsroom/releases/whd/whd20200325.. [28]   Id.
Gibson Dunn's lawyers are available to assist with any questions you may have regarding developments related to the COVID-19 outbreak. For additional information, please contact any member of the firm's Coronavirus (COVID-19) Response Team. Gibson Dunn attorneys regularly counsel clients on the compliance issues raised by this pandemic, and we are working with many of our clients on their response to COVID-19. Please also feel free to contact the Gibson Dunn attorney with whom you work in the Labor and Employment Group, or the following authors: Catherine A. Conway - Co-Chair, Labor & Employment Practice Group, Los Angeles (+1 213-229-7822, cconway@gibsondunn.com) Amanda C. Machin – Washington, D.C. (+1 202-887-3705, amachin@gibsondunn.com) Michele L. Maryott - Irvine (+1 949-451-3945, mmaryott@gibsondunn.com) Karl G. Nelson - Dallas (+1 214-698-3203, knelson@gibsondunn.com) Greta B. Williams – Washington, D.C. (+1 202-887-3745, gbwilliams@gibsondunn.com) Jason C. Schwartz - Co-Chair, Labor & Employment Practice Group, Washington, D.C. (+1 202-955-8242, jschwartz@gibsondunn.com) Zoë A. Klein - Washington, D.C. (+1 202-887-3740, zklein@gibsondunn.com) © 2020 Gibson, Dunn & Crutcher LLP Attorney Advertising:  The enclosed materials have been prepared for general informational purposes only and are not intended as legal advice.

March 20, 2020 |
U.K. Employment Law – Updated Considerations for Companies Responding to COVID-19

Click for PDF Whatever industry you are in, you are undoubtedly concerned about preparing your business to face the threat of the novel coronavirus (COVID-19). In our alert of 17 March 2020, we identified some of the key considerations for UK-based businesses working to reduce the risk of employee exposure. We also outlined key steps to take when an employee tests positive for COVID-19 or must care for someone with the virus. The UK government response to the outbreak evolves daily, and we encourage employers in the UK to monitor UK government and National Health Service guidance and legislative developments over the coming days and weeks. UK Government introduces the Coronavirus Job Retention Scheme In a television address on 20 March 2020, the UK government has outlined a number of support measures for UK businesses impacted by the virus, including cafes, pubs, restaurants, theatres, cinemas, gyms, nightclubs and leisure centres which have been forced to close with effect from today. Following discussions with both the Trade Union Congress and employer organisations, the UK government has established a Coronavirus Job Retention Scheme to be administered by HM Revenue & Customs. The scheme will make available grants to those employers who elect to furlough, rather than lay off, employees who are without work during the current crisis. The grant will cover 80% of the wages of furloughed employees up to a maximum of £2,500 per month. The scheme will cover wages payable from 1 March 2020 and will remain in place for a minimum of three months. The government’s comments appear to suggest that grants would not cover the wages of those employees working a reduced schedule due to the virus. The Coronavirus Job Retention Scheme sits alongside other measures introduced by the UK Government to support businesses, including the provision of government-backed loans which will be interest free for 12 months and a deferral of Value Added Tax payments for the next quarter.


Gibson Dunn's lawyers are available to assist with any questions you may have regarding developments related to the COVID-19 outbreak. For additional information, please contact any member of the firm's Coronavirus (COVID-19) Response Team. This client update was prepared by James Cox and Charlotte Fuscone. Gibson Dunn attorneys regularly counsel clients on the compliance issues raised by this pandemic, and we are working with many of our clients on their response to COVID-19. Please also feel free to contact the Gibson Dunn attorney with whom you work in the Employment Group, or the following lawyers in the firm's London office: James A. Cox (+44 (0)20 7071 4250, jcox@gibsondunn.com) Sarika Rabheru (+44 (0)20 7071 4267, srabheru@gibsondunn.com) Heather Gibbons (+44 (0)20 7071 4127, hgibbons@gibsondunn.com) Georgia Derbyshire (+44 (0)20 7071 4013, gderbyshire@gibsondunn.com) Charlotte Fuscone (+44 (0)20 7071 4036, cfuscone@gibsondunn.com) © 2020 Gibson, Dunn & Crutcher LLP Attorney Advertising:  The enclosed materials have been prepared for general informational purposes only and are not intended as legal advice.

March 23, 2020 |
Briefing: Federal Government Response to COVID-19

Please join Gibson Dunn for a discussion of the recently announced federal government responses to the Coronavirus (COVID-19) pandemic. Topics to be discussed include:

  • Congressional responses
    • Emergency appropriations
    • Family relief (paid sick leave requirements)
    • Stimulus (including President’s proposal)
  • Executive branch relief for businesses and families
    • Emergency declaration
    • SBA loans
    • Tax filing relief
    • Regulatory relief (other than below)
  • Federal Reserve liquidity measures and banking agency actions
  • CFTC actions
  • FDA actions
  • Defense Production Act invocation

DATE AND TIME: Monday, March 23, 2020 1:00 pm – 2:00 pm EDT

View Slides (PDF) Listen to Audio (MP3) – Audio file is available for download and replay at your convenience

MODERATOR: 

Michael BoppPartner and Co-Chair, Gibson Dunn’s Public Policy Group PANELISTS: Roscoe Jones, Jr.Counsel, former Chief of Staff in House of Representatives and Legislative Director in the U.S. Senate Marian J. LeePartner, Co-Chair of Gibson Dunn’s global FDA & Health Care Practice Kristen C. Limarzi, Partner, former Chief of the Appellate Section of the DOJ’s Antitrust Division Arthur LongPartner, Co-Chair of Gibson Dunn’s Financial Institutions Practice Amanda C. MachinSenior Associate, Labor & Employment Practice Lindsay M. PaulinSenior Associate, Government Contracts Practice Jeffrey L. SteinerPartner, Co-Chair of Gibson Dunn’s Derivatives Practice Joseph D. WestPartner, former Co-Chair of Gibson Dunn’s Government Contracts Practice