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Author: Brett Holubeck

Top 10 Post COVID-19/Coronavirus Employment Law Issues

Published by Brett Holubeck on June 17, 2020
Image of a sign that says that "the world is temporarily closed" to demonstrate that most activities are shutdown until the post COVID-19 recovery begins.
Photo by Edwin Hooper on Unsplash

Businesses are slowly returning to normal from the COVID-19/Coronavirus pandemic. However, there are still a number of issues that are employers are facing. Of course, the most important issue for many employers is making sure that their business survives. Unfortunately, many businesses are also facing another issue: lawsuits. The potential liability for companies is continuing to accelerate. Here are the most likely lawsuits, administrative proceedings, and labor/employment law issues that employers will face in a post COVID-19 workplace.

1. WARN Act Lawsuits

As I stated in a previous article, the WARN Act generally requires employers with 100 or more employees to provide 60 days’ notice before the closure of a business or a mass layoff.

With the numerous layoffs that have occurred, accelerating bankruptcies, lockdowns continuing in many states, and businesses operating at reduced capacity or shutting down there will be a number of people that will not come back to work. Many people suspect that 40% of the layoffs will be permanent. 40 million people have lost their jobs. Unfortunately, the sheer number of layoffs means that there will be some layoffs that were not properly done. WARN Act lawsuits will accelerate.  

2. Worker Safety Lawsuits and OSHA Complaints

As I stated in my post about essential workers, employees want to be safe. Many are filing OSHA complaints and lawsuits because they do not feel safe.

a. OSHA Complaints Are Increasing

OSHA has issued over 5,000 complaints related to COVID-19. There will be a number of OSHA complaints that will continue after businesses begin to reopen. Many employees are concerned about their safety especially those that are vulnerable or work in high risk jobs. Companies should expect that there will continue to be a number of OSHA complaints due to companies not following all the safety protocols that OSHA and the CDC have put out. As a reminder here are the protocols from OSHA and the CDC have been released:

There are two important steps to employee safety and COVID-19. First companies need to follow the guidance to the extent that it applies at their workplace. Second, companies need to communicate with their employees about the safety steps. Employees need to know the procedures that they need to follow.  Employees also need to have channels that they can use to report workplace problems and safety concerns. Finally, employees that know that their company is taking steps so that they feel safe in the workplace are less likely to pursue lawsuits or complaints against a company.

b. Lawsuits About Personal Protective Equipment (PPE)

A number of employers have been sued for not providing enough personal protective equipment for employees including one against Smithfield  and another against a hospital.

The Smithfield plaintiffs’ suit was dismissed because they did not follow the proper channels for pursuing their claim (they should have gone through OSHA). While similar lawsuits are unlikely to succeed, companies should expect employees to continue to use all legal channels when they are not satisfied with the protective measures that their employer has taken.

3. Worker’s Compensation Lawsuits

Employers should expect a surge of worker’s compensation claims related to the coronavirus. It may be difficult for many employees to demonstrate that they got sick at work, but some states have made this easier through executive orders or other legislation that have basically enacted a rebuttable presumption that essential workers are presumed to have been infected while on the job. Bloomberg has a nice chart of which states have enacted such laws. For workers that are not essential or are not in one of the 8 states that have enacted such a law or regulation, it will be difficult to show that the employee actually got COVID-19 at work. This fact should reduce the number of successful claims in those states.

There continues to be conversations in Congress about protecting companies from liability, but nothing has passed yet.

4. NLRB Charges and Union Organizing

There are a number of signs that union organizing will increase as a result of COVID-19. Here are exhibits one, two, and three. Even nonprofit workers are turning to union organizing.

Union organizing and NLRB charges will continue to increase in the wake of COVID-19. Many unions have used the pandemic to strengthen their relationship with employees and seek to organize more employees. Many have been successful because employers have failed to take appropriate steps to protect employees or have not communicated with  employees about the steps that they have taken.

As a reminder, in some prior posts I wrote about what employers can and cannot do in a union organizing campaign and how to respond to an NLRB charge.

a. Employee Walkout Issues

There will continue to be employee walkouts because of the coronavirus. Stories about employees walking out because of concerns about safety are everywhere. As COVID-19 continues to cause problems and potentially a second wave of the Coronavirus comes, employers may see more walkout issues. This may especially be the case for workers that are more concerned about the virus because they are more susceptible to suffering from a severe reaction from it. Employers should remember that walkouts are likely protected under both the OSH Act (which may protect workers that refuse to perform a job if they are in imminent danger) and the National Labor Relations Act (which protects concerted protected activities by employees).

5. Employee Recall Lawsuits

As businesses reopen, there are a number of issues where employers could get into trouble. I wrote about employee recall issues recently. Specifically, I listed issues regarding the WARN Act, age discrimination, collective bargaining issues, and issues with the FFCRA once an employee is brought back. As businesses recall employees all of these issues, especially those related to discrimination, will become major concerns.

6. Refusal to Perform An Illegal Act

A Texas Supreme Court case called Sabine Pilot Service, Inc. v. Hauck states that an employer cannot fire an employee when they refuse to perform an illegal act.

In a recently filed case, an employee was required to come into the office to work. She claims that she was able to work from home and that the business was not an essential business and thus her employer was requiring to do an illegal act by requiring her to come to work. She claims that she was fired for refusing to come to work, which would have violated the stay at home order.

As businesses continue to reopen and restrictions continue to be placed on businesses, it may be the case that there will be additional lawsuits like this one.

7. FFCRA and Expanded Family and Medical Leave Lawsuits

When employees are finally able to resume working and meet with attorneys, it is likely that some of them will have potential claims against their employer for failing to follow the Families First Coronavirus Response Act (FFCRA). There may have been a number of people that have not been able to work because of childcare issues, their own illnesses, and being denied leave for other reasons (some of which may be legitimate). At least one employer has already been sued. Many companies will face similar lawsuits.  

8. Disability Discrimination Lawsuits

As I mentioned previously, employers have obligations to accommodate individuals based on a disability. As companies open up, it is likely that many people that may be more vulnerable to COVID-19 will seek accommodations from their employer. The most common accommodations include remote work or additional leave. The way that employers respond to these employee requests for a reasonable accomodation will be critical to avoiding potential lawsuits.

9. Employee Layoff Issues and Lawsuits

The sheer number of employees that have lost their jobs (more than 40 million) leaves a lot of room for lawsuits that typically follow a layoff. Excluding lawsuits related to WARN, here are some of the common issues that follow a layoff.

a. COBRA Notice Lawsuits

I wrote about COBRA notice problems in a recent post. There will be more COBRA lawsuits due to the difficulty that many companies have in providing appropriate notice to employees of their loss in health insurance coverage.

b. Non-Compete and Trade Secret Litigation

As people leave companies because of layoffs many will try to start their own companies or will be hired by competitors of their former employer. Some of these employees will inadvertently or purposefully try to take clients or trade secrets of their former employer. Companies should be careful when laying off workers that they eliminate employee access to various accounts and that no information is taken. Companies would do well to consider a severance agreement for employees with any confidential information to make sure that they return all confidential information and understand their responsibilities.

c. Failure to Pay Employees Properly

At least one company has been sued for failing to pay employees after the business was forced to shutdown due to COVID-19 and the employer lacked the funds to pay employees for their most recent work. It is likely that a number of wage and hour lawsuits will occur after the pandemic ends. Many employees were working remotely at time when many companies did not have many remote employees and may not have had the framework in place to track working time for these employees. The failure to correctly track time worked is likely to be a big concern for all companies that had hourly employees that were working remotely.

10. Remote Work Increases

Remote work is going to increase after the pandemic ends. Approximately 66% of workers were working remotely at the height of the coronavirus. This is compared to the approximately 5 million workers (or 3.6% of the workforce) that were working at home at least half the time in 2018. One survey from Gartner of CFO’s found that 74% of the surveyed CFO’s believed that 5% of their workforce would be permanently converted from office to remote employees after the pandemic ends. With as easy as it is to work from anywhere for office employees one should expect this trend to continue to accelerate.

Conclusion

Life after the pandemic will be very different than it was before. People are much more concerned about safety.  Travel is down and will stay that way for the foreseeable future. Some countries are discussing reducing globalization and diversifying their supply chains. In other words, the pandemic and the governments’ reaction to it are a major black swan event.

Companies need to be aware of the above issues in the immediate future as they navigate a post COVID-19 pandemic workplace. The only way for companies to grow after COVID-19 is for companies to adapt and seek ways to improve. Companies need to plan for the above problems and work with employees to succeed. With a recession already underway and uncertainty about how long it will take the economy to recover, planning is critical to the future success of companies.

The information provided in this blog is for educational purposes only and is not legal advice. If you need legal advice, then you should speak with a lawyer about your specific issues. Every legal issue is unique. A lawyer can help you with your situation. Reading the blog, contacting me through the site, emailing me or commenting on a post does not create an attorney-client relationship between any reader and me.

The information provided is my own and does not reflect the opinion of my firm or anyone else.                                                                                                                                                                                   

Employer’s Guide to COBRA

Published by Brett Holubeck on May 22, 2020
Picture of a person holding a stethoscope to represent an employee electing to continue COBRA coverage to keep their doctor.
Photo by Online Marketing on Unsplash

Cobra. No, not that Cobra. Not that one either. The employment law one that sounds like it has absolutely nothing to do with employment law. The Consolidated Omnibus Budget Reconciliation Act of 1985.  You know COBRA. The law that, among other things, requires companies that lay off or terminate employees to provide employees the option to continue their health insurance coverage for a period of time. 

What Triggers COBRA Notice

Employers with 20 or more employees are subject to COBRA. First, group health insurance plan administrators that are covered by COBRA must give a general COBRA notice to employees within the first 90 days after their group health insurance coverage begins (when they first join the employer health insurance plan). A model notice is available on the DOL website.

COBRA also requires any employer that uses a group health plan to offer employees the choice to continue coverage for themselves, their spouses, and any dependent children when certain events occur. As stated by the Department of Labor (DOL), the following are the qualifying events that trigger COBRA coverage: 

Termination of the employee’s employment for any reason other than gross misconduct; 

Reduction in the number of hours of employment [(if it causes employees to lose coverage)]

Covered employee becomes entitled to Medicare;  

Divorce or legal separation of the spouse from the covered employee; or  

Death of the covered employee. 

Loss of dependent child status under the plan rules. Under the Affordable Care Act, plans that offer coverage to children on their parents’ plan must make the coverage available until the adult child reaches the age of 26. 

FMLA leave (for example for maternity leave) is not a qualifying event under COBRA. 

Employers must provide notice to the plan administrator within 30 days of a qualifying event. After it receives notification, the plan administrator will provide an election notice to employees within 14 days. Many employers are also the plan administrators of their health insurance plans and are thus responsible for providing notice to their employees. A model COBRA election notice is available on the DOL website. Using the DOL’s election notice may be preferable to avoid lawsuits for an insufficient election notice. Employees then have 60 days to elect to coverage under COBRA. In the coronavirus pandemic, it is especially important that employers give this notice as soon as possible to initiate the process and allow the employee to obtain the coverage that they need. 

Employees and their dependents must have been previously enrolled in the employee’s health plan coverage to continue coverage after the qualifying event. Employees and other qualified beneficiaries can remain on the health insurance for 18 months “when the qualifying event is the covered employee’s termination of employment or reduction in hours of employment….”Guidance from the DOL also states that “[w]hen the qualifying event is the end of employment or reduction of the employee’s hours, and the employee became entitled to Medicare less than 18 months before the qualifying event, COBRA coverage for the employee’s spouse and dependents can last until 36 months after the date the employee becomes entitled to Medicare.” 

Knowing when to provide notice is often the most important step to avoiding liability. Many employers fail to provide timely notice and/or fail to include all the necessary items in the notice. 

Penalties for Failure to Comply with COBRA

There are severe penalties for employers that fail to follow the requirements of COBRA. My Cobra Plan has a good outline of the penalties for violations. They state: 

Plans that violate COBRA’s provisions may be subject to a non-deductible excise tax penalty equal to $100 per day, per affected individual, per violation. In addition, ERISA provides notice penalties of up to $110 per day from the date of the compliance failure. A violation is anything that can cause a company to fall out of compliance with COBRA regulations. The minimum tax levied by the IRS for non-compliance discovered after a notice of examination is generally $2,500. The maximum tax for “unintentional failures” is the lesser of 10% of the amount paid during the preceding tax year by the employer for group health plans, or $500,000. In addition, employee/COBRA administrators can be held personally liable for COBRA non-compliance.

In short, failing to comply with COBRA is expensive.

Texas’s COBRA Law 

Texas has its own mini-COBRA law. The Small Employer Health Insurance Availability Act  grants employees insurance continuation rights if the company has 2 to 50 employees. The law grants employees up to nine months of coverage if the employee did not qualify for COBRA and up to six months of additional coverage once the continuation under the federal COBRA law expires (if they qualified for COBRA). As noted by the Texas Department of Insurance, the Texas state law does not apply to self-funded plans and employees must have had coverage for 3 months before the job ended to be eligible for the additional coverage under the law. 

Conclusion

COBRA used to be more frequently used before the Affordable Care Act/Obamacare became law. Many employees now choose to go on the Healthcare Exchange/Obamacare rather than continue COBRA coverage as the exchange is much cheaper. However, some employees will choose to remain on COBRA to retain the same doctor that they have been using, to keep certain medications covered, if they have already hit their deductible and if other factors are present. Regardless, it is a law that employers need to be careful to follow to avoid potential penalties. 

The information provided in this blog is for educational purposes only and is not legal advice. If you need legal advice, then you should speak with a lawyer about your specific issues. Every legal issue is unique. A lawyer can help you with your situation. Reading the blog, contacting me through the site, emailing me or commenting on a post does not create an attorney-client relationship between any reader and me.

The information provided is my own and does not reflect the opinion of my firm or anyone else.                                                                                                                                                                                   

Severance Agreement Checklist

Published by Brett Holubeck on May 8, 2020
Picture of a man leaving an office to represent that all employers need a severance agreement checklist. before employees leave a company.
Photo by Jornada Produtora on Unsplash

Unfortunately, the Coronavirus and COVID-19 layoffs are going to continue. In one survey, 32% of Chief Financial Officers believe that there will be more job cuts. There are a number of surveys that discuss what people will do once restrictions regarding the coronavirus are lifted. One survey found that 57% of people in Seattle will avoid social gatherings once restrictions are lifted. There are a lot of stories out of Texas about restaurants and other businesses that have no customers coming back. Some experts expect a recovery sometime soon and others looking at a recovery in 2 years or so.

With more layoffs expected now is a good time to review the basics of severance agreements.

One thing that many employers fail to do is to create a severance agreement checklist when they are laying off employees. There are a number of items that should be included. A checklist is a great way to make sure that companies have the information that they need to let create the best severance agreement. Here are some provisions that should be considered to include in any severance agreement checklist.

1. Waiver of Liability

All severance agreements normally have a waiver and release of various claims including: Title VII of the Civil Rights Act of 1964, the Americans with Disabilities Act (ADA), the Equal Pay Act (EPA), 42 U.S.C. § 1981 (“Section 1981”), Veteran’s Reemployment Rights Act, Employee Retirement Income Security Act, Age Discrimination in Employment Act including the Older Worker’s Benefit Protection Act, and many other statutes such as state statutes.

Some claims cannot be waived such as Workers’ Compensation claims or rights falling under the National Labor Relations Act.

Severance agreements should normally include a waiver of liability and some sort of admission that the employee does not have any claims that they are aware of against the company. This waiver serves as a way to reduce a company’s liability.

2. Company Property Returned

Companies need to make sure that employees return property. Any severance payment should be contingent on the employees returning any files, computers, passwords, and other items that they have taken or have from the company.

Employees should also be required to return any confidential information in any medium including flash drives, passwords, access to dropbox and other accounts on home and other devices. Employers should ideally change passwords after an employee leaves.

3. Confidentiality

Most people want to keep the terms of the agreement secret (both for the employee’s and the company’s sake). Moreover, confidentiality is something that the employer may also be purchasing with the payment that they give to their soon to be former employee. The confidentiality provision usually protects the employer and the employee from revealing issues about each other and the terms of the agreement. The employer would be prohibited from revealing the terms that the employee is leaving under to anyone that asks them (usually a future employer or member of the media).

4. Non-Disparagement

Companies and employees often seek a non-disparagement agreement that prevents both parties from discussing problems in the workplace or with each other. Again, this is beneficial for both employers and employees. Both parties are prohibited from giving negative comments about the other party. For employees, this generally prohibits them from commenting to the media, writing on social media, and engaging in other communication that is negative about the company. For employers, this usually is meant to stop them from making negative comments about an employee to potential future employers.

5. Medical Benefits

Many companies will offer me`dical benefits to employees as an incentive for the employee sign the agreement or as a benefit that that they want departing employees to have. Employers may wish to pay for an employee’s COBRA insurance for a certain period while alerting employees that they will be responsible for COBRA after that period.

6. Older Worker Benefits Protection Act

The Older Worker Benefits Protection Act modified the Age Discrimination in Employment Act that protects workers that are 40 and older. There are some requirements that the OWBPA imposes on any severance agreement.

  • It must be in writing.
  • The agreement must be drafted in plain language so that the employee signing the agreement can understand it.
  • It should not be misleading. Any advantages or disadvantages should be adequately described.
  • The waiver must specifically waive rights under the ADEA and OWBPA.
  • The agreement cannot waive future claims.
  • The agreement must be backed by consideration. The employer must give something of value to the employee in exchange for the agreement.
  • Employees must have 21 days to consider the severance offer, or 45 days if more than one employee is laid off as part of a group lay off.
  • When the layoff is for a group of employees then the individuals must be informed in writing of the group of individuals that will be laid off, the eligibility factors for the exit program (e.g. voluntary early retirement), the job titles and ages of all employees that are eligible to participate in the lay off or those that are laid off involuntarily, the ages of all employees in the same job/class as the person being laid off that were not eligible for the voluntary layoff or were not selected for the layoff.
  • Employees also have 7 days to revoke the severance agreement after signing. The parties cannot waive this time to revoke.
  • Employees should also be advised in writing to consult a lawyer before signing the agreement.

Employers are strictly liable when they fail to follow the requirements. An employer either followed it or failed to follow it. There is not much arguing about whether the required steps were in the agreement, so employers should be careful to follow all requirements.

7. Waiver of Future Employment

A severance agreement may need to address whether an employee will be able to join the company in the future and what will happen if they apply. When an employee is being terminated for cause or because of a disagreement with the company, the employer will typically require the employee to waive the right to rejoin the company or apply for jobs at the company.

8. Address Letters of Recommendation

There are usually two purposes to a provision about letters of recommendation and they differ based on the circumstances for the termination of the employee. For employees that had good performance and were not fired for cause, a severance will often say that the employer will provide a detailed letter of recommendation on request. For employees that were terminated for cause or due to some dispute with the company, the provision usually states that the employer will give a letter confirming dates of employment and job title with few other details. Some employers will refuse to do even this.

9. Dispute Resolution

How will disputes between the parties be solved?  Will the agreement require claims to go to arbitration or through the court system? Is the agreement going to include a class action waiver that limits class claims? Will the agreement have a jury waiver so that the dispute will be heard by the judge? These are a few of the issues that should be resolved.

10. Tax Issues

Employees should be required to accept and bear all tax consequences for the payment (under most circumstances). Some payments may not be treated as wages and the employer is not able to withhold income taxes for the employee (which should be outlined in the agreement) for these payments.

11. Unemployment

Employers often agree not to contest unemployment. It is often beneficial to not contest a departing employee’s unemployment even when they are being terminated for cause to discourage the employee from filing a claim against the company.

12. Paying Out Vacation

Companies should consider whether they intend to pay out vacation. In may states, PTO must be paid out. Texas does not require companies to pay out any accrued paid time off or other leave. Employers should follow their policies and past practices for paying out vacation.

13. Governing Law and Venue

What state law will apply to the agreement? How will disputes be resolved? Some states allow you to insert a choice of law provision to apply the law of another state to the dispute concerning the agreement. Usually, this occurs when an employer is headquartered in a different state than the state where the employee works,  when the employee works in more than one state, or when the employee lives in a different state from where they work. The venue, particular state or federal court or arbitration association and the location of any arbitration, should be outlined in the agreement.  There are very specific state laws to follow here so you should consult an attorney.

14. No Admission of Liability

A severance agreement normally includes a clause that the company does not admit liability for anything that may have happened, and the agreement should not be evidence that the company did something wrong.

15. Severability Provision

Agreements should include a provision stating that provisions within the agreement may be removed from the agreement or not enforced if they are unlawful or impermissible. However, the rest of the agreement will remain in force.  

16. Liquidated Damages Provision

This is not a necessary part of the agreement. However, many agreements will put some form of liquidated damages that will or could be enforced upon a party that breaks the agreement. Frequently, this is something that the employer seeks to include in the agreement in the event that the employee disparages the company, breaks the confidentiality agreement, or violates other portions of the agreement.

17. Entire Agreement Clause

Severance agreements should contain a statement that the severance agreement encompasses the entire agreement between the parties. Essentially, this provision means that there is no other agreement between the parties. Oftentimes, employers may have separate agreements (e.g. noncompetition agreements) that they wish to continue to enforce and may also be referenced in this section.

18. Statement of Legal Competence

Agreements generally include a provision that the signee has legal competence; they are of sound mind and understand what they are signing.

Conclusion

Severance agreements are an important part of ensuring a smooth departure for both the employees and the companies. In the times of the coronavirus, they are critical to ensure that companies reduce potential liability and to ensure that employees get some payment as their service to a company ends. All companies can benefit from using a severance agreement checklist to ensure that they include all the needed or wanted provisions within their severance agreement.

The information provided in this blog is for educational purposes only and is not legal advice. If you need legal advice, then you should speak with a lawyer about your specific issues. Every legal issue is unique. A lawyer can help you with your situation. Reading the blog, contacting me through the site, emailing me or commenting on a post does not create an attorney-client relationship between any reader and me.

The information provided is my own and does not reflect the opinion of my firm or anyone else.                                                                                                                                                                                   

Brett Holubeck (of Houston, Texas) is the attorney responsible for this site.