Category Archives: Wisconsin

WI Work Comp Forum – October 8, 2020

The Wisconsin Worker’s Compensation Forum (WIWC) invites you to attend an all-virtual, one-day educational event on October 8, 2020.  You can expect the same quality speakers and topics as you would normally see during our annual conference, but now you can enjoy them from the comfort of your own home!  Additionally, we are offering opportunities for giveaways and social interaction with our sponsors.  With panel discussions and sessions on a variety of current worker’s compensation topics, this is a seminar you won’t want to miss!

Register now, as the first 300 people to do so will receive a goodie bag filled with swag from some of our sponsors.  Spots are filling up fast so register today!

General Attendees – $45

Attorneys (with included CLEs) – $80

Lindner & Marsack is proud to be a founding member of the Wisconsin Worker’s Compensation Forum where our own Chelsie Springstead serves as the current President.

Take a Break from Covid: Back to Basics (Part 2 of 3)

Register Now for the Upcoming Complimentary Webinar on September 22, 2020

The National Workers’ Compensation Defense Network (NWCDN) invites you to attend a webinar on September 22, 2020 at 10:00 am (CST). NWCDN lawyers from four adjacent midwestern states, Minnesota, Michigan, Wisconsin and Iowa are partnering to present a three part series of webinars entitled “Back to Basics.” Attorney Chelsie Springstead from our office will be among the presenters in this second of three webinars.  Look for part three coming up later this year.

With most adjusters handling claims from multiple jurisdictions, this series is a must! The webinar will focus on compensability of claims, factors of entitlement, types of work injuries, causation issues, and defenses. These topics will be covered by utilization of factual hypotheticals which will highlight similarities and differences between each of the four states.

Lindner & Marsack is proud to be a founding member of the National Workers’ Compensation Defense Network (NWCDN) where our own Doug Feldman serves as the current Treasurer.  In an effort to provide up to date legal information addressing workers’ compensation law across the nation in this ever-changing environment, NWCDN teamed up with WorkersCompensation.com to offer complimentary webinars.

Registration is complimentary.  Click here now to reserve your spot!

Federal Court Throws Employers a Curve Ball on the FFCRA Paid Leave Provisions

By Sally Piefer  

A decision from a federal district court in New York may very well have changed several key regulations implementing the Families First Coronavirus Response Act (FFCRA). This decision could impact many employers across the country, right as schools are determining whether they will hold in-person class or whether they will remain virtual for the foreseeable future. The uncertainty for employers and employees continues.

By way of background, on March 18, 2020, President Trump signed the FFCRA into law. Two key provisions affect employers – the Emergency Family & Medical Leave Act (EFMLA) and the Emergency Paid Sick Leave Act (EPSLA). Together these Acts required employers with fewer than 500 employees to provide certain paid leave to employees. The EFMLA provided employees with up to 12 weeks of paid protected leave if unable to work because a dependent child’s school or day care was closed or where the child’s caregiver was unavailable due to COVID-19. The EPSLA also provided, among other things, up to two weeks of paid leave for a parent to care for a dependent child whose school day care is closed or whose caregiver was unavailable due to COVID-19. In April, the Department of Labor (DOL) released regulations applicable to the FFCRA.

The State of New York challenged several of the regulations, alleging that the DOL exceeded its authority under the Administrative Procedure Act. The district court agreed, striking down the following provisions.

Work Availability 

The EFMLA and EPSLA both provide paid leave to employees who are “unable to work (or telework)” because of a need to care for a child. The DOL’s final regulations indicated that employees were not entitled to the paid leave if the employer “does not have work” for the employee to perform. This provision was interpreted to mean that if a business had closed due to COVID or an employee was furloughed, he or she was not entitled to paid leave because the employer did not have work.

The district court concluded that the DOL’s regulations were inconsistent with the text of the law. First, the district court concluded that the DOL’s regulations treated the six qualifying reasons for EPLSA leave differently, and DOL failed to explain this anomaly. The court further concluded that the differential treatment was contrary to the language of the legislation. The district court concluded that the DOL’s regulation impermissibly narrowed the scope of the legislation. Accordingly, the district court determined that an employee is eligible for paid leave regardless of whether the employer has work available for the employee.

Health Care Provider Exception 

Both provisions of the FFCRA also allowed employers to exclude from coverage “health care providers.” The DOL’s definition of a “health care provider” that may be exempted was broadly defined to include “anyone employed at any 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 any similar institution, Employer, or entity” including “any permanent or temporary institution, facility, location, or site where medical services are provided that are similar to such institutions.”

In DOL’s Q&A, the broadly-worded definition includes:

  1. Any individual employed by an entity that contracts with any of these institutions described above to provide services or to maintain the operation of the facility where that individual’s services support the operation of the facility;
  2. Anyone employed by any entity that provides medical services, produces medical products, or is otherwise involved in the making of COVID-19 related medical equipment, tests, drugs, vaccines, diagnostic vehicles, or treatments; and
  3. Any individual that the highest official of a State or territory, including the District of Columbia, determines is a health care provider necessary for that State’s or territory’s or the District of Columbia’s response to COVID-19.

The State of New York challenged this provision because the DOL’s determination of whether an employee was excluded was based on what the employer’s business was, and not on the job functions of the employee. Again, the district court agreed, finding the DOL’s expansive definition impermissible.

Intermittent Leave 

Under the DOL’s regulations, employees were permitted to take intermittent leave for EFMLA with the consent of the employer. The regulations also allowed employees to take intermittent leave for some EPSL provisions—again with the consent of the employer.

The State of New York challenged the intermittent leave rules because Congress never mentioned intermittent leave in the legislation, and the constraints on intermittent leave in the DOL’s rules were inconsistent with the underlying intent of the FFCRA. The district court struck down the intermittent leave provisions because they applied only in certain conditions—and only if agreed to by the employer.

Advance Notice of Need for Leave 

The final challenge to the DOL’s regulations was to the requirement that prior to taking leave, the employee must provide the employer the reason for leave, the duration of the leave, and if applicable the authorized person who ordered isolation or quarantine. The State of New York argued that the advance notice provisions were inconsistent with the legislation. For example, the text of the EFMLA only required advance notice of leave “as is practicable.” Similarly, the text of the EPSLA allowed an employer to require employees to follow reasonable notice procedures.

The district court agreed and held that the DOL’s regulations required different and more stringent notice requirements, and that the regulation could not stand because it was inconsistent with the statute’s unambiguous notice provisions.

Employer Take-Aways

At this point it remains a bit unclear how this decision will impact employers outside the area covered by the Southern District of New York. Generally, decisions from a district court create precedent in that district—but not in other parts of the county. If the decision is strictly limited to the Southern District of New York, it could, however, pave the way for similar lawsuits challenging the DOL regulations throughout the country. A court in Wisconsin need not follow a New York court’s lead, so there is uncertainty as to whether other courts will reach the same decision as the Southern District of New York.

The DOL has not yet indicated whether it will challenge the decision, and if it does, whether it will seek a stay of the district court’s decision pending resolution in the Court of Appeals. It is also possible that DOL could amend the regulations or modify its guidance. Finally, if the legislature believes the district court got it wrong, it is possible that the legislature could amend the FFCRA to specifically overrule the district court’s decision.

What is clear at this point is that the decision leaves employers across the country (other than those in the Southern District of New York) in a state of uncertainty. Employers will need to determine whether they will follow the district court’s decision or whether they will continue to follow the DOL’s regulations.

We will continue to monitor these important issues. Should you have any specific questions that are not addressed, please contact your Lindner & Marsack attorney or the Firm at (414) 273-3910 to seek counsel.

Take a Break from Covid: Back to Basics (Part 1 of 3)

 

Register Now for the Upcoming Complimentary Webinar on August 13, 2020

 

The National Workers’ Compensation Defense Network (NWCDN) invites you to attend a webinar on August 13, 2020 at 10:00 am (CST). NWCDN lawyers from four adjacent midwestern states, Minnesota, Michigan, Wisconsin and Iowa are partnering to present a three part series of webinars entitled “Back to Basics.” Attorney Melissa Stone from our office will be among the presenters in this first part of three webinars.  Look for parts two and three coming up in September and October.

With most adjusters handling claims from multiple jurisdictions, this series is a must. The first webinar will focus on the front end of a claim with tips on forms, penalties, investigation, IMEs, surveillance, social media and more. The speakers will compare and contrast the differences and similarities in these states.

Lindner & Marsack is proud to be a founding member of the National Workers’ Compensation Defense Network (NWCDN) where our own Doug Feldman serves as the current Treasurer.  In an effort to provide up to date legal information addressing workers’ compensation law across the nation in this ever-changing environment, NWCDN teamed up with WorkersCompensation.com to offer complimentary webinars.

Registration is complimentary.  Click here now to reserve your spot!

 

Wisconsin’s COVID-19 Response Bill Signed By Governor Evers

By: Daniel Finerty and Melissa Stone

After Assembly Bill 1038 passed on April 14, 2020 and was quickly taken up and passed by the State Senate the following day, Governor Evers took swift action to sign the legislation, known as the COVID-19 Response Bill. 2019 Wisconsin Act 185 (Act) became effective April 16, 2020. The bipartisan bill was passed to ensure Wisconsin is eligible for the federal CARES Act Pandemic Unemployment Assistance by making necessary changes to Wisconsin’s Unemployment Insurance Law, Worker’s Compensation Act and others changes to Wisconsin law.

Unemployment Insurance

One-Week Waiting Period

Historically, an employee filing for unemployment insurance benefits (UI) needed to wait one week after becoming eligible to receive UI benefits before the benefits could be received for a week of unemployment.

However, the Act suspends the application of the one-week waiting period for benefit years that began after March 12, 2020, and before February 7, 2021. See 2019 WI Act 185, Section 38 (creating Wis. Stat. § 108.04(3)(b)). The Act also directs the Department of Workforce Development (DWD) to seek the maximum amount of federal reimbursement for benefits that are, during this time period, payable for the first week of a claimant’s benefit year as a result of the suspension.

Initial Claims

The Act requires DWD to determine whether a claim for UI or a work-share plan is related to the COVID-19 public health emergency declared by the Governor on March 12, 2020. See 2019 WI Act 185, Section 50 (creating Wis. Stat. § 108.07(5)(bm)). If a claim is related to the public health emergency, the Act provides that the regular benefits for that claim for weeks occurring after that date, and before December 31, 2020, will not be charged to an employer’s unemployment insurance reserve account, as is normally the case provided the employer does not fail to “timely and adequately provide any information required by the Department.” As a result, it is critical for employers to respond to UI requests for information to document the claim is related to the public health emergency in order to ensure the financial health of the employer’s UI reserve account.

While there are a number of exceptions, for employers that pay the quarterly payroll taxes, UI benefit charges related to the public health emergency will be charged to the balancing account of the unemployment reserve fund. This fund is the pooled account financed by all employers that pay contributions and is used to pay benefits that are not chargeable to any employer’s account. However, in the case of employers that instead reimburse DWD for benefits directly, the UI benefits are to be paid in the manner specified under current law for certain other circumstances involving benefits chargeable to reimbursable employers. The exceptions to this charging rule include that it only applies those benefits paid through the state UI program; it does not apply to any federal share of CARES Act extended benefits; and it does not apply to work-share program benefits and other exceptions.

The Act also directs the DWD Secretary, to the extent permitted under federal law, to seek advances to the state’s unemployment reserve fund from the federal government, to ensure that all UI tax rates can remain the same through the end of the year.

Changes to Work-Share Program

Under prior law, an employer could utilize a “work-share” structure to keep workers employed who would otherwise be laid off. The program used partial unemployment benefits combined with continued, but reduced, work hours to insulate employees from lay off.

The Act creates a more accessible, modified workshare program for employers to access their unemployment insurance reserve account instead of laying off employees. The Act outlines the following changes to work share plans submitted between April 16, 2020, the Act’s effective date, and December 31, 2020, which will not have to follow the traditional elements of a Work Share Program outlined in our prior E-Alert:

  • Work-share plans must cover at least 2 positions that are filled on the effective date of the work-share program, rather than at least the greater of 20 positions or 10 percent of employees in a work unit under prior law. See 2019 WI Act 185, Section 48 (creating Stat. § 108.062(20)(b)).
  • The maximum reduction in working hours under a work-share program may be either 60 percent of the normal hours per week of the employees included under a work-share plan, or the maximum percent reduction of normal hours per week permissible by federal law, whichever is greater, rather than the 50-percent limitation on reduction of hours under prior law. See 2019 WI Act 185, Section 48 (creating Stat. § 108.062(20)(f)).
  • Work-share plans may cover any employees of the employer instead of being limited to a particular work unit of the employer as provided in the prior law. See 2019 WI Act 185, Sections 41, 48 (amending Stat. § 108.062(1)(b); creating Wis. Stat. § 108.062(20)).
  • Under prior law, if in any week there were fewer than 20 employees included in a work−share program of any employer, the program would terminates on the 2nd Sunday following the end of that week; however, that provision no longer applied to a work− share program that has been approved or modified under the Act. See 2019 WI Act 185, Sections 46 (amending Stat. § 108.062(15)).
  • Employers with an existing work-share plan that was approved by the DWD prior to April 16, 2020 are allowed to submit a plan modification under the modified program requirements. See 2019 WI Act 185, Sections 43m (creating Stat. § 108.062(3r)).

Employers that have existing work-share plans may want to consider requesting a modification to comply with the new requirements, which permit greater flexibility in terms of reductions of hours, can include a smaller number of employees, and are not limited to a particular work unit. Employers looking to apply for a work-share program should ensure their application is in compliance with these changes.

Compliance with Requests for Personnel Files

With regard to any request for an employee’s personnel file, received on or after March 12, 2020, the date of the Governor’s original Emergency Declaration, an employer is not required to provide an employee’s personnel records within 7 working days after an employee makes a request to inspect his or her personnel records, and an employer is not required to provide the inspection at a location reasonably near the employee’s place of employment during normal working hours. See 2019 WI Act 185, Section 35 (creating Wis. Stat. § 103.13 (2m)).

In light of this likely temporary amendment to the personnel record requirement, employers can provide copies of personnel files by mail to ensure social distancing in a reasonable period of time and may charge an employee reasonable costs for copying the file, which may not exceed the actual cost of reproduction.

Worker’s Compensation

Under prior Wisconsin worker’s compensation law, in order for a COVID-19 claim to be found compensable, medical and factual evidence must be provided that documents by a “preponderance of the evidence” that the employee contracted the COVID-19 virus while at work, as opposed to some other community source. This means that there are facts strong enough to prove the probability that the virus, parasite or bacteria claims arose out of employment.  The compensability of COVID-19 cases should be decided on a case-by-case basis following an investigation of the relevant factual background. In the absence of this preponderance of evidence, it cannot be concluded that that the employee sustained an injury while performing services arising out of or incidental to employment, and the claim may be denied.

However, the Act created new conditions of liability for COVID-19 claims as it relates to “First Responders” only. See 2019 WI Act 185, Section 33 (creating Wis. Stat. § 102.03(6)). That section provides the following changes:

  • “First Responders” are defined as an employee or volunteer employee that provides fire-fighting, law enforcement, or medical treatment of COVID-19, who have regular, direct contact with, or are regularly in close proximity to, patients or members of the public requiring emergency services within the scope of the “First Responders” work for the employer. See 2019 Act 185, Section 33 (creating Stat. § 102.03 (6)(a)).
  • If the “First Responder” is exposed to persons with confirmed cases of COVID-19 in the course of employment, there is now a rebuttable presumption in favor of the employee that the COVID-19 injury is caused by the employment and is work-related. See 2019 Act 185, Section 33 (creating Stat. § 102.03 (6)(b)).
  • The “First Responders” injury must have occurred between March 12, 2020 and ending 30 days after termination of Governor Evers’ Public Health Emergency Order, which, as a result of an subsequent Order, is now set to continue past from April 24, 2020 until May 26, 2020, or until a superseding order is issued. See 2019 Act 185, Section 33 (creating Stat. § 102.03 (6)(b)).
  • The “First Responders” injury must be supported by a positive COVID-19 test or by a specific diagnosis by a physician. See 2019 Act 185, Section 33 (creating Stat. § 102.03 (6)(c)).
  • This is a rebuttable presumption. If an employer or insurer has credible evidence that the “First Responder” was exposed to COVID-19 outside of the work for the employer, the compensability of the claim may be challenged. See 2019 Act 185, Section 33 (creating Stat. § 102.03 (6)(d)).

This change to Wisconsin worker’s compensation law only applies to “First Responders,” as defined in the Act. It does not apply to all employees classified as “essential” during the crisis. The Act creates a presumption that whenever a “first responder” on the front line of the State’s COVID-19 response gets COVID-19, the injury is work-related. The burden is then on the employer and insurer to present credible factual evidence to rebut the new statutory presumption in order to deny liability for the claim.

The Act contained a second amendment to the Worker’s Compensation Act. Under existing worker’s compensation law, there is an additional benefit of up to $13,000.00 available to an employee that sustains injury as a result of exposure in the workplace over a period of time to toxic or hazardous substances or conditions. See Wis. Stat. § 102.565. Under the Act, this additional benefit does not apply to a “First Responder” who claims presumed injury under the other changes outlined by the Act. See 2019 Act 185, Section 33 (creating Wis. Stat. § 102.565 (6)).

For more information about these changes, please contact your Lindner & Marsack, S.C. attorney at (414) 273-3910.

Work-Share Programs – A Viable Option For Employers Reducing Employee Hours Due to COVID-19

By: Daniel Finerty and Laurie Petersen

A Work‐Share Program (“program” or “plan”) is a benefit plan for which Wisconsin businesses can apply to the Unemployment Insurance Division of the Department of Workforce Development (“UI Division” or “DWD”). The program is designed to help both Wisconsin businesses and their employees by allowing businesses to tap the funds in their unemployment insurance reserve to offset wage reductions and keep employees working.

Instead of laying off workers, a qualified employer, after approval of its program application, can plan to reduce work hours across a work unit. After approval, work hour reductions can be implemented when the program becomes effective. The plan’s effective date is the Sunday of the 2nd week after approval or any Sunday after that day specified in the plan, whichever is later, and generally last for a 6-month period. Workers whose hours are uniformly reduced under the plan can receive unemployment benefits that are pro‐rated for the partial work reduction from the employer’s unemployment insurance account. As a result, a plan, once approved, can help employers avoid layoffs, mitigate the unemployment insurance reserve account impact of more dramatic workforce reductions, allow workers to remain employed and ensure employers can retain trained staff during these times of reduced business activity caused by COVID-19.

More relevant for employers may be the fact that employees working under an approved plan may be eligible to receive the $600/week recently included in the CARES Act. Even if the plan includes more than 32 hours of work or more than $500 in wages per week (both facts that would normally make an employee ineligible for unemployment insurance benefits), the employees may still be entitled to unemployment insurance benefits through an approved program. Workers eligible for at least $1 in unemployment benefits as a result of participation in an approved program, or otherwise, will likely also be eligible for the $600/week federal payment. Just this week, the Department of Workforce Development revealed that it has entered into an agreement to receive this funding from the U.S. Department of Labor. DWD expects its system modifications to be in place and able to accept the CARES Act claims by April 21, 2020, and expects to have the first checks issued around April 28, 2020. These dates are subject to change based on circumstances that arise.

A program requires an employer to apply to the UI Division, as outlined in Wis. Stat. § 108.062. To do so, the employer must certify the following conditions to meet the required elements of a work-share program, or plan. The applicant employer must:

  • Specify the work unit in which the plan will be implemented, including the affected positions, and the names of the employees filling those positions on the date of submittal. “Work unit” is defined as an operational unit of employees designated by an employer for purposes of a work-share program, which may include more than one work site.
  • Provide for inclusion of at least 10 percent of the employees in the affected work unit on the date of submittal and for initial coverage under the plan of at least 20 positions that are filled on the effective date of the work-share program. In this regard, the plan must include the greater of 20 positions or 10% of the employees in a work unit. Here are some examples:
  • If there are 20 employees in a work unit, the plan must include all 20 employees in unit;
  • If 100 employees in a work unit; the plan must include at least 20 employees in unit; and,
  • If 1000 employees in a work unit; the plan must include at least 100 employees in unit (10%).
  • Specify the period or periods when the plan will be in effect, which may not exceed a total of 6 months in any 5-year period within the same work unit.
  • Provide for apportionment of reduced working hours equitably among employees in the work-share program.
  • Exclude participation by employees who are employed on a seasonal, temporary, or intermittent basis.
  • Apply only to employees who have been engaged in employment with the employer for a period of at least 3 months on the effective date of the work-share program and who are regularly employed by the employer in that employment. A work-share program becomes effective on the later of the Sunday of the second week beginning after approval of a work-share plan or any Sunday after the effective date specified in the plan.
  • Specify the normal average hours per week worked by each employee in the work unit and the percentage reduction in the average hours of work per week worked by that employee, exclusive of overtime hours, which shall be applied in a uniform manner and which shall be at least 10% but not more than 50% of the normal hours per week of that employee.
  • Describe the manner in which requirements for maximum federal financial participation in the plan will be implemented, including a plan for giving notice, where feasible, to participating employees of changes in work schedules.
  • Provide an estimate of the number of layoffs that would occur without implementation of the plan.
  • Specify the effect on any fringe benefits provided by the employer to the employees who are included in the work-share program other than fringe benefits required by law. Generally, the employer must maintain coverage under any defined benefit or defined contribution retirement plan for employees who receive work-share benefits under the same terms and conditions as if the employees were not included in the program. In addition, the employer must maintain any health insurance coverage in place under the same terms and conditions as if the employees were not included in the program.
  • Include a statement affirming that the plan is in compliance with all employer obligations under applicable federal and state laws.
  • Indicate whether the plan includes employer-sponsored training to enhance job skills and acknowledge that the employees in the work unit may participate in training funded under the federal Workforce Innovation and Opportunity Act, 29 USC 3101 to 3361, or another federal law that enhances job skills without affecting availability for work, subject to department approval.

Generally, work-share programs that contain all the required elements must be approved by the UI Division and can be modified during that period to account for changes in business conditions. While current employer experience indicates that work-share program approval takes about a week, it is possible that additional delays may occur due to the generally increased workload being handled by the UI Division. Also, the DWD is advocating some potential statutory changes that may broaden coverage to include more significant hour reductions, perhaps, up to 60%; however, that change would require an amendment by the Legislature and approval by the Governor.

Once approved, the business’s unemployment insurance reserve account will be charged for the payments to employees for the weeks specified in the approved program, similar to unemployed workers who receive unemployment benefits. However, by contrast to laying off employees that will collect unemployment, the business keeps these employees working, realizes the economic benefit of that work, ensures that economic challenges tie the employees to the employer’s workforce and ensures an adequate cushion for employees whose hours are subject to reduction.

Notably, while an employer’s work-share program can be in effect for a total of six months in any five-year period within the same work unit, that same employer is not prohibited from and can, in fact, have multiple plans for different work units.

If approved, it is critical for employers to explain the impact of the work-share plan upon the impacted employees to ensure an understanding of what will happen. In general, the employees will receive an amount equal to the employee’s regular benefit amount multiplied by the employee’s proportionate reduction in hours worked for that week as a result of the Work-Share Program.

Employees under an approved plan do not need to register for work or conduct a work search while in the plan; thus, these employees will be further tied into the employer’s workforce by the plan. However, employees must be available for work with the employer participating in the plan, should the employer need extra hours beyond what is anticipated.

An employer is not restricted by the plan from either terminating an employee or accepting an employee’s resignation. The employee’s eligibility for UI benefits after termination or resignation will be subject to the normal analysis.

More information on Work-Share Programs can be found on the Unemployment Insurance Division website. Interested employers can complete the Work-Share Plan Application and send or fax it to the UI Division:

Address:

DWD-Unemployment Insurance
Employer Service Team
P.O. Box 7942
Madison, WI 53707

Fax:   (608) 267-1400

For more information about the benefits of Work-Share Plans, please contact your Lindner & Marsack, S.C. attorney at (414) 273-3910.

The CARES Act Provides Substantial Assistance to American Businesses

By Daniel Finerty and Oyvind Wistrom

 On March 27, 2020, President Trump signed the “Coronavirus Aid, Relief, and Economic Security Act,” or the CARES Act (“Act”), the most dramatic financial legislation yet in response to the COVID-19 pandemic. In total, the Act provides $2 trillion in financial assistance, a portion of which is allocated to American businesses, in addition to clarifying and delaying the terms of some business obligations going forward.

Changes and Clarifications to the Families First Coronavirus Response Act

The Act provides a few clarifications and makes modest changes to the extended Family Medical Leave Act provisions in the Families First Coronavirus Response Act (FFCRA). Those changes include definitional changes and clarifications as to the limitation on paid leave:

  • An addition to the definition of “eligible employee” (defined as employed for at least the last 30 calendar days) to include an employee who was laid off by the employer March 1, 2020 or later, worked for the employer for at least 30 days in the last 60 calendar days prior to the lay-off and was subsequently rehired by the employer. (Section 3606.) Therefore, employers should ensure that the amended definition is applied when considering who is eligible for Emergency FMLA.
  • The Act also clarifies that an employer shall not be required to pay “more than $511 per day and $5,110 in the aggregate for each employee,” when the employee is taking leave for the following reason (the numbers correspond to those outlined in the FFCRA):
  1. The employee is subject to a Federal, State, or local quarantine or isolation order related to COVID–19;
  1. The employee has been advised by a health care provider to self-quarantine due to concerns related to COVID–19; or,
  1. The employee is experiencing symptoms of COVID–19 and seeking a medical diagnosis. (Section 3602.)
  • The Act further clarifies that “[a]n employer shall not be required to pay more than $200 per day and $10,000 in the aggregate for each employee” for paid leave, which was not specifically made clear in the FFCRA, for employees taking leave for the following reasons:
  1. The employee is caring for an individual subject to an order described in (1) or self-quarantine as described in (2) above;
  1. The employee is caring for a child whose school or place of care is closed (or child care provider is unavailable) for reasons related to COVID-19; or
  1. The employee is experiencing any other substantially-similar condition specified by the Secretary of Health and Human Services, in consultation with the Secretaries of Labor and Treasury. (Section 3601.)

Unemployment Insurance Support

The Act not only provides additional funds for unemployment insurance (“UI”) benefits through the Department of Labor (“DOL”) but provides states, like Wisconsin, with the opportunity to secure additional supplement benefits. It appears that the federal government is covering 100% of the costs of the expanded UI benefits, and covering the additional administrative expenses that will be incurred to provide these benefits; however, while it does not appear these amounts will have to be repaid to the federal government in a manner similar to prior DOL loans taken in 2008 and 2009, it is not entirely clear.

Support for Non-Traditional Workers

The Act provides the following support to states and waives other DOL requirements:

  • The Act provides additional UI benefits, if caused by COVID-19, to those who are:
  • Self-employed;
  • Seeking part-time employment;
  • Do not have sufficient work history, or otherwise would not qualify for regular unemployment or extended benefits under State or Federal law or pandemic emergency unemployment compensation.

The inclusion of these non-traditional groups is a reflection of the need to allow UI support to a broader category of workers to whom traditional UI is not usually available, such as independent contractors. Specifically exempted from this section, however, are those who have the ability to telework with pay or who are receiving paid sick leave or other paid leave benefits. (Sec. 2101).

In addition to providing independent contractors the ability to apply for Small Business Administration (“SBA”) loan (see below), independent contractors (“ICs”) may able be entitled to obtain UI benefits through the provision above. Business should communicate with their ICs to let them know these avenues of additional relief may be available. However, consideration should be given to the impact of an IC filing for UI on a business’s reserve account compared to an IC seeking to access relief through an SBA loan. The former action portrays an IC akin to an employee, while the latter action stresses the independent nature of the IC’s business and the risk associated with that business. Whether a UI filing by an IC will come back to haunt a business sometime down the road is anyone’s guess.

Waiver of Waiting Period

While DOL typically requires a waiting period before UI benefits start, the federal waiting period has been waived and DOL has offered to pay for the one-week waiting period; however, two clarifications are necessary. First, Wisconsin must opt into this benefits by entering into an agreement with DOL to provide for full DOL funding for the first week of UI benefits. The Unemployment Insurance Division is indicating that they are awaiting further word from DOL on this issue.

Second, if Wisconsin does opt in, which remains to be seen, Wisconsin’s waiting period is statutory in nature instead of a regulatory requirement which could be waived by the Governor. See Wis. Stats. §§ 108.02(26m), 108.04(3). These provisions must be amended by the Legislature and enacted by the Governor. Assembly Bill 1034, relating to the suspension of the waiting period for collection of unemployment insurance benefits, has been introduced in the Assembly and referred to the Rules Committee. Accordingly, the one-week waiting period is still in place pending further action in the Assembly.

Additional UI Supplemental Funding

States can also, upon agreement with DOL, receive additional federal funding through the Pandemic Unemployment Assistance (PUA), for a period of their choosing to end no later than December 31, 2020, to provide UI benefits, where permissible under state law in a supplemented amount. This supplemented amount includes the amount permitted by state law plus “an additional amount of $600.” (Section 2104.) Wisconsin must also opt into or agree to receive this DOL funding.

Tax Credits

Other sections of the Act provide a business tax credit based on a percentage of wages paid to be taken as a tax credit, for businesses closed due to COVID-19 if the business sustains a specifically outlined loss in gross receipts provided the business achieves the same or similar gross revenue from the calendar quarter in the prior year. (Section 2301.)

Delay of Employer Payroll Taxes

Additional provisions delay the obligation to pay employer payroll taxes. (Section 2302.) The Act postpones the due date for depositing employer payroll taxes and 50% of self-employment taxes related to Social Security and attributable to wages paid during 2020. Any deferred tax payments would then be due in two installments, the first at the end of this year on December 31, 2021 and the second half due a year after on December 31, 2022.

Employee Retention Credit

The Act provides eligible employers, including 501(c)(3) entity non-profits, with a refundable credit against payroll tax (Social Security) liability equal to 50% of the first $10,000 in wages per employee (including value of health plan benefits). To be eligible, the business must have carried on a trade or business during 2020 and satisfy one of two tests. First, the business must have operations fully or partially suspended due to orders from a governmental entity limiting commerce, travel, or group meetings. Second, alternatively, the business must experience a year-over-year (comparing calendar quarters) reduction in gross receipts of at least 50% – until gross receipts exceed 80% year-over-year.

For employers with more than 100 full-time employees, only employees who are currently not providing services for the employer due to COVID-19 causes are eligible for the credit. The employee retention credit is effective for wages paid after March 12, 2020, and before January 1, 2021.

SBA Paycheck Protection Program

The $349 billion SBA lending program will help keep small businesses operating, to keep their workers employed and to encourage rehiring of employees that have been furloughed or laid off. Eligible businesses include certain business concerns, nonprofit organizations, veterans’ organizations, or certain Tribal business concerns with fewer than 500 employees, hospitality businesses with fewer than 500 employees at each location, sole-proprietors, independent contractors, and self-employed individuals. (Section 1102(2)). The maximum amount of any such loan is calculated using a formula based upon number of employees and other factors, not to exceed $10,000,000.

For an eligible self-employed individual, independent contractor, or sole proprietorship seeking a covered loan, these entities must submit such documentation as is necessary to establish eligibility, including payroll tax filings reported to the Internal Revenue Service, Forms 1099–MISC, and income and expenses from the sole proprietorship.

These businesses may be eligible for forgiveness of indebtedness on a covered loan in an amount equal to the sum of the costs incurred and payments made during the time of the loan including payroll costs, any payment of interest on any covered mortgage obligation (which shall not include any prepayment of or payment of principal on a covered mortgage obligation), any payment on any covered rent obligation and any covered utility payment. When forgiven, the amount of the loan is paid by the federal government to the lender.

Of particular note for businesses is that these loans may be forgiven for an amount equal to the amount spent on payroll (capped at $100,000 in wages), rent, mortgage interest, and utilities for eight weeks beginning on the origination date of the loan. However, forgiveness will be reduced in proportion to any reduction in employees and to a reduction in employees’ pay of greater than 25 percent.

The SBA will issue implementing regulations within 15 days of the Act’s enactment. Regulations are likely on either Saturday, April 11, 2020, or the next business day, Monday, April 13, 2020. The provisions are retroactive to February 15, 2020, and cover loans from that date to June 30, 2020.

Additional Business Loans to Distressed Industries

The Act creates a new Business Loan Program category (Program) for a period from February 15, 2020 to June 30, 2020 and allows the SBA to provide 100% federally-backed loans up to a maximum amount to eligible businesses to help pay operational costs like payroll, rent, health benefits, insurance premiums, utilities, etc. to certain recipients subject to certain conditions. The Program provides financing for banks to loan money to business with between 500 and 10,000 employees; specifically, $25 billion is allocated for passenger airlines; $4 billion for cargo airlines; $17 billion for businesses critical to “maintaining national security;” and $454 billion for loans, loan guarantees, and investments in businesses and municipalities.

Notably, the $454 billion Program provides assistance to businesses that otherwise do not receive relief under the Act and, in this regard, this program should be considered a business’s option of last resort. While there are numerous conditions upon a loan under the program, among those that are troubling from a labor and employment perspective are the following conditions, which the business must certify that:

  • The funds the business receives will be used to retain at least 90 percent of the business’s workforce, at full compensation and benefits, until September 30, 2020;
  • The business intends to restore not less than 90 percent of the business’s workforce that existed as of February 1, 2020, and to restore all compensation and benefits to the workers no later than 4 months after the termination date of the public health emergency declared by the Secretary of Health and Human Services on January 31, 2020;
  • The business will not outsource or offshore jobs for the term of the loan and 2 years after completing repayment of the loan;
  • The business will not abrogate existing collective bargaining agreements for the term of the loan and 2 years after completing repayment of the loan; and,
  • The business will remain neutral in any union organizing effort for the term of the loan.

(Section 4003(c)(3)(D)). Because of the uncharted territory that both union and non-union businesses are traveling, in which the economic future may not be predictable, it may be understandably difficulty to certify these conditions and/or comply with them in the long-run. In addition to the difficulty of this certification, this Program does not provide loan forgiveness and requires a business that is not publicly traded provide the government with a warrant, equity interest or senior debt instrument in the business. As a result, to the extent support is available through other SBA programs, businesses should turn to those options first.

Pension Extensions

The Act permits single-employer pension plan businesses to delay the due date for any contribution otherwise due during 2020 until January 1, 2021. As such, a business’s contribution typically due on July 1, 2020 may be delayed until January 1, 2021, which will free up financial resources that can be used to assist in pandemic response and/or ramp up when the economy comes back on line.

If you have questions or concerns, please contact your Lindner & Marsack attorney.

This Legal Alert provides an overview of a specific developing situation. It is not intended to be, and should not be construed as, legal advice for any particular fact situation.

DOL ISSUES MODEL NOTICE FOR FAMILIES FIRST CORONAVIRUS RESPONSE ACT

By; Sally A. Piefer

This afternoon the Department of Labor (DOL) issued its Families First Coronavirus Response Act Notice. A copy of the notice can be found here.

Please note the following about the Notice:

  • The effective date for the new Act will be April 1, 2020.
  • Covered employers (those with fewer than 500 employees) must post this notice in a conspicuous place on your premises.
  • For employees who are already working remotely or are on leave, you may also satisfy your posting requirement by emailing or mailing a copy of the notice to employees, or posting it on your intranet.
  • You need not provide the notice to employees who are laid off. You only need to provide notice to current employees.
  • If you are hiring new employees, you must convey the notice to them, either by email, direct mail or by posting the notice on your premises. If new employees will not have access to your premises, we recommend conveying the notice by email or direct mail.

While not required to post the notice in multiple languages, be aware that the DOL is working on translating the notice in other languages.

We will continue to monitor further COVID-19 developments. If you have questions or concerns, please contact your Lindner & Marsack attorney.

GOVERNOR EVERS SIGNS EMERGENCY ORDER #12, ALSO KNOWN AS THE SAFER-AT-HOME ORDER

Today, Wisconsin Governor Tony Evers directed the Department of Health Services (DHS) to issue a Safer at Home order that prohibits all nonessential travel, with various exceptions.  The Order is available here.

Businesses should review the Order to see if they quality as an exempted business and, if not, what restrictions exist.  If a business is unsure whether it qualifies as an essential business under the Order, representatives are encouraged to contact the Wisconsin Economic Development Corporation https://wedc.org/essentialbusiness/ for clarification.  For businesses not exempted from coverage by the Order to which exceptional circumstances apply, an exemption from the Order can be requested:

In the exceptional circumstance that a business is not listed in this Order as an Essential Business or Operations but believes that it should be included in that designation, a business is not listed in this Order as an Essential Business or Operations but believes that it should be included in that designation, the business should consult the information page on the Wisconsin Economic Development Corporation (WEDC) website.  If a business still believes that it does not fall within the meaning of Essential Businesses and Operations, it may apply to the Wisconsin Economic Development Corporation (WEDC) using the provided form requesting designation as such.

Order, Section 13(z), p. 14.  The order is effective from 8:00 a.m. on Wednesday, March 25, 2020 until 8:00 a.m. Fri., April 24, 2020, or until the Governor issues a superseding Executive Order.

As a result of the Order, the majority of Lindner & Marsack, S.C. personnel will be working from home, except for a small number of employees necessary to complete on-site projects each day.  All employees are available as if they were sitting at their desk.