March 23, 2020;
Updated March 28, 2020 to reflect new guidance from the U.S. Department of Labor
What the Order Says – and Doesn’t Say
On March 20, 2020, Governor Andrew Cuomo, in an ongoing effort to combat the coronavirus pandemic, issued Executive Order 202.8 (the “Order”). Among other things, the Order mandates that, effective March 22, 2020, at 8:00 p.m., “[each] employer shall reduce the in-person workforce at any work locations by 100%.” To effectuate this mandate, all businesses and not-for-profit entities in the state are directed to utilize any telecommuting or work-from-home procedures they can safely utilize.
The Order modifies the previously issued Executive Order 202.6, and incorporates the prior Order’s exemptions for essential businesses or entities providing essential services or functions. Specifically, the Order states that essential businesses and entities providing essential services or functions shall not be subject to the in-person workforce restrictions. The list of essential businesses is extensive, and consists of the following:
1. Essential health care operations including:
- research and laboratory services
- hospitals
- walk-in-care health facilities
- emergency veterinary and livestock services
- elder care
- medical wholesale and distribution
- home health care workers or aides for the elderly
- doctor and emergency dental
- nursing homes, or residential health care facilities or congregate care facilities
- medical supplies and equipment manufacturers and providers
2. Essential infrastructure including:
- utilities including power generation, fuel supply and transmission
- public water and wastewater
- telecommunications and data centers
- airports/airlines
- transportation infrastructure such as bus, rail, or for-hire vehicles, garages
- hotels, and places of accommodation
3. Essential manufacturing including:
- food processing, manufacturing agents, including all foods and beverages
- chemicals
- medical equipment/instruments
- pharmaceuticals
- sanitary products
- telecommunications
- microelectronics/semi-conductor
- agriculture/farms
- household paper products
4. Essential retail including:
- grocery stores including all food and beverage stores
- pharmacies
- convenience stores
- farmer’s markets
- gas stations
- restaurants/bars (but only for take-out/delivery)
- hardware and building material stores
5. Essential services including:
- trash and recycling collection, processing and disposal
- mail and shipping services
- laundromats
- building cleaning and maintenance
- child care services
- auto repair
- warehouse/distribution and fulfillment
- funeral homes, crematoriums and cemeteries
- storage for essential businesses
- animal shelters
6. News media
7. Financial Institutions including:
- banks
- insurance
- payroll
- accounting
- services related to financial markets
8. Providers of basic necessities to economically disadvantaged populations including:
- homeless shelters and congregate care facilities
- food banks
- human services providers whose function includes the direct care of patients in state-licensed or funded voluntary programs; the care, protection, custody and oversight of individuals both in the community and in state-licensed residential facilities; those operating community shelters and other critical human services agencies providing direct care or support
9. Construction including:
- skilled trades such as electricians, plumbers
- other related construction firms and professionals for essential infrastructure or for emergency repair and safety purposes
10. Defense:
- defense and national security-related operations supporting the U.S. Government or a contractor to the U.S. government
11. Essential services necessary to maintain the safety, sanitation and essential operations of residences or other essential businesses including:
- law enforcement
- fire prevention and response
- building code enforcement
- security
- emergency management and response
- building cleaners or janitors
- general maintenance whether employed by the entity directly or a vendor
- automotive repair
- disinfection
12. Vendors that provide essential services or products, including logistics and technology support, child care and services:
- logistics
- technology support for online services
- child care programs and services
- government owned or leased buildings
- essential government services
The list is potentially subject to further modification, and the current list and further guidance can be found here. Further, businesses that do not appear in the above list may submit a request to be deemed an “essential business” using the form found here.
Any business found in violation of the Order shall be subject to enforcement as if this were a violation of an order pursuant to section 12 of the Public Health Law, which provides for civil penalties ranging from $2,000 to $10,000 per violation, as well as injunctive relief. In addition to the civil penalties, employers may face other exposure, including insurance coverage issues should occurrences happen to employees and others in work sites that remain operational but do not qualify as an essential business.
In addition to the in-person workforce restriction, the Order further provides:
1) The time limit for commencing, filing, or serving any legal action, notice, motion, or other process or proceeding under any applicable state statute, local law, ordinance, order, rule, or regulation, is tolled from March 20, 2020, until April 19, 2020.
2) Extends the validity of driver’s licenses, non-driver identification cards, and motor vehicle registrations through April 19, 2020.
3) Eliminates the requirement that shareholder meetings be noticed and held at a physical location.
4) Authorizes the Commissioner of Taxation and Finance to abate interest for a period of 60 days for taxpayers required to file returns and remit sales and use taxes by March 20, 2020.
The complete Order can be found here.
Changes to Your Workforce
Whether or not your business is deemed “essential,” you may be considering changes to your workforce for employee safety and in response to the undeniable economic impact of the pandemic. We suggest you consider all available options carefully before making any decision, and refer to the following chart for an overview, with details below the chart. Whether notice is legally required as detailed below, we recommend all employers provide written notice to employees of their decision, including an explanation of the rationale and assurance that these measures are only being taken in response to the pandemic and with the ultimate goal of returning to business as usual in the near future. Goodwill toward your employees will go a long way in rebuilding.
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Option
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Description
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Important Information
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Furlough
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§ Temporary suspension of employment during which employees do not receive wages
§ Those on furlough remain employed
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§ Advise employees they must not work during the furlough period and employer should consider employer maintaining control over employer issued mobile devices and limiting or cutting off employee email access.
§ Employee receipt of continuation of health benefits dependent on health insurance policies, plan documents and other policies or agreements with employees.
§ Employer may restrict the use of vacation/PTO during furlough.
§ Employees are entitled to use New York City Earned Sick Time Act and Paid Sick Leave (“NYC Paid Sick Leave”).
§ Employees may be entitled to state sick pay under the New York State Emergency Sick Leave Law signed by Governor Cuomo on March 18, 2020 due to a “mandatory or precautionary order of quarantine or isolation issued by the state of New York, the department of health, local board of health, or any government entity duly authorized to issue such order due to COVID-19.”
- Employers with 100 or more employees: 14 days of paid sick leave to employees who are not working remotely and are self-quarantining inside their homes in response to a mandatory order of quarantine
- Employers with more than 10 employees but fewer than 100 employees: 5 days of paid sick leave. These employers are also required to provide their employees with access to short-term disability benefits and New York paid family leave.
- Employers with 10 or fewer employees as of January 1, 2020 are not required to provide their employees with any paid sick leave, but must provide their employees with access to short-term disability benefits and New York paid family leave (along with unpaid leave).
§ Employees are entitled to federal sick pay under the Families First Coronavirus Response Act “FFCRA” if employer has 500 or fewer employees.
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Layoff/
Termination
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A layoff is the removal of an employee from the workforce, without any guarantee of returning to work.
A termination is a complete and permanent separation of employment.
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§ Notice required if employer is subject to NY WARN.
§ Final pay due on last day of work including all earned but unused vacation or PTO.
§ Employer need not pay out accrued sick leave at time of termination or layoff, unless required by company policy or employment contract.
§ Provide timely notice regarding COBRA benefits.
§ See below regarding potential notice requirements under NY WARN.
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Reduction in Pay
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Reducing an employee’s hourly rate or prospective salary
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§ Ensure you pay hourly, non-exempt, non-tipped employees minimum wage: $15 per hour in New York City, $13.00 per hour in Nassau, Suffolk and Westchester counties and $11.80 per hour in the remainder of the state (there are differently hourly rates for workers in the fast food industry and those who receive tips).
§ Ensure you pay your salaried, exempt employees a minimum of $1,125.00 per week ($58,500 annually).
§ Reduction in exempt salary may result in future loss of the employee’s exempt status (*See further discussion below under the section on Reduction in Salary).
§ You may only reduce pay going forward, and if possible, give 7 days’ advance notice
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Reduction in Hours
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Reduce hours for non-exempt employees and pay only the hours worked.
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§ Take care not to reduce hours in a way that appears discriminatory – such as only for higher paid (and generally older) workers.
§ Employees may receive Unemployment Compensation Insurance.
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Work From Home
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An employee is permitted to work remotely (out of the office), generally by accessing employer files through a virtual desktop.
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§ Employers must reimburse for such expenses as home internet, cell phone usage, printer ink, paper, and other relevant supplies. Demand proof of incurred expenses.
§ Send clear directives to non-exempt employees to take and record rest breaks and meal periods.
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What Should You Do?
With many employers facing the difficult decision of whether to furlough or lay off employees, the critical question is the expense associated with each choice. If you have a generous vacation policy, and many tenured employees with banks of hours, it may be more expensive to lay off employees because you would be required to pay out all earned vacation. If you furlough employees, you must maintain benefits and pay sick leave as requested, which includes federal and/or state. Your business also may be required to pay sick leave under the new federal law. You may consider layoff or furlough of some employees and reduction in hourly pay or salary for others.
Reduction in Salary
A predetermined regular salary reduction, for a bona fide business reason (such as the pandemic), and not related to the quantity or quality of work performed, will not result in loss of an employee’s exempt status, as long as the employee still receives the minimum New York salary requirement of $58,500 annually.
You may decide that because the future of your business is uncertain due to the pandemic, the loss of exempt status for employees is not important. This means that if you reduce salary and later are sued by the employee claiming he/she is now non-exempt and is due unpaid overtime and/or penalties for or missed meal or rest periods, you may not be able to claim that employee was exempt.
If you decide to reduce an exempt employee’s salary, rather than lay that person off completely, keep in mind the following: An employer must pay an exempt employee the full predetermined salary amount for any week in which the employee performs any work without regard to the number of days or hours worked. However, there is no requirement that the predetermined salary be paid if the employee performs no work for an entire workweek. Deductions may not be made from the employee's predetermined salary for absences occasioned by the employer or by the operating requirements of the business. If the employee is ready, willing, and able to work, deductions may not be made for time when work is not available.
That said, if yours is an “essential” business and remains open, and your employees can be put to work, an exempt employee who elects to stay home due to the pandemic and does not perform any work on that day (unless working remotely), is considered absent for personal reasons and need not be paid for that day. Deductions from salary for absences of less than a full day for personal reasons or for sickness are not permitted. If an exempt employee works any portion of a day, there can be no deduction from salary for a partial day absence for personal or medical reasons.
If you choose to lower salaries, you may implement the change as of the next payday. We also suggest that you inform the employee in writing with a clear explanation that the reduction is due to COVID-19, and without the reduction, the employee could be subject to layoff.
New York City Earned Sick Time Act and Paid Sick Leave
While it is well settled that employees can use NYC Paid Sick Leave (1) if they are sick for any reason, including COVID-19, and (2) to seek care or treatment of an existing health condition for the employee or the employee’s family member, what is less certain is the impact of New York’s stay at home orders as it relates to preventative care, which is another reason an employee can take NYC Paid Sick Leave.
According to guidance from the NYC Department of Consumer and Worker Protection, employers must allow employees to use sick leave when a public official closes your business. Per this guidance, any non-essential business where an employee is not able to work from home must provide paid sick leave to its employees due to the state’s closure of their business. Ultimately, if the payment of sick leave will cause the financial collapse of your business, future lawsuits may not be a concern, but it is important to consider the potential for claims by your employees.
New State Sick Leave Law
On March 18, 2020, Governor Cuomo signed a new paid sick leave bill into law. The law is intended, among other things, to provide New Yorkers out of work due to the COVID-19 pandemic with immediate relief. The law applies to employees “under a mandatory or precautionary order of quarantine or isolation issued by the state of New York, the Department of Health, local board of health, or any government entity duly authorized to issue such order due to COVID-19.”
As noted above, employers are required to provide unpaid leave, either one week paid sick leave, or two weeks paid sick leave depending on the size of the employer. The law covers all employees, including part-time employees and temporary employees. New York employers must provide this emergency paid sick leave in addition to any sick leave benefits employees have accumulated up until this point. However, employees who voluntarily traveled to a location that the CDC has issued a level two or three travel health notice for non-work related purposes (including China, most of Europe, Iran, Ireland, Malaysia, South Korea, and the United Kingdom) and were aware of such notice prior to their travel are not eligible for the emergency paid sick leave benefits detailed above under the new legislation. Employees who are asymptomatic and are able to work from home are also not entitled to state paid sick leave.
There has been no clarity from the New York State Department of Labor or Governor Cuomo as to whether employers must provide paid sick leave under this law to all non-essential employees in light of the mandatory shutdown Order. As New York is an employee friendly state, we expect that after the pandemic has (hopefully) resolved, courts may interpret the paid sick leave law to include mandatory stay at home orders such that employees are entitled to paid sick leave under this law in light of the New York statewide Order. However, Governor Cuomo has refused to call the Order a blanket “quarantine,” and employers may not be required to provide paid sick leave unless the employee is individually subject to a mandatory or preventative quarantine because he or she or another with whom they have been in contact is suspected to have COVID-19. As with paid sick leave under the NYC Paid Sick Leave law, ultimately, if the payment of sick leave will cause the financial collapse of your business, future lawsuits may not be a concern, but it is important to consider the potential for claims by your employees. It is unclear whether employers in New York State will be entitled to a tax credit, as is the case with the federal sick leave law discussed below.
New Federal Sick Leave Law
The Families First Coronavirus Response Act ("FFCRA") becomes effective April 1, 2020.
- Employers of up to 500 employees (see below for calculation method) must provide 80 hours of paid sick leave for full time employees (average hours worked over two weeks for part time) if there is work for the employee available and the employee is unable to work (or telework) because:
- The employee is subject to a Federal, State, or local quarantine or isolation order related to COVID-19. (This includes any government order directing people to remain at home unless they work for an essential business);
- The employee has been advised by a healthcare provider to self-quarantine due to concerns related to COVID-19;
- The employee is experiencing symptoms of COVID-19 and seeking a medical diagnosis;
- The employee is caring for an individual who is subject to an order as described in subparagraph 1 above or has been advised as described in paragraph 2 above; or
- The employee is caring for a child of such employee if the school or place of care for the child has been closed, or the childcare provider for the child is unavailable, due to COVID-19 precautions.
- If your business closed before or after April 1 due to lack of business, or if required to close pursuant to Federal, State or local directive, sick leave is not due.
- Intermittent sick leave is permitted with the consent of the employer (it is not required).
- If business closes while an employee is on FFCRA sick leave, they must be paid for leave through the date of closure.
- Businesses with less than 50 employees are potentially exempt from providing sick leave pursuant to reasons four and five above (as amended by the CARES Act) and should document any hardship presented by providing this leave (after considering the impact of potential tax credits) and wait for further guidance from the DOL.
- Employees may use FFCRA paid sick leave before using state or local paid sick leave, or accrued PTO.
- Paid leave provided prior to April 1, 2020, does not count to fulfill obligations under the FFCRA.
- Employers must require documentation in support of the reason for leave and include:
- Employee’s name, qualifying reason for requesting leave, statement that the employee is unable to work, including telework, for that reason, and the date(s) for which leave is requested; and
- Documentation including a copy of the Federal, State or local quarantine or isolation order related to COVID-19 applicable to the employee (reason 1 above) or written documentation by a health care provider advising the employee to self-quarantine due to concerns related to COVID-19 (reasons 2 to 4 above) or notice that has been posted on a government, school, or day care website, or published in a newspaper, or an email from an employee or official of the school, place of care, or child care provider (reason 5 above).
- If you intend to claim a tax credit under the FFCRA for payment of sick leave wages, you should retain the FFCRA documentation in your records.
How Much to Pay – Employees must be paid based on their required compensation as follows:
- Regular rate of pay subject to a limit of: $511 per day and $5,110 in the aggregate for a use described in paragraph (1), (2), or (3) above; or
- Two-thirds of the regular rate of pay subject to a limit of: $200 per day and $2,000 in the aggregate for a use described in paragraph (4), (5), or (6) above.
Emergency Federal Medical Leave Expansion Act
The Emergency Federal Medical Leave Expansion Act ("EFMLE") becomes effective April 1, 2020.
- The EFMLE applies under the following circumstances:
- The EFMLE applies to employers with fewer than 500 employees (see below);
- Employees must be employed at least 30 calendar days at the time leave is requested;
- The need for leave must be a Qualified Need Related to A Public Health Emergency (“PHE”);
- A PHE exists when declared by a Federal, State or local authority due to COVID-19; and
- The employee must be restored to their position upon return from leave.
- An employee can request this leave for a very narrow reason: if there is work for the employee and they are unable to work (or telework) due to the need to care for their child under 18 years of age if the child’s elementary or secondary school or place of care is closed, or the care provider of such child is unavailable, due to a PHE.
- Intermittent expanded medical leave is permitted with the consent of the employer (it is not required).
- If your business closed before or after April 1 due to lack of business or if required to close pursuant to Federal, State or local directive, expanded medical leave is not due.
- If your business closes while an employee is on expanded medical leave, employees must be paid for leave through the date of closure.
- Businesses with less than 50 employees are potentially exempt from providing sick leave pursuant to reasons four and five above (as amended by the CARES Act) and should document any hardship presented by providing this leave (after considering the impact of potential tax credits) and wait for further guidance from the DOL.
New York WARN Act
Under the NY WARN, an “employer” is defined as any business that employs 50 or more employees within New York (excluding part-time employees). In New York, an employer must provide a WARN act notice 90 days in advance for an “employment loss,” which includes a mass layoff, plant closing, relocation, or a covered reduction in work hours. A mass layoff is a reduction-in-force (that is not the result of a plant closing) of at least 25 full-time employees and 33% of the workforce, or at least 250 employees, during any 30-day period at a single employment site; a plant closing is 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 at the site during any 30-day period for 25 or more employees; relocation is the removal of all or substantially all of the operations of an employer to a location 50 miles or more away; a reduction in work hours occurs where more than 50% during each month of any consecutive six-month period that impacts at least 25 employees, provided those affected employees constitute at least 33% of the workforce at the site, or that impacts at least 250 employees at the site.
Due to the effects of COVID-19, it is unlikely employers can issue 90 day notices of a layoff, termination, or reduction in force. Employers should still send notices as soon as practicable, as there are several exemptions, one of which may apply to COVID-19. Specifically, under the unforeseeable business circumstances exception, the 90-day notice will not be required where the employer can establish that the employment loss was caused by the occurrence of some sudden, dramatic, and unexpected action or condition outside the employer’s control, that was not reasonably foreseeable when the 90-day notice would have been required. Examples of such a condition include a principal client’s sudden and unexpected termination of a major contract with the employer, a strike at a major supplier of the employer, an unanticipated and dramatic major economic downturn, or government-ordered closing of an employment site that occurs without prior notice.
The New York State Department of Labor advises that 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. The New York State Department of Labor has advised that if an employer’s business is forced to close, it should provide required notices as soon as possible and identify the circumstances that required the closure, specifically COVID-19.
Under NY WARN, notice must be given to:
(1) The employees of the covered establishment affected by the order;
(2) Any employee representative(s);
(3) The New York State Department of Labor (DOL);
(4) The Local Workforce Investment Board (LWIB).
As noted above, the Notice must be given as soon as practicable and includes the following information:
(1) A brief statement of the basis for reducing the notification period, including that COVID-19 related business circumstances were not reasonably foreseeable as of the time that notice would have been required; and
(2) the statement “If you have lost your job or been laid off temporarily, you may be eligible for Unemployment Insurance (UI).”
Unemployment Insurance
A good resource for your employees can be found here.
Visit our COVID-19 Hub for ongoing updates.