Douglas T. Radigan is a partner at Worcester law firm Bowditch & Dewey. Reach him at dradigan@bowditch.com.
Updated: March 30, 2020
Know How
Businesses face these urgent coronavirus legal issues
By Douglas T. Radigan
The coronavirus pandemic is impacting businesses and public life around the world. As a local response, Bowditch formed an interdisciplinary legal team to assist companies and individuals in the development and execution of strategies to address this quickly evolving crisis.
Layoff vs. furlough?
A layoff is a separation of employment for an indefinite or permanent period of time. A furlough is a temporary leave of absence implemented by an employer. During the furlough, employees do not need to be paid regular wages, but they are still employed (potentially, an employee may use accrued vacation or other paid time off for income continuation during a furlough). When the business reopens to full strength, furloughed employees will become active again.
A furlough is sometimes implemented to retain talent and reduce the cost of separation and of future hiring and training.
Do I have to pay furloughed employees?
If a salaried employee does any work while on furlough, the employer must pay them the equivalent of their salary for the entire week. If an hourly employee works while on furlough, the employer must pay them for the time worked.
Does family and medical leave apply?
Generally, employees are not entitled to take FMLA to stay at home to avoid getting sick. However, as with many employment situations, the worst thing an employer can do is reject immediately an unorthodox leave request before understanding the facts. Even in the absence of state or federal protection, an employer’s internal policies may extend protection to individuals. When in doubt, the prudent approach is to work with counsel to ensure legal compliance.
If employees aren't working, are they entitled to health coverage?
You need to check your group health plan document (or certificate of coverage if your plan is fully insured) to determine how long employees who are not actively working may remain covered by your group health plan. Once this period expires, active employee coverage must be terminated from the plan (unless the insurance carrier or self-funded plan sponsor otherwise agrees to temporarily waive applicable eligibility provisions), and a COBRA notice must be sent. If your plan is self-funded and you would like to waive applicable plan eligibility provisions, you should first make sure any stop-loss coverage insurance carriers agree to cover claims relating to participants who would otherwise be ineligible.
Will insurance cover my COVID-19 losses?
Affected companies will be checking carefully the wording of any contracts and the extent of any available insurance. All business lines are potentially impacted and likely to see claims. Policy wording will obviously be the key to whether there is any coverage. The key takeaways are:
Do not assume your claim will be denied.
Do not make statements concerning the inapplicability of coverage.
Review your policy language for coverage and exclusions.
Provide timely notices to your insurer and fulfill all conditions of your policies to prevent against a waiver of coverage.
Document your damages.
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