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March 31, 2020

By: Robbins, Salomon & Patt, Ltd.

As the effects of the Coronavirus (COVID-19) continue, employers face questions about temporary workplace closures, furloughs and reductions in force. Employers must be mindful that their actions do not create wage and hour and WARN Act issues.

Do employers have to keep paying employees who do not come to work for COVID-19-related reasons?

Yes, unless they are off for a reason that does not fit one of the six reasons set forth in the Families First Coronavirus Response Act (Act), were laid off before the effective date of the Act (April 1), or are a necessary healthcare worker who is exempt from the Act.

Can employers reduce employees’ pay or work hours due to the economic effects from COVID-19?

Yes, for non-exempt employees, if those reductions keep employees’ wages above minimum wage. But wage reductions should be made across the board for similarly situated employees to avoid discrimination claims.

For exempt employees, the answer is, “no.” Reductions to the employees’ weekly salary are not permissible because employees must be paid the same minimum weekly salary for any workweek in which they perform work, regardless of the hours worked.

Does the WARN Act still apply?

Yes, if an employer is covered by the Worker Adjustment and Retraining Notification (WARN) Act and the layoff/closure is one that would qualify for notices required under the WARN Act. Generally, employers with 100 or more full-time employees who implement a “plant closing” or “mass layoff” must provide at least 60 calendar days’ notice to employees affected by those closings or layoffs as well as their union representatives (if any) and certain government entities.

A plant closing is a permanent or temporary shutdown, resulting in an employment loss for at least 50 employees during a 30-day period, of (i) a single site of employment; or (ii) facilities or operating units within a single site of employment.

A mass layoff is a reduction in force that is (i) not the result of a plant closing; and (ii) results in an employment loss at a single site during any 30-day period of either (a) 50 employees who comprise at least 33% of active employees; or (b) at least 500 employees.

An employment loss is a (i) termination of employment that is not a discharge for cause, voluntary departure, or retirement; (ii) a layoff exceeding six months; or (c) a reduction in work hours of more than 50% during each month of a six-month period.

Violations of the WARN Act can result in liability of up to 60 days of back pay and benefits plus civil penalties of $500 per day.

WARN is not triggered if employees are going to be laid off for less than six months because those employees have not suffered an “employment loss” requiring notice. It often can be hard to know at inception whether a layoff will only last six months, so notice is generally advisable.

Must an employer give notice to the union if it needs to make changes due to the effects of COVID-19?

Union employers must bargain before making changes to any terms or conditions of employment. The National Labor Relations Act requires employers to bargain in good faith on mandatory subjects of bargaining, such as wages, schedules, temporary closures, and layoffs. Making unilateral changes to those terms without first notifying the union and bargaining in good faith could lead to unfair labor charges.

The safest route may be for employers to give the union notice and offer to bargain quickly on such terms.