March 23, 2020;
Updated March 28, 2020 to reflect new guidance from the U.S. Department of Labor
What the Orders Say
To mitigate the impact of COVID-19 and protect the capacity of New Jersey’s health care system, on March 21, 2020, Governor Phil Murphy signed Executive Orders No. 107 and 108, directing all residents to stay at home until further notice. The Executive Order No. 107 provides for certain exceptions, such as obtaining essential goods or services, seeking medical attention, visiting family or close friends, reporting to work, or engaging in outdoor activities.
Executive Order 107 further directs the closure of all non-essential retail businesses to the public, with the exceptions of:
- Grocery stores, farmer’s markets and farms that sell directly to customers, and other food stores, including retailers that offer a varied assortment of foods comparable to what exists at a grocery store;
- Pharmacies and medical marijuana dispensaries;
- Medical supply stores;
- Gas stations;
- Convenience stores;
- Ancillary stores within healthcare facilities;
- Hardware and home improvement stores;
- Banks and other financial institutions;
- Laundromats and dry-cleaning services;
- Stores that principally sell supplies for children under five years;
- Pet stores;
- Liquor stores;
- Car dealerships, but only for auto maintenance and repair, and auto mechanics;
- Printing and office supply shops;
- Mail and delivery stores.
Additionally, Executive Order 107 mandates that all businesses or non-profits, wherever practicable, must accommodate their workforce for telework or work-from-home arrangements. To the extent a business or non-profit has employees that cannot perform their functions via telework or work-from-home arrangements, the business or non-profit should make best efforts to reduce staff on site to the minimal number necessary to ensure that essential operations can continue. The Gordon & Rees New Jersey attorneys are working remotely and are available to respond to your questions and concerns, and to guide you and your companies through the myriad of employment issues arising under the Governor’s Orders and the National Emergency.
The Order continues existing bans on recreational and entertainment businesses, requirements that all restaurants operate by delivery and takeout only.
Over the past two weeks, several municipalities enacted restrictions to curtail movement of citizens that reside or work in their respective localities. In Teaneck, New Jersey, one of the hotspots for the outbreak, Mayor Mohammed Hameeduddin asked all of the township’s 40,000 residents to self-quarantine themselves, only leaving their homes for food and medicine. On March 18, 2020, Mayor Ras Barakas of Newark ordered that non-essential retail, such as liquor stores, close until further notice. However, also on March 21, 2020, Governor Murphy signed Executive Order No. 108, which invalidates any county or municipal restriction that in any way will or might conflict with any of the provisions of Executive Order No. 107. Municipalities or counties cannot 1) make any additions to or deletions from the list of essential retail businesses; 2) impose any additional limitations on businesses beyond the Governor’s Order; 3) impose any additional density or social distancing requirements; or 4) impose any additional restrictions on freedom of movement. The only exceptions are two categories over which municipalities or counties may impose any additional restrictions: 1) online marketplaces for arranging or offering lodging and 2) municipal or county parks.
Changes to Your Workforce
Whether or not your business is deemed “essential," you may be considering changes to your workforce for employee safety and in response to the undeniable economic impact of the pandemic. Such changes may include furloughing employees, laying off employees, or reducing an employee’s rate of pay/hours.
In New Jersey, an employer is only required to advise an employee, in writing, if it is reducing its rate of pay/hours; an employer does not need to provide an employee notice of a furlough or layoff (unless the layoff is subject to the New Jersey WARN Act, as described below). However, some employers may decide to provide written notice to employees of their decision, the reason and assurance that these measures are only being taken in response to the pandemic and with the ultimate goal of returning to business as usual in the near future. We suggest you consider all available options carefully before making any decision, and refer to the following chart for an overview.
|
Option
|
Description
|
Important Information
|
|
Furlough
|
§ Temporary suspension of employment during which employees do not receive wages
§ Those on furlough remain employed
|
§ Advise employees they must not work during the furlough period and consider keeping employer issued mobile devices and limiting or cutting off email access.
§ Employee receipt of continuation of health benefits dependent on health insurance policies, plan documents and other policies or agreements with employees.
§ Employer may restrict the use of vacation/PTO during furlough.
§ Employee may be entitled to state sick pay under the New Jersey Paid Sick Leave (“NJ PSL”).
§ Employee is entitled to federal sick pay under the Families First Coronavirus Response Act “FFCRA” if employer has 500 or fewer employees.
§ See below regarding more detail on the NJ PSL and the FFCRA.
§ Employees may receive Unemployment Compensation Insurance.
|
|
|
|
|
|
Layoff/Termination
|
A layoff is the removal of an employee from the workforce, without any guarantee of returning to work.
A termination is a complete and permanent separation of employment.
|
§ Notice required if employer subject to NJ WARN. See below regarding potential notice requirements under NJ WARN.
§ Final pay due must be made no later than the next regular pay day (which may not be more than 10 days from the end of the work period for which such wages were earned). Unused vacation or PTO may need to be paid out depending on company policy.
§ You not need to pay accrued paid sick leave at time of termination or layoff.
§ If you layoff or terminate a salaried employee, you need only pay them through the final day’s work.
§ Provide timely notice regarding COBRA benefits.
|
|
|
|
|
|
Reduction in Pay
|
Reducing an employee’s hourly rate or prospective salary
|
§ Ensure you pay hourly, non-exempt, non-tipped employees minimum wage. The statewide minimum wage is $11 per hour; however, municipalities may have higher minimum wages (there are also differently hourly rates for workers in the fast food industry and those who receive tips).
§ Reduction in exempt salary may result in the employee’s exempt status.
§ You may only reduce pay going forward, and must provide notice in writing.
|
|
|
|
|
|
Reduction in Hours
|
Reduce hours for non-exempt employees and pay only the hours worked.
|
§ Take care not to reduce hours in a way that appears discriminatory – such as only for higher paid (and generally older) workers.
§ Employees may receive Unemployment Compensation Insurance.
|
|
|
|
|
|
Work From Home
|
An employee is permitted to work remotely (out of the office), generally by accessing employer files through a virtual desktop.
|
§ There are no laws governing reimbursing employees for expenses when working from home in New Jersey. However, employers may want to consider reimbursement to their employees for such expenses as home internet, cell phone usage, printer ink, paper, and other relevant supplies. Demand proof of incurred expenses.
|
New Jersey Warn Act
If you are an individual or private business establishment that has been in operation in the State of New Jersey for longer than three years and you employ 100 or more full-time employees, you must comply with the NJ WARN Act if you anticipate a "mass layoff." A “mass layoff” means a reduction in force which is not the result of a transfer or termination of operations and which results in the termination of employment at an establishment during any 30-day period for 500 or more full-time employees or for 50 or more of the full-time employees representing one third or more of the full-time employees at the establishment.
Before the first termination of employment occurs, an employer must provide no less than 60 days advance notice in writing to the following entities:
- Commissioner of Labor and Workforce Development;
- The chief elected official of the municipality where the establishment is located;
- Each employee whose employment is to be terminated; and
- Any collective bargaining unit of employees at the establishment.
A severance must be provided to each full-time terminated employee to whom the employer provides less than the number of days of notification. Calculation is equal to one week of pay for each full year of employment and is in addition to any other severance paid for any reason. Back pay provided by the employer to conform to the WARN law is credited towards meeting this severance pay criteria.
On January 21, 2020, Governor Murphy signed Senate Bill 3170 into law effective July 19, 2020, amending the NJ WARN Act. The amendments, when they take effect, will dramatically alter the landscape for businesses instituting a large-scale reduction in force in New Jersey. As one of the changes, the July 2020 law will make New Jersey the first state in the Country mandating severance pay for mass lay-offs even if timely notice is given, which has increased from 60 to 90 days.
Other Laws to Keep in Mind
New Jersey Paid Sick Leave (PSL)
Under New Jersey’s Paid Sick Leave, an employee is entitled to up to five (5) days of paid leave to be used in any of the following instances:
- A person who has COVID-19, or symptoms of COVID-19;
- A worker was unable to work because of school or daycare closed for a public health reason;
- A worker was exposed and quarantined and his employer remains open;
- A person who is out of work because employer was ordered closed;
- An employer stays open in defiance of public health urging to close, and worker refuses to work;
- A worker is afraid of gathering in a group and refuses to go to work (self-distancing);
- A worker is immune-compromised and advised by healthcare provider to self-quarantine;
- A health care worker exposed at work and self-quarantine; or
- A worker is caring for a sick family member
New Jersey Unemployment Insurance
If an employee’s hours are reduced, but not completely cut, he/she may be able to collect Unemployment Insurance Benefits. Specifically, to be eligible for partial unemployment benefits, the person cannot work more that 80% of the hours normally worked. For example, if a person normally works 40 hours a week, they cannot work more than 32 hours in a week to be eligible. Additionally, if the person earns 20% or less of their weekly benefit rate, the person would receive the full weekly benefit. For earnings greater than the 20%, the weekly benefit would be reduced.
New Jersey Shared Work Program
New Jersey’s Shared Work Program lets businesses temporarily reduce the hours of their employees, instead of laying them off during economic downturns.
The Shared Work Program benefits both businesses and workers as businesses retain their trained workforce, for easy recall to full-time work when economic conditions improve, while workers keep their jobs instead of being laid off, and collect reduced unemployment benefits to partially replace their lost wages.
Specifically, in New Jersey, an employer who has not less than 10 employees, who are each employed for not less than 1,500 hours per year, may apply to the of Unemployment and Temporary Disability Insurance of the Department of Labor and Workforce Development for approval to provide a shared work program, the purpose of which is to stabilize the employer’s work force during a period of economic disruption by permitting the sharing of the work remaining after a reduction in total hours of work. An individual who is employed by an employer with a shared work program approved by the Division shall be eligible for short-time benefits during a week if:
a. The individual works for the employer at an affected unit less than the individual’s usual weekly hours of work, and the employer has reduced the individual’s weekly hours of work pursuant to a shared work program in effect during that week;
b. The percentage of the reduction of the individual’s work hours below the individual’s usual weekly hours of work is not less than 10% and not more than 60%, with a corresponding reduction of wages;
c. The individual would be eligible for unemployment benefits other than short-time benefits during the week, if the individual was entirely unemployed during that week and applied for unemployment benefits other than short-time benefits; and
d. During the week, the individual is able to work and is available for the individual’s usual weekly hours of work with the shared work employer.
The amount of short-time benefits paid to an eligible individual shall, for any week, be equal to the individual’s weekly benefit rate multiplied by the percentage of reduction of his wages resulting from reduced hours of work.
New Federal Sick Leave Law
The Families First Coronavirus Response Act ("FFCRA") becomes effective April 1, 2020.
- Employers of up to 500 employees (see below for calculation method) must provide 80 hours of paid sick leave for full time employees (average hours worked over two weeks for part time) if there is work for the employee available and the employee is unable to work (or telework) because:
- The employee is subject to a Federal, State, or local quarantine or isolation order related to COVID-19. (This includes any government order directing people to remain at home unless they work for an essential business);
- The employee has been advised by a healthcare provider to self-quarantine due to concerns related to COVID-19;
- The employee is experiencing symptoms of COVID-19 and seeking a medical diagnosis;
- The employee is caring for an individual who is subject to an order as described in subparagraph 1 above or has been advised as described in paragraph 2 above; or
- The employee is caring for a child of such employee if the school or place of care for the child has been closed, or the childcare provider for the child is unavailable, due to COVID-19 precautions.
- If your business closed before or after April 1 due to lack of business, or if required to close pursuant to Federal, State or local directive, sick leave is not due.
- Intermittent sick leave is permitted with the consent of the employer (it is not required).
- If business closes while an employee is on FFCRA sick leave, they must be paid for leave through the date of closure.
- Businesses with less than 50 employees are potentially exempt from providing sick leave pursuant to reasons four and five above (as amended by the CARES Act) and should document any hardship presented by providing this leave (after considering the impact of potential tax credits) and wait for further guidance from the DOL.
- Employees may use FFCRA paid sick leave before using state or local paid sick leave, or accrued PTO.
- Paid leave provided prior to April 1, 2020, does not count to fulfill obligations under the FFCRA.
- Employers must require documentation in support of the reason for leave and include:
- Employee’s name, qualifying reason for requesting leave, statement that the employee is unable to work, including telework, for that reason, and the date(s) for which leave is requested; and
- Documentation including a copy of the Federal, State or local quarantine or isolation order related to COVID-19 applicable to the employee (reason 1 above) or written documentation by a health care provider advising the employee to self-quarantine due to concerns related to COVID-19 (reasons 2 to 4 above) or notice that has been posted on a government, school, or day care website, or published in a newspaper, or an email from an employee or official of the school, place of care, or child care provider (reason 5 above).
- If you intend to claim a tax credit under the FFCRA for payment of sick leave wages, you should retain the FFCRA documentation in your records.
How Much to Pay – Employees must be paid based on their required compensation as follows:
- Regular rate of pay subject to a limit of: $511 per day and $5,110 in the aggregate for a use described in paragraph (1), (2), or (3) above; or
- Two-thirds of the regular rate of pay subject to a limit of: $200 per day and $2,000 in the aggregate for a use described in paragraph (4), (5), or (6) above.
Emergency Federal Medical Leave Expansion Act
The Emergency Federal Medical Leave Expansion Act ("EFMLE") becomes effective April 1, 2020.
- The EFMLE applies under the following circumstances:
- The EFMLE applies to employers with fewer than 500 employees (see below);
- Employees must be employed at least 30 calendar days at the time leave is requested;
- The need for leave must be a Qualified Need Related to A Public Health Emergency (“PHE”);
- A PHE exists when declared by a Federal, State or local authority due to COVID-19; and
- The employee must be restored to their position upon return from leave.
- An employee can request this leave for a very narrow reason: if there is work for the employee and they are unable to work (or telework) due to the need to care for their child under 18 years of age if the child’s elementary or secondary school or place of care is closed, or the care provider of such child is unavailable, due to a PHE.
- Intermittent expanded medical leave is permitted with the consent of the employer (it is not required).
- If your business closed before or after April 1 due to lack of business or if required to close pursuant to Federal, State or local directive, expanded medical leave is not due.
- If your business closes while an employee is on expanded medical leave, employees must be paid for leave through the date of closure.
- Businesses with less than 50 employees are potentially exempt from providing sick leave pursuant to reasons four and five above (as amended by the CARES Act) and should document any hardship presented by providing this leave (after considering the impact of potential tax credits) and wait for further guidance from the DOL.
The factors are not evaluated as stand-alone. The entire relationship is to be reviewed in its totality.
Visit our COVID-19 Hub for ongoing updates.