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In light of Governor Wolf’s emergency declaration and current recommendations our office is currently closed. Our attorneys and staff continue to work remotely, however, and we can assure you they are set up to respond to your calls, emails and all communications. For more details on AMM operations during this time, read our full update.
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May 14, 2020
Yesterday the Small Business Administration (SBA) issued updates to its Frequently Asked Questions (FAQs) guidance on the Paycheck Protection Plan (PPP) Loans, and added Questions/Answers (Q&A) 45 and 46, with the latter Q&A being directly related to the certification issues, and to the corresponding May 14th deadline for the return of funds as a “safe harbor” from civil and criminal penalties relating to the certification of need.
As previously reported, the PPP applications required borrowers to certify that “current economic uncertainty makes this loan request necessary to support the ongoing operations of the Applicant.” Until its issuance of this Q&A, the SBA’s guidance suggested that it would seek to impose civil and criminal penalties relating to the certification as a first resort, if it determined that the loan was unnecessary. In doing so, the SBA induced a sense of fear; and then further induced a sense of urgency by offering the safe harbor from such penalties, allowing borrowers to return the funds on or before May 7th to avoid such penalties. Such deadline was further extended to May 14th.
As state governments issue stay-at-home orders, employment lawyers across the country have been digesting new employment laws, assisting clients in managing layoffs, furloughs, and leaves of absence, and working to keep up with a changing employment landscape. Federal legislation has imposed dramatic, although temporary, changes to the way employers manage their employees during this trying time. The Families First Coronavirus Response Act (“Families First Act”) and its regulations impose, for the first time under federal law, paid leave obligations. The CARES Act changes the economics of layoffs, furloughs and reduced hours for employers.
On March 18, 2020, President Trump signed the Families First Act into law. The Act includes provisions to assist employers and employees during these extraordinary times. The Families First Act creates two forms of paid leave related to the Covid-19 crisis: two-week paid leave (“Emergency Leave”); and expansion of the Family and Medical Leave Act (“FMLA”) to provide twelve weeks of paid leave (“Expanded FMLA Leave”).
On April 1, 2020, the Department of Labor issued temporary regulations regarding the terms of the Families First Coronavirus Response Act (“Families First Act”). The regulation provides extensive guidance regarding the regulation to help employers comply with its terms.
On March 24, 2020, the United States Department of Labor ("DOL") issued limited guidance regarding the Families First Coronvirus Response Act (the “Act”).
Most importantly, the DOL identified April 1, 2020 as the Effective Date of the Act, contrary to the conclusion of most observers that the Act would go into effect on April 2, 2020. Accordingly, employers of all sizes should plan to come into compliance on April 1, 2020. The DOL also clarified that the Act is not retroactive. The DOL also advises not to send requests for the small business exemption to the department, and that it will issue regulations regarding the small business exemption at a later date.
On March 18, 2020, President Trump signed the Families First Coronavirus Protection Act (the “Act”) into law. The Act includes provisions to assist employers and employees during these extraordinary times.
Expansion of Protections Under the Family and Medical Leave Act
For the period of time beginning April 2, 2020 to December 31, 2020, the Act expands the protections of the Family and Medical Leave Act (“FMLA”). Employees may be eligible for a combination of paid and unpaid leave for a period of up to 12 weeks under the FMLA, under certain conditions.
This requirement applies only to employers with fewer than 500 employees. The Act gives the Department of Labor authority to exempt small employers (those with fewer than 50 employees) where the imposition of the Act’s requirements would jeopardize the viability of the business as a going concern. The Department of Labor will use guidance on this procedure. Employers of health care professionals and emergency responders may also elect not to comply.
Eligible employees will receive 2 weeks of unpaid leave and 10 weeks of paid leave. To be eligible for leave, the employee must have been on the employer’s payroll for 30 days. The Act applies where the employee is unable to work or telework to care for a child of an employee if the child’s school or place of care has been closed, or the childcare provider is unavailable, due to the Covid-19 crisis.
The employer has no obligation to pay for the first two weeks, but the employee is free to use paid time off during this period. The employer cannot require the employee to exhaust paid time off. After the first two weeks of unpaid leave, employers must continue paid leave, calculated as two-thirds of the employee’s usual rate of pay. The maximum amount of paid leave under the Act is $200 per day and $10,000 in the aggregate.
Employers must return the employee to the same or equivalent position upon return to work. There is an exception for employers who employ less than 25 employees – if the position no longer exists due to the Covid-19 crisis, the employer must make “reasonable efforts” to restore the employee to an equivalent position over a one-year period.
Two Weeks of Emergency Paid Leave
The Act requires employers with fewer than 500 employees to provide full-time employees with 2 weeks of paid sick leave, and to provide part-time employees with the equivalent of average hours per week for 2 weeks, if the employee is unable to work or telework because the employee:
- is subject to a quarantine or isolation order;
- has been advised by a health care provider to self-quarantine;
- is experiencing symptoms and seeking a medical diagnosis;
- is caring for an individual (not limited to family members) who is subject to a quarantine order, has been advised to self- quarantine, or is experiencing symptoms;
- is caring for a son or daughter whose school or place of care has been closed or the child care provider is unavailable; or
- is experiencing similar conditions to any specified by the Secretary of Health and Human Services in consultation with the Secretaries of Labor and the Treasury.
A few limitations apply to this requirement. If the leave is required because the employee is subject to a quarantine order, has been advised to self- quarantine or is experiencing symptoms and seeking a diagnosis, paid leave under this provision shall not exceed $511 per day and $5,110 in the aggregate Where the leave is necessary to care for another or a child, paid leave under the Act is limited to $200 per day and $2,000 in the aggregate. The Act limits the required payment to two-thirds of an employee's regular rate of pay (subject to the caps) for care of family members.
For this provision, the Department of Labor has substantial authority to issue guidance on which employers may be excluded from this requirement.
This leave is available for immediate use by employees, regardless of length of employment. Employers cannot require employees to exhaust other paid leave before using the paid leave provided by the Act.
Antheil Maslow & MacMinn will continue to provide guidance to employers with regard to the Coronavirus Outbreak on employment, tax and related issues as they develop. Please contact Employment Law partner Patricia Collins or Tax Law partner Michael Mills, with questions.
Late Friday, the United States House of Representatives passed the Families First Coronavirus Response Act (the “Act”). The President has tweeted his support of the legislation, and the Senate will take it up this week.
Most employers these days are aware of the many workplace claims an employee might bring, including allegations of discrimination on account of race, color, religion, sex, national origin, sexual orientation, pay, age, or disability. Among other claims are those brought under the Fair Labor Standards Act (minimum wage, overtime) and the Family Medical Leave Act.
Employers paradoxically seem less aware of a retaliation claim an employee may bring. Paradoxically, because as reported by the Equal Employment Opportunity Commission (“EEOC”-the federal agency responsible for enforcing laws prohibiting employment discrimination), retaliation claims constituted the highest percentage of all charges filed in its fiscal year 2019.
Moreover, as discussed below, retaliation claims, by which an employee can obtain the same remedies as discrimination claims, are often easier for an employee to prove.
A recent opinion by the United States Court of Appeals for the Third Circuit (covering Pennsylvania) illustrates what an employee must do to state a case for retaliation and how an employer might defend the action.
On September 24, 2019, the United States Department of Labor announced a new final rule regarding eligibility for overtime pay. The rule requires employers to revisit their classifications of employees as exempt in order to ensure compliance.
As I discussed in previous articles (Texas Federal Judge Blocks New Overtime Rules and Speaking of Overtime Rules and One Final Overtime Update) the DOL announced rules in 2016 to dramatically increase the salary threshold in order for certain categories of employees to meet the standards for exemption from federal overtime requirements. The rules were met with litigation and a stay of their enforcement.
The new final rule raises the salary threshold from $455 a week to $684 a week, or $35,568 a year. Employers may now use nondiscretionary bonuses and incentive payments, such as commissions to satisfy up to 10% of the salary level. Employees will still have to meet requirements related to their duties in order to meet the standards of exemption for the overtime requirements.
This final rule will become effective on January 1, 2020. As we advised in 2016, employers should take steps to ensure compliance by the end of the year. The first step is to identify any employees who are classified as exempt but are making less than $422 a week, and develop a plan to reclassify those employees, or revise their compensation. This is a good time to revisit the job duties of those employees to ensure that they meet the applicable standards for exemption in terms of their duties as well as their salary. This is also a good time to review overtime policies to ensure appropriate recordkeeping, efficient use of overtime and compliance with applicable law.
AMM can help employers navigate these new rules and review their employee classifications to ensure compliance and minimize risk.
Many companies use restrictive covenant agreements with key employees to guard against economic harm to the company by an employee who takes a job with the company’s competitor and/or tries to persuade the company’s customers to stop doing business with the company. These are particularly common with sales staff. In Pennsylvania, these covenants will generally be upheld if they are narrowly drawn to protect the employer’s legitimate business interests and if the employee has been given meaningful consideration in exchange for agreeing to be bound by the covenants. To learn more about Noncompetes, visit our Navigating Noncompetes blog series in the AMM Employment Law Blog.
Companies recognize that merely doing business with other firms can also be risky when it comes to protecting their interests in employees and customers. Consequently, it has become customary to include “no hire” provisions in contracts to prohibit a party from hiring away the other party’s staff. These clauses are particularly common in agreements in the technology field and in non-disclosure agreements that parties often enter into when evaluating whether or not to begin a business relationship. The viability of these provisions is in doubt in Pennsylvania, where the Pennsylvania Superior Court struck down a no-hire clause in a service agreement earlier this year. The Pennsylvania Supreme Court has agreed to hear the case.
In Pittsburgh Logistics Systems, Inc. v. BeeMac Trucking, LLC, the trial court held that the no-hire clause was unenforceable because it prevented individuals from seeking employment with certain companies even though those individuals had not agreed to or been compensated for the restriction. It is important to note that in a separate action, Pittsburgh Logistics Systems (“PLS”), the company attempting to enforce the restrictions against BeeMac, was unsuccessful in its efforts to enforce the restrictive covenants contained in four employees’ employment agreements, each of whom left to work at BeeMac. The trial court concluded that the covenant not to compete was oppressive and overly broad since it had an unlimited geographic scope. The court viewed PLS as having “unclean hands” and refused to enforce the restriction at all.
The Superior Court agreed with the trial court and held that the no-hire clause was unenforceable as a matter of law. The Superior Court was influenced by the lower court’s holding that the non-compete covenants in the employment agreements were not enforceable, noting that it would be unfair for PLS to achieve the same result by using a contractual no-hire provision in its contracts with other companies.
Two Superior Court judges dissented, drawing a distinction between a no-hire provision in a contract between two companies and a non-compete clause binding employees. They reasoned that the no-hire clause did not restrict the employees’ actions; rather, the clause was a bargained-for restriction in recognition of the fact that BeeMac would have access to PLS employees and know-how. The dissenting opinion suggests that the correct analysis is whether the no-hire clause was a reasonable restraint on trade. Using that test, the dissenting judges would have enforced the clause and granted the injunctive relief requested by PLS to prevent BeeMac from “enjoy[ing] the benefit of its purported breach” and “leverag[ing] the specialized knowledge that PLS’s former employees acquired while under its employment.”
It will be interesting to see how the Pennsylvania Supreme Court views these issues when it hears this case. Stay tuned for further developments.
Reprinted with permission from the June 21st edition of The Legal Intelligencer. (c) 2019 ALM Media Properties. Further duplication without permission is prohibited.
In Fort Bend County v. Davis, 587 U.S. ___ (2019), the Court held that the requirement that a plaintiff in an employment discrimination case brought under Title VII, 42 U.S.C. § 2000e, et seq, file a charge of discrimination with the Equal Employment Opportunity Commission (“EEOC”) prior to filing a complaint in court is a procedural and not a jurisdiction requirement. Therefore, an employer’s failure to assert the absence of an appropriate charge of discrimination in a motion to dismiss results in a waiver of the defense. The Supreme Court’s decision resolves a split in the circuits regarding whether the requirement is jurisdictional, and highlighted the importance of the charge of discrimination and the motion to dismiss in employment discrimination cases.