Client Alert: COVID-19 Related Guidance and Effect on Group Health Plans

The government is quickly issuing guidance to address the overwhelming concerns over the coronavirus pandemic and to cover testing and treatment of COVID-19. Below are highlights involving recent changes affecting group health plans.

FFCRA’s Health Provisions

This past Wednesday, March 18, 2020, the Families First Coronavirus Response Act (“FFCRA”) was signed into law.  In part, the FFCRA requires coverage of testing for COVID-19. Specifically, group health plans (including grandfathered plans) and health insurance issuers offering group or individual health insurance coverage must provide coverage, without cost sharing or prior authorization or medical management requirements, for the following items and services:

  • Certain diagnostic products for the detection of SARS-CoV-2 or the diagnosis of the virus causing COVID-19 approved or authorized under certain provisions of the Federal Food, Drug and Cosmetic Act; and
  • Items and services furnished to an individual during health care provider office visits, urgent care and emergency room visits relating to furnishing or administration of the above diagnostic products or to evaluate that such individual needs the product.

These requirements are effective on March 18, 2020 for services and items furnished on or after March 18, 2020.

High Deductible Health Plans, HSAs, and COVID-19

The IRS has issued Notice 2020-15 to address concerns over medical expenses and testing relating to COVID-19. The link to the Notice can be found here: https://www.irs.gov/pub/irs-drop/n-20-15.pdf

Specifically, the Notice provides that a qualifying high deductible health plan (“HDHP”) with accompanying health savings accounts (“HSAs”) will not lose its qualifying HDHP status if it provides health benefits associated with testing for and treatment of COVID-19 prior to the deductible being met. IRS Notice 2020-15 states, in relevant part:

Part of the response to COVID-19 is removing barriers to testing for and treatment of COVID-19. Due to the nature of this public health emergency, and to avoid administrative delays or financial disincentives that might otherwise impede testing for and treatment of COVID-19 for participants in HDHPs, this notice provides that all medical care services received and items purchased associated with testing for and treatment of COVID-19 that are provided by a health plan without a deductible, or with a deductible below the minimum annual deductible otherwise required under section 223(c)(2)(A) for an HDHP, will be disregarded for purposes of determining the status of the plan as an HDHP.

Therefore, an employee participating in such a HDHP will not be disqualified from contributing to HSAs merely because the plan provided no or low-deductible health benefits for testing and treatment of COVID-19.

Catastrophic Plans and COVID-19

The Department of Health and Human Services (“HHS”) has issued guidance stating that, although catastrophic plans may not provide coverage of essential health benefits before the deductible being met (except as otherwise required), it will not take enforcement action against any health insurance issuer that does so for the purposes of diagnosing and/or treating COVID-19:

To facilitate the nation’s response to COVID-19, until further notice, HHS will not take enforcement action against any health insurance issuer that amends its catastrophic plans to provide pre-deductible coverage for services associated with the diagnosis and/or treatment of COVID-19.

Please see https://www.cms.gov/CCIIO/Resources/Files/Catastrophic-Coverage-of-COVID-19.pdf.

Needless to say, the law and guidance are rapidly evolving in this area. Please check with your Fraser Trebilcock attorney for the most recent updates.

This alert serves as a general summary, and does not constitute legal guidance. Please contact us with any specific questions.


Elizabeth H. Latchana, Attorney Fraser TrebilcockElizabeth H. Latchana specializes in employee health and welfare benefits. Recognized for her outstanding legal work, in both 2019 and 2015, Beth was selected as “Lawyer of the Year” in Lansing for Employee Benefits (ERISA) Law by Best Lawyers, and in 2017 as one of the Top 30 “Women in the Law” by Michigan Lawyers Weekly. Contact her for more information on this reminder or other matters at 517.377.0826 or elatchana@fraserlawfirm.com.

Navigating Executive Order No. 2020-19 (“Order 19”); The Eviction and Land Contract Forfeiture Moratorium

UPDATE: On Monday, April 20, 2020, Governor Gretchen Whitmer signed Executive Order 2020-54, extending the duration of relief in prior Order 2020-19 through May 15, 2020.

With Executive Order 2020-54, Governor Whitmer enacted a “temporary prohibition against entry to premises for the purpose of removing or excluding a tenant or mobile home owner from their home,” which can fairly be described as an “eviction moratorium.”

This is a brief summary and does not constitute legal advice. We encourage you to review our new blog which analyzes Executive Order 2020-54, by following the link here.


On Friday, March 20, 2020, Governor Whitmer signed an executive order enacting a “temporary prohibition against entry to premises for the purpose of removing or excluding a tenant or mobile home owner from their home,” which can fairly be described as an “eviction moratorium.” It is in place until the end of the night on Friday, April 17, 2020, which effectively means that it is in place until Monday, April 20, unless it is amended, extended or repealed.

It prohibits landlords and land contract vendors from evicting tenants or vendees for about one month; nominally until midnight on Friday April 17, 2020, but practically until the following Monday, April 20. It also prohibits personal delivery of Notices to Quit and other forfeiture notices, but does not prevent them entirely. It has provisions that apply to court officers as well. It is both detailed and summarized below.

Legal Basis: Like all the COVID-19 executive orders, Order 19 follows the March 10, 2020 Executive Order 2020-4, which declared a state of emergency across Michigan. It cites Michigan’s Constitution (Const 1963, art 5, sec 1) (vesting executive power in the governor) for support, along with Michigan’s 1976 Emergency Management Act, codified at MCL 30.401-421, and its 1945-era Emergency Powers of the Governor Act, codified at MCL 10.31-33 (please see links below to these statutes). Order 19 states:

“[t]he current state of emergency would be exacerbated by the additional threats to the public health related to removing or excluding people from their residences during the COVID-19 pandemic. To reduce the spread of COVID-19, protect the public health, and provide essential protections to vulnerable Michiganders, it is reasonable and necessary to provide temporary relief from certain eviction-related requirements.”

In sum, the Governor has determined that the personal interactions necessitated by the eviction process, and the possibility of people being put out “on the street”, so to speak, presents avoidable risks. Thus, the landlords of Michigan and those who sold residential property on land contract are being called on to contribute resources to the public good. At the time of writing and publication of this article, this contribution is uncompensated. Without addressing or resolving those issues, this article simply identifies what is prohibited and places those prohibitions into the context of the ordinary procedures for evictions or summary land contract forfeitures.

Prohibited Acts: Order 19 prohibits or regulates the following, described as numbered under the Order itself. The terms of Order 19 are summarized here:

  1. No person shall remove or exclude a residential tenant, people holding under that tenant (such as roommates, family members, and likely any other hangers-on), land contract vendees (buyers) or those holding under those vendees from the residential premises in question until 11:59 pm on April 17. This does not apply if the “tenant, vendee, or person holding under them poses a substantial risk to another person or an imminent and severe risk to property. This order should be broadly construed to effectuate that purpose.”

In other terms, regardless of where one was at in an eviction or land contract forfeiture process, actual removal or execution on a Writ of Restitution or other eviction order is stayed, barring exception. The “severe risk” exception is discussed briefly in the “What This Means” section below.

  1. “This order does not affect the inherent power of a judge to order equitable relief.”

It is uncertain at this time whether this section intends to create a judicial carve out that would allow the equitable relief of eviction in circumstances not contemplated under Order 19, or whether this is a statement intended to limit the scope of Order 19 and prevent it from being mis-applied in commercial or other contexts. The later seems more likely, but this section is open to some interpretation.

  1. This section, translated, provides that tenants and vendees still have to pay, and will still owe money for the time they occupy the property in question. In addition, landlords and vendors still have to issue notices to quit (and by extension, other forfeiture notices) consistent with MCL 600.5716 and MCL 600.5718. However, such notices cannot be personally delivered during the moratorium period – they must be mailed or e-served if allowed under the applicable lease.

It is highly unlikely that any judge will construe this section to prohibit a landlord or vendor from knocking on a tenant’s door to conduct other business, to check on a tenant, or to provide assistance to a tenant. The landlord just cannot knock on a tenant’s door to deliver the “bad news” of a notice to quit. The damages to the landlord continue to accrue, however.

  1. Further, no person may enter residential property to remove a tenant, vendee or anyone claiming under them, even if they have already obtained a Writ of Restitution or other eviction order. Like Section 1 above, there is an exception where the tenant, vendee, or person holding under them poses a substantial risk to another person or an imminent and severe risk to property.

This is largely a re-hash of Section 1: if no person can remove or evict under Section 1, it follows that no person may enter a rental unit or residential property subject to a land contract for those purposes.

  1. There is a moratorium preventing any court officer, sheriff or deputy from serving process (i.e., new lawsuits) that seek eviction of forfeiture as a remedy.

This section governs law enforcement, as opposed to the landlords or land contract vendors. It does not, on its face, bar lawsuits only seeking money damages. Assuming your local district court will take the filing and issue process (which remains uncertain at this time), one may theoretically initial a new contract-based suit for money damages and seek to amend to add an eviction remedy when the moratorium is lifted.

  1. “[N]o person may deny a mobile home owner access to their mobile home, except when the mobile home owner’s tenancy has been terminated because the mobile home owner poses a substantial risk to another person or an imminent and severe risk to property.”

This section basically brings mobile home parks under the same prohibitions applicable to residential landlords and land contract vendors.

  1. For 30 days after the restrictions in sections 1 through 6 expire, courts have latitude to adjourn proceedings, toll redemption periods, toll limitations periods, and extend deadlines.

This appears to be a “housekeeping” section granting court latitude with scheduling that likely already would be found to exist under Michigan’s rules of Court and revised Judicature Act.

  1. As used in this order, all terms have the meaning provided by the Revised Judicature Act.

This unifies Order 19 with existing statutes that the Courts and your attorney will already be familiar with.

  1. A willful violation of this order is a misdemeanor.

This section requires little or no translation.

  1. A copy of this order will be transmitted to the State Court Administrative Office.

This is a mechanical section that will mean little to landlords or land contract vendors.

What This Means: Landlords and those who sold residential property on land contract must either challenge the legality of Order 19, or wait out all evictions until it expires or is amended to allow evictions.

Order 19 excepts situations where a tenant is creating substantial risk to another person or an imminent and severe risk to property. While Order 19 is silent as to what those situations are, the case-by-case determinations that a court might make in that regard will be governed and informed by existing statute and common law. Owing to the numerous pronouncements in Order 19 regarding the necessity for people to shelter in place, along with the “Stay At Home” Order issued March 23, 2020, it seems clear that having a tenant or vendee with COVID-19 will not likely be deemed an exception, unless that person is taking assaultive or offensive actions to spread it to others in the building. If you are confronted with that situation, nothing in Order 19 prevents a landlord from calling the police along with pursuing legal remedies.

Landlords may still mail and e-mail notices to quit, notices to terminate tenancies and related land contract forfeiture notices, but they cannot be personally delivered. There is a chance that the 30 day notice to terminate tenancy may be timely enforced, but (barring a court order striking or modifying Order 19), enforcement of a notice to quit for non-payment will be delayed. Order 19 does not technically prohibit a contract-based lawsuit against a tenant or vendee for money damages, but your counsel may advise that, in these uncertain times, such a suit may be of limited utility, unless it is later amended to add the eviction remedy.

In the meantime, Michigan’s prohibitions against landlord self-help and retaliatory eviction remain in place. While it was never a good time for landlords to take certain matters into their own hands before the current state of emergency, now is an even worse time to do so. It is anticipated that courts would treat lockouts or landlord utility shutoffs or service denials harshly at this time. It is unknown whether courts would likewise be lenient with landlords regarding repair issues at this time, but there are good arguments to support a rule of reason in that regard.

In Conclusion: Every situation is different. This general discussion cannot be used as a substitute for legal advice, pursuant to an established attorney-client relationship. Thus, contact your legal counsel or the undersigned if you have questions. The attorneys at Fraser Trebilcock remain ready and able to serve.

Michigan Constitution of 1963:

Emergency Management Act:

Emergency Powers of Governor Act:


Jared Roberts is a shareholder at Fraser Trebilcock who works in real estate litigation and transactions, among other areas of the law. Jared also “walks the walk” as a landlord and owner of residential rental properties and apartments in Downtown Lansing. He may be reached at jroberts@fraserlawfirm.com and (517) 482-0887.

Employer Actions to Comply With Michigan “Stay-at-Home” Executive Order 2020-21

Employer Actions to Comply with Michigan “Stay-at-Home” Executive Order 2020-21

Effective Tuesday March 24, 12:01 am, Employers are with certain exceptions, ordered by Governor Whitmer to cease all operations that cannot be performed by employees working remotely from their homes. “Individuals” residing in Michigan, including employees, are similarly ordered to “stay at … their residence,” again with certain exceptions. To emphasize the importance of the order and to give it the most broad effect, it is to “be construed broadly to prohibit in-person work that is not necessary to sustain or protect life.[1] EO 2020-21 §1 (referred to as the “EO”). This article focuses on the obligations of Employers employing workers in Michigan. The Order is available here.

EMPLOYER OBLIGATIONS

Fundamental Prohibition on In-Person Work

The specific prohibition on in-person work in EO Section 4 states in its entirety:

“No person or entity shall operate a business or conduct operations that require workers to leave their homes or places of residence except to the extent that those workers are necessary to sustain or protect life or to conduct minimum basic operations.”

Thus, all in-person work must be:

  • Necessary to sustain or protect life, or
  • Necessary to conduct the minimum basic operations of the Employer.

Workers expected to perform “minimum basic operations” as permitted under Section 4 are those “whose in-person presence is strictly necessary to allow the business or operation to maintain the value of inventory and equipment, care for animals, ensure security, process transactions (including payroll and employee benefits), or facilitate the ability of other workers to work remotely.” EO §4.b.

Critical Infrastructure Workers are Permitted to Perform In-Person Work

Employees permitted to engage in in-person work are referred to as “critical infrastructure workers,” adopting the terms used in federal Coronavirus enactments. EO §4.a. Critical infrastructure workers include workers so designated under federal guidance issued March 19, 2020, available here. Federal guidance adopted in the EO limits critical infrastructure workers to those “who conduct a range of operations and services that are essential to continued critical infrastructure.” Id p. 1. This federal guidance includes an industry-specific discussion, “Identifying Essential Critical Infrastructure Workers.” Id., pp. 4 et seq. Thus, workers in the identified sectors may or may not be allowed to engage in in-person work, and it remains the responsibility of the Employer to determine that each “critical infrastructure worker” is properly so categorized. The Michigan EO adopts the following sectors as identified in the federal guidance:

  1. Health care and public health.
  2. Law enforcement, public safety, and first responders.
  3. Food and agriculture.
  4. Energy.
  5. Water and wastewater.
  6. Transportation and logistics.
  7. Public works.
  8. Communications and information technology, including news media.
  9. Other community-based government operations and essential functions.
  10. Critical manufacturing.
  11. Hazardous materials.
  12. Financial services.
  13. Chemical supply chains and safety.
  14. Defense industrial base.

The Michigan EO adds to the above list the following sectors:

  1. Child care workers serving dependents of critical infrastructure workers.
  2. Workers in designated supply and distribution centers, including workers needed to supply or distribute to other such centers. There are specific criteria for this category and “[b]usinesses … that abuse their [supplier/distributor] designation authority shall be subject to sanctions to the fullest extent of the law.” EO 9.b.6.
  3. Insurance industry.
  4. the provision of “food, shelter, and [life] necessities” to persons who are (a) economically disadvantaged, (b) otherwise needy, (c) disabled, or who (d) need assistance due to the Coronavirus emergency. The Governor, in guidance issued after the EO, clarified that hotels and places of lodging provide critical infrastructure to the extent that the customers of those businesses are providing mitigation or containment efforts or are themselves critical infrastructure workers of other employers.
  5. Labor union officials including benefit fund administrators.

Obligations of Employers Intending to Continue Operations

  1. Duty to Designate Critical Infrastructure Workers

Most employers that continue to conduct in-person operations under the EO must designate and inform those workers. Designations must be in an ordinary or electronic writing after March 31, until that date, designations may be oral. EO §5.a.

Employer operations involving the following situations are exempt from required designations:

  • “health care and public health” services;
  • “necessary government activities;” and,
  • community shelter, food and life necessities operations as described above.
  1. Duty to Suspend Other Operations

An Employer that continues to operate with permitted in-person workers must suspend all other operations. EO § 5.b.[2] As an example, a hotel providing lodging to persons who are themselves critical infrastructure workers of other employers must suspend all non-lodging services and amenities such as in-service restaurant and gym access.

Since compliance with EO § 5.b. is a requirement of permissibly performing any in-person work, the improper continuation of “other operations” would appear to put at risk the permissibility of otherwise-allowed in-person work performed by critical infrastructure workers.

  1. Adoption of Workplace Social Distancing Practices

The operating Employer must adopt social distancing procedures including adoption of the most restrictive practices on workplace access, promoting remote work “to the fullest extent possible,” screening and requiring symptomatic workers and workers with possible exposure to COVID-19 to remain away from the workplace, and engaging in robust workplace hygiene and disinfectant practices. Stringent and aggressive fulfillment of this duty may predictably be expected under the General Duty clause of the Occupational Safety and Health Administration Act (OSHA) in later review actions.

We recommend in addition to the EO requirements that the Employer immediately (1) adopt these required social distancing policies in writing, (2) where workers have public contact, adopt policies that apply social distancing requirements to the public persons coming in contact with workers, including pre-access screening for travel, exposure and other risk factors, and (3) post, publicize, and train all workers of all such policies and requirements.

  1. Additional Workplace Safety Guidance and Advice

The Centers for Disease Control and Prevention (CDC) are maintaining and updating a useful website, Interim Guidance for Businesses and Employers to Plan and Respond to Coronavirus Disease. Topics include “Maintaining Healthy Business Operations” and “Maintaining a Health Work Environment.”

PENALTIES AND DURATION

The stated penalty for violation is minor, specifically, a “willful violation” is designated as a misdemeanor – criminal – violation.

The Order as presently issued expires April 13, 2020 at 11:59 pm.

[1] All italicized language when quoting the Executive Order is added as assistance to the reader.

[2] Note while EO § 5.b. literally references, and thus permits, only activities “to sustain or protect life,” we interpret this provision, which applies to employment of critical infrastructure workers, also to include and permit the employment of workers designated as necessary to conduct minimum basic operations of the Employer.


Fraser Trebilcock Shareholder Dave Houston has over 40 years of experience representing employers in planning, counseling, and litigating virtually all employment claims and disputes including labor relations (NLRB and MERC), wage and overtime, and employment discrimination, and negotiation of union contracts. He has authored numerous publications regarding employment issues. You can reach him at 517.377.0855 or dhouston@fraserlawfirm.com.

Hotels Are Deemed Essential During Governor’s Stay-at-Home Executive Order

The MRLA has been in constant communication with Governor Whitmer’s office all day to secure clarification on hotels being deemed essential, meaning they may remain open during the Stay-At-Home Executive Order.

HOTELS ARE DEEMED ESSENTIAL with the following guidance from the Governor:

 In general, hotels and motels may remain open, but should limit functions.

Under the order, workers at hotels and motels are critical infrastructure workers to the extent they “provide temporary or permanent housing for… shelter … for … otherwise needy individuals.” For purposes of the order, the term “otherwise needy individuals” includes anyone currently residing in a hotel or motel or anyone seeking shelter during the current pandemic. Hotels and motels may also remain open to the extent they are used for COVID-19 mitigation and containment efforts and to serve critical infrastructure workers.

Hotels and motels may therefore remain open, but should limit guest-to-guest, guest-to-staff, and staff-to-staff interactions, and may only engage in activities providing shelter and basic needs (carry out/delivery/room service food, laundry, etc.). They may not provide additional in-house amenities such as gyms, pools, spas, entertainment faculties, meetings rooms or like facilities, or provide in-house dining.


We have created a response team to the rapidly changing COVID-19 situation, and will continue to post any new developments. You can view the page and additional resources by following the link here. In the meantime, if you have any questions, please contact your Fraser Trebilcock attorney.

Employers & COVID-19: New Legal Requirements under the Families First Coronavirus Response Act

These are unprecedented times and ensuring health and safety of the world’s population is certainly on everyone’s mind. For those running and operating businesses, a whole separate challenge exists. 

Due to the various orders and advisories to self-quarantine, school closings, and far-reaching spread of the COVID-19 pandemic, employers are faced with a rapidly changing workforce. They are grappling with how to continue business while dealing with the safety of their workers. It is a moral and financial dilemma. As employers of all sizes must consider how to manage this ever changing situation, new laws, requirements, and relief are being released just as quickly.

Given the economic downturn spurred by the recent turn of events, additional legal requirements are undoubtedly daunting for employers who face uncertainty or are weighing difficult decisions regarding their workforce. To help provide some clarity on these new obligations, this Client Alert discusses the emerging laws affecting employers and their health plans, including expanded benefits under FMLA, as well as additional required paid sick days.

 

Families First Coronavirus Response Act (“FFCRA”)

This past Wednesday, March 18, 2020, the Families First Coronavirus Response Act (“FFCRA”) was signed into law. The FFCRA applies numerous requirements and obligations to employers. In addition to expanding unemployment benefits, lessening financial obstacles for COVID-19 testing, and setting forth funding to assist with domestic nutrition programs, the FFCRA’s affects employers by amending the Family and Medical Leave Act (FMLA) to provide a new type of leave relating to the COVID-19 pandemic and separately requiring that employers provide paid sick days to employees for COVID-19 related matters.

The FFCRA becomes effective on April 1, 2020. Therefore, employers must understand its provisions and act quickly.

Emergency Family and Medical Leave Expansion Act

The FFCRA modifies FMLA under the Emergency Family and Medical Leave Expansion Act (“FMLA Expansion Act”). While the FMLA, in general terms, applies to employers with 50 or more employees and protects employees who have worked at least 12 months with that employer, the FFCRA now changes that with respect to COVID-19 related issues and adds a new section titled “Public Health Emergency Leave.”

In summary, FMLA leave now also applies to employees who have been employed at least 30 days by employers who employ fewer than 500 employees (and public agencies) if those employees are unable to work (or telework) because they need to care for their under age 18 children due to the closure of schools or unavailability of day care due to a government declared COVID-19 public health emergency. The first 10 days of the 12-week job-protected leave is unpaid; however, subsequent days must be paid leave in an amount of not less than two-thirds of regular pay, capped at $200 per day with a maximum cap of $10,000 per employee.

Effective Dates:

The FMLA Expansion Act is applicable from April 1, 2020 to December 31, 2020.

Qualifying Leave:

Specifically, the FMLA Expansion Act applies to qualifying needs related to a public health emergency, as set forth below:

  • “Qualifying need related to a public health emergency” is when an employee is “unable to work (or telework) due to a need for leave to care for the son or daughter under 18 years of age of such employee if the school or place of care has been closed, or the child care provider … is unavailable, due to a public health emergency.”  The terms “child care provider” and “school” are also defined.
  • “Public health emergency” is an emergency with respect to COVID-19 declared by a Federal, State, or local authority.
 
Affected Employers:
The leave requirements apply to employers with fewer than 500 employees, as well as public agencies. 

Exemptions may apply for employers with less than 50 employees if complying would jeopardize the viability of the business as a going concern and if regulations are so issued. See: https://www.irs.gov/newsroom/treasury-irs-and-labor-announce-plan-to-implement-coronavirus-related-paid-leave-for-workers-and-tax-credits-for-small-and-midsize-businesses-to-swiftly-recover-the-cost-of-providing-coronavirus. We expect such regulations to be issued in April of 2020.

Special rules apply in cases of employment under multi-employer bargaining agreements.

Eligible Employees:

Employees who have been employed for at least 30 calendar days by the employer are eligible for the leave if they have a qualifying need related to a public health emergency. Certain health care providers and emergency responders may be excluded from this additional protection, if regulations are so issued. Additionally, an employer of an employee who is a health care provider or an emergency responder may elect to exclude such employee.

Employees must provide the employer with notice of leave as practicable.

Special rules apply in cases of employment under multi-employer bargaining agreements.

Unpaid and Paid Leave Components:

The 12-week FMLA leave has both unpaid and paid components.

Unpaid leave applies for the first 10 days; however an employee may substitute accrued vacation, personal, medical or sick leave time.

Paid leave must be provided by the employer for days in excess of 10 days, calculated based on at least two-third’s of an employee’s regular rate of pay and the number of hours the employee would otherwise be scheduled to work.

The amount shall not exceed $200 per day and $10,000 in the aggregate. However, for an employee whose schedule varies from week to week and an employer is unable to determine with certainty the number of hours the employee would have worked, the employer must instead average the number of hours the employee was scheduled per day over the 6-month period ending on the date the employee took such leave (or if the employee did not work, the employer must use a reasonable expectation the employee’s average hours at the time of hiring).

Small Employer Partial Exception:

FMLA’s restoration to work provisions will not apply to employers with fewer than 25 employees if:

  • The employee takes leave pursuant to a public health emergency;
  • The position held by the employee no longer exists due to economic conditions or operation changes that affect employment and are caused by a public health emergency during the leave;
  • The employer makes reasonable efforts to restore the employee to an equivalent position (with equivalent benefits, pay, and other terms and conditions of employment); and
  • If the above efforts of the employer to restore the employee fail, the employer makes reasonable efforts to contact the employee if an equivalent position becomes available for a period of 1 year beginning on the day the qualifying need related to the public health emergency concludes (or the date that is 12 weeks after the date the employee’s public health emergency leave starts).
Significantly, small employers who are not accustomed to FMLA must now comply with the FMLA Expansion Act for COVID-19 related leaves.  However, in a joint news release issued late in the day of Friday, March 20, 2020, the U.S. Treasury Department, Internal Revenue Service, and the U.S. Department of Labor stated that small businesses with fewer than 50 employees will be eligible for an exemption in cases where the viability of the business in threatened. See: https://www.irs.gov/newsroom/treasury-irs-and-labor-announce-plan-to-implement-coronavirus-related-paid-leave-for-workers-and-tax-credits-for-small-and-midsize-businesses-to-swiftly-recover-the-cost-of-providing-coronavirus.
Additionally, unless otherwise specified, all covered employers must apply FMLA’s typical protections for these public health emergency leaves, including job-protection and restoration, and the continuation of group health plan coverage with employer contributions during such leaves. 

Emergency Paid Sick Leave Act

The FFCRA also requires employers to provide up to 80 hours of paid sick time for COVID-19 related issues under the Emergency Paid Sick Leave Act (“EPSLA”).

Effective Dates:

The EPSLA is effective from April 1, 2020 to December 31, 2020.

Affected Employers:

The EPSLA applies to virtually all private employers with fewer than 500 employees and to virtually all public agencies employing 1 or more employees. Exemptions may apply for employers with less than 50 employees if complying would jeopardize the viability of the business as a going concern and if regulations are so issued.  Additionally, future regulations may allow an employer of an employee who is a health care provider or an emergency responder to opt out.

Eligible Employees:

The EPSLA requires no hour or service requirement to receive paid leave, which may be immediately used. However, employers of employees who are health care providers or emergency responders may elect to exclude these employees from the above.

Special rules apply for multi-employer bargaining agreements.

Reason for Paid Sick Leave:

Under EPSLA, employers shall provide employees with paid sick time if they are unable to work (or telework) due to a need for leave because:

  1. The employee is subject to a Federal, State, or local quarantine or isolation order related to COVID-19;
  2. The employee has been advised by a health care provider to self-quarantine due to concerns relating to COVID-19;
  3. The employee has COVID-19 symptoms and is seeking a medical diagnosis;
  4. The employee is caring for an individual subject to quarantine or isolation or advised to self-quarantine as described in paragraphs (1) or (2) above;
  5. The employee is caring for his/her child if the school or place of care has been closed or the child care provider is unavailable due to COVID-19 precautions; and
  6. The employee is experiencing any other substantially similar condition specified by the Secretary of Health and Human Services.
 
Amount of Paid Sick Time:
Paid sick time is calculated based on the employee’s required compensation and the number of hours the employee would otherwise be scheduled to work capped at:
  • $511 per day and $5,110 in the aggregate for reasons (1)-(3) under Reason for Paid Sick Leave above; and
    • For Reasons (1)-(3), compensation shall not be less than the greater of the employee’s regular rate of pay under the Fair Labor Standards Act (“FLSA”), minimum wage rate under the FLSA, or the minimum wage rate in the applicable State or locality (whichever is greater) in which the employee is employed.
  • $200 per day and $2,000 in the aggregate for reasons (4)-(6) under Reason for Paid Sick Leave above
    • For Reasons (4)-(6), compensation shall be two-thirds of that described for Reasons (1)-(3).
However, for any part-time employee whose schedule varies from week to week and an employer is unable to determine with certainty the number of hours the employee would have worked, the employer must instead average the number of hours the employee was scheduled per day over the 6-month period ending on the date the employee took such leave (or if the employee did not work, the employer must use a reasonable expectation the employee’s average hours at the time of hiring). The Department of Labor is expected to issue additional information and guidelines regarding calculation of this paid sick time.
 
Duration of Paid Sick Leave:
For full-time employees, 80 hours of paid sick time must be provided.  For part-time employees, paid sick time will be the number of hours that the employee works, on overage, over a two-week period. There will not be a carryover from one year to the next.  Paid sick time is terminated with the employee’s next scheduled work shift immediately following the point when leave is no longer needed as defined under EPSLA. 

Notice Requirement:

Employers must post, in conspicuous places where employer notices are customarily posted, an approved notice describing the requirements of the EPSLA. The Secretary of Labor will make a model notice availability no later than March 25, 2020.  It must be posted by April 1, 2020.

Prohibited Acts:

Employers cannot discharge, discipline, or otherwise discriminate against employees who take leave under the EPSLA or have filed a complaint, instituted (or caused to be instituted) any proceeding or has testified or is about to testify in any proceeding related to the EPSLA.

Additionally, the EPSLA states that employers cannot require that an employee be involved in a search or find a replacement to coverage his/her hours during the leave.

Employers also cannot require that an employee use other employer provided paid leave prior to using leave under the EPSLA.

Enforcement:

Employers who fail to comply will be subject to stiff penalties under the Fair Labor Standards Act.

Tax Credits for Paid Sick and Paid Family and Medical Leave

While the FFCRA requires employers to comply with additional paid FMLA and sick leave relating to the COVD-19 pandemic, it also provides some relief for employers in the form of tax credits.

Employers will be allowed a quarterly tax credit equal to 100 percent of the qualified sick leave wages paid under the EPSLA and equal to 100 percent of the qualified family leave wages paid under the FMLA Expansion Act, subject to limitations and requirements. For example, the sick leave wages taken into account shall not exceed $200 per day (or $511 per day for leaves associated government order quarantine or isolation due to COVID-19, self-quarantine as advised by a health care provider due to COVID-19 concerns, or if an employee has COVID-19 symptoms and is seeking a diagnosis) up to a limited number of days. The family leave wages taken into account shall not exceed $200 per day or up to $10,000 in the aggregate and is limited to certain employment taxes.

The credits also include a portion of the health plan cost allocable to the paid leave.

Tax credits are also available for eligible self-employed individuals.

However, these tax credits are subject to additional restrictions and requirements. As the law continues to evolve and new guidance is to be issued this week, an in-depth discussion is beyond the scope of this Client Alert.

Concluding Thoughts:

While aspects of the FFCRA are not completely clear, we certainly hope to see more guidance from the Department of Labor prior to the law’s April 1st effective date.

Current actions for employers include analyzing the interplay between the FFCRA’s new leave and paid sick time requirements, their own policies, as well as other federal, state, and local laws. Questions to ask include whether the employer’s leave of absence provisions should be amended and whether paid time off polices need to be rewritten.

Benefits are also a key component in this analysis. Depending on potential layoffs or leaves of absence, even if unaffected by the FFCRA, will benefits be continued? What do the applicable employee benefit plans, insurance policies, and/or other governing documents provide? How will monthly payments by the employee continue?  Is there a risk of insurers denying continued benefits? Does COBRA apply? What are the Affordable Care Act or Pay or Play consequences if coverage is terminated, or if coverage is continued but the employer contribution ceases for non-FMLA leaves?  Do benefit documents require amendments to comply?

A plethora of questions are mounting and the rapid nature of legal changes is not helping. However, as always, careful consideration of options and benefits is paramount.

Of some relief, good faith efforts toward compliance will be considered.  In a subsequent IRS News Release issued on Friday, March 20, 2020, the Department of Labor stated that it will be issuing a temporary non-enforcement policy in order for employers to come into compliance with the Act. “Under this policy, Labor will not bring an enforcement action against any employer for violations of the Act so long as the employer has acted reasonably and in good faith to comply with the Act. Labor will instead focus on compliance assistance during the 30-day period.” See https://www.irs.gov/newsroom/treasury-irs-and-labor-announce-plan-to-implement-coronavirus-related-paid-leave-for-workers-and-tax-credits-for-small-and-midsize-businesses-to-swiftly-recover-the-cost-of-providing-coronavirus.

Again, the law and guidance are rapidly evolving in this area. Please check with your Fraser Trebilcock attorney for the most recent updates.

This alert serves as a general summary, and does not constitute legal guidance. Please contact us with any specific questions.


Elizabeth H. Latchana, Attorney Fraser TrebilcockElizabeth H. Latchana specializes in employee health and welfare benefits. Recognized for her outstanding legal work, in both 2019 and 2015, Beth was selected as “Lawyer of the Year” in Lansing for Employee Benefits (ERISA) Law by Best Lawyers, and in 2017 as one of the Top 30 “Women in the Law” by Michigan Lawyers Weekly. Contact her for more information on this reminder or other matters at 517.377.0826 or elatchana@fraserlawfirm.com.

COVID-19 Mortgage Relief

Homeowners who have reduced income or lost their jobs because of the coronavirus pandemic are being offered some relief.

Federal regulators, through the mortgage giants Fannie Mae and Freddie Mac, are ordering lenders to offer homeowners flexibility. Fannie and Freddie guarantee about half of all home loans in the U.S.

Depending on their situation, homeowners who are current on their mortgage should be eligible to have their mortgage payments either reduced or suspended for up to 12 months.

This is not a forgiveness of debt or free money. Homeowners must be proactive and contact their mortgage servicer to work out a repayment plan or a forbearance (suspension) once they recover financially. This might entail just extending the term of the loan, but it will likely vary by lender and each homeowner’s situation.

Homeowners can find out if they have a Fannie Mae-owned mortgage and access to the Disaster Response Network* by visiting www.KnowYourOptions.com/loanlookup.

Fannie and Freddie are also directing lenders to suspend foreclosures for the next 60-days, though this is more of a public health move because anyone facing foreclosure already would have run into serious financial trouble before the coronavirus started to spread in the United States.


We have created a response team to the rapidly changing COVID-19 situation, and will continue to post any new developments. You can view the page and additional resources by following the link here. In the meantime, if you have any questions, please contact your Fraser Trebilcock attorney.

Governor Whitmer Orders Halt to Many Medical and Dental Services

Governor Gretchen Whitmer today signed Executive Order 2020-17, restricting non-essential medical and dental procedures in hospitals, surgery centers, clinics and medical offices. The order is wide-ranging and specific and provides examples of actions that may not be taken, and exceptions if applicable.

Many medical and dental providers have already initiated contact with patients to defer many scheduled appointments even prior to the Governor’s order, but these steps are no longer optional.

The stated purpose of the Order is “To mitigate the spread of COVID-19, protect the public health, provide essential protections to vulnerable Michiganders, and ensure the availability of health care resources, it is reasonable and necessary to impose temporary restrictions on non-essential medical and dental procedures.”

For more information regarding the Executive Order, follow the link here.


We have created a response team to the rapidly changing COVID-19 situation, and will continue to post any new developments. You can view the page and additional resources by following the link here. In the meantime, if you have any questions, please contact your Fraser Trebilcock attorney.

COVID-19 and Business Interruption Coverage

COVID-19 has already caused severe disruption to the economy in every state, our nation, and the world. In the United States, government entities as well as the private sector are implementing more and more drastic measures to respond to COVID-19. While these efforts may be wise in light of the substantial public health concerns, they threaten to bring parts of the economy to a virtual halt, adversely impacting most every business and resulting in substantial losses.

These losses for businesses, coupled with having to fully close or halt nearly the vast majority of the scope of services they provide, are detrimental to the longevity of their operations. If there is an expectation that these events caused by COVID-19 would trigger their business interruption coverage, this might not be the case.

Insurance companies over nearly the past two decades have begun to quietly remove infectious diseases from the coverage, starting with the SARS epidemic in 2003, followed by the H1N1 virus in 2009.

Some states are aware of this, and are in the process of passing legislation to ensure that insurers pay businesses interruption claims during this pandemic.

While COVID-19 presents a unique and difficult situation for all of us, this presents a great opportunity to review your own business interruption coverage policy to fully understand your coverage and exceptions to such coverage.


We have created a response team to the rapidly changing COVID-19 situation, and will continue to post any new developments. You can view the page and additional resources by following the link here. In the meantime, if you have any questions, please contact your Fraser Trebilcock attorney.

Governor Whitmer Executive Order Allows Public Bodies To Meet Electronically

UPDATE: On April 14, 2020, Governor Gretchen Whitmer signed Executive Order 2020-48, extending the duration of relief through May 12, 2020 for public bodies that are subject to the Open Meetings Act to use telephone or video conference methods to continue meeting and conduct business. With this new order, EO 2020-15 is rescinded.

With Executive Order 2020-48, public bodies that are subject to the Open Meetings Act can use telephone or video conferencing methods to continue meeting and conduct business. This will be allowed provided there is two-way communication for members and the public to hear and address each other.

This is a brief summary and does not constitute legal advice. We encourage you to review Executive Order 2020-48 as there are many terms which address how a public body meeting must be conducted.


March 19, 2020: Governor Whitmer through an executive order is temporarily allowing public bodies to meet electronically until April 15, as long as the method used facilitates public participation.

With Executive Order 2020-15, public bodies that are subject to the Open Meetings Act can now use telephone or video conferencing methods to continue meeting and conduct business. This will be allowed provided there is two-way communication for members and the public to hear and address each other.

This Order does not apply to nonprofit corporations that do not meet the definition of a “public body.” Nonprofit corporations that are not public bodies may conduct meetings by conference telephone or similar communications equipment provided all participants can communicate with each other, unless the articles or bylaws restrict such participation.


Fraser Trebilcock Business Tax Attorney Edward J. CastellaniEdward J. Castellani is an attorney and CPA with Fraser Trebilcock and serves as Chair of the Firm’s Business and Tax Department. He may be contacted at ecast@fraserlawfirm.com or 517-377-0845.

IRS Extends Tax Filing and Payment Date by 90 Days

Update: March 20, 2020: The Treasury Secretary Steven Mnuchin announced that the IRS is now extending the federal income tax filing deadline to July 15.  Earlier this week, the Treasury Department released guidance that pushed back just the deadline for making federal tax payments — not for filing tax returns — to July 15.

As part of its coronavirus response, the federal government is giving taxpayers a three-month reprieve to pay their 2019 taxes.

2019 tax returns and payments were originally due on April 15. Treasury Secretary Steven Mnuchin announced on March 17 that a 90-day grace period to pay applies to taxpayers who owe up to $1 million and covered many pass-through entities and small businesses, according to the Treasury Secretary.

Corporate filers will get the same 90-day extension to pay on amounts due up to $10 million.

During this three-month grace period, taxpayers won’t be subject to interest and penalties if their 2019 taxes are paid on or before July 15, 2020.

The 90-day grace period applies only to the payment of 2019 taxes. The tax return due date remains April 15. Taxpayers should get their 2019 federal income tax return filed as soon as possible, especially if expecting a refund and in need of cash.

As of this afternoon, the State of Michigan has not announced any adjustments to its tax filing and payment deadlines; those remain April 15, 2020.


Fraser Trebilcock attorney Paul V. McCord has more than 20 years of tax litigation experience, including serving as a clerk on the U.S. Tax Court and as a judge of the Michigan Tax Tribunal. Paul has represented clients before the IRS, Michigan Department of Treasury, other state revenue departments and local units of government. He can be contacted at 517.377.0861 or pmccord@fraserlawfirm.com.