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In the Age of COVID-19, What Should Employers Know About Employee Leaves of Absence?

In the Age of COVID-19, What Should Employers Know About Employee Leaves of Absence?

| July 16, 2020

The novel coronavirus (COVID-19) crisis has shuttered businesses, schools, and care facilities across the country. This has left many employees scrambling to find childcare arrangements, set up a home office for teleworking, or arrange time off for an illness. And for employers, questions about when (and why) employees can take leaves of absence have never been more important. Learn more about employee leaves of absence in the age of COVID-19.

Childcare-Related Leaves of Absence

Federal law doesn't require employers to provide paid (or even unpaid) leave to parents who are dealing with a childcare emergency. In other words, an employee who is unable to come to work because their child's school or daycare has closed may have their employment terminated.

However, because of the sheer number of parents affected by the closure of schools and daycares nationwide, it may make sense for employers to adopt new leave policies or exercise greater flexibility to avoid driving away otherwise good employees who need some temporary accommodation. And some states have passed COVID-19 legislation providing certain childcare benefits to parents in this situation.

Illness and Family Caregiving Leaves of Absence

Employees who have worked for a "covered employer" (one with 50 or more employees within 75 miles) for at least 12 months are eligible for unpaid leave under the Family and Medical Leave Act (FMLA).1 FMLA leave may be used for the employee's own illness or if the employee must care for a family member who is seriously ill. However, it cannot be used for the care of a healthy child or to simply avoid contracting the coronavirus.

An employee who qualifies for FMLA leave can take up to 12 weeks of leave per year. Although this leave is unpaid, the employee has the right to keep their employer-covered health insurance during this time (as long as they pay the premiums they would normally pay). Employees can also opt to use their paid time off during FMLA to keep their normal paycheck.

Close of Business Leaves of Absence 

Many employers, particularly bars and restaurants, have temporarily shut down due to statewide "shelter in place" orders. These employers are not required to pay employees for hours not worked (though they are required to pay employees for PTO they use during this time). This essentially transforms these shutdowns into unpaid leaves of absence for employees. However, for employers who wish to lay off their staff while their businesses aren't operating, there are a couple of important federal laws to keep in mind.

First, if an employer is laying off some but not all employees, it's important that those who are laid off are not disproportionately part of a certain demographic. Employers are prohibited from discriminating on the basis of race, sex, religion, national origin, and age (for those over age 40); laying off only the oldest workers, or only those of a certain ethnic group, can create a presumption of illegal discrimination.

In addition, if the business has more than 100 workers, it may be required to provide at least 60 days of advance notice of layoffs or plant closings under the WARN Act.This Act is designed to keep employees from being blindsided by a sudden business closure that has been known to management for months. However, in this unprecedented COVID-19 shutdown, many businesses may be able to waive WARN Act notice requirements by pointing out that they lacked advance notice of the closure as well. 

Important Disclosures:

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which investment(s) may be appropriate for you, consult your financial professional prior to investing. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and cannot be invested into directly.

The information provided is not intended to be a substitute for specific individualized tax planning or legal advice. We suggest that you consult with a qualified tax or legal advisor.


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