Examining the Solvency of Vendors, Customers, and Your Business During and After the COVID-19 Crisis

Socially and economically, we are living in truly unprecedented times, especially in the downstate New York and broader Tri-State area where we have been hit exceptionally hard by the COVID-19 pandemic.  Many businesses which closed during the pandemic will never reopen, and many more will struggle to get back on their proverbial feet after weathering the worst of this storm.  The PPP loans offered by the SBA have allowed many small businesses to continue to meet obligations for a few months during their shut down, but that money is about to run out and many businesses do not know where to turn next.  The silver lining here is that businesses have many options for restructuring their relationships with vendors, customers, landlords, and even their lenders.

Although it may seem obvious, in these troubled times the vendors that traditionally had trouble filling orders and the customers who always paid late will likely be the first to go out of business.  With respect to those vendors and customers, businesses may consider cutting ties before they run up too high of a debt, or negotiating adjusted terms which are more beneficial to the company such as getting large deposits from customers or paying vendors less if they deliver late.  Setting up backup vendors before the current vendor fails is also a good idea so that your business is not scrambling if an important vendor runs into financial issues and can’t deliver.

Troubled times also make it especially important to plan ahead and businesses should make sure to budget out for at least 6 months.   Most companies need to be realistic about what the business world will look like in the coming weeks, months, and years, and in most industries it is important to be very conservative when projecting growth.  It is also important to understand that some businesses which implemented cost-cutting measures during the pandemic are going to realize that those measures worked and that they don’t need those discretionary products or services going forward.  If you’re in the business of selling discretionary products or services, you need to be concerned about that possibility and project accordingly.

Even for the most struggling business, a chapter 11 bankruptcy filing has typically been a last resort and that will likely continue.  However, coincidentally last year Congress passed the Small Business Restructuring Act, or SBRA, which went into effect in February. The SBRA has made the chapter 11 process much more affordable for small businesses and allows small business owners to reorganize their companies, shed bad debt, and keep their equity when they would not have been able to do that previously. And as part of the CARES Act, Congress also raised (for one year only) the amount of non-insider debt a company can have to qualify to $7.5 million.  This means many companies which otherwise would never have been able to afford to successfully reorganize through a bankruptcy now can.

Although bankruptcy is usually a last resort, the new SBRA actually allows small businesses to move quickly through a bankruptcy process and force terms upon their creditors instead of the other way around.  It’s a great tool for what we like to call “right sizing” (not downsizing) a business and can help get struggling businesses through these tough times.

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New Voting Leave Regulations – Effective April 1, 2020

Effective April 1, 2020, New York State revised Voting Leave regulations as follows:

Employees who are registered to vote in New York should be granted paid time off from work to vote, for up to two hours, IF sufficient time is NOT available for the employee to vote BEFORE or AFTER their shift.  Sufficient time is defined as having four consecutive hours between the polls opening and the beginning of their work shift, OR four consecutive hours between the end of their shift and polls closing.

Employees must request voting leave from their employer at least two business days before the day of the election.  The company will then designate the two hours to be taken at the beginning or end of the employee’s work shift.  Employees are expected to report to work for the remainder of their shifts once their voting leave has expired.

This new law does not specify which elections it applies to but the language of the law is certainly broad enough to support an interpretation that all federal, state or local elections would be covered.

In addition, employers must conspicuously post a notice in the place of work.  Notices must be posted at least ten days prior to every election that sets forth the provisions of the voting law.  The notice shall be kept posted until the close of the polls on the day of the election.

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New Policies and Procedures Employers Should Consider During The COVID-19 Pandemic

As COVID-19 continues to pose grave threats and health concerns in the United States, businesses and employers in all industries are now forced to adapt to a new normal. Employers must now navigate this new normal and take affirmative steps to address employee concerns and protect their workforce from spreading or contracting Coronavirus. Since many employers may be required by law to shut down all in-person workplace functions and require employees to perform work remotely, employers may want to consider developing policies and procedures to address current issues and concerns employers are now facing as a result of the COVID-19 pandemic. PMP put together a list of topics for policies and procedures employers may want to consider implementing while employees work remotely during the COVID-19 pandemic.

Telework Policies. If an employer has been mandated by law to cease all in-person office functions and to perform work remotely, employers should consider drafting a policy on teleworking. Prior to drafting a telework policy, an employer should determine if it is equipped to offer telework to employees. In order for employees to successfully perform telework remotely, the employer must have the capability to provide technology and equipment to set up and support multiple employees working from remote locations, without risking the security of its network and confidential information. When teleworking is found to be unsuccessful, it is commonly the result of IT failure. Although most teleworking platforms and software may not function with the same ease and speed as if employees were working in the office, employers should coordinate with their IT provider to ensure that they will be ready and capable to address any issues that arise as quickly as possible.

Employers must also determine how to offer and administer telework in a manner which does not violate anti-discrimination laws. Unfortunately, teleworking is not conducive to support every employee’s job functions and duties. If employers are not able to offer temporary telework to all employees, employers must be mindful to avoid a potential claim that the employer only offered telework to certain employees based upon a protected category such as age, race, or sex. To avoid such a claim, employers should offer teleworking based on certain criteria including job duties, department needs, seniority, or any other non-discriminatory factors.

A telework policy must also communicate the employer’s expectations at the outset of the telework arrangement. The policy should set forth the expected hours of work, the manner in which work product is to be communicated to the appropriate recipient, and how employee productivity will be measured. Further, employers may want to address any required security measures employees must take if employees are using personal devices to perform work remotely. The policy should also note the temporary nature of the telework assignment in light of the current health crisis. Employers may choose to require employees to sign a document acknowledging their receipt and understanding of the employer’s telework policy and the employee’s duties and obligations under such policy.

Overtime Policies. Employers may also want to draft a policy addressing the employer’s policies on overtime for non-exempt employees working remotely. The policy should provide clear guidance on how non-exempt employees are expected to document their time records and should explicitly state that non-exempt employees must obtain authorization to work overtime prior to performing that work. Employer may also want to emphasize in the policy that employees will be compensated for all time spent performing unauthorized overtime work; however, non-exempt employees performing overtime work without authorization will be subject to discipline.

I-9 Procedures for Remote Work. In response to the COVID-19 National Emergency Declaration, the U.S. Department of Homeland Security (the “DHS”) announced temporary modifications to the Form I-9, Employment Eligibility Verification process and enforcement actions. The requirement that employers must physically review employee identification and employment authorization documents when completing the Form I-9 has been temporarily halted. Employers who have been required to cease all in-office functions may inspect the Form I-9 Section 2 documents remotely and will have 3 business days after resuming normal operations to physically inspect and retain copies of the Section 2 documents. Employers may remotely inspect and review Section 2 documents over video chat, fax, or email, etc. within the usual 3 days of hire. The DHS has stated that this change is to remain in effect through the earlier of May 20, 2020, or 3 business days after the termination of the National Emergency Declaration. When completing Section 2 of the Form I-9 when the employer resumes normal operations and conducts a physical review of the original documents provided by the employee for remote verification, employers should enter the phrase “COVID-19” in the “Additional Information” field, together with the notation “documents physically examined on” followed by the date of actual physical examination.

Confidentiality and Information Security Policies and Procedures. Depending on the nature and subject of work performed remotely, employers should consider drafting and implementing a confidentiality policy. The policy should set forth explicit parameters as to what information employees may access remotely and which employees are authorized to view certain documents containing confidential information. Employers should also determine what, if any, security measures must be taken to ensure the company’s proprietary information is protected while employees perform telework remotely. If employees are using personal devices to work from home, the policy should address the employer’s security protocols and any inspection rights the employer may have with regard to those devises.

Families First Coronavirus Response Act Policies and Procedures. Under the Families First Coronavirus Response Act (“FFCRA”), which took effect on April 1, 2020, most U.S. private employers are required to provide paid leave to employees for certain COVID-19-related reasons under the Emergency Paid Sick Leave Act (“EPSL”) and expanded paid leave under the Emergency Family and Medical Leave Expansion Act (“FMLEA”).. Since the FFCRA applies to most private employers with fewer than 500 employees, employers may choose to implement policies and procedures regarding the FFCRA. The Department of Labor (“DOL”) advised that employers should count all active employees, including full- and part-time employees, as well as employees on leave, temporary employees who are jointly employed with another employer, and day laborers provided by a temporary agency. However, independent contractors are not counted to determine whether an employer is subject to the FFCRA. To determine whether the

FFCRA is applicable to your business, you must count the number of employees that are working for you as of the date the requesting employee’s leave is to be taken.

Under the EPSL under the FFCRA, employers are required to provide up to 2 weeks (80 hours) of paid sick leave if an employee is unable to work (or perform work remotely) due to a need for leave for one of the following reasons:

1. Subject to a federal, state or local quarantine or isolation order related to COVID-19;

2. Has been advised by a health care provider to self-quarantine due to concerns related to COVID-19;

3. Is experiencing symptoms of COVID-19 and is seeking a medical diagnosis;

4. Is caring for an individual who is subject to an order federal, state or local quarantine or isolation order related to COVID-19 or has been advised by a health care provider to self-quarantine due to concerns related to COVID-19;

5. Is caring for his or her child because the school or place of child care has been closed, or the child care provider is unavailable due to COVID-19 precautions;

6. Is experiencing any other substantially similar condition as specified by the Secretary of Health and Human Services.

Employees are eligible for EPSL on their first day of employment. EPSL for reasons 1-3 entitles the employee to paid sick leave at their regular rate of pay up to a maximum of $511 per day and leave for reasons 4-6 entitles the employee to paid sick leave at two thirds the employee’s regular rate of pay, up to a maximum of $200 per day.

The FFCRA expands Family Medical Leave Act (the “FMLA”) to provide leave to employees to care for a child as a result of school or child care closings due to COVID-19. Employees may be eligible to take up to 12 weeks of FMLA leave under the FFCRA. Employees must have worked for the employer for 30 days in order to qualify for the expanded leave. Employees are entitled to a total of 12 weeks between the regular FMLA and the FMLEA. The first two weeks of FMLEA is generally unpaid, however, an employee may elect to use their entitlement under EPSL (reason number 4 above) for pay at two thirds of their regular rate of pay not to exceed $200 per day, or use their own accrued PTO for full pay, or be unpaid. After that, and for the remainder of time available under FMLEA, an employee will receive two thirds of their regular rate of pay up to $200.00 per day.

New York State COVID-19 Paid Sick Leave Policies and Procedures. On March 18, 2020, Governor Andrew M. Cuomo signed emergency legislation taking immediate effect and guaranteeing job protection and pay for New Yorkers who have been quarantined as a result of COVID-19. All New York State Employers are required to provide sick leave to employees who have been subjected to mandatory or precautionary orders of quarantine or isolation issued by New York State, the department of health, a local health board, or any other governmental entity authorized to issue such order related to COVID-19. An employer’s size and net income dictates the duration of an employee’s leave and whether an employee’s leave will be paid or unpaid.

· Employers with 10 or fewer employees (as of Jan. 1, 2020) and net income of less than $1 million, must provide employees with at least 5 days of unpaid sick leave, and then unpaid sick leave until the termination of any quarantine or isolation order. During the period of mandatory or precautionary order of quarantine or isolation due to COVID-19, an employee shall be eligible for NYS paid family leave and disability benefits.

· Employers with 10 or fewer employees (as of Jan 1, 2020) and net income of more than $1 million or employers of 11-99 employees, must provide employees with at least 5 days of paid sick leave, and then unpaid sick leave until the termination of any quarantine or isolation. After the five days of paid sick leave from the employer, an employee shall be eligible shall be eligible for NYS paid family leave and disability benefits.

· Employers with 11 to 99 employees (as of Jan. 1, 2020) must provide at least 5 days of paid sick leave, and then unpaid sick leave until the termination of any quarantine or isolation. After the five days of paid sick leave from the employer, an employee shall be eligible for NYS paid family leave and disability benefits.

· Employers with 100 or more employees (as of Jan. 1, 2020) must provide at least 14 days of paid sick leave, and then unpaid sick leave until the termination of any quarantine or isolation. (The number of paid days is calendar days, and the pay required should represent the amount of money that the employee would have otherwise received for the 12-day period.)

PMP is here to help employers interpret, draft and implement policies based on the emergent federal and state laws adopted as a result of the COVID-19 pandemic. If your company is interested in drafting new policies and procedures, please do not hesitate to call the HR directors at PMP for assistance.

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What Employers Should Know About COVID-19 and Workers’ Compensation

Guest Author: Jessica Cullen,  Gallagher,  Jessica_Cullen@ajg.com

Gallagher Contact: Jim Doran, Gallagher, Jim_Doran@ajg.com

As the coronavirus (COVID-19) continues to spread globally, many employers are wondering if they can be held responsible if an employee contracts the illness and what precautionary actions should be taken to reduce risk. To help address these concerns, Gallagher offers the below guidance.

What should employers do to minimize risk?

Overall, employers should have a plan to protect workers, whenever possible, so as not to increase the risk of infection. Employers should review illness and absence policies to ensure they are allowing sick workers to stay home or avoid higher than average risk situations. Some cities, counties and states are issuing specific orders for shelter-in-place. Employers should monitor and comply with these orders through local governmental and health agencies. The CDC has issued guidance and recommended strategies for employers, available on their website.

These strategies include:

• Encouraging sick employees to stay home and maintaining flexible policies so employees do not feel pressured to return to work too soon

• Separating sick employees who appear to have acute respiratory symptoms

• Emphasizing staying home when sick, respiratory etiquette and appropriate hygiene

• Performing active environmental cleaning of all frequently touched surfaces

• Advising before travel in accordance with the CDC’s travel guidance

To respond to sporadic importations of COVID-19, the CDC advises employees and employers to take specific precautions when an employee is well but has an infected family member at home. Additionally, if an employee is confirmed to have COVID-19, leadership teams are asked to inform their employees while maintaining confidentiality. In each of these situations, it is advised that employers perform a risk assessment of potential exposure.

Are employees who fall ill from COVID-19 entitled to workers’ compensation benefits?

Whether or not an employee affected by COVID-19 is entitled to workers’ compensation benefits requires analysis of the particular case and an application of rules affecting compensability. Although these rules can vary from state to state, generally speaking, in order to be compensable an illness or injury must arise out of the employment and occur in the course of employment.

Certain classes of workers have a greater risk of contracting COVID-19 than the general public. Healthcare workers caring for those suffering from and exposed to the virus are one such group. Others at risk for contracting COVID-19 according to the Occupational Safety and Health Administration (OSHA) are:

• Clinical laboratory workers, if they collect or handle infectious specimens

• Airline and transportation workers, if exposed to infected people

• Border protection workers

• Waste management workers

• U.S. business travelers arriving from China or other international locations with confirmed cases

An otherwise “low” or “medium” risk employee who works with the public might have a claim but only if they can prove they were exposed at work. Contracting the virus at work is likely not enough to trigger the assertion that it is a compensable occupational illness. To be occupational and compensable requires something peculiar about the work that increases the likelihood of getting sick.

If a workers’ compensation claim is received alleging the illness from COVID-19, it is imperative that the workers’ compensation insurer is immediately notified. You should contact your specific carrier to understand what information they will need when you report a suspected COVID-19 related workers’ compensation claim. General guidelines to follow if an incident occurs include the following:

• Make it clear when you report a claim that it is a COVID-19-related accident to ensure the proper protocols are followed.

• Check to see if other employees or immediate family members are showing symptoms of COVID-19.

• Document when the person was diagnosed and when symptoms started.

• Find out if the person was in contact with someone known to be infected, and when and where that contact happened. This includes whether they or their family have recently traveled to locations with known infections.

• Determine if the infected person has been in contact with healthcare providers and if the facility has been notified.

In summary, precaution and preparation are key to an effective safety program when addressing the concerns for the current outbreak of the coronavirus. We hope that the information and instructions included in this advisory are helpful, and if at any time you require additional assistance, please do not hesitate to reach out to your Gallagher team.

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Furlough vs. Layoff: How Does it Affect Employees Benefit Eligibility?

Guest Author: Tony Haberman, President, The Haberman Group


While many employers are contemplating the tough decision of whether to furlough or layoff employees, a question arises as to how this would affect their employees’ benefit eligibility. Under normal circumstances, the employee would no longer be eligible for health or ancillary coverage and would be offered COBRA or State Continuation. However, under this crisis, the rules have been relaxed by many insurance carriers to mitigate the negative impact to both employers and employees.




Generally, when an employer is furloughing employees, the employer/employee relationship is not severed. Conversely, when the employer is laying off employees, the employment relationship is terminated.

FURLOUGH: When an employer furloughs an employee, generally the employee is required to work fewer hours or take a certain amount of unpaid time off. The employer believes that the condition causing the furlough will change and intends to reinstate the person to normal hours, when work becomes available again. Continue Health and Ancillary Benefit Coverage: Most insurance carriers in NY are allowing employees to maintain benefit coverage for a limited period of time. These carriers are allowing employees that are furloughed to remain active on the plan through May 31, 2020. This also applies to ancillary coverage (dental, vision, etc.). Confirm with your carrier to see if this applies with your plan. How does an employer collect the employee’s health contribution, if they are furloughed: The employer can collect the employee’s share of premium to maintain the coverage during a paid or unpaid leave of absence. Premiums may be collected (as determined by the employer’s policy) in one of the following manners:

Catch up: Some employers will choose to keep the employees (on leave) enrolled in their benefits until they return to active work, and then recoup those payments at the time. If there is a fairly large premium payment due, it may be necessary for the employer to take deductions over several payroll periods. In some cases, state wage and hour laws will limit the amount that can be deducted from pay (thus the cap may be necessary).

Pre-pay: If the leave is scheduled in advance, and the employee remains eligible for benefits during the leave, the employer may collect the employee’s share of premium for the rest of the plan year from the employee’s pre-tax earnings before the start of the leave. However, if the leave is anticipated to span more than one plan year, the employer cannot collect the premiums for the latter part of the leave since this would violate the cafeteria plan regulations prohibiting deferred compensation.

Pay-as-you-go: During the leave, the employer may require the employee to pay the employee’s portion of the premiums to maintain coverage. Such payments would generally be on an after-tax basis. The employer could require payment no more frequently than regular deduction frequencies for employees during periods of active work. Most employers collect premiums from employees on leave of absence on a monthly basis.

Please consult with your payroll vendor for further guidance, before implementing any of the above payment options.

LAYOFF: Under a layoff, the employment relationship is terminated, and the employee is no longer on payroll. Therefore, the employee normally loses eligibility under a health and ancillary plan. The employer believes that the condition causing the layoff will change and intends to recall the person. Employees can typically collect unemployment while on an unpaid layoff.

Continue Health and Ancillary Benefit Coverage: Most insurance companies in NY are NOT allowing employees to maintain benefit coverage. Thus, COBRA or State Continuation will need to be offered for the health and ancillary benefits (medical, dental, vision, health FSA, etc.). Loss of health eligibility is also a qualifying special enrollment event for the individual health market.

Who pays for COBRA coverage: The employee generally pays the full cost of the insurance premiums. The Federal law allows the employer (COBRA administrator) to charge up to 102 percent of the premium to cover administrative costs. Employers can choose but are not required to subsidize COBRA for terminated employees.

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Stay Medically Connected: How to Ensure You Can Communicate With Your Loved One’s Medical Providers

We hope that all stay healthy and safe during these difficult times as we weather this COVID-19 pandemic.  Although it is a stressful and trying time for all of us, being prepared has always been a good stress reliever.  These times are no different and there are easy steps you can take to ensure you that if a loved one must stay in the hospital, you are able to communicate with their medical providers.

A reminder – when our children reach 18, they are independent adults in the eyes of the law.  As adults they are entitled to privacy privileges.  What does that mean?  In short, their medical records, decisions and care are private.  Can you discuss a medical condition with his or her doctor?  Not without their permission.

There is a solution and it works for young adults, your elderly parents and anyone else you feel responsible for.  A Health Care Proxy and HIPAA Release Form will allow an individual to authorize another party to make decisions and have access to speak with the individual’s doctors and view medical records.  A Power of Attorney will allow an agent access to all other personal data including financial.

What is a HIPAA Release Form?  HIPAA (the Health Insurance Portability and Accountability Act of 1996) requires health care providers and insurance companies to protect the privacy of patient’s health care information.  Those who violate HIPAA are subject to civil and criminal penalties, including jail time, which makes them reluctant to share protected health information without an authorization.

What is a Health Care Proxy?  The Health Care Proxy is a Medical Power of Attorney which allows an individual to authorize an agent to make medical decisions if he or she is incapacitated and unable to do so.  An agent acting under a Medical Power of Attorney is authorized to see the principal’s medical records to make informed medical decisions on his or her behalf.

What is a Power of Attorney?  The Power of Attorney will allow an individual to authorize an agent to manage his or her financial affairs either immediately or in the future should he or she become mentally or physically unable to do so.  This would authorize you to handle tasks such as paying bills, applying for social security or government benefits and opening and closing accounts, if necessary.

While it’s true, an agent under a Health Care Proxy has the authority to view the principal’s medical records, the Health Care Proxy does not grant authority to the agent until the principal is incapacitated.  If capacity is questioned, the HIPAA regulations would prevent access to protected health information.

This means that even parents may be prevented from accessing their children’s medical information without an authorization.  By signing a HIPAA Release, your loved ones can authorize doctors to share diagnoses and treatment options with you.  Without a HIPAA release, you may not be able to pick up a prescription for your loved ones.

The hope is that the documents discussed here are never necessary.  However, if a problem arises, you and your loved ones will be prepared.  A simple document can save a lot of anxiety during these difficult times.

All legal forms should be completed under the supervision of an attorney.  Our partners at SilvermanAcampora LLP would like to offer that supervision, in order to help spread peace of mind during these unprecedented times. Contact htrust@silvermanacampora.com for more information on these documents.

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5 Solutions to Managing Remote, Non-exempt Employees

During this current health crisis, many employees’ living rooms have turned into home offices as businesses deemed non-essential by the “New York State on PAUSE” executive order have been forced to close in-office personnel functions. Now that a majority of workers are working from home, employers are faced with many issues that arise when non-exempt employees perform work remotely. Accurately tracking employees’ time worked presents problems when employees work outside of the office.

Typically, telecommuting or working remotely has been reserved for exempt workers since those workers are not entitled to overtime pay and employers need not worry about the number of hours worked by the exempt employee.  But the reality is that the use of technology in the workplace, whether company-issued or personal, has led to the increased accessibility employees have to their work, especially when off site or after hours.

Importantly, work not specifically requested by an employer, yet still allowed, is still compensable, and companies must be proactive in ensuring employees receive all pay due to them.  Employers must pay non-exempt employees when they respond to emails, answer or send text messages, or make or answer phone calls outside of their regular work hours.  Tracking such time presents many difficulties.  Below, we have set forth some tips….

  1. Find out if your current time tracking system can be accessed remotely. Employers must remember that the law requires employers to maintain contemporaneous and accurate records of non-exempt employees’ time worked each day.  Many timekeeping systems can be accessed remotely by employees if performing work outside of the office.  In the absence of accurate time records, courts will employ a rebuttable presumption that the hours claimed by the employee are correct.  Thus, employers must provide remote workers with the ability to access time tracking software so they can contemporaneously record their time.
  2. Employers must clearly explain what constitutes “hours worked” to non-exempt employees as well as to their supervisors. Non-exempt workers’ hours worked are usually determined based upon the time an employee starts their “principal activity” and the time on that day at which they cease the “principal activity.”  Employees must understand the expectations employers have if employees are to track their own compensable time.  Usually, meal breaks of 30 minutes or more where employees are not performing any work can be unpaid, while rest breaks of 20 minutes or less should paid for as working time.
  3. Develop or update your timekeeping policy. Most employers share the concern that permitting non-exempt workers to work remotely will allow those employees to work too many hours at home and result in high overtime costs.  Employers should institute a policy prohibiting off the clock work.  If work performed remotely will result in a non-exempt employee to exceed the 40 hour mark in a workweek, employers can require non-exempt employees to receive advanced written approval that they may work overtime.  In addition, this policy should explicitly state that under-reporting hours worked, or over-reporting hours worked is strictly prohibited.  Employers should have all employees execute an acknowledgment that they have been made aware of and understand the time-recording policies.  If any non-exempt employee fails to obtain the written approval to work overtime hours, employers are still legally bound to pay the overtime but may take remedial action due to the employee’s failure to comply with the policy.
  4. Managers must be instructed and understand that they are not permitted to direct non-exempt employees to perform work off the clock. When overtime is not permitted managers must tell employees that “no one is allowed to work any extra hours.”  It should be noted that the previous statement is very different from telling employees that “the business cannot afford to pay for overtime,” since employees are likely to interpret that they should still work the extra hours but not record their time.  Similarly, if a manager works longer or different hours than the employees who report to them, the manager should try to schedule sending emails during the employee’s normal hours.  If that is not practical, managers should include in the email’s subject line that the employee should not respond to the email until they return to work.  Supervisors must also be trained to report any potential off the clock work by non-exempt employees to enable HR or upper level management to speak with the employee to determine if they are owed pay for hours worked.
  5. Set boundaries for any kind of remote work non-exempt employees may perform. This should include establishing well-defined rules about when and if a non-exempt employee is permitted to work remotely. For instance, employers can set times when workers may use company-issued phones or may log into their computer remotely.  However, it may not be practical for all employers to set specific times for remote work.  Nonetheless, employers should make certain that all non-exempt employees understand the boundaries for when they are permitted to work remotely and how time is to be recorded to ensure wages are properly paid.

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What You Need to Know about the 2020 W-4 Form

On December 5, 2019, the Internal Revenue Service (IRS) released the final version of the Form W-4, Employee’s Withholding Certificate.  Employees have long used the Form W-4 to establish their withholding allowances to adjust their federal income tax withholding in order to match their anticipated full-year income tax liability.  Since the enactment of the Tax Cuts and Jobs Act (TCJA) in 2018, it has been anticipated that a new, redesigned Form W-4 would be released based on the TCJA’s significant changes to tax rates, deductions, tax credits and personal exemptions.  Due to time constraints and concerns from the payroll community, the IRS postponed the release of a new Form W-4.

The 2020 Form W-4 includes major revisions so that it complies with the income tax withholding requirements in the TCJA, including new input elements for federal income tax withholding calculations (which require payroll systems to be significantly reprogrammed).

Major Changes to the 2020 Final Form W-4 Include:

  • Not all employees must use the new 2020 Form W-4. While the new form includes significant changes from the 2019 Form W-4, the IRS has designed the withholding tables to work with the new 2020 form or a form W-4 from a prior year.  Most importantly, not all employees are required to complete a form.  However, any and all new hires in 2020 are required to complete a 2020 Form W-4.  Also, current employees who have completed a Form W-4 prior to 2020 and want to make changes to their withholding in 2020 are required to complete a 2020 Form W-4.  Employers should also note that while employees are not required to complete a new form (other than the previously discussed employees), employers may request all employees complete a 2020 Form W-4.
  • The new 2020 Form W-4 requires a five-step process for employees to complete to determine his/her withholding as follows:
    • Step 1: Input employee’s personal information and anticipated filing status to determine the standard deduction and tax rates used to compute the withholding amount.
    • Step 2: Use if employee has: (1) more than one job at the same time, or (2) are married and filing jointly with his/her spouse.
    • Step 3: Instructions to determine the amount of the child tax credit and the credit for other dependents.
    • Step 4: Use to enter: (1) other estimated income for the year (e.g., dividends, interest, and retirement income), (2) deductions other than the standard deduction to reduce withholding, and (2) any additional tax an employee wants to withhold for each pay period.
    • Step 5: Where an employee signs and dates the form under the penalties of perjury.
  • Employees are now limited to claim exemptions from withholding. An employee may claim an exemption from withholding in the 2020 tax year if: (1) the employee had no federal income tax liability in 2019 and (2) the employee expects to have no federal income tax liability in 2020.

What can employers do now to prepare for the new 2020 Form W-4?  Inform managers and Human Resources who are involved in the hiring process of the new changes to the form.  It may also be necessary to adjust certain hiring and/or on-boarding procedures, such as allowing new employees to complete the new form at home or provide additional time for employees to complete the form.

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Best Practices for Employers to Store Form I-9

Form I-9, the Employment Eligibility Verification, is a U.S. Citizenship and Immigration Services (USCIS) form used to verify an employee’s identity and employment authorization to work in the United States.  All employers in the United States are required to ensure each individual hired for employment properly completes a Form I-9.  Employers are also required to retain original I-9 forms for 3 years after the date of hire, or one year after the date employment ends, whichever is later, so that the records are available for possible inspection by the federal government.

USCIS provides a Portable Document Format (PDF) fillable-printable Form I-9 from its website, uscis.gov, or employers may generate and retain Form I-9s electronically as long as the employee receives instructions for completing the form and:

  • The resulting form is legible;
  • No change is made to the name, content, or sequence of the data elements and instructions;
  • No additional data elements or language are inserted; and
  • The standards specified in the regulations are met.

If Form I-9s are retained in paper form, employers should avoid storing I-9 records in employee’s personnel files.  This is because employers must meet a 3-day deadline for official inspection by USCIS and it may be difficult to extract records from individual personnel files before the deadline expires, particularly if a large number of employees are involved.  We recommend employers create a separate secure file for all I-9s to be stored.

If employers choose to maintain Form I-9s electronically, the electronic storage system should include the following:

  • Clear audit trails that detail when a Form I-9 is created, completed, modified, updated or corrected. This provides assurance that when the electronic record is created or updated, there is a permanent and secure record to establish the date of access, the identity of the individual who accessed the electronic records, and a history of the action taken.
  • Controls to ensure the accuracy and reliability of the system.
  • Controls to detect and prevent the unauthorized access to, or creation, alteration or deletion of stored Form I-9s, including the electronic signature, if used.
  • An inspection and quality assurance program that regularly evaluates the electronic generation or storage system, and includes periodic checks of electronically stored Form I-9s.
  • An indexing system that allows the identification and retrieval for viewing or reproducing of relevant documents and records maintained in an electronic storage system.
  • The ability to produce legible and readable paper copies.

For each electronic generation or storage system used for Form I-9s, employers must maintain and make available upon request complete descriptions of:

  • The electronic generation and storage system, including all procedures relating to its use.
  • The indexing system that allows the identification and retrieval or relevant documents and records maintained in an electronic system. Employers are not required to maintain separate indexing databases for each system if comparable results can be achieved without separate indexing d

Regardless of how Form I-9s are stored, employers should institute an alert system triggering reminders to re-verify with employees who present work authorizations which bear an expiration date, and to accurately dispose of old forms.  For example, if an employee indicates in Section 1 that they are an alien authorized to work until a certain date, the employer must follow up with the employee to update their Form I-9 with the related work authorization documents.  This includes employment authorization cards, foreign passports, and I-9 records.  It’s a good idea to set these reminders 90 days in advance of expiring documents, and to set additional 60 and 30-day reminders before the expiration date, to ensure the employee is afforded every opportunity to take the necessary steps to obtain the necessary documents to be re-verified.

I-9 compliance penalties can be severe.  A simple clerical mistake, if performed on every form, can result in tens of thousands of dollars in fines.  PMP can perform an I-9 audit to identify problematic areas and work with you to correct the errors to ensure that your Form I-9s are in compliance.

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Why the Legalization of Marijuana is a Topic of “High” Concern for Employers?

While marijuana is known for its calming effects, recently it has been having quite the opposite effect on employers.  As more and more states legalize the use of medical and recreational marijuana, employers must now navigate the myriad of state laws affecting the use of marijuana in the workplace and employer’s drug-testing policies and procedures.

Although under federal law marijuana still remains illegal as a Schedule I controlled substance, 34 states plus the District of Columbia have legalized the use of marijuana for medical reasons.  Of those states, 11 states and the District of Columbia have legalized the recreational use of marijuana.  These conflicting state and federal laws are troubling for employers who seek a concrete answer on how to deal with their employees’ use of marijuana.  Unfortunately for employers, a simple answer does not exist.  As state laws are continuously evolving and jurisdictions are passing stronger protections for individuals who use marijuana, employers must assess their policies to ensure compliance with both state and federal laws.

So what should employers do about their policies to comply with the new laws legalizing the use of marijuana?

Evaluate “Zero-Tolerance” Programs

Employers must evaluate their zero-tolerance drug testing policies.  Employers should first determine whether their workplace is regulated by The Drug Free Workplace Act (the “Act”).  Employers who are recipients of a federal grant or contracts with a federal agency are required to adopt a zero tolerance policy in their workplace and certify to the federal government that their workplaces are drug free in accordance with the Act.  Employers are not required to conduct mandatory drug tests under the Act.  Additionally, the Act requires employers to:

  • Create and publish a written policy on the employer’s zero-tolerance policy and ensure that employees read and consent to the policy as a condition of employment;
  • Institute awareness programs to teach employees about the company’s drug workplace policies, the dangers of drug abuse, any available counseling and rehabilitation programs, and the penalties that may be imposed on employees for drug abuse violations;
  • Require employees to notify the employer within 5 days of any conviction for a drug offense in the workplace; and
  • Continuously make a good faith effort to maintain a drug-free workplace.

If an employer is not required to comply with the Act, employers may still institute a zero-tolerance policy for employees in “safety-sensitive” positions.  A “safety-sensitive” position is generally one in which an employee is responsible for the safety of himself or others, and includes responsibilities such as driving or the use of machinery, among many others.  If an employee’s job responsibilities require a commercial driver’s license (“CDL”), then the employer is mandated under the Omnibus Transportation Employee Safety Act of 1991 to drug test those employees whose duties require a CDL.

Revise Policies to Comply With State Laws

Employers who are not required to comply with The Drug Free Workplace Act or who do not employ employees in safety sensitive positions must revise their policies to comply with varying state laws.  Although some states have legalized medical and recreational marijuana, no law obligates employers to tolerate the use of marijuana in the workplace or being high on the job.

Employers must modify their zero-tolerance drug testing policies based on some state laws that require accommodations for use of marijuana off the job.  In the 14 states where medical marijuana is legal – including New York – state laws expressly prohibit employers from discriminating against medical marijuana uses.  Maine and Nevada – which have both legalized medical and recreational marijuana –adopted laws prohibiting employers from taking adverse actions against most workers’ employment based on their use of marijuana when the employees are off the job.

Most state laws generally permit employers to drug test employees for marijuana if the employee is working in a safety sensitive position, if the employee exhibits signs of impairment on the job, or after an accident at work that requires an investigation by the Occupational Safety and Health Administration.  Employers should consult an expert to determine that their policies comply with all applicable state laws.

Determine Whether Pre-Employment Testing Is Permitted Under State and Local Laws

State laws generally regulate when employers may test job candidates for marijuana.  Nevada and New York City have passed laws determining when employers are permitted to conduct pre-employment marijuana testing.  Other states have enacted laws prohibiting employers from rejecting job candidates based solely on a positive result after testing for marijuana if the individuals are eligible for medical marijuana.

Even in states where pre-employment testing is legal, employers are weighing the benefits of drug testing against the consequences of losing out on talented candidates who can’t pass a drug test.  Many businesses have stopped pre-employment drug testing because they believe it hurts their ability to hire well-qualified individuals and compete in the labor market.  If employers seek to implement pre-employment testing, they should confer with their advisors prior to implementing pre-employment marijuana tests.

Understand What the Results of a Marijuana Drug Test Mean

The vast complications employers face when drug testing for marijuana stem from the fact that testing for marijuana impairment does not render the same type of results when testing for alcohol impairment.  Marijuana is unlike alcohol.  States set a legal limit to determine whether a person is impaired by alcohol; however, there is no specified amount of tetrahydrocannabinol (the psychoactive component in marijuana more commonly known as THC) known to determine whether a person is impaired by marijuana, since THC metabolizes into a compound that can remain in an individual’s body for weeks after marijuana use.  Further, factors such as whether a person only casually uses pot or is a heavy smoker also affects the level of THC remaining in his or her body after the impairing effects of the marijuana wear off.  Hence, it is difficult to interpret from the results of a positive drug test for marijuana if the individual was actually high at the time of the test or if the THC detected is merely lingering in the individual.  Employers are starting to realize that it is increasingly difficult to use the results of a marijuana drug test in the same way as a detection test for alcohol.  Instead, employers are looking for tests to measure performance impairment.

Best Practices For Employers to Comply With State Laws

Below we have put together a list of best practices employers can implement to ensure your workplace remains drug free without violating the rapidly shifting state and local laws protecting the use of marijuana.

  • Just as employers do not tolerate the use of alcohol in the workplace or showing up to work under the influence of alcohol, employers can still implement those same rules with regard to marijuana. Create and distribute workplace policies that delineate the circumstances that would prompt reasonable suspicion that an employee is high and mandate drug testing.  The policy should also set forth any consequences an employee could face if the employee tests positive for marijuana.
  • Employers should train supervisors and managers to spot signs of impairment. An employee may exhibit signs of impairment from marijuana if the employee is disregarding safety protocols, exhibiting odd behaviors, or repeatedly making bad decisions.  If it is apparent that an employee is under the influence of marijuana, send that employee to be tested.  If the test renders a positive result for marijuana, the employer may take disciplinary actions against that employee for being under the influence of marijuana in the workplace.
  • Before deciding on drug policies and testing programs, consult with an expert to ensure all policies are compliant with both state and local laws. In addition, employers should note that if the company operates in different states (or even different counties), they must make sure that all policies must vary by location to comply with all state and local laws.
  • Be sure to thoroughly educate employees about any new drug policy implemented and all repercussions an employee may face for failed tests, including random, reasonable suspicion, or post-accident tests.

While the whirlwind of changes in this area of law has created a lot of confusion for employers, PMP is here to help employers navigate these new laws to develop and implement compliant drug policies and testing programs.

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