Legal risks for business owners are changing every day. Here's how you could be vulnerable over paid leave, cleaning supplies, and your work-from-home policy.
Across the US, business owners are scrambling to adapt to the new realities of the coronavirus pandemic, and new laws are presenting yet another challenge. Recently imposed requirements on business owners include paid leave guidelines, reporting COVID-19 cases at work, and managing risks associated with cleaning supplies, security, and temporary reduced pay.
These requirements have changed in real time and even legal experts are having a tough time keeping up, according to Lee Geiger, a partner at Graydon Law in Cincinnati, Ohio. "I've led seven webinars in the last three weeks, and in two of them the law changed mid-webinar," Geiger told Business Insider. "That is how quickly all of this has happened."
Business Insider spoke with Geiger and other employment lawyers to identify some of the key legal risks small business owners should know about when it comes to managing their workforce during and after the pandemic.
Payroll relief, paid sick time, and the new FMLA
If you received a loan through the Paycheck Protection Program, it's important to remember that it's only forgivable if you keep your headcount steady.
"Now is not the time to take on a loan and then lay off half your staff," said Geiger. "That doesn't mean that you can't fire a bad employee, but you have to recognize that a percentage of the loan is then not forgivable, or you need to hire somebody else in the position."
The Families First Coronavirus Response Act (FFCRA) has also put new paid leave requirements on small employers. An expansion of the Family and Medical Leave Act (FMLA) now applies to companies with fewer than 500 employees, even those with under 50 employees.
Employees are now eligible for up to two weeks of paid leave at full pay if they're quarantined or sick with COVID-19, and up to eight weeks of paid leave at two-thirds pay if they have to stay home to take care of a child. Unlike the regular FMLA, employees are eligible for these benefits after working at a company for just 30 days.
These benefits are covered by the government, but small businesses will only be reimbursed later in the form of a tax credit. Businesses should expect to fully cover the costs upfront.
Guidance from the Department of Labor, which is responsible for administering and enforcing the new paid leave benefits, hasn't been crystal clear, according to Shelley Smith, a Philadelphia-based employment lawyer at Archer.
For example, the bill covers sick employees who are "seeking a medical diagnosis" of COVID-19, but it's unclear what exactly that means when there's a testing shortage. "Employers have to be cautious about demanding a medical note because in many instances it's just not going to be possible for the employee to get the documentation," Smith said.
Cleaning supplies and reporting COVID-19 cases
On top of financial stress, the coronavirus pandemic has introduced a new set of safety and security concerns for small business owners.
Businesses are required to report employee COVID-19 cases to the Occupational Safety and Health Administration (OSHA) if there's evidence that an employee contracted it at work.
"Employees are looking at the workplace and wondering, 'Are you keeping me safe from COVID-19?'" said Natalie Sanders, an employment lawyer at Brooks Pierce in North Carolina. To minimize their risks, employers should regularly consult guidelines published by OSHA and the Centers for Disease Control and Prevention (CDC).
"Say you're introducing new and different cleaning supplies," said Sanders, "there's training and OSHA guidance on all of those things. Many small companies may not be thinking about that."
Your work-from-home policy
Sanders has also advised clients on the risks associated with remote working. "For many small businesses it's very new, and it is something where employers really need to get into the weeds," she said. "They need to think very carefully about how they're maintaining confidentiality of any information the employees may take with them home."
Small businesses should also consider how their COVID-19 policies might impact them in the future. Does a work-from home policy make employees more or less productive? There might be implications for how you run your business when things return to normal. Are employees able to perform all essential job functions from home? If so, they might have a right under the Americans with Disabilities Act to receive similar accommodations in the future, according to Sanders.
"This is a time to really evaluate and document what happens," Sanders said.
Layoffs, discrimination, and the risks of reduced pay
While responding to the coronavirus crisis, small business owners also need to remember that all normal labor and employment laws still apply.
"If you're looking at laying off part of your workforce but not all of your workforce, think carefully about how you're selecting who you're laying off so it's not discriminatory," she said. "Even if it's not intentional."
Small businesses also need to make sure they're not running afoul of the Fair Labor Standards Act, according to Geiger. "Some companies are trying not to lay people off by reducing hours or reducing pay," he explained. "Exempt or salaried employees need to be paid their regular salary if they do any work in a workweek. If you're going to cut pay, you can't do it on a fluctuating basis. It's got to be on a prospective basis and it also needs to be done in writing."
"You don't want to make promises," Geiger added. "What we've learned from this is it's very hard to predict the future. Businesses can get in trouble if they say this is a three-week furlough or three-week reduction in pay."
Make a 'good faith effort' and document everything
In all of the conversations Business Insider had with employment lawyers, one conclusion stood out: There are no clear answers during this unprecedented time.
Small business owners don't have the time or resources to make perfect decisions, and it's impossible to predict what the government is going to require in the future. But it is possible to prepare by keeping thorough records, according to Smith.
"I think the best way to do it is for employers to work with their counsel and document all of the steps that they're trying to make a good faith effort to interpret these various laws and regulations correctly," she said, "so they're in the best position to present the best case they can in whatever context they have to present it."