COVID-19 | 

Compliance Checkpoint: Paid Leave, Discrimination, Minimum Wage, and Overtime

At the beginning of the year, we identified five compliance trends to watch in 2020. Then, the COVID-19 pandemic hit. While the pandemic has played a large role in the types of laws and regulations we've seen over the past few months, earlier trends are still relevant. Below are recent developments in four major employment areas: paid leave, discrimination, minimum wage, and overtime.

Paid Leave:

Prior to the pandemic, many jurisdictions had enacted laws requiring employers to offer paid sick leave, family leave, and/or all-purpose leave. While some of these laws would cover situations related to COVID-19, the pandemic prompted some jurisdictions to expand their laws. Additionally, several states and local jurisdictions passed emergency requirements for employers to offer paid leave to employees impacted by COVID-19. The federal government also stepped in to require leave during COVID-19.

FFCRA:

The Families First Coronavirus Response Act (FFCRA), which took effect on April 1 and expires on December 31, grants employees up to 80 hours of emergency paid sick leave when they're unable to work (or telework) due to the following reasons:

  • The employee is subject to a federal, state, or local quarantine or isolation order related to COVID-19 or is caring for an individual who is subject to an order.
  • The employee has been advised by a healthcare provider to self-quarantine or is caring for an individual who has been advised to self-quarantine.
  • The employee is experiencing symptoms of COVID-19 and seeking a medical diagnosis.
  • The employee is caring for their son or daughter due to their school or place of care being closed or unavailable due to COVID-19 precautions.
  • The employee is experiencing any other substantially similar condition specified by the Secretary of Health and Human Services in consultation with the Secretary of the Treasury and the Secretary of Labor.

The FFCRA also requires employers to provide up to 12 weeks of job-protected leave for an employee to care for a son or daughter under 18 years of age if their school or place of care has been closed, or their childcare provider is unavailable, due to a public health emergency. The first two weeks of this leave may be unpaid, but the employee may elect to substitute any accrued paid leave, including emergency paid sick leave, during this period. After the first two weeks, employees are entitled to paid leave.

State and Local Changes:

Some jurisdictions that enacted new or expanded paid leave requirements in response to COVID-19 include, but aren't limited to the following:

  • Chicago. Effective July 1, 2020, new rules and ordinances expand coverage under the city's paid sick leave law, create new notice and recordkeeping requirements, and prohibit adverse action against employees because of COVID-19.
  • Colorado. An emergency rule temporarily requires employers in certain industries to provide paid sick leave to employees for certain COVID-19 related purposes. Additionally, the state will require employers to provide paid sick leave and public health emergency leave starting next year.
  • District of Columbia. An emergency ordinance requires employers with 50-499 employees to provide paid leave to employees impacted by COVID-19. The emergency ordinance also temporarily expands the D.C. Family and Medical Leave Act to cover all employers for certain COVID-19 situations.
  • Michigan. An executive order requires, among other things, that employers treat an employee following state guidelines for staying home after testing positive for COVID-19 or being in close contact with someone who has tested positive or is symptomatic as if they were taking leave under the state's Paid Medical Leave Act, even if the employer has fewer than 50 employees.
  • New Jersey. The state expanded its earned sick leave, family leave act, and temporary disability insurance rules.
  • New York. A new state law provides paid leave to employees who are subject to a COVID-19 quarantine or isolation order.
  • Oregon. A temporary rule expands the Oregon Family Leave Act to cover certain COVID-19 related situations.
  • Philadelphia. The Promoting Healthy Families and Workplace Act was expanded to cover absences related to COVID-19, including business closures, quarantines, and the children's school closures.
  • San Jose, CA. An emergency ordinance requires employers to provide paid sick leave to employees if they are exempt from the leave requirements under the federal FFCRA.
  • Seattle. The city expanded the reasons employees may take leave under its Paid Sick and Safe Time Ordinance to include when any family member's (not just their child's) school or place of care has been closed for any reason.

Note: Several jurisdictions that already required paid sick leave released guidance making clear that existing rules cover certain COVID-19 situations. Check your state and local laws and guidance to ensure compliance here.

Nondiscrimination:

Race:

In 2019, New York, California, and New Jersey became the first three states to enact laws expressly prohibiting employers from discriminating against individuals because of hair texture and hairstyles closely associated with race. New York City also issued guidelines indicating hairstyle discrimination is unlawful under city law. So far this year, Cincinnati, Colorado (effective August 5), Maryland (effective October 1), Virginia, and Washington have enacted similar laws.

Given the heightened awareness around racial discrimination as a result of recent events, many states and local jurisdictions are likely to consider additional protections from race-based discrimination in the future.

Sexual Orientation and Gender Identity:

In June, the U.S. Supreme Court ruled that federal law prohibits employers from discriminating against applicants and employees because they are gay or transgender. Meanwhile, states continue to enact protections from discrimination, many of which apply to smaller employers. For instance, Virginia enacted legislation that expands nondiscrimination protections to cover sexual orientation and gender identity and applies to employers with over five employees.

Pregnancy:

States continue to enact legislation expanding the rights and protections for pregnant workers. For example, Virginia now requires employers with five or more employees to provide employees with reasonable accommodations for pregnancy, childbirth, or related medical conditions, unless it would pose an undue hardship on the business. Tennessee enacted a similar law that takes effect October 1, 2020 and applies to employers with 15 or more employees.

Equal Pay:

States continue to enact equal pay protections. Virginia now prohibits employers from retaliating against employees for discussing their wages. Effective October 1, 2020, Maryland requires employers to provide an applicant, upon request, the pay range for the position for which they are applying and prohibits employers from seeking an applicant's pay history.

Minimum Wage:

On July 1, 2020, at least 20 state and local jurisdictions increased their minimum wage rates. A small number of jurisdictions (including Hayward, CA and San Carlos, CA) delayed their July 1 minimum wage increase because of COVID-19. Impacted employers should ensure they have made any necessary changes and posted updated minimum wage notices in each work location.

Overtime:

Exemptions:

On January 1, 2020, the minimum salary required to be classified as exempt from overtime under federal law increased to $684 per week (employees must also satisfy certain duties tests in order to be considered exempt). Since then, some states have increased their minimum salary threshold as well. For example, in Washington state, the minimum salary requirement will increase incrementally until it reaches 2.5 times the minimum wage, though it will not surpass the federal minimum until January 1, 2021. Colorado has also increased its minimum salary requirement and, like Washington, won't surpass the federal requirement until January 1, 2021.

Fluctuating Workweek:

In June, the U.S Department of Labor issued a final rule that addresses the fluctuating workweek method for calculating overtime under the Fair Labor Standards Act (FLSA). The final rule takes effect August 7, 2020 and, among other things, clarifies that:

  • Bonuses, premium payments, commissions, and hazard pay on top of fixed salaries are compatible with the fluctuating workweek method, and employers must include these payments when calculating the regular rate of pay if otherwise required under the FLSA.
  • To use the fluctuating workweek method, an employee's hours don't necessarily need to fluctuate below 40 hours per week, so long as the employee's hours worked do vary.

Note: Earlier this year, the Pennsylvania Supreme Court ruled that using the fluctuating workweek method to calculate overtime pay violates the Pennsylvania Minimum Wage Act. Other states, such as California, also prohibit employers from using the fluctuating workweek method. Additionally, this method is a common source of employee lawsuits. Check your state (and local) law and consult legal counsel as necessary before using the fluctuating workweek method.

Conclusion:

COVID-19 is expected to continue playing a major role in federal, state, and local legislation. But many jurisdictions have shown they are also committed to addressing additional workplace issues. Make sure you understand all of the laws that apply to your employees and regularly review workplace forms, policies, practices, and training to ensure compliance.

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