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COVID-19: Top Ten Issues for Employers Considering Layoffs, Furloughs or Reduction in Hours

April 02, 2020

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As private and governmental employers cope with reduced revenues and other significant effects of the COVID-19 pandemic, many are considering whether to lay off or furlough employees, or reduce employees’ hours. Below, the Labor and Employment and Employee Benefits Groups at Hanson Bridgett have flagged several issues for employers to consider in making these decisions, along with links to postings on Hanson Bridgett's Online COVID-19 Resource Center that may provide useful information. Of course, each employer’s specific situation is different, and some issues may be more important than others, depending on the circumstances.

  1. Can you qualify for a small business “paycheck protection” program loan under the CARES Act to continue paying employees instead of laying them off?
  2. Can your employees qualify for paid sick leave or paid family and medical leave under the Families First Coronavirus Response Act instead of laying them off?
  3. Are you eligible for federal tax credits for “qualified retention wages” because your business had to partially or completely shut down, or you had a 50% decline in revenue compared to the same period last year?
  4. Does the layoff or furlough trigger federal or California WARN Act protections for employees, or other California Labor Code obligations such as final paycheck requirements?
  5. In the event of a layoff, will you offer a severance payment in exchange for a release of claims?
  6. Will employees lose eligibility under your health plan, and what will that mean under COBRA and the Affordable Care Act (ACA) employer shared responsibility penalties?
  7. If you plan to rehire employees in the near future, will they be treated as new hires under your benefit plans, especially for the ACA break-in-service rules?
  8. Will your employees be eligible for increased unemployment compensation coverage under the CARES Act?
  9. How will you select employees for layoffs, furloughs, or reduction in hours to avoid potential claims of discrimination (disparate treatment or impact)?
  10. In the event of a furlough, what measures should you take to restrict exempt employees from performing work during furlough weeks? Similarly, what measures should you take to restrict non-exempt employees from performing work during furlough or non-working hours?

If you have questions about these or other COVID-19 labor and employment or employee benefits issues, please contact a member of the Hanson Bridgett Labor and Employment or Employee Benefits team.

For more information, please contact:

Elizabeth Masson

415-995-5106 Direct Phone
415-995-3593 Fax

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Gilbert Tsai

415-995-5874 Direct Phone
415-995-3408 Fax

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COVID-19 Resource Center

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