COVID-19 Creates a Myriad of Compliance Challenges for Employers
Liliana Salazar, Esq., is Chief Compliance Officer for the Western Region of global insurance brokerage HUB International Limited. She is responsible for addressing public and private employers’ health and welfare responsibilities under federal and state laws and city ordinances. Liliana works closely with HUB’s service teams and clients to develop short- and long-term strategies that will allow clients to remain in compliance while addressing clients’ financial and human capital needs.
As COVID-19 creates new challenges and opportunities for businesses, employers must also review how the pandemic impacts their compliance with federal and state laws and local ordinances.
As business prepare to reopen and reinstate employees back to work, employers should review how the new COVID-19 workplace rules impact their business. Employers in multiple states and localities are required to comply with complex (and sometimes contradictory) requirements established by the CDC, OSHA, EEOC, state, and local agencies. New COVID-19 technology solutions enable employers to comply with and track daily health screenings of employees and vendors; develop new social distancing and sanitation protocols; provide training and support for employees; and conduct contact tracing if an employee tests positive for COVID-19. Employers also rely on the COVID-19 technology solutions to process leaves of absences as employers are immediately notified when an employee may have COVID-19 or tests positive for the virus. Early notification allows employers to offer leave of absence to affected employees under the Families First Coronavirus Response Act (FFCRA), state, or city ordinances. The FFCRA generally applies to employers with less than 500 employees, and offers under the Emergency Paid Sick Leave, up to 10 days (80 hours) to employees who test positive for COVID-19 or are advised by a medical professional to quarantine due to COVID-19. Employers exempt from complying with the FFCRA may be subject to state sick leave laws and/or disability programs that provide employees with salary continuation and/or job protected leave due to COVID-19. By processing leaves of absence rapidly, employees are discouraged from coming to work if they are experiencing COVID-19 symptoms, as their pay will not significantly impacted. Lastly, these technology solutions aid employers in making determinations on when it is safe to reinstate employees to work in accordance with CDC and state guidelines.
COVID-19 and the ACA
Another challenge created by COVID-19 is compliance with the Affordable Care Act (“ACA”). Under the ACA, an employer that had at least 50 full-time employees and full-time equivalent employees in the prior year, (an Applicable Large Employer or “ALE”) is required to reinstate the coverage of full-time employees who have a break in service of less than 13 weeks no later than the first day of the month, following the employee’s reinstatement. However, the ACA allows an employer to impose a new waiting period or a new measurement period, if the break in service is greater than 13 weeks. Employers reinstating furloughed or laid off employees, should become familiar with what constitutes a break in service and which hours are counted as hours of service because the treatment of furloughed employees is unclear under the rules. Through ACA platforms, employers can determine which hours count as an hour of service in determining if an employee experienced a break in service. The rules governing what constitutes an hour of service are complex, as employers are required to count not only hours worked but also hours employees do not work such as: vacation, sick time, PTO, payments under an employer paid short term and long-term disability plan, payments under the Families First Coronavirus Response Act (FFCRA), jury duty, FMLA leaves, and USERRA. For this reason, it is critical for employers to automate the administration of measurement periods, as failure to offer coverage to or reinstate coverage of a full-time employee can result in steep penalties. Employers subject to these rules are also required to file a Form 1095-C for every employee that was full-time for one or more months in a calendar year. Therefore, employers must be able to rapidly capture changes in employee’s status under the ACA to adequately complete and file Forms 1095-C.
Compliance with State Laws and City Ordinances
As teleworking became the preferred method for many employers to do business during the pandemic, employers should review where their employees live, as they may be now operating in new jurisdictions that give rise to additional mandates. Most states require employers to register as a tax withholding entity when they have employees working in their state; teleworking is not an exception. Employers may now be required to comply with state disability and/or Paid Family and Medical Leave laws, sick pay laws, state individual mandate reporting requirements, and state mandated benefits. Employers should also pay close attention to county/city mandates, as some counties and cities such as San Francisco, require employers to make a health care expenditure for each employee that works a minimum of eight hours per week (104 hours in a quarter) in the city. Failure to make the required health care expenditure either through an offer of employer sponsored coverage or by contributing into the City option may result in the imposition of penalties. Lastly, employers should review city ordinances to ensure they are complying with new paid sick leave mandates, as many cities have implemented more generous paid sick leave policies than those required by states. More than ever, employers may need to rely on technology to carefully track were their employees work to ensure they remain in compliance during the pandemic.