COVID-19 Employer Playbook

COVID-19 Employer Playbook

Update: August 6, 2020

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Contents Introduction ....................................................................................................2 Essential Action List for Employers ..............................................................4 Families First Coronavirus Response Act (FFCRA) .................................. 12 Coronavirus Aid, Relief, and Economic Security (CARES) Act ............... 31 Privacy Issues ............................................................................................... 41 Health and Welfare Plan Issues ................................................................. 44 Non-Benefits Employment Issues.............................................................. 69 Carrier and Coverage Issues...................................................................... 75 COVID-19 and Other Laws......................................................................... 82 A Word from Vita......................................................................................... 94

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Introduction No March Madness

The Crystal Ball In addition to legislation, administrative actions pursuant to COVID-19 are likely to affect employers and their benefit plans over the coming weeks and months. Action is likely at the federal, state, and local levels. Given the nature of the emergency, most of these actions will demand immediate attention, so it is important to stay closely attuned. The team at Vita will keep you apprised of critical benefits-related issues.

March Madness 2020 has been replaced by the COVID-19 pandemic this year. Many of us are watching depressing reports of COVID-19 numbers that replaced what would have been cheering on our favorite teams in major sports leagues. Old reruns are replacing what would have been a new season of our favorite show, we are struggling to obtain basic household items, and we can't be there to hug our loved ones that are in nursing homes. Inevitably, social distancing has had a significant effect on our interpersonal connections. For those missing the overwhelming infusion of sports talk in

Your Team at Vita

March, we bring you a new kind of playbook: The COVID-19 Employer Playbook.

The entire team at Vita continues to stand by you, ready to provide support and consultation regarding your benefit plans. We understand the day to day challenges of

adapting the new employment and employee benefits realities that were brought forth by this crisis.

The Employer Playbook

This Employer Playbook is designed to highlight the issues and concerns of interest to employers. We recognize that there are many excellent resources available to employers. Our intent is not to flood employers with yet another resource book but rather to consolidate resources that are available in a clear and comprehensive way.

As always, it is our privilege to serve you and to bring to bear our commitment to the values that underpin who we are at Vita: Knowledge, Service, Excellence, and Relationships.

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COVID-19 Impact Due to the urgent crisis the United States is facing because of the COVID-19 pandemic, the President has declared a national emergency, as well as declared major disasters in California, Washington, New York, Iowa, Louisiana, Texas, and Florida. Federal and state governments have passed legislation and issued executive orders in an effort to protect and encourage the health and well-being of individuals. As employers work to understand and comply with the requirements of the new legislation and guidance, they have no choice but to be flexible and adept in implementing the additional programs and practices. Purpose of the Employer Playbook The purpose of this Employer Playbook is to provide an easy to read, comprehensive overview of key issues facing employers during the COVID-19 pandemic. Employers are being deluged with unique business pressures, new legislation, changed work arrangements due to Shelter-in-Place orders, financial stressors, as well as a host of valid employee questions about their work and their futures. In the face of this reality, our goal is to calm some of the storm by providing a reference resource encompassing all things COVID-19 for employers. Continually Updated Given the uncertainty of the COVID-19 pandemic itself, the pace with which information is changing, and the extremely fluid legislative environment where actual regulations have yet to be promulgated, this Employer Playbook will be continually changing. It will be updated as additional information, clarification, and guidance becomes available. While every effort has been made toward complete accuracy, please check back regularly for updates reflecting ongoing clarifications and corrections. In addition, federal agencies are moving quickly to expand their resources in response to the needs of employers and employees, particularly with respect to the new sick and family leave mandates. While this is a lot to digest, there is more to come (including another round of legislation), so employers will want to quickly identify the questions and issues that are most relevant to their situation and prepare for future guidance and legislation. Not Legal Advice This Employer Playbook expressly does not provide legal advice. Neither does it purport to include every detail and nuance for all of the topics covered. If formal legal advice is required, please consult your employment or benefits attorney.

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Essential Action List for Employers

Overview The Families First Coronavirus Response Act (FFCRA) and the Coronavirus Aid, Relief, and Economic Security Act (CARES) require employers to take a number of specific actions. The following is a summary of action items, grouped in general categories.

Decisions to Make

1. Communication Strategy 2. Retirement Plan Provisions 3. Benefit Plan Provisions (Self-Funded Employers) 4. Student Loan Provisions Notification and Communication 5. Sick Time and Paid Family Leave Notice 6. Courtesy Plan Change Notice 7. COBRA Premium Grace Period Extension Administrative Items 8. Set up New Payroll Codes 9. Payroll Credit Reporting and Process 10. Pre-Tax Plan – A Non-Decision 11. Formal SMM Distribution

12. Retirement Plan Administration Issues 13. Retirement Plan Document Amendments

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Decisions to Make 1. Communication Strategy What

Develop a strategy for communicating all of the relevant provisions of the FFCRA and CARES Act provisions to employees. Some provisions require formal notification. Other provisions will require formal plan amendments and SPD updates or SMMs (but the formal “due date” for formal ERISA communication is 60 days which isn’t helpful for employees right now). We are suggesting informal communication to employees of the key items they need to know.

Why

ASAP

When

A communication strategy for informing employees of the new provisions and entitlements under the laws is critical to ensure that affected individuals know what their new benefits are, and how to access them.

Notes

2. Retirement Plan Provisions What

Decisions need to be made on whether (or not) to include the following offerings:

• Waive 10% early withdrawal penalty • Increase maximum loan amount

The CARES Act authorized these changes to be made to retirement plans for participants meeting the COVID-19 qualifications. Employers must individually decide to adopt the more lenient plan provisions for 2020 (or not).

Why

ASAP

When

We anticipate that essentially all employers will adopt these more lenient plan provisions to aid employees during financially challenging times.

Notes

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3. Benefit Plan Provisions (Self-Funded Employers) What

Decisions need to be made by self-funded employers on whether (or not) to include the following offering: • If an HDHP plan is offered, waive deductible for telehealth services or other remote care service • Waive cost sharing provisions for COVID-19 treatment on all plans Most fully insured plans are in the process of being amended already to reflect free telehealth and COVID-19 treatment coverage. The idea is to remove all potential barriers to employees receiving care, especially telehealth care. These provisions are not mandates, but fully insured carriers are essentially aligned in amending plans to reflect this coverage. Self-funded plans must decide whether or not to adopt these changes. Employers should check stop loss coverage to confirm coverage will conform to these amendments.

Why

ASAP

When

We are hearing that the vast majority of employers are following “the wave” and covering treatment at no cost for COVID-19 related services.

Notes

4. Student Loan Provisions What

Consider whether to adopt a Code Section 127 tuition reimbursement plan to provide assistance to employees through tax-free student loan payments. Employers wishing to assist employees burdened with student loan debt may temporarily provide aid to these employees on a tax-free basis. No deadline, but the tax-free loan payment provision expires on December 31, 2020. Some employers may want to implement a student debt cancellation plan to provide assistance and to retain valuable employees.

Why

When

Notes

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Notification and Communication 5. Sick Time and Paid Family Leave Notice What

Distribute notice of paid sick time and paid family leave to workforce.

The FFCRA requires that employers provide notice to employees.

Why

Immediately. While the law doesn’t specify a deadline, employees have heard about these leaves and want to know their rights. The effective date of the law is April 1, 2020.

When

The DOL has created a model notice for distribution.

Notes

6. Courtesy Plan Change Notice What

Distribute a courtesy communication advising employees of plan changes to health plans, pre-tax plans, and retirement plans. • Free COVID-19 testing • Free COVID-19 treatment* • OTC drugs eligible under pre-tax account plans without prescription • Menstrual products eligible under pre-tax accounts • HDHP telehealth services* • Waive 10% early withdrawal penalty* • Increase maximum loan amount* • Required Minimum Distribution removed for 2020

*If adopted

Formal participant notification via a Summary of Material Modification will be necessary for all of these changes. The deadline for distribution of an SMM is 60 days and the deadline for modifying retirement plans is 2022. Notification to participants by these deadlines is not very helpful. Therefore, we are recommending a “Courtesy Plan Change Notice” to communicate key plan enhancements to participants. Vita has created a template consolidated Courtesy Plan Change Notice that incorporates notification for health plan, pre-tax plan, and retirement plan changes.

Why

ASAP. Vita has provided a template Courtesy Plan Enhancement Notice .

When

This notification does not replace the SMM. Rather, it is intended to provide important information about plan enhancements in a timely manner.

Notes

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7. COBRA Premium Grace Period Extension What

Advise COBRA Qualified Beneficiaries of grace period extension to 60-days (if applicable). The COBRA premium grace period is either 30 days or the grace period of the employer, if longer. This means that if the employer has a longer grace period, so do their COBRA Qualified Beneficiaries.

Why

ASAP, but prior to April 30, 2020 which would be the normal premium deadline for April premiums.

When

This assumes the carrier has approved premium extension as requested by California Department of Insurance (DOI). This was a request made by DOI, not a requirement, so while adoption is widespread, it is not necessarily universal. Self-funded plans must make the decision whether to offer the grace period extension or not. It should be noted that this guidance was made by the DOI, and similar language has not been issued by the DMHC which governs HMO plans. Many plans are following suit on this premium extension, but it is important to confirm whether your plans have adopted this grace period extension.

Notes

Administrative Items 8. Set up New Payroll Codes What

Coordinate with payroll vendor to set up payroll codes for tracking paid sick time and paid family leave. Because employers need effective reporting of these payments in order to take tax credits to offset payments for paid leaves. Prior to the first payments being paid to employees. That typically means codes must be set up prior to the first payroll run after April 1, 2020 (the effective date of the law). Most payroll companies are quickly preparing new codes to accommodate the needed infrastructure. HR and payroll departments will need to develop new procedures and coordinate communication in terms of how these leaves are reported by employees and tracked in company systems.

Why

When

Notes

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9. Payroll Credit Reporting and Process What

Coordinate between payroll and finance departments to be proactive with tax credits for paid leaves. Estimate expected leave payments and confirm if tax credits will be sufficient or if an expedited refund advance from the IRS will be necessary. Plan for submitting documentation to IRS and for cash flow realities if this is necessary. Payroll tax credits are the method by which employers are “reimbursed” for paid sick time and paid family leave payments to employees.

Why

The first cycle will be Q2 payroll tax deposits.

When

Essentially all major payroll vendors are creating standardized processing for tax credit reporting. While it has yet to be promised, it is possible that payroll vendors will be able to automate the process for taking the tax credit for COVID-19 leaves.

Notes

10. Pre-Tax Plan – A Non-Decision What

Some are advising that plan amendment decisions need to be made on whether (or not) to include the following offerings:

• OTC drugs covered with no prescription required • Menstrual products

Address FSA/HRA plan eligibility for over-the-counter drugs and menstrual products. Frankly, most see this as a non-decision.

We see essentially all plans conforming to allow these enhancements.

Why

Vita Flex plans automatically will include these items as eligible. The Summary Plan Description will be updated to delete the reference to requiring a prescription for OTC drugs to be eligible. An updated SPD will be available online on the participant portal effective April 3, 2020. Some would say that a decision is required, and an amendment should be made to the plan document. Some plans are designed to make such a change automatic and won’t require a formal plan amendment. All VitaFlex plan documents are structured to reference IRS codes for eligible expenses, so no formal decision or plan amendment is necessary.

When

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11. Formal SMM Distribution What

Formal notification of the material modifications to plans must be prepared and distributed to plan participants. This includes the following elements:

• Free COVID-19 testing • Free COVID-19 treatment* • HDHP free telehealth services* • Waive 10% early withdrawal penalty* • Increase maximum loan amount* • Required Minimum Distribution removed for 2020

*If adopted

This is an ERISA requirement.

Why

SMMs must be provided within 60 days of the material modification (May 30, 2020). This is the technical standard, however, a "common sense" deadline has emerged as standard practice when merely furnishing information about plan changes within the statutory guidelines clearly would be insufficient or detrimental based on common sense. Given this, formal SMMs should be distributed as soon as administratively possible. For those employers using a wrap-around SPD, the updated language in the certificate of coverage or a plan amendment document from the carrier will be required.

When

Notes

12. Retirement Plan Administration Issues What

Coordinate retirement plan provisions with plan recordkeeper to confirm the necessary steps to enable and administer:

• Hardship withdrawals on account of a major disaster • COVID-19 distributions • Loan relief for participants

Some employees will want to take advantage of these new safety net features of their retirement plans. Employers will want to make sure that administrators are ready and able to process requests.

Why

ASAP

When

Retirement plan administrators are scurrying to define procedures and put processes in place to accommodate these provisions. Proactive employers will want to confirm the details with their recordkeeper.

Notes

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13. Retirement Plan Document Amendments What

Execute formal retirement plan document amendments (based on decisions made to adopt the specific COVID-19 plan provisions). The COVID-19 plan enhancements for retirement plans fall into the category of changes that require formal plan amendments. Employers have considerable time to draft and execute conforming plan amendments. The deadline is the last day of the first plan year beginning on or after 2022. It is important to work with your retirement plan administrator to make sure the plan amendments are initiated.

Why

When

Notes

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Families First Coronavirus Response Act (FFCRA)

Summary New legislation has been enacted to ease the economic consequences stemming from the COVID-19 pandemic. The new law, titled Families First Coronavirus Response Act was signed into law on March 18, 2020. It includes a number of provisions addressing social concerns as well as four provisions that address health coverage and financial support for employees.

1. Free COVID-19 Testing 2. Paid Sick Leave for Employees 3. Paid Family Leave added to FMLA 4. Employer Tax Credits

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Free COVID-19 Testing

Mandate to Cover Testing Group health plans and insurers must cover FDA-approved diagnostic products to detect the virus that causes COVID-19. No Cost Share Benefits for COVID-19 testing must be provided without any cost-sharing. That means no deductibles, no copays, no coinsurance, and no other form of out-of- pocket expense to the employee. In addition, preauthorization and any other form of medical management are also prohibited. What is Included? No cost coverage requirements include costs for the actual test (nasal swab and lab analysis) plus any related services or provider services. This includes visits to urgent care, emergency room, in-person or telehealth provider that result in an order for or administration of a covered diagnostic test. Impacted Plans This requirement applies to all health plans. This includes self-funded plans and all fully insured plans (regardless of the state in which they are situated). In addition, ACA grandfathered plans are also subject to this Act. However, it appears that excepted benefit plans and retiree-only plans are not subject to this provision. Note that it is essentially unheard of for a federal mandate to sweep across all health plan types.

Are Insurance Plans Responding Quickly? Most insurance carriers are already well down the road of implementing free coverage for COVID-19 testing. Many implemented these provisions prior to the law requiring them. What about HDHP/HSA Plans? Authorities have confirmed that the free testing provisions, when added to an HDHP plan (prior to the deductible), will not disqualify the plan as an HDHP plan. This means that individuals may continue to make contributions to an HSA without concern. CARES Act Expansions The CARES Act (passed eight days after the FFCRA) expanded the types of testing that plans must cover without cost-sharing. The amended provisions now require plans to also cover, without cost-sharing, any other forms of tests that are found to be necessary by the HHS. This open protection is designed to ensure that any future COVID- 19 testing protocols or services remain under the no-cost sharing umbrella. Effective Date and Duration The effective date of the free COVID-19 testing mandate is April 1, 2020. It should be noted, however, that many carriers already started covering the testing on a no-cost basis prior to the mandate. The mandate expires December 31, 2020.

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Paid Sick Time for Employees

Mandate for Paid Sick Time The legislation provides for emergency paid sick time for employees affected by the COVID- 19 pandemic. Who is Subject? Employers with fewer than 500 employees (as well as federal and state employers of any size) must provide paid sick time to employees who are unable to work (or telework) for specified virus-related reasons. All employees are immediately eligible for the COVID-19 paid sick time benefit. Eligibility for Paid Sick Time Full time employees are entitled to 80 hours of paid sick time. While not specifically defined, it is presumed that full time means 40 hours per week. Part-time employees are entitled to sick time on a pro-rated basis. Benefits are available immediately regardless of the employee’s length of employment. Temporary employees are eligible to receive benefits, with benefits being based on whether they are full-time or part-time workers. Independent contractors working for the employer are not eligible for this paid sick time benefit. Sick Time Maximum Benefit Benefits are calculated based on the employee’s regular rate of pay and the number of hours the employee would otherwise be normally scheduled to work. The maximum benefit varies based on the reason for absence, as outlined below.

Employee Category

Sick Leave Benefit

Employee who is: 1) Subject to a quarantine or isolation order 2) Advised by a health provider to self-quarantine 3) Experiencing symptoms and seeking diagnosis

100% of regular pay $511 per day maximum $5,110 total

Employee who is: 4) Caring for an individual described in category (1), (2), or (3) 5) Caring for a son or daughter whose school or place of care has been closed 6) Experiencing a “substantially similar condition” to be specified by HHS

66.67% of regular pay $200 per day maximum $2,000 total

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If No Work Available, Then No Sick Leave Quarantine or isolation orders include a broad range of governmental orders, including orders that advise or require employees to Shelter in Place, Stay at Home, or quarantine. The regulations clarify that an employee may take paid sick leave only if such an order prevents him or her from working or teleworking. The question is whether the employee would be able to work or telework “but for” being required to comply with a quarantine or Shelter in Place order. An employee subject to one of these orders may not take paid sick leave where the employer does not have work for the employee. For example, if a coffee shop closes temporarily or indefinitely due to a downturn in business related to COVID-19, it would no longer have any work for its employees. A cashier previously employed at the coffee shop who is subject to a Shelter in Place order would not be able to work even if he were not required to stay at home. As such, he or she may not take paid sick leave because the inability to work is not due to the need to comply with the Shelter in Place order, but rather due to the closure of the place of employment. Employers are encouraged to direct employees to their state unemployment insurance resources for circumstances such as these. If Work at Home Available, Then No Sick Leave If an employee subject to a Shelter in Place or quarantine order is able to telework, the employee may not take paid sick leave (assuming the employer has work for the employee, the employer permits working from home, and there are no extenuating circumstances that prevent the employee from performing that work). For example, if a law firm permits its attorneys to work from home, a lawyer would not be prevented from working by a Shelter in Place order, and thus may not take paid sick leave as a result of that order. Self-Quarantine and Work at Home Where an employee is unable to work because he or she has been advised by a health care provider to self-quarantine for a COVID-19 reason, that employee may not take sick leave unless it actually prevents the employee from working. If the employee is able to telework, the employee may not take paid sick leave because of the need to self-quarantine. Employee Experiencing Symptoms or Seeking Diagnosis If an employee is experiencing symptoms of COVID-19 and seeking a medical diagnosis, paid sick time may be taken, but it is limited to the time the employee is unable to work because he or she is taking affirmative steps to obtain a medical diagnosis. There are a number of permutations to this scenario, summarized as follows: 1. If the employee is self-quarantining without seeking a medical diagnosis, paid sick leave may not be taken. 2. If an employee is waiting for the results of a test and can telework, paid sick leave may not be taken, unless disease symptoms actually prevent work. 3. If an employee tests positive for COVID-19, regardless of symptoms experienced, paid sick leave may be taken provided that the health care provider advises the employee to self-quarantine. 4. If an employee is unable to telework, paid sick leave may be taken while awaiting a test result, regardless of the severity of the COVID-19 symptoms. 5. If an employee exhibits COVID-19 symptoms and seeks medical advice but is told that he or she does not meet the criteria for testing and is advised to self-quarantine, paid leave may be taken.

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Sick Time to Care for Another Person The paid sick time trigger of needing to care for another person applies only if, but for a need to care for an individual, the employee would be able to perform work. This means an employee caring for an individual may not take paid sick leave if the employer does not have work for him or her. In addition, the employee must have a genuine need to care for the individual and the individual being cared for must be: • Subject to a formal quarantine or isolation order. • Have been advised by a health care provider to self-quarantine based on a belief that he or she has COVID-19, may have COVID-19, or is particularly vulnerable to COVID- 19. Sick Time to Care for Son or Daughter Paid sick time also be taken when the employee is unable to work because the employee needs to care for his or her son or daughter if:

• The child's school or place of care has closed; or • The childcare provider is unavailable, due to COVID-19 related reasons.

Here again, the employee must be able to perform work for his or her employer but for the need to care for his or her son or daughter, which means an employee may not take paid sick leave if the employer does not have work for him or her. The regulations also specify that an employee may take paid sick leave to care for his or her child only when the employee needs to, and actually is, caring for his or her child. Generally, an employee does not need to take such leave if another suitable individual, such as a co- parent, co-guardian, or the usual childcare provider, is available to provide childcare. Must it be Additional Sick Time? Technically, no. Practically, yes. A key question has arisen about whether the new COVID-19 paid sick time needs to be a standalone, separate benefit, or whether it can be overlaid onto an existing sick leave program. The bill does not specifically state that the 10 days of COVID- 19 paid sick time must be provided in addition to whatever paid sick time or PTO the employer already provides to its employees. That said, let’s look at reality. If an employer has a policy that provides 10 days of regular sick leave, technically, they wouldn't need to add more; rather, they would just need to make sure the sick leave that was provided encompassed all COVID-19 sick leave requirements. Practically speaking, there are complications to that approach. For example, if an employee has already used up some or all of their regular sick leave, the employer would need to provide additional COVID-19 sick leave on top of the regular sick leave. To retrofit existing sick time policies with the COVID-19 requirements would be very difficult to administer (for tracking, payroll coordination, and tax credit reporting purposes). The reality is that employers are quickly taking action to set up a new bank of COVID-19 sick leave. Importantly, tracking will be imperative for tax credit purposes. Other than lost productivity from sick leave, there is no direct financial loss to the employer for doing so because they will be reimbursed for the expense through the payroll tax credit.

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Sequencing of Sick Time Employers may not require that an employee use any other paid time program offered by the employer before using this sick time. In other words, employees are entitled to use COVID-19 sick leave prior to using any other paid leave available to them. ”Topping Off” Paid Sick Time with Other Sick Leave Employers may supplement COVID-19 paid sick time benefits with other paid sick leave benefits for an employee. The aggregate amount of COVID-19 paid sick time and other paid sick time benefits may not exceed an employee’s normal earnings. Employer tax credits are only available for the statutory sick time payments. No Carry Over, No Payout The paid sick time does not carry over to the following year. Furthermore, employers are not required to reimburse employees for unused paid sick time if the employee terminates employment with a balance of paid sick time. No Accrual of Sick Time COVID-19 sick time is available for immediate use by all employees. Employers may not apply an accrual mechanism to the 10 days. No Double Dipping on Sick Time by Employees Employees cannot collect more than the statutory maximum by taking paid sick leaves for different purposes. No Restrictions on Sick Time by Employers Employers cannot deny employees sick time under the FFCRA on the grounds that they provided leave for the same reasons prior to the effective date of the paid sick time provisions implemented on April 1, 2020. This means that if an employer-provided “regular” sick leave that was used prior to the effective date of the FFCRA, the employer cannot offset the employee’s entitlement to 80 hours of COVID-19 sick leave by the time already taken under a regular sick leave program. How Are Employees Counted? Essentially, all employees are counted. This includes full-time employees, part-time employees, employees on leave, temporary employees (even if they are jointly employed through an agency), and day laborers from a temp agency. Companies are typically treated as separate employers, but different rules apply if companies are joint employers under the FLSA or meet the integrated employer test under the FMLA. Calculation of Hours for Part Time Employees The DOL has modified the calculation method for part time employees whose schedules vary from week to week, in order to determine the number of paid sick leave hours. • For Part Time Employees with Regular Schedules : The number of paid sick time hours should be determined based on the number of hours an employee works, on average, over a 2-week period. • For Part Time Employees with Variable Schedules : The number of paid sick time hours should be determined based on the number of hours an employee was scheduled per day over the rolling 6-month period ending on the date on which the employee takes the paid sick time.

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Employer Notices and Procedures An employer must post a notice for employees about the requirements of the law. (For a little levity, it is a bit amusing that the law requires that the notice be “posted in conspicuous places on the premises of the employer” in the midst of so many Shelter-in-Place orders wherein a significant percentage of employees are actually working from home.)

The DOL has provided a model notice . Vita has also provided a model notice .

No Requirement to Find Replacement Worker An employer may not require an employee to find or search for a replacement to cover the hours the employee will be away due to sick time. Must OT be Included in Pay? Regularly scheduled overtime pay must be included. (Although not specifically stated, we are presuming that ad hoc overtime pay does not need to be.) However, paid sick time need only be paid up to 80 hours over a two-week period. For example, an employee who is scheduled to work 50 hours a week may take 50 hours of paid sick time in the first week and 30 hours of paid sick time in the second week. The total number of hours paid is capped at 80. Small Employer Exemption Small employers (under 50 employees) may be eligible for an exemption from the paid sick time mandate on the basis that doing so would jeopardize the viability of the business as a going concern. The DOL will establish a process for employers to apply for an exemption. To qualify, an authorized officer of the business would need to certify meeting any of the following criteria: • Providing leave would cause the business’s expenses and financial obligations to exceed available revenues and the business to cease operating at a minimal capacity. • The absences would create a substantial risk to the financial health or operational capabilities of the business. • The employer would not be able to operate at a minimal capacity because it would have insufficient workers to perform the labor or services provided by the absent employees. Healthcare Provider Exemption Employers of healthcare providers may exempt certain employees from COVID-19 paid sick time and thus opt-out of providing this benefit. The DOL has provided a detailed definition of the types of entities that qualify as healthcare providers and whose employees may be that may be exempted. The list is exhaustive and includes just about every type of healthcare provider one could think of. 500 Employee Threshold Calculation Questions have been asked regarding how the 500-employee threshold is measured for the law. Question #2 of the DOL Employer Fact Sheet clarifies that the measurement of the 500 employees is as of the time the employee's sick time is taken. Therefore, it should be considered a “rolling 500” not a “point in time 500” as of the effective date of the law (April 1st). So, if an employer dips below or inches above the threshold, the availability of COVID- 19 paid sick time for employees might change. The availability of employer tax credits pursuant to those paid sick time benefits would follow suit.

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50 Employee Threshold Calculation While the exact converse to the 500-employee calculation (the lower-end 50-employee threshold) is not directly addressed, it is reasonable to assume that the same logic would be applied to this threshold as well. More guidance on this is expected. No Retaliation Employers may not retaliate or discriminate against any employee who elects to take COVID- 19 paid sick leave. Effective Date and Duration The effective date of the paid sick time mandate is April 1, 2020. The mandate expires December 31, 2020. Enforcement Grace Period The DOL has announced a 30-day non-enforcement period for employers to come into compliance. The 30-day period runs from March 18, 2020 through April 17, 2020. During that time, DOL enforcement actions will not be taken against employers that have made reasonable and good faith efforts to comply with the law. That condition will be deemed met only if violations were not willful and are remedied as soon as practicable, and the employer supplies a written commitment to comply in the future.

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Expanded FMLA - Paid Family Leave Mandate for Paid Family Leave The legislation includes the Emergency Family and Medical Leave Expansion Act (EFMLA), which provides a temporary expansion of the FMLA to cover a new category of leave related to COVID-19. Notably, the new COVID-19 Paid Family Leave is not a standalone provision of the law. Rather, it builds upon the existing FMLA law and the long-standing definitions and regulations that support it.

Paid Leave Benefit Amount Benefits are calculated based on the employee’s regular rate of pay and the number of hours the employee would otherwise be normally scheduled to work. • 66.67% of regular pay • $200 per day maximum benefit • $10,000 aggregate maximum benefit The first 10 days of leave may be unpaid. After day 10, paid leave must be provided. This is a notable deviation from other FMLA leaves, as all other FMLA leaves are unpaid (except that benefits must be continued). Duration The maximum duration of benefits is 12 weeks. Who is a Son or Daughter? The FMLA defines son or daughter as a biological, adopted or foster child, a stepchild, a legal ward, or a child of a person taking the place of a parent. Benefits Continuation Employers are required to maintain an employee's employee benefits coverage during a paid family leave on the same terms as if the employee had continued to work. The employee generally must continue to make any normal contributions to the cost. This requirement applies for the duration of the 12-week paid family leave period. Employer Notices and Procedures An employer must post a notice for employees about the requirements of the law. The DOL has provided a model notice . Vita also provided a model notice .

Who is Subject? Employers with fewer than 500 employees are required to provide paid leave due to the public health emergency. Eligibility for Paid Leave The emergency leave is available when an employee is unable to work (or telework) due to a need for leave that meets all of the following criteria: • To care for a son or daughter under age 18 because a school or place of care has been closed, or a childcare provider is unavailable • The need is due to the COVID-19 public emergency • The employee has been employed for at least 30 days (note this is a deviation from the standard 12- month waiting period for other types of FMLA leave). Rehired employees are immediately eligible to take EFMLA if they were laid off after March 1, 2020 but had worked for the employer for at least 30 of the last 60 calendar days prior to the layoff. Notably, regular FMLA allows for unpaid leave for the care of a spouse, child, or other family members with a serious health condition. This extended paid family leave is restricted to the care of children and only for the specific reasons outlined above.

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How is Pay Calculated? The regular rate of pay used to calculate paid leave is the average of the employee’s regular rate over a period of up to six months prior to the employee’s leave date. For employees who have not worked for six months, the regular rate used is the average rate of pay for each week worked over the period of employment. Integration with Teleworking Telework/work from home arrangements under the current Shelter-in-Place orders are commonplace for many employers. When an employee can work from home and is paid normal wages, no benefits are available under the paid family leave program. If an employee works a normal number of hours, but performs that work outside their normally scheduled workday (for instance early in the morning or late at night), the employee is considered able to work, and paid leave would not be available to them. That is, unless the employee experiences a COVID-19 qualifying reason that would prevent them from working.

COVID-19 Paid Leave and Regular FMLA Integration Employees are eligible to take paid sick leave (described in the prior section) regardless of how much leave they may have already taken under the regular FMLA provisions. However, if an employee already used a portion of their 12 work-week maximum under regular FMLA prior to April 1, 2020, their eligibility for COVID-19 paid family leave would be restricted to the number of remaining weeks in their 12 weeks per 12-month FMLA period. The reverse is also true, subject to the restriction that paid family leave is only available until December 31, 2020. Thereafter, only regular FMLA leave may be taken. ”Topping Off” Paid Leave with Other PTO Employers may supplement COVID-19 paid family leave benefits with other paid time off benefits for an employee. The aggregate amount of COVID-19 paid leave and other leave benefits may not exceed an employee’s normal earnings. Employer tax credits are only available for the statutory leave benefit payments. More Leave Expected The addition of this Emergency paid family leave may result in more employees taking FMLA and EFMLA leave, which will affect the administration of group health plans. Employers should review their policies and procedures in light of the changes (e.g., new definitions and temporary timeframes). Structure of the Law The extended paid family leave provisions of the law amends the existing FMLA law. Importantly, that means that substantially all of the body of FMLA law and regulations exist and apply to this new type of leave. This should add a measure of familiarity to this provision, since standard FMLA definitions, conventions, and provisions will apply to this new type of leave.

Can Paid Leave be Taken Intermittently?

Yes, paid leave may be taken intermittently. The increment of the intermittent leave may be arranged at any level supported by the employer (daily or even in hourly periods of time). The DOL encourages employers to work collaboratively with employees to achieve flexibility and meet mutual needs. Voluntary arrangements that combine telework and intermittent leave are also acceptable.

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75-Mile Radius Rule The new family paid leave benefit deviates from the underlying FMLA law as it relates to the 75-Mile Radius rule. Under the regular FMLA provisions, an employer is subject only if they have 50 or more employees within a 75-mile radius. This new law does not allow for that exception and thus applies more broadly. Small Employer Exemption The regular FMLA law applies to employers with at least 50 employees and exempts employers below that threshold. The new extended paid family leave does not automatically exempt small employers under the 50-employee threshold. However, small employers may be eligible for an exemption from these required family paid leave benefits on the basis that doing so would jeopardize the viability of the business as a going concern. To qualify, an authorized officer of the business would need to certify meeting any of the following criteria: a. Providing leave would cause the

500 Employee Threshold Calculation Questions have been asked regarding how the 500-employee threshold is measured for the law. Question #2 of the DOL Employer Fact Sheet clarifies that the measurement of the 500 employees is as of the time the employee's leave is taken. Therefore, it should be considered a “rolling 500” not a “point in time 500” as of the effective date of the law (April 1st). So, if an employer dips below or inches above the threshold, the availability of COVID-19 paid leave for employees might change. The availability of employer tax credits pursuant to payments for those leaves would follow suit. 50 Employee Threshold Calculation While the exact converse to the 500- employee calculation (the lower-end, 50- employee threshold) is not directly addressed, it is reasonable to assume that the same logic would be applied to this threshold, as well. More guidance on this is expected. No Retaliation Employers may not retaliate or discriminate against any employee who elects to take COVID-19 paid family leave. Effective Date and Duration The effective date of the paid sick leave mandate is April 1, 2020. The mandate expires December 31, 2020. Enforcement Grace Period The DOL has announced a 30-day non- enforcement period for employers to come into compliance. The 30-day period runs from March 18, 2020 through April 17, 2020. During that time, DOL enforcement actions will not be taken against employers that have made reasonable and good faith efforts to comply with the law. That condition will be deemed met only if violations were not willful and are remedied as soon as practicable, and the employer supplies a written commitment to comply in the future.

business’s expenses and financial obligations to exceed available revenues and the business to cease operating at a minimal capacity substantial risk to the financial health or operational capabilities of the business The employer would not be able to operate at a minimal capacity because it would have insufficient workers to perform the labor or services provided by the absent employees.

b. The absences would create a

c.

Healthcare Provider Exemption Employers of healthcare providers may exempt certain employees from COVID-19 paid family leave and thus opt-out of providing this extended paid family leave. The DOL has provided a detailed definition of the types of entities that qualify as healthcare providers and whose employees may be that may be exempted. The list is exhaustive and includes just about every type of healthcare provider one could think of.

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Federal Judge Strikes Down Key Limitations on FFCRA Paid Leave Overview In response to the COVID-19 pandemic, Congress passed the Families First Coronavirus Response Act (FFCRA) which created emergency paid sick leave (ePSL) and emergency FMLA (eFMLA) leave for those suffering from COVID-19 or its effects. Shortly after the passage of FFCRA, the Department of Labor (DOL) finalized temporary regulations interpreting and implementing the FFCRA’s provisions. On Monday, a federal district court judge provided a ruling that invalidated four significant aspects of the regulations: 1. The DOL’s definition of “healthcare provider” 2. The DOL’s “work availability” requirement 3. The requirement of employer consent to intermittent leave 4. The requirement that employees provide notice of leave prior to taking the leave What Does This Mean? The result of this ruling will be that that more employees are eligible for up to 12 weeks of COVID-19-related ePSL and eFMLA. As such, employers should consider whether they need to adjust their leave determinations in light of the court’s decision. This is particularly relevant for any employers who are healthcare providers or who have denied COVID-19 leaves. A Little History on the FFCRA and the DOL Regulations Anticipating the stress COVID-19 would put on our nation’s healthcare system, Congress made certain types of employees, specifically healthcare providers and emergency responders, ineligible for FFCRA paid leave. If an employee falls into either category, the employer may decline to authorize requested leave. The FFCRA generally defines a healthcare provider as: • A doctor of medicine or osteopathy who is authorized to practice medicine; or • Any other person determined by the Secretary of Labor to be capable of providing healthcare services. Dramatic Expansion The DOL dramatically expanded the definition of healthcare provider under the regulations such that, a “health care provider” includes: • Anyone employed at a “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 other similar institution, employer, or entity.” As an example, a professor or cafeteria worker at a medical school would all be considered health care providers under the DOL definition. • Anyone employed by an entity that contracts with one of the aforementioned institutions to provide services that support or maintain the institution’s operation.

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The regulations also spelled out several other criteria for leaves:

• Employers do not need to provide employees with paid leave when the employer does not have work for them (the “work availability” requirement) • Employees must receive employer consent before taking intermittent leave • Prior to taking leave, an employee must provide documentation to the employer outlining, among other things, the reason for and duration of the leave. Four Key Aspects of the Regulations Invalidated 1. Definition of Healthcare Provider: The court struck down the DOL’s definition of healthcare provider, finding that it was “vastly overbroad” and did not focus on whether an employee’s duties have a nexus to the provision of healthcare. As such, the rule gave employers wide latitude to exclude employees in a broad array of facilities and positions. Rather than exempting entire companies from providing paid leave, the court held that only employees who are capable of providing healthcare services should be excluded. RESULT: Employers will need to consider, on a role-specific (if not case-by-case) basis, that the “skills, role, duties, or capabilities of a class of employees” render those individuals “capable of providing healthcare services,” before they can be excluded from FFCRA paid leave. 2. Work Availability Requirement: The regulations applied the work availability requirement to eFMLA leave and to three of the six reasons an employee may take ePSL. The court found that the regulations lack an explanation as to why the work availability requirement only applies to half of the ePSL qualifying absences. As a result, the court noted that the requirement was unreasonable. RESULT: Employers may not deny FFCRA paid leave to an employee simply because the employer has no work for the employee. Many employers have already relied on DOL’s rule to grant or deny leave. Under the court’s ruling, employees must still have a FFCRA-qualifying reason for leave, but they may now be eligible even if the employer has no current work for them. 3. Employer Consent for Intermittent Leave: The regulations distinguish between eFMLA leave that may be taken intermittently and ePSL that may not be taken intermittently (unless the employee is teleworking). Employer consent is required in order to take intermittent leave. While the court did not object to limiting intermittent leave to certain types of absences, it did find that the DOL failed to explain why employer consent should be required. RESULT: Employers should allow intermittent eFMLA and ePSL teleworking arrangement leaves upon request. (Note that the prohibition on intermittent leave for certain qualifying absences is allowed because the conditions for which intermittent leave is entirely barred are those that logically correlate with a higher risk of viral infection.

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