Layoff vs Furlough – Employer Guidelines in a COVID-19 World

March 23, 2020 by

layoffLayoff or Furlough? As California enters this unprecedented time with Mandatory “Shelter In Place” orders throughout California, many employers are facing the imminent decision to reduce workforce while we all face uncertainty over when normal business with resume.  Many employers are unable to assign work to their employees at home and must consider greatly reducing their current workforce as soon as possible.

Employers reducing scheduling for non-exempt hourly employees with a reduced work schedule or not at all generally do not have to worry about liability for the reduction.  However, a common question is what to do with employees and whether employees should be laid off or furloughed during this time.

Layoff vs. Furlough

A layoff can be temporary or permanent.  It is recommended that layoffs occurring during this recent pandemic are temporary due to the unknown duration of the reduction of workforce.  When laying off an employee, the employer must follow all California Labor Laws and the Worker Adjustment Retraining and Notification Act (WARN) with no expectation the employee will return to work in the future.

A layoff is a separation of the employment relationship and the rehire process must occur for the employee to rejoin the workforce.  All benefits are terminated at the end of the term of the separation and the employee will no longer be employed by the employer.

A furlough occurs when the employer is reducing the days or weeks an employee may perform work.  An employer will suspend the work of most or all employees and send them home without pay.  This is a mandatory suspension from work that can last briefly or as long as the employer desires.  It typically occurs when the employer wants to retain staff that they cannot afford.  Furloughed employees also retain their benefits with the Company and retain their employment relationship with the employer.

Employees are generally furloughed when there is a reduction in workforce but the reduction is temporary and employees are expected to return to work on a certain date or a specific condition.

If an employee performs any work for the employer during the furlough, an exempt employee is entitled to an entire week’s pay and a non-exempt employee is entitled to payment for any time worked.  Employee work includes checking e-mails, making phone calls, or performing any task for the employer.  A “workweek” in California is defined as 7 consecutive days, starting with the same calendar day each week.  The workweek can begin on any day and any hour.  However, if an employer has no properly established workweek, the Division of Labor Standards Enforcement (DSLE) assumes the workweek is from Sunday through Saturday.

It is highly recommended that employers revoke all access for employees during the furlough and send notices of the change in employment status outlining the employer’s furlough procedures and policies.

The main difference between a furlough or laying off employees is that furloughed employees can come and go fairly easily but layoffs require the employer comply with all relevant Labor Laws, the federal and California WARN Act, and possibly conduct the rehiring process to reinstate the employees.  Furloughed employees also retain their benefits and employment status with the employer while a lay off is the end of the employment relationship.

Work Adjustment Retraining Notification (WARN)

When an employer decides to layoff its workforce, it is important to comply with the Worker Adjustment Retraining Notification Act (WARN) both federally and within California.

Federal WARN

Compliance with Federal WARN laws is triggered when there are temporary layoffs longer than 6 months and the layoffs include 50+ employees in a 90 day period.  Notice may be shortened if circumstances were not reasonably anticipated 60 days before the employee was laid off.  However, actual notice must be given is a much advanced time as possible.

California WARN

The similar California WARN laws provides no exception for the 60 day notice rule and it has not yet been determined if COVID-19 would be an exception to the notice requirements.  However, on March 17, 2020, Governor Newsom signed Executive Order N-31-20 relieving employers of some on these requirements.

Executive Order N-31-20 explains “the need to prevent or mitigate the spread of COVID-19” has caused employers to “close rapidly without providing their employees the advanced notice required under California Law.  Therefore, Labor Code sections 1401(a), 1402, and 1403 are suspended for the employer at this time.

This order will be in effect for the duration of the COVID-19 “emergency” and provides notice still must be given but amends the 60 day requirement to “as soon as practicable.”  The following is required by all California employers engaging in layoffs during this time:

  1. The employer must still give written notice to the employee under the WARN Act;
  2. The employer must give as much notice as practicable including a brief statement explaining why the notice is reduced;
  3. The notice must explain that COVID-19 was not reasonably foreseeable that the time notice would have been required; and
  4. The notice must include “If you have lots your job or been temporarily laid off, you may be eligible for Unemployment Insurance (UI). More information on UI and other resources available for employees is available at labor.ca.gov/coronavirus2019

It is anticipated further guidance will be given to employers in the upcoming week by the Employment Development Department (EDD).

Other Resources

While employers are faced with difficult decisions there are resources available for both employers and employees.

All employers have the option the offer paid Sick Leave and use of Paid Time Off to their employees during any temporary closure but cannot require the employee use Sick Time.

All employees with changes in their current employment status should check the EDD regarding possible unemployment compensation.  Employers should advise their employees that more information is available at labor.ca.gov/coronavirus2019 for possible resources during this emergency.

Employers may also avoid potential layoffs by participating in Unemployment Insurance Work Sharing Program if the employer will reduce wages and hours no more than 60%.  This allows for a quick adjustment when the business improves.

If your business is closing or you will be laying off your entire staff, you may be able to utilize the EDD’s Rapid Response Services.

If you are an “Essential Business” with an exception to the Shelter In Place Order and will be staying open during this time, you may consider possible waivers of liability and informed consent.  A list of “Essential Business” can be found here.
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Filed Under: Blog, COVID-19 Tagged With: , ,

The NLRB Changes Joint Employment Standards

October 12, 2015 by

joint employment, joint employment standardsThe National Labor Relations Board (NLRB) has issued a ruling that adopts a new definition of joint employment. The case revolved around a California labor dispute – but the more expansive definition of joint employment laid out in the decision is expected to have a significant effect on labor cases around the country.

The labor dispute case involved Browning-Ferris Industries of California (BFI), which operates a recycling facility in Milpitas, and Leadpoint Business Services, which provides BFI with employees. A union, Sanitary Truck Drivers and Helpers Local 350, sought to represent the sorters, screen cleaners, and housekeepers who work at the facility. The Union argued that BFI and Leadpoint were joint employers of the employees in question.

A regional director of the NLRB issued a decision stating that Leadpoint was the sole employer of these employees. The ruling used the NLRB’s previous definition of joint employment, which focused on whether the employers exercised the right to control workers in a direct, immediate way (rather than a limited and routine way).

The NLRB’s Reversal on Joint Employment Standards

The NLRB overturned the Regional Director’s decision and found that BFI and Leadpoint are joint employers. The NLRB concluded that it is relevant whether a putative employer has the authority to control the terms and conditions of employment, even if the employer does not actually use that authority. The NLRB’s ruling clarifies that the correct test for whether joint employment exists is “whether one statutory employer possesses sufficient control over the work of the employees to qualify as a joint employer with another employer.”

Under the ruling, entities are considered joint employers if:

  • They are both employers within the meaning of the common law, and
  • They share or codetermine those matters governing the essential terms and conditions of employment.

The factors that the NLRB examined in order to determine the answers to these questions included hiring, firing, discipline, supervision, direction of work, hours, and wages. After considering these factors, the Board concluded that BFI shared and co-determined the terms and conditions of employment, and thus, was a joint employer along with Leadpoint.

Why the Joint Employment Standards Change?

The ruling states that the new standard was previously used by the NLRB and courts for years, and that it is based on the common-law definition of an employment relationship. According to the opinion, the common-law test for an employment is based on the right to control and not on whether that control is exercised.

The ruling argues that the previous standard was significantly narrower than the common-law standard. It also states that, under the old standard, employees could be deprived of their right to bargain effectively simply because there were two employing firms involved in their work arrangements instead of one. [Read more…]

Filed Under: Employee Rights Tagged With: , , , , , , ,

Amendments to California’s Sick Leave Law Are Passed

July 22, 2015 by

Amendments-to-California's-sick-leave-law-are-passedOn July 13, Governor Jerry Brown signed into law amendments to California’s sick leave law; the Healthy Workplaces, Healthy Families Act of 2014. The law (also known as Assembly Bill 1522) greatly increased the number of workers in California who are eligible for paid sick leave. The amendments make substantial changes to the law – many of which are favorable to California employers.

The amendments (which are contained in Assembly Bill No. 304) include the following changes to the Healthy Workplaces, Healthy Families Act:

  • They add an important stipulation to a provision in the original law. The provision stated that employees who work in California for 30 or more days within a year of beginning their employment are entitled to paid sick days (at a rate of at least one hour for every 30 hours worked). The new amendments require that an employee do that work for the same employer in order to qualify for the accrued sick leave.
  • They allow an employer to provide for employee sick leave accrual on a basis other than one hour for each 30 hours worked – provided that the accrual is on a regular basis, and the employee will have 24 hours of accrued sick leave available by the 120th calendar day of employment.
  • They allow an employer to limit an employee’s use of paid sick days to 24 hours or three days in each year of employment, or a calendar year, or a 12-month period.
  • They require employers to calculate paid sick leave based on an employee’s regular pay rate, or by the total wages divided by the total hours worked in a 90-day period, or the wages for other forms of paid leave.
  • They state that if an employee is rehired within one year of the end of their employment, then the employer is not required to reinstate the employee’s accrued paid time off, if the employee was paid off for their time when their employment ended.
  • They make a clarification regarding the original law’s rule that an employer is required under the original law to keep records for three years documenting an employee’s hours worked and paid sick days accrued. The amendments clarify that the employer is not obligated to inquire into (or record) the purposes for which an employee uses sick leave or paid time off.
  • They allow some employers who provided paid sick leave or paid time off to employers prior to January 1, 2015 to keep their old policies, so long as they make available an amount of leave applicable to employees that may be used for the same purposes and under the same conditions as specified in this section.

Can This Affect Your Business?

If you have concerns about what these amendments mean for your company’s policies, or you are considering making a change to your policies based on the passage of the amendments, it is highly advisable that you speak to an attorney. The employment and labor law attorneys at Beck Law P.C. in Santa Rosa are available for consultation. You can call or email their office today.

Filed Under: Paid Sick Leave Tagged With: , , , ,

A Guide to Some of California’s Most Frustrating Employee Protection Laws

December 19, 2014 by

Frustrating Employee Protection LawsA guide to some of California’s most frustrating employee protection laws. While California is typically considered one of the most worker-friendly states in the U.S., the flip-side is that many employers operating within the state believe that California’s employee-protection laws are onerous and complicated to understand. In fact, employers who operate in California as well as other states have noted how the laws within this state are frustrating to comply with, especially when compared to more business-friendly jurisdictions. What employers have been confounded by is the administrative burdens, the lack of flexibility with regards to compliance and enforcement, and also the enhanced degree of litigation possibilities. The California Chamber of Commerce decision to enact 24 additional new state employment laws and amendments will go into effect starting in 2015, which will provide additional procedures and regulations that employers must adhere to. The following includes the four most difficult and frustrating employment laws that both California employers and employees should be aware of in order to avoid violations and to be fully informed about employee rights.

The Four Most Confusing California Employee Protection Laws

  • Overtime: While in many states overtime cannot be paid until after over 40 hours have been worked by the employee, in California employees are entitled to overtime pay when they work more than 8 hours in one single day. This law has confused many new employees and employers because its effects reach beyond just overtime pay. Under the law, employees are prevented from having the flexibility to work late or leave early and subsequently make up the hours later during that same workweek without their employer being required to pay overtime wages.
  • Employee Breaks: California has extremely strict requirements for employee breaks. In fact, employers are required to provide employees with both a 30-minute meal break per every five hours of work, plus a 10-minute rest break for every four hours of work. This law has resulted in a great deal of class actions against employers, especially the section about the 10-minute rest break, which is a requirement not provided by many other states. A 2012 decision clarified the 10-minute rest break requirement, holding that employers did not have to relieve their workers of all of the work duties during the break. However, this rule has been difficult for employees who would simply like the flexibility to skip their rest break in order to take a longer lunch. While employers would like to provide their employees with the flexibility to do so, fear of litigation prevents such employers from providing this leniency.
  • Layoffs: California state law requirements for layoff reporting are some of the most stringent in the country. While federal law requires 60-day notices before any layoffs for those employers with over 100 full-time workers, California law requires the same notice from employers that have 75 or more part-time and full-time employees.
  • Employment Contract Non-Compete Agreements: Non-compete agreements provide employers with protections and prohibit employees from soliciting their employer’s clients after the employment relationship is terminated, or taking other actions that place the employees in direct competition with the employer. While in many states non-compete agreements in employment contracts are enforceable, in California non-compete agreements are not valid.

The above is not a completely exhaustive lists of all of the California laws that are difficult to understand and comply with. However, understanding the basics of these laws will keep employers out of trouble and allow employees to understand their basic rights. When you need labor and employment law legal assistance, make sure to contact the labor and employment attorneys at Beck Law, P.C. in Santa Rosa, California.

Filed Under: Blog, California Employment Law, California Labor Law Tagged With: , , , ,

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