This post was last updated on Feb 03, 2021.
DISCLAIMER: This content is provided for informational purposes only and is not intended as legal, accounting, tax, HR, or other professional advice. You are responsible for your own compliance with laws and regulations. You should contact your attorney or other relevant advisor for advice specific to your circumstances.
This is a special-edition feature written by Toast's HR Services Team. The HR Services team consults members of the Toast community about HR-related issues affecting their restaurant operations, including general staff management, payroll, compliance, employee conflicts, and other restaurant staffing related issues, questions, and concerns. To learn more about Toast's HR Services team and ways they can help your restaurant thrive, click here.
The following content is for informational purposes only and is not intended as legal, accounting, tax, HR, or other professional advice. You are responsible for your own compliance with laws and regulations. Contact your attorney or other relevant advisor for advice specific to your circumstances.
COVID-19 – also known as the coronavirus – has ushered in a new era of uncertainty and anxiety for the restaurant industry.
At present, 23 states, District of Columbia, Puerto Rico, Dallas, Miami, and Milwaukee have enacted legislation on the local level restricting restaurant operations to off-premise only, instituting slashed capacity, or forcing the closure of restaurants, bars, breweries, wineries, and nightclubs altogether.
These preventative and precautionary measures have resulted in widespread job loss for millions of restaurant owners, operators, managers, and employees. Thursday morning, The Department of Labor announced that 281,000 Americans had filed for unemployment assistance the week prior, a 33% increase over the first week of March. Leading economists believe March may soon hold the title of the month with the single largest mass layoff in US history, The Washington Post reported earlier this morning.
To support the industry during this unprecedented time, we've compiled and answered the top employment-related questions being most frequently asked by the Toast community and the restaurant industry at large.
For real-time updates about the COVID-19 crisis, it's impact on restaurants, and tips for navigating the uncertainty, bookmark this resource page by Toast.
COVID-19 Employment Questions from Real Restaurants
QUESTION: Can employees utilize paid sick leave, vacation, personal time or any other type of PTO to supplement their income during business closures, furloughs, or temporary lay offs?
Paid Sick Leave - In states or localities where paid sick leave is mandatory, employers should look at the law to determine reasons for permitting or allowing employees to utilize this leave. If the permissible reasons include public health emergency, school closings, etc. then there is a chance that paid sick leave could be used by the employees, to the extent that they are eligible and have accrued time. If there is no paid sick leave mandate, then employers should look at their own policy or practice to determine whether this would be permissible.
UPDATE: First Families Coronavirus Response Act (FFCRA) provides employees of employers with less than 500 employees emergency paid sick leave of up to 80 hours with pay for reasons specifically associated with COVID-19 (pay amount depends on reason for leave). This leave is in addition to any paid sick leave currently required by law in the states/localities described above. Businesses with <50 employees may be exempted if imposition of requirements would jeopardize the viability of the business - we are waiting for further guidance on this.
UPDATE as of 3/19/20: First Families Coronavirus Response Act (FFCRA) provides employees of employers with less than 500 employees emergency paid sick leave of up to 80 hours with pay for reasons specifically associated with COVID-19 (pay amount depends on reason for leave). This leave is in addition to any paid sick leave currently required by law in the states/localities described above. Businesses with <50 employees may be exempted if imposition of requirements would jeopardize the viability of the business - we are waiting for further guidance on this.
UPDATE as of 3/27/20: We have received further guidance from the DOL as of 3/26/20 indicating that FFCRA emergency paid sick leave and expanded FMLA may only be used if employees are still employed (i.e. not furloughed, laid off, or not working due to business closure) as of April 1, 2020, the effective date of the law. State and local laws may differ, so employers should check their local laws or check with an attorney for guidance. We have also seen additional guidance regarding the exemption for employers with <50 employees. Refer to this FAQ from the DOL for more insight: https://www.dol.gov/agencies/whd/pandemic/ffcra-questions
Vacation/Personal time - Employers should review their own policies and practices to determine whether employees are allowed to take paid time off for purposes associated with school closings. If there is no carve out for these purposes, employers may be able to limit their employee’s usage of accrued and unused vacation or personal time. If letting employees use vacation or personal time to get paid during the closure, employers should be aware that allowing employees to use this PTO for this purpose could set a precedent and have usage implications later on. A good option may be to temporarily amend the policy for this specific purpose to allow for usage in the short term without longer term implications.
If an employee can’t work due to contracting the virus, it’s good practice to discuss other paid or unpaid leave options under regular FMLA (if applicable, potentially using vacation/sick leave in tandem with FMLA in accordance with company policy), ADA (as a reasonable accommodation), paid leave eligibility and requirements (paid sick leave, vacation, other PTO) and other personal leave options if not eligible for any other type of federal or state leave.
UPDATE: The FFCRA provides expands FMLA for employees of employers with less than 500 employees. The first ten days of that leave will be unpaid (though other accrued and unused PTO, like the emergency paid sick leave provided by FFCRA) may be used during that time. The rest of the 12 weeks of leave are paid at ⅔ what the normal average pay would be for that employee. Job protection is provided for the 12 weeks. Businesses with <50 employees may be exempted if imposition of requirements would jeopardize the viability of the business. Further, businesses with <25 employees may not be required to reinstate employees after the 12 weeks if the job no longer exists. We are waiting for further guidance on this.
UPDATE as of 3/27/20: We have received further guidance from the DOL as of 3/26/20 indicating that FFCRA emergency paid sick leave and expanded FMLA may only be used if employees are still employed (i.e. not furloughed, laid off, or not working due to business closure) as of April 1, 2020, the effective date of the law. State and local laws may differ, so employers should check their local laws or check with an attorney for guidance. Refer to this FAQ from the DOL for more insight: https://www.dol.gov/agencies/whd/pandemic/ffcra-questions
QUESTION: What strategy is best? Furlough, temporary layoff, business closure, or termination? What are some considerations with each method when it comes to unemployment claims, or continuation of insurance benefits?
Furloughs, temporary layoffs, or extended business closures
These are short-term employment strategies many employers are taking right now. Some employers are choosing to simply tell employees “We are temporarily closing operations or suspending dine-in operations in accordance with recent local/state regulations placed upon the industry”. Things to consider:
Unemployment - In many states, regardless of method (furlough, temporary layoff, business closure, or termination), unemployment benefits may be awarded due to reduction in hours. There may not be a need to terminate all employees in order for them to be awarded unemployment benefits. However, employers should check local unemployment laws to confirm eligibility, payment amounts and waiting periods as these aspects vary by state.
Return to work - If staff are furloughed, temporarily laid off, or the business simply takes them off the schedule, then employees would likely be called back in when the time comes via the company's regular mode of communication - usually email or text or via scheduling apps.
Benefits - For medical insurance or other paid benefits, employers should examine their insurance and handbook policies to determine how medical benefit eligibility could be disrupted, and how paid time off/paid leave may be applied for time away from work.
For employers who want to terminate their employees now, with the possibility of rehiring them later, here are things to consider:
If employees are terminated, COBRA (Consolidated Omnibus Budget Reconciliation Act) or mini-COBRA should be examined to determine how benefits would need to be continued post-termination. If rehiring terminated employees down the road, a rehire would go through the normal process and receive all federal and state required paperwork including wage notices, local employment law notices, a new I-9 (in some cases), notices to tipped employees, and other important tax forms. Depending on the gap of time between term and rehire, the rehired employee may be immediately eligible for benefits without the normal waiting period. Employers should refer to benefits policies to determine the best course of action.
For larger restaurants, there may be WARN (Worker Adjustment and Retraining Notification) implications. Make sure to check federal and state guidelines to determine what notice responsibilities you may have if laying off a significant percentage of workers permanently closing operations.
QUESTION: What are some things to consider when it comes to paying employees during this time?
Hourly employees should be paid for hours worked, and should receive over-time in accordance with all federal and local wage and hour laws. Note that if employees are working in a non-tipped capacity, then they should receive at least the regular minimum wage per hour worked, i.e. employers should not take the tip credit if employees are performing duties that qualify as non-tipped work.
If a salaried exempt employee performs any work during the work week, they need to be paid for their full work week’s salary (Note: the work week definition may be different than the calendar week). Employers may be able to require employees to utilize PTO in full day increments for the other days of the workweek on which no work is performed. If no work is performed by the employee at all during the work week, then no pay is required. However, employers should consider what constitutes “work” (texting/calls with employees, checking emails, “on call” duties, etc.) and should set those expectations in writing before the work week begins.
UPDATE: The FFCRA provides emergency paid sick leave and expands FMLA for employees affected by the virus. This may determine further pay considerations associated with COVID-19 leaves (as described above). Talk to an attorney for guidance here.
QUESTION: What advance notice requirements do I need to consider when informing my employees of a furlough, temporary layoff, shut down, or mass termination event?
Federal WARN laws
Federal WARN laws requiring advance notice typically do not apply to temporary layoffs for less than 6 months. However, if you are permanently terminating employees, closing locations, or shuttering your doors, there may be notification requirements to consider under this law.
State/local “mini-WARN” laws
Like Federal WARN law, many states do not require advance notice for layoffs and closures if temporary and less than 6 months. However, some states do not have this carve out and could still require special notice. Employers should check state and local laws to ensure they are compliant with requirements.
Note: many of the WARN laws have a provision stating that advance notice may not be required if the reason for the closure or lay off is a result of a natural disaster or other calamities. Though formal guidance has not been issued yet, employers should discuss their concerns with an attorney before assuming COVID-19 concerns fall into this category/exception.
If WARN laws do not apply, as a practical matter, you will still want to communicate with employees about the state of the business to ensure no one is reporting to work if there are closures, reduced hours or decreased staffing needs. Failure to do this could hurt employee morale and potentially result in having to pay call-in pay in some states and localities.
QUESTION: What are some ways I can address employees that are high-risk, showing symptoms, may have been directly exposed, or have been medically diagnosed with the virus?
If an employee is exhibiting symptoms related to coronavirus or COVID-19--fever, cough, shortness of breath--you may ask the employee to leave work and stay home until the employee is symptom-free.You may also send employees home if they appear to have acute respiratory symptoms or if they indicate potential exposure due to travel or contact with a person who has COVID-19. If an employee has called off work due to illness, you may also ask questions about symptoms or whether the employee has been diagnosed with COVID-19 to determine if any other employees have potential risk of exposure.
UPDATE: If caring for themselves or a family member with COVID-19 related issues or school closings, please note that FFCRA emergency paid sick leave or expanded FMLA may be an option (as described above).
In the event that an employee has been diagnosed with COVID-19, you will need to discuss accommodations (e.g., regular or FFCRA expanded FMLA, leave of absence, paid time off - including state/local paid sick leave and FFCRA emergency paid sick leave - remote working accommodations, etc.) with them. You can also require a note from a healthcare provider clearing the employee to return to work. Best practice is to inform any employee who worked closely with the employee that there is a risk that they have been exposed, but keep the employee’s name and other identifying factors confidential.
If an employee is refusing to work with another employee out of fear of contracting COVID-19, employers must assess the reasonableness of the situation. It is important that management determine whether the fear is rooted in legitimate reasons (see CDC risk assessment guidelines here), or if the fear is stemming only from some sort of workplace rumor, discriminatory behavior or other perceived cause without any concrete evidence.