With Governor Baker’s announcement earlier this week of the Commonwealth’s four-phase approach to re-opening businesses, many employers are turning their attention and making plans to re-open their workplaces and re-hire employees who were laid off or furloughed because of the COVID-19 pandemic. The four-phase approach is a gradual process to re-open the Massachusetts economy, with businesses and activities with a lower risk of COVID-19 transmission opening in the earlier phases.
An emerging concern for employers is what to do when laid off or furloughed employees decline the employer’s offer to return to work. How does an employee’s failure to return to work impact a business’s pursuit of loan forgiveness through the Paycheck Protection Program (“PPP”)? What should employers tell their employees about unemployment benefits? We address these important questions below.
If I offer to re-hire an employee who was laid off or furloughed because of the COVID-19 pandemic and the employee refuses the offer, will this affect my right to PPP loan forgiveness?
The short answer is no, as long as the employer takes certain steps. In guidance issued by the Small Business Administration (“SBA”), the SBA indicated that the SBA and the U.S. Department of Treasury intend to issue an interim final rule that excludes laid-off employees that the borrower offered to re-hire from the CARES Act’s loan forgiveness reduction calculator. In order to be excluded, the employer’s offer to re-hire must be for the same salary/wages and the same number of hours. The employer must have also made a good faith offer of re-hire in writing. The employee’s refusal of the employer’s offer must be documented. The SBA cautioned that employees who reject offers of re-hire may forfeit eligibility for continued unemployment compensation (and this is addressed in more detail below).
Critically, all guidance and rules that have been issued by the U.S. Department of Treasury and the SBA have been interim, and not final. This means that applicants, borrowers, and the professionals who advise them must wait until final regulations are issued before we are able to make more certain determinations about loan forgiveness calculations.
Will the employee’s refusal to return to work jeopardize their continued eligibility for unemployment benefits?
It depends. Ordinarily, the Massachusetts unemployment insurance program is intended to assist people during periods of unemployment when suitable work is not available. The Massachusetts Department of Unemployment Assistance (“DUA”) advises that the claimant has an obligation to apply for or accept offered work if suitable work is available. Importantly, the definition of “suitable work” was altered in response to the COVID-19 pandemic by a DUA emergency regulation, which are effective until June 14, 2020.
According to the new regulation, in determining whether work is suitable, the DUA will consider “whether a claimant has a condition that prevents the claimant from performing the essential functions of the job without substantial risk to the claimant’s health and safety.” See 403 C.M.R. 22.05. A “condition” is defined as “a request from an employer, a medical professional, a local health official, or any civil authority that the claimant or a member of the claimant’s immediate family or household member be isolated or quarantined as a consequence of COVID-19, even if the claimant or the claimant’s immediate family or household member has not been actually diagnosed with COVID-19.” This is exceedingly broad, though it is not unlimited.
The DUA, through responses to FAQ’s, clarified the circumstances under which an employee’s refusal to return to work would result in a denial of unemployment benefits. Employees who are able to work remotely for their employer and refuse to do so, or refuse work solely because they want to continue collecting unemployment benefits, may be denied benefits. However, if the employee has a “reasonable justification” for refusing to return to work, he or she will remain eligible for unemployment benefits. Whether a justification is “reasonable” is fact-specific. Per the DUA, important considerations include the employee’s health, work conditions, and the type of job (i.e., whether the employee interacts with the public or in close proximity of other employees). However, if the employee’s work requires them to be physically present at the workplace, the employee may be lawfully terminated if they refuse to return to work.
If I re-open my business at a limited capacity, and can only offer part-time work, how will this affect an employee’s unemployment benefits?
Employees who return to work on a part-time basis may still be eligible for partial unemployment benefits. The DUA explains that the employee may continue filing weekly claims and their weekly unemployment benefit payment will be adjusted based on the gross wages reported. The DUA cautions that it is very important that employees correctly report their work and earnings. If they fail to do so, it may result in overpayment and a possible penalty. An employee will no longer be eligible for unemployment benefits if the employee returns to full-time work, or the employee consistently earns over his or her weekly benefit amount. If either of these two events occur, the employee can stop filing the weekly certification.
How should I respond to employees who have been working remotely, but do not want to return to the office because they are fearful?
Generally, the employer has the final say on whether employees are able to perform their work remotely, or whether the work performed is of such a nature and character that the employee must perform some or all of their work at the employer’s workplace. However, the employer should have a conversation with the employee about his or her specific concerns and emphasize the employer’s efforts to maintain a safe workplace. If the employee articulates specific medical conditions that he or she believes prevent a return to the office, the employer may need to engage in the interactive process, as required under the Americans with Disabilities Act (“ADA”), to determine whether the employer must provide a reasonable accommodation. These situations can be complex, and consulting experienced counsel to guide you through the process can be helpful to mitigate risk.
Returning to work in the age of COVID-19 requires thought and planning. Please feel free to contact us for consultation regarding best practices in returning to the workplace.