COVID-19 brings important employment law changes for CUs to consider

Paid leave black rubber stamp

By Chris Pajak, Director of Member Relations and HR Consultant

Now that the federal Emergency Family and Medical Leave Expansion Act and the Emergency Paid Sick Leave Act have gone into effect, many questions are arising from credit unions on the practical application of these laws.

At this point, New York state’s paid leave law that was passed is largely irrelevant as the new federal laws that went into effect on April 1 are more generous towards employees.

There are two focal points of these two new federal laws. The Emergency Family and Medical Leave Act provides up to 12 weeks of job-protected paid leave (first 10 days unpaid) for employees who cannot work due to child care challenges resulting from school closings, day care closings, etc. The other provides job-protected paid sick leave up to 80 hours (at varying compensation levels) for employees directly impacted by the virus. More information can be accessed on the Department of Labor’s website.

The practical application of the Emergency FMLA Expansion Act is causing some challenges for credit unions. After an initial 10-day unpaid waiting period (during which the employee can utilize additional paid time off benefits if available to them), the employee could be eligible for up to an additional 10 weeks paid leave at two-thirds of their pay (subject to certain maximums) if they are unable to work (or telework) due to a bona fide need for leave to care for a child whose school or child care provider is closed or unavailable for reasons related to COVID-19.

If an employee cannot work from home and requests this type of leave due to child care issues, you’ll likely have to approve the leave. All they’ll need to do is show you notice of the school or day care closing.

If your employee can work remotely, this is where things get more challenging.  If you’re willing to allow your employee to work from home and give them the flexibility they need to also tend to their child care needs, and the employee is not willing to accept what the credit union is offering, what do you do? While you could probably deny the request in this case, it will be very important to document your decision to protect the credit union.

Documentation will also be needed for both the child care and sick leave provisions to make sure that your credit union can take advantage of federal tax credits being offered as a form of reimbursement to you for the cost of paying these benefits to your employees.

Fear factor. Many employees think that they are entitled to these new paid leave benefits no matter what. For employees who can work, telework and have not been affected by the virus directly or indirectly, these new paid leave laws are not available to them. However, many are fearful (and rightfully so) about going to work and are deciding they do not want to expose themselves or their families to the virus. As a result, some employees are refusing to come to work, but still expecting some kind of benefit. The harsh reality of this situation is that even though the employee’s concerns are valid and we all empathize, as an “essential business” you do have the right to require them to come to work.

 Unemployment benefits. While the employee might not be entitled to any paid leave benefits, it’s possible they could be eligible for unemployment benefits if they resign or you let them go. Normally, an employee who resigns voluntarily would not be eligible for unemployment, but these are not normal times. I would suspect that will continue to be the case during the pandemic (perhaps even more so). What makes this scenario even more enticing to the employee is the potential to receive more income on unemployment than they were earning while working for the credit union.

The CARES Act included the expansion of unemployment benefits for employees who lose their jobs during this crisis. Under the act, unemployed individuals can receive an additional $600 per week in unemployment benefits on top of what they would have been able to receive from NYS unemployment.

For credit unions contemplating potential layoffs, the good thing is your employees will be well taken care of from an unemployment perspective. However, there is also another aspect of the CARES Act, referred to as the Employee Retention Credit, which is designed to encourage businesses to keep employees on their payroll. This is separate of the Payroll Protection Program. If you’re contemplating staff reductions I would highly recommend speaking to a tax professional before making any final decisions on layoffs.

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