What businesses need to know for COVID-19 compliance in 2021
2020 — looking back and moving forward, Part 4
The federal government, State of California and local jurisdictions have all adopted and modified laws relating to COVID-19 in the last several months to respond to the spike in COVID-19 cases. This section reviews these recent laws to provide dealers in California with a complete picture of how to comply with COVID-19 in 2021.
2021 Federal Spending Bill
Congress passed, and President Trump eventually signed, a new spending bill, the Consolidated Appropriations Act of 2021 (“Spending Bill”). The Bill includes multiple provisions to address the ongoing economic impact of the COVID-19 crisis.
The most important provision for California businesses is the modification of the Families First Coronavirus Relief Act (FFCRA). This past spring, Congress passed the FFCRA, which applies to employers with fewer than 500 employees. The law includes two main provisions: Emergency Paid Sick Leave (EPSL) and Emergency Family Medical Leave (EFML). The EPSL provision mandates that qualified employers provide up to 2 weeks of paid sick leave (in addition to any state/local/other sick leave you provide) to qualified employees. The EFML provision expands FMLA job-protected leave to employees who have been employed for at least 30 days, if they are unable to work (or telework) due to a need for leave to care for a child of such employee if the school or place of care has been closed, or the childcare provider of the employee’s child is unavailable, due to a public health emergency.
The Spending Bill modifies certain provisions of the FFCRA through specified dates in 2021. However, it did not extend EPSL mandated leave. Therefore, mandated leave under the FFCRA ended on December 31, 2020. Instead, starting on January 1, 2021, qualifying employers may voluntarily provide paid sick leave, relying on the same criteria established in the EPSLA. In return for providing emergency paid sick leave or emergency paid FMLA leave, employers will receive a tax credit. However, that tax credit is only applicable for leave through March 31, 2021.
Many employers had employees who took all 80 hours of EPSLA available under the FFCRA in 2020. We do not believe that the Spending Bill requires employers to provide an additional 80 hours of EPSLA in 2021. However, if your business’s FMLA 12-month period resets on January 1, 2021, it is likely an employee would be entitled to emergency paid FMLA leave again. We hope the Department of Labor or the Internal Revenue Service will clarify this issue in the imminent future.
Employers should also be mindful of additional state and local requirements regarding paid leave, and their own paid leave and paid time off policies.
While the FFCRA generally did not apply to employers with over 500 employees, California enacted Assembly Bill 1867 (“AB 1867”) in September, which effectively extended the paid leave provisions of the FFCRA to large employers in California. The California legislature included a caveat in AB 1867 that also extended the bill beyond 2020 if the FFCRA was amended. Therefore, because Congress extended the FFCRA in the Spending Bill, qualifying employers with 500 or more employees must continue to offer up to 80 hours of paid leave if an employee qualifies.
The Spending Bill also includes $285 billion to small businesses for first and second forgivable Paycheck Protection Program (“PPP”) loans. Small businesses are defined as businesses with no more than 300 employees and that demonstrate at least a 25% reduction in gross revenues between comparable quarters in 2019 and 2020. The maximum loan size is 2.5 times the average monthly costs, up to $2 million. Borrowers will receive full loan forgiveness if they spend at least 60% of their PPP second-draw loan on payroll costs over a time period of their choosing between 8 weeks and 24 weeks. Finally, the bill includes set-asides to support first-time PPP borrowers with 10 or fewer employees, second-time PPP borrowers with 10 or fewer employees, first-time PPP borrowers who have been made newly eligible, and second-time returning PPP borrowers.
In addition to the tax credits for voluntarily providing paid leave, the Spending Bill expands the employee retention credit intended to prevent layoffs. It also includes a two-year tax break for business and rolls over a variety of temporary tax breaks known as “extenders,” some for multiple years. Deferred payroll tax payments may be paid throughout 2021. Finally, it boosts the Earned Income Tax Credit.
W-2s and FFCRA Benefits
Any qualifying business that provided sick leave wages or family leave wages under the FFCRA in 2020 must report the amount of these wages on the employee’s Form W-2 for 2020. The IRS issued specific guidance in Notice 2020-54 regarding this reporting requirement, allowing employers to report these wages in Box 14 of the W-2 or in a separate statement provided with the W-2 that complies with the IRS guidance. While it is unclear whether qualifying businesses that are not claiming the FFCRA tax credit for these wages must comply with this reporting requirement, we nonetheless recommend that employers comply out of an abundance of caution.
Employers that have already provided W-2s for 2020 to employees may still issue an amended or corrected W-2. There is a difference between an amendment and a correction. An amended W-2 may be issued if the W-2 has not yet been filed with the government. However, the correction process must be followed if the W-2 has been submitted to the government. Employers should act quickly to confirm whether they have accurately reported FFCRA wages on employees’ W-2s.
Statewide “Stay Home” Order
Governor Newsom announced the Regional Stay Home Order in December of 2020. Under this Order, additional restrictions will go into effect within 48 hours in regions with less than 15% hospital Intensive Care Unit (ICU) capacity. These restrictions prohibit private gatherings of any size, close some businesses, limit retail capacity to 20%, and require 100% masking and physical distancing in all others. Currently every region in California is subject to this Order.
When the Order is triggered in a region, it will remain in effect for at least 3 weeks and, after that period, will be lifted when a region’s projected ICU capacity meets or exceeds 15%. This will be assessed on a weekly basis after the initial 3 week period.
Regions are defined as follows:
Northern California: Del Norte, Glenn, Humboldt, Lake, Lassen, Mendocino, Modoc, Shasta, Siskiyou, Tehama, Trinity
Bay Area: Alameda, Contra Costa, Marin, Monterey, Napa, San Francisco, San Mateo, Santa Clara, Santa Cruz, Solano, Sonoma
Greater Sacramento: Alpine, Amador, Butte, Colusa, El Dorado, Nevada, Placer, Plumas, Sacramento, Sierra, Sutter, Yolo, Yuba
San Joaquin Valley: Calaveras, Fresno, Kern, Kings, Madera, Mariposa, Merced, San Benito, San Joaquin, Stanislaus, Tulare, Tuolumne
Southern California: Imperial, Inyo, Los Angeles, Mono, Orange, Riverside, San Bernardino, San Diego, San Luis Obispo, Santa Barbara, Ventura
The Order requires that capacity be strictly metered. Dealerships should interpret this to mean that a person on staff be tasked with monitoring and enforcing the capacity limit within the sales facility at all times.
Cal/OSHA Emergency Regulations
Cal/OSHA finalized new temporary emergency standards for employers to prevent the spread of COVID-19 on November 30, 2020. These regulations largely reinforce the requirements of the Governor’s Blueprint for a Safer Economy guidance. The basic requirements are as follows:
- Establish, implement, and maintain an effective written COVID-19 Prevention Program that includes:
- Identifying and evaluating employee exposures to COVID-19 health hazards.
- Implementing effective policies and procedures to correct unsafe and unhealthy conditions (such as safe physical distancing, modifying the workplace and staggering work schedules).
- Providing and ensuring workers wear face coverings to prevent exposure in the workplace.
- Provide effective training and instruction to employees on how COVID-19 is spread, infection prevention techniques, and information regarding COVID-19-related benefits that affected employees may be entitled to under applicable federal, state, or local laws.
- If there are three or more cases of COVID-19 within 14 days at a workplace, offer COVID-19 testing to potentially exposed employees at no cost to the employees during their working hours and provide them with information on COVID-19 related benefits.
- Contact the local health department no later than 48 hours after learning of three or more COVID-19 cases within 14-days to obtain guidance on preventing the further spread of COVID-19 within their workplace.
- Maintain a record of and track all COVID-19 cases among employees, while ensuring medical information remains confidential. These records must be made available to employees, authorized employee representatives, or as otherwise required by law, with personal identifying information removed.
The regulation also sets out specific standards to determine if an “exposure” to COVID-19 has occurred at a work place. The regulation defines exposure to COVID-19 as any time an employee was within 6 feet of a positive COVID-19 case for a cumulative total of 15 minutes within any 24-hour period during the COVID-19 case’s “high risk exposure period.” The high-risk exposure period is:
- If COVID-19 symptoms present: from two days before symptoms first developed symptoms until 10 days after symptoms first appeared, and 24 hours have passed with no fever, without the use of fever-reducing medications, and symptoms have improved.
- If COVID-19 symptoms not present: from two days before until ten days after the specimen for the first positive test for COVID-19 was collected.
These specific rules should provide businesses with greater certainty in determining which employees should quarantine due to an exposure to COVID-19. In addition, they highlight the importance of instructing employees to not come to work when they have symptoms of COVID-19 or suspect they have been exposed to COVID-19. The less time a potentially ill persons spends at the dealership, the less likely it is that the employee will cause additional exposures.
SB 1159: COVID-19 and Worker’s Compensation
California passed SB 1159 in the fall and it went into immediate effect. The law formalizes the State’s approach to COVID-19 and worker’s compensation. First, it creates a rebuttable presumption that an employee contracted COVID-19 at work if all of the following apply:
- The employee works for the employer with five or more employees;
- The employee tests positive for COVID-19 within 14 days after reporting to his or her place of employment; and
- This occurs during a COVID-19 “outbreak” at the employee’s specific workplace.
For most dealers, an outbreak occurs when, over a 14 day period, 4 or more employees test positive for COVID-19 at a single dealership facility. Specifically, if a workplace has 100 or fewer employees, the threshold for an outbreak is 4 employees; if it the workplace has more than 100 employees, the threshold is 4 percent.
A workplace is defined as a “building, store, facility, or agricultural field” and does not include an employee’s home. For dealerships with a single facility, we recommend treating that as a single workplace. If it has two or more facilities on the same lot, we recommend treating them as two separate facilities unless employees regularly use space in both facilities. Facilities that are on separate lots should be treated as separate workplaces. Individual employees who work at multiple workplaces should be counted as a positive case at each facility they work at.
In addition, if the local or state health department shuts the workplace down due to risk of COVID-19 infection, the workplace is deemed to be experiencing an outbreak.
The second major change due to the law is clarification regarding requirements to report COVID-19 cases to worker’s compensation claims administrators. When an employer knows or reasonably should know that an employee has tested positive for COVID-19, the employer must report this to their workers’ compensation claims administrator. This report must be made within three business days and in writing by email or fax. Your claims administrator may have created a form for this purpose.
Employers may be subject to civil penalties of up to $10,000 for violating these reporting requirements.
AB 685: Notices Regarding Positive COVID-19 Cases or Exposure
Starting January 1, 2021, if an employer learns that an employee has tested positive for COVID-19, the employer must provide employees, their union representatives, and the employer of any subcontracted employees, with notice of the positive case and provide special notice those who have been exposed to COVID-19. This notice must go out to employees within one business day. Please note that the privacy of the positive employee must be protected during this process. In addition, if three or more people within 14 days test positive If an employee tests positive, the employer must do following:
For all employees at the workplace:
- Provide a written notice that they may have been exposed to COVID-19.
- Provide information regarding the disinfection and safety plan that the employer plans to implement and complete per the guidelines of the federal Centers for Disease Control.
- Provide all employees who may have been exposed and the exclusive representative, if any, with information regarding COVID-19-related benefits to which the employee may be entitled under applicable federal, state, or local laws. These may include, but are not limited to, workers’ compensation, and options for exposed employees, including COVID-19-related leave, company sick leave, state-mandated leave, supplemental sick leave, or negotiated leave provisions, as well as anti-retaliation and anti-discrimination protections for the employee.
- Notify all employees, and the employers of subcontracted employees and the exclusive representative, if any, on the disinfection and safety plan that the employer plans to implement and complete per the guidelines of the federal Centers for Disease Control.
- If an employer or representative of the employer is notified of the number of cases that meet the definition of a COVID-19 outbreak, as defined by the State Department of Public Health, within 48 hours, the employer shall notify the local public health agency in the jurisdiction of the worksite of the names, number, occupation, and worksite of employees who tested positive.
Finally, numerous local jurisdictions have also adopted more restrictive measures to combat COVID-19. These include:
- The County of Santa Clara issued Mandatory Directives limiting capacity in indoor facilities to 10%. Notably this order appears to apply equally to retail and other indoor public facilities, such as vehicle service. In addition, the Directives require that people who travel 150 miles from the county quarantine for 14 days upon their return to the county.
- The City of Pasadena issued a Temporary Limited Stay at Home Order that mirrors other local orders. However, the order also requires that employees working outdoors wear face coverings at all time. Dealerships that operate in the City of Pasadena should adopt this change to their written prevention plan on a temporary basis.
- LA County issued an update to its Reopening Protocols for Dealerships. The order requires that employees working in cubicles, even if partitioned, wear face masks. In addition, the order requires employees to maintain a six-foot distance while eating and drinking, encourages outdoor dining where possible, and encourages eating at cubicles and workstations as opposed to in breakrooms.
2020 — looking back and moving forward
Part 1: Laws and regulations affecting dealerships
Part 2: Laws and propositions affecting all businesses
Part 3: Employment laws affecting businesses
Part 4: What businesses need to know for COVID-19 compliance in 2021
Part 5: 2020 cases affecting dealerships in 2021