Emergency Law May Spike Loss of Jobs

March 24th, 2020

As an unintended consequence of the emergency legislation passed by Congress last week, many businesses may conclude that they need to rush formal termination notices to their employees in the coming days.

The Families First Coronavirus Response Act (“FFCRA”) creates an emergency sick leave benefit, and modifies the long-standing Family Medical Leave Act (“FMLA”) to expand coverage and require a paid benefit.   The costs of all these new benefits for employees must be borne by their employers, offset only in small measure by a limited payroll tax credit.  But while most acts of Congress take effect immediately upon the President’s signature, the FFCRA postponed its effective date to April 2.  This offers businesses a window of opportunity to avoid liability for the mandated benefits, because any employee terminated on or before April 1 will not be covered by the new law.

Many businesses have already placed numerous employees on leave.  The hope, of course, is to be able to recall those employees at some point.  But as government leaders increasingly suggest that current virus-response restrictions could be left in place for months, or perhaps even become more restrictive, that hope may be fading.  If an employee is not really working anyway, making the termination official, and documenting that it occurred on or before April 1, would spare the employer a substantial expense at a time when it is likely already struggling with the budget impact of the current economic fallout.  Some employers may even be pushed to accelerate the time table for inevitable terminations, so as to avoid the FFCRA obligations.

In short, if your business determines that the termination of certain employees is necessary to best manage the economic impact of the coronavirus crisis, you should strongly consider communicating employment terminations no later than April 1.

We do recommend that you consult with your attorney to assist you in properly and compassionately notifying the affected employees.  Any employer in this situation will rightly empathize with the employees, and should seek to couch notices in the softest terms possible.  But this should not go so far as to leave any doubt that a termination has occurred.  And most importantly, the notice must be delivered no later than April 1; there are no extensions.

More information regarding the FFCRA can be found at these links: US Department of Labor Summary & The National Law Review: Details on FFCRA .

This is a very difficult time for employers and employees alike.  At Marrs & Henry, we remain open and ready to help you in dealing with all of these sudden and unexpected situations.