By Christopher A. Pajak, PHR
As credit unions deal with the many operational challenges of serving their members during this difficult time, there are also many challenges and questions that have arisen relating to staffing, payment of wages to employees and dealing with leaves of absence.
Last week, two significant laws were passed regarding paid leave benefits for employees in response to the COVID-19 pandemic, one on the federal level and one for New York state employers. In addition, there are several existing laws that may have an impact in how credit unions manage their employees during this pandemic.
New York State: Emergency COVID-19 Paid Sick Leave
Effective immediately, New York state employers must provide job-protected leave and other benefits only for employees subject to mandatory or precautionary orders of quarantine or isolation issued by New York state, the department of health, local board of health or any governmental entity with authority to issue such an order due to COVID-19.
The law provides for different leave benefits depending on the size and net income of the credit union. In general, small credit unions will be subject to honoring unpaid leave and job protection for the duration of the quarantine order and/or providing paid leave up to five days. For larger credit unions, the paid leave benefit increases to 14 days in addition to guaranteeing job protection for the duration of the quarantine order.
To learn more about how this law applies to your credit union, a detailed overview can be found here. Employees may also be eligible for New York’s existing paid family leave benefits and short-term disability benefits.
It is important to note that this law does not apply if the employee is deemed “asymptomatic” or has not yet been diagnosed with any medical condition, and is physically able to work while under the order through remote access or other means.
In other words, if the employee can work, but chooses not to, he or she would not be eligible for this benefit. In addition, if federal law or regulation provides sick leave and/or employee benefits for employees relating to COVID-19, then New York’s paid sick leave, paid family leave and disability benefits under this bill are not available, unless New York law provides more sick leave and/or benefits. In such a case, the employee may claim the amount of any difference in benefit.
Lastly, the law eliminates the waiting period for unemployment where the employer closes “for a reason related to COVID-19” or due to a mandatory order of a governmental entity duly authorized to issue such order to close employer. As a result, if your credit union or branch is forced to close and your employee cannot work, they may be eligible for unemployment right away.
Federal: Families First Coronavirus Response Act
Effective on April 2, 2020 (and through 12/31/2020), the Family Medical and Leave Act has been expanded to require employers to provide job-protected, paid leave for employees who cannot work due to childcare challenges resulting from school closings and for those directly impacted by the COVID-19 virus.
This law applies to private employers with fewer than 500 employees and certain public employers. Full-time employees who have been employed for at least 30 calendar days will be eligible to receive up to 80 hours of paid sick leave (or the equivalent of the average number of hours over two weeks for part time employees).
The required compensation levels during this leave vary depending on the reason for the leave (i.e., a leave directly related to the COVID-19 virus or a leave needed for childcare purposes due to school closings). Credit unions will be responsible for paying employees for these benefits, but will eligible for reimbursement through tax credits. To learn more about how this law applies to your credit union, a more detailed overview can be found here.
The most important distinction from the New York State law that was passed is the ability for employees to receive paid leave if they cannot work due to childcare issues resulting from school closings. In addition, the federal law is more generous towards the employees of smaller credit unions. However, subsequent regulations may allow U.S. Department of Labor to exempt small businesses with fewer than 50 employees when the provision would jeopardize the viability of the business as a going concern. This will be a very important matter for credit unions to follow in the days ahead as this could mean most credit unions would only be subject to the New York State law. In the meantime, credit unions should operate under the assumption this law will apply to them.
Additional points to consider
For credit unions that have committed to paying all employees in full during the short term, regardless of the circumstances, these new paid sick leave requirements do not impact you at this time. However, as we continue to deal with this pandemic, the ability to pay employees who are not able to work or completely fulfill their responsibilities will likely become a challenge. As a result, it will be important for your credit union to understand the impact of these new laws.
It is also critical to keep wage and hour laws in mind. Remote working arrangements, reduced hours for your employees, potential branch closings and exhaustion of paid time off benefits by your employees (e.g., vacation, sick and personal time) will all have a significant impact on your pay practices.
Compliance with the Fair Labor Standards Act as it pertains to paying exempt and non-exempt employees will be challenging. For example, a full-time exempt employee who is working, but not able to work full days for variety of reasons, must be paid their full salary, even if they have exhausted all their paid time off. This would not be the case for non-exempt employees, which raises both compliance and employee relations challenges.
There are many additional issues and questions that will likely surface for credit unions regarding these laws or others that impact your employment practices. For further guidance, credit unions may contact me at christopher.pajak@nycua.org or (800) 342-9835 ext. 8188.
Christopher A. Pajak is the New York Credit Union Association’s director of member relations and human resources consultant.