Should You Partner with A PEO? Can a PEO help your small business?

Understand the Importance of What PEOs are Doing for Their Clients; Consider what a PEO can offer your small business; Having a business relationship that benefits you!

Check out the article below to see how PEOs work to protect small business clients

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THE EXPANDING PEO WHEELHOUSE: HELPING SMALL BUSINESSES SURVIVE

COVID-19: STORIES OF ADAPTATION: HOW SERVICE & DELIVERY CHANGED

BY KATHRINA SALADRIGAS

Eighteen weeks have passed since we sent our first COVID-19 newsletter to Regis HR Group clients. Looking back, we could not have anticipated the scope of support our clients would need. In addition to inquiries about traditional human resources matters, we received an unprecedented number of questions about general business operations from employers, to the point of, “What can we do to survive?”

PEOs are uniquely positioned to help our local economies (and the country as a whole) recover from the pandemic, so here are some of things we hope all PEOs will implement to help their worksite employers overcome the challenges of the COVID-19 pandemic.

EMPLOYERS DESERVE A BETTER ANSWER THAN ‘THAT’S NOT WHAT WE DO’

Laws such as the Coronavirus Aid, Relief, and Economic Security (CARES) Act and the Families First Coronavirus Response Act(FFCRA) are being passed and subsequently changed at an extraordinary rate, so employers are reasonably overwhelmed:

  • What government-sponsored financial relief is available to our business?
  • How do layoffs and furloughs affect health benefits?
  • Is our business an “essential” business?
  • Who is eligible for sick leave under the FFCRA?
  • Do we have to close our facility if an employee tests positive? If yes, for how long?

This is a very small sample of the questions creating uncertainty and anxiety for business owners. While some of these questions are business-specific and can only be addressed by the employer’s legal counsel and/or tax professional, there are practical steps PEOs can take to support these employers without defaulting to “that’s not what we do:”

  • We’ve learned that monitoring regulatory changes and providing brief descriptions (one to three sentences) with links to the governing body in a timely fashion reassures clients that they have a trusted partner to lean on and reduces worries about missing something.
  • Similarly, sharing a finite list of well-researched government resources that consolidate information from multiple regulatory bodies (such as the Centers for Disease Control and Prevention (CDC) Resuming Business Toolkit​) saves employers time and reduces the incidence of misinformation.
  • We’ve learned that employers appreciate live interactive webinars where they can connect with employment lawyers and tax professionals. To this end, Regis HR Group has sponsored eight webinars (at no charge to PEO clients) with topics ranging from FFCRA requirements to Payroll Protection Program (PPP) loan forgiveness, with additional webinars scheduled in the upcoming weeks.
  • Perhaps most importantly, we’ve witnessed the significance of the human connection (albeit socially distanced). Our entire team, from our payroll specialists to our president, has proactively worked to check in with our clients and ask, “How can we help?” Often, the answer is not something in our traditional scope of services, but we’re committed to do what we can.

HELPING EMPLOYERS ADJUST TO THE ‘NEW WORKPLACE’

The pandemic has created a seismic shift in our traditional workspace. Whether or not this shift is temporary remains to be seen. In the meantime, however, employers are finding it difficult to adjust to the new workplace.

To help mitigate the stress that accompanies these significant changes, we have provided several tools to educate employers and their managers about how to get the most out of their employees in remote work environments, how to maintain employee morale, and how to continue to communicate effectively as a team.

Some employers find themselves in a position to reopen, but their pre-pandemic staff is refusing to return. We are helping these employers find qualified staff, often by connecting them with employees who have been laid off by other clients.

For clients that are hiring during this ordeal, we are sharing resources on interviewing best practices and, in particular, educating them about the importance of behavioral interview questions.

While it has long been commonplace to ask behavioral interview questions to assess a candidate’s problem-solving skills, resiliency, and adaptability in demanding/high-stress work environments (such as healthcare, investment banking, and hospitality), the pandemic has demonstrated that these skills are central to the success of every business.

To that end, PEOs should be encouraging employers to ask behavioral interview questions, in addition to assessing candidates on previous experience—because past behaviors can help predict future performance. Examples of behavioral questions include:

  • “Tell me about a chaotic situation you experienced in a professional setting.”
  • “Describe a time that, despite your best efforts, things did not work out as you had envisioned.”

FACILITATING REPORTS FOR PPP FINANCING & MEANINGFUL BUSINESS CONNECTIONS

Lenders participating in the Payroll Protection Program, which helped businesses across the United States maintain their workforces during the COVID-19 crisis, required employers to submit payroll reports quickly and accurately.

In addition to producing detailed payroll reports that included employee salaries, wages, commissions, cash tips, group health benefits payments, retirement benefits payments, state or local taxes, etc., Regis HR Group was able to help small businesses connect with local, community banks participating in the Small Business Administration’s PPP loan program.

Our clients thanked us for these introductions because community bankers were often more helpful with questions about PPP loans and more responsive than their counterparts working for national banks. Similarly, the community banks were thankful for the introductions because, prior to the pandemic, many of these employers had not considered partnering with a local bank for their routine banking and financing needs.

WE ARE IN THIS TOGETHER

COVID-19 remains a clear and present danger, but we are confident that working together, our country will overcome this crisis. We are motived by the dedication of our team and inspired to work harder each day to earn the gratitude of our clients.

Moving forward with the support of PEOs across the nation, we can serve our clients in new ways and emerge stronger from this pandemic.

KATHRINA SALADRIGAS

Marketing & Talent Acquisition Director

Regis HR Group

Miami, Florida

Paid Leave for Employees if School/Daycare/Summer Camps are Closed

With the new school year fast approaching and some schools electing to delay the start date, we want to make sure employers are plugged into the requirements of FFCRA. Small businesses are required by the Families First Coronavirus Response Act (FFCRA) to give employees paid leave from wok in certain circumstances relating to COVID-19. One requirement is that the child’s school/daycare/summer camp must be unavailable because of COVID-19.

The below article from FUBA helps breakdown the requirements of FFCRA.

Small businesses are required by the Families First Coronavirus Response Act (FFCRA) to give employees paid leave from work in certain circumstances relating to COVID-19. Employees who cannot work due to very specific reasons related to COVID-19 are entitled to two weeks of paid leave, with an additional 10 weeks of paid leave if they have to stay home to care for a son or daughter whose school, daycare, or summer camp is closed due to COVID-19.

If you have an employee who cannot come to work because they have to take care of a child because the child’s summer daycare – a school, camp or other program in which the employee’s child is enrolled – is closed or unavailable for a COVID-19 related reason, the employee may be entitled to paid leave.

Keep in mind that the child’s school/daycare/summer camp must be unavailable because of COVID-19. School being closed for summer vacation does not qualify an employee for paid leave because school is always closed during the summer and that closure is not related to COVID-19. If school does not reopen in the fall due to COVID-19, that may qualify employees for paid leave. However, if schools reopen but the employee’s children are attending online or digitally, the employee may not qualify for paid leave.

If an employee requests paid leave, you should get the following:

  1. The employee’s name and the dates the leave is requested
  2. A statement of the COVID-19 related reason the employee is requesting leave
  3. A statement that the employee is unable to work or telework for this reason
  4. Documentation supporting the reason for leave

The employee also needs to give you the name and age of the child they will be taking care of, the name of the daycare/summer camp that has closed, and they must provide a statement that no one else will be caring for the child while the employee is on paid leave. If the child is older than 14, the employee must show that special circumstances require them to stay home with the child during daylight hours.

Employees taking paid leave because their child’s daycare/summer camp is closed due to COVID-19 must be paid two-thirds their regular rate of pay, up to $200 per day. Learn more about calculating pay here.

You can offset the cost of their leave by keeping a portion of the quarterly federal employment taxes you would otherwise deposit with the IRS. If the cost of the leave is more than your federal employment tax bill, you can request an advance refund from the IRS using form 7200. To claim a payroll tax credit, you must retain the documentation described above and comply with any IRS procedures for claiming the tax credit. For more information about how to claim these payroll tax credits and what documentation is required, click here. For more information about form 7200, click here.

Click here to learn about other reasons that entitle employees to paid leave.

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This article was written by FUBA Workers’ Comp

Paid Leave Concerns When Employees Get COVID-19 Twice – Law360.com

https://www.law360.com/articles/1291176

Law360 (July 15, 2020, 4:21 PM EDT) —

Mark Konkel
Mark Konkel
Maria Biaggi
Maria Biaggi
Nicholas Kromka
Nicholas Kromka

The coronavirus has been novel in more ways than one. On one end of the spectrum, employers confront new questions of almost philosophical dimensions.

How much risk is too much risk? What risks should we ask our employees to accept? Where is the line between ordinary risk — the kind that employees undertake when they walk out the door every day to go to work — and the extraordinary risks posed by a pandemic from which, in the end, employers cannot entirely shield their workforces?

A seemingly more mundane novelty is the plethora of new COVID-19 laws and regulations. Compliance should just be a matter of reading a statute and, well, complying. But even there, an evolving real-world pandemic potentially makes compliance just as complicated.

One example we have helped our clients wrestle with involves exactly this kind of straightforward-on-paper, tricky-in-practice complexity.

One requirement of the Families First Coronavirus Response Act appears to be simple: When an employee working for an employer with under 500 employees gets sick with COVID-19, is seeking a COVID-19 diagnosis, or is subject to a quarantine order of a doctor or a government, they are entitled to up to 80 hours of emergency paid sick leave.

And that made perfect sense when the law was hurriedly drafted: You get sick once, and you do not get sick again, right?

Wrong. Mounting evidence now shows that contracting COVID-19 does not confer absolute immunity and that many individuals have now contracted the novel coronavirus more than once. So what happens when an employee exhausts his or her 80-hour emergency paid sick leave entitlement, recovers from COVID-19, and then contracts it again?

What are the basic requirements of the FFCRA?

Under the FFCRA, full-time and part-time employees who are unable to work or telework due to one of the qualifying reasons below may take up to 80 hours of paid sick leave.

  • The employee is subject to a federal, state or local quarantine or isolation order related to COVID–19.
  • The employee has been advised by a health care 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 the first or second reason above.
  • The employee is caring for his or her child if the school or place of care of the child has been closed, or the child care provider of such child is unavailable, due to COVID–19 precautions.
  • The employee is experiencing any other substantially similar condition specified by the secretary of the U.S. Department of Health and Human Services in consultation with the secretary of the U.S. Department of the Treasury and the secretary of the U.S. Department of Labor.

An employee who contracts COVID-19 may be eligible to take 80 hours of emergency paid sick leave for one or more of the above-qualifying reasons. However, they may only take 80 hours of paid sick leave once.

That is, the language of the FFCRA is arguably quite clear that two weeks of emergency paid sick leave is all an employee is entitled to within one Family and Medical Leave Act period, i.e., 12 months, whether a calendar year, another fixed 12-month leave year, etc.

The new legislation, effective April 1 to Dec. 31, was quickly drafted in March when the coronavirus was still novel. But while there is still so much that is unknown about COVID-19, we can no longer assume that an individual who has been infected with COVID-19 and recovers, will not be able to get the virus again.

In the U.S., people are reporting testing positive for the virus after having recovered from an initial infection.[1] According to the Centers for Disease Control and Prevention:

When a positive test occurs less than about 6 weeks after the person met criteria for discontinuation of isolation, it can be difficult to determine if the positive test represents a new infection or a persistently positive test associated with the previous infection. If the positive test occurs more than 6-8 weeks after the person has completed their most recent isolation, clinicians and public health authorities should consider the possibility of reinfection.[2]

And, of course, persons who are determined to be potentially infectious should undergo evaluation and remain isolated.

In April, the DOL issued guidance which also confirms the plain language of the FFCRA’s FMLA Expansion Act. That is, employees are not entitled to any more than 12 weeks of FMLA leave in a 12-month period, regardless of whether an employee takes paid leave under the FMLA Expansion Act or regular unpaid FMLA leave for reasons unrelated to COVID-19.

The FMLA Expansion Act does not add additional job-protected leave time. Rather, it adds additional qualifying reasons to take leave. Thus, an employee who takes 12 weeks of FMLA leave, does not have an additional 12 weeks of leave under the act because he or she is, for example, experiencing symptoms of COVID–19 for a second time and seeking another medical diagnosis.

Moreover, employees who may have taken FMLA leave for reasons other than the public health emergency in the preceding leave year may have reduced leave time under the FMLA for purposes of the public health emergency. This may have the unfortunate effect of potentially leaving those who are most vulnerable with less leave time than employees who have not needed to use regular unpaid FMLA leave for their own serious health condition. Also, the FFCRA only applies to employers with 500 or fewer employees.

New York employers are required to comply with both the FFCRA and the New York Emergency Paid Sick Leave Law, or EPSL. The benefits available under the EPSL vary based on the size and net income of the employer.

Under the EPSL, private employers with 100 or more employees are required to provide their employees with at least 14 days of paid sick leave. Employees in New York are eligible for benefits under the EPSL when the benefits provided by that law are in excess of those provided under the FFCRA.

In this situation, employees would be entitled to federal benefits, plus the difference in benefits provided under the FFCRA and the EPSL. In other words, no double dipping. And, unless the employee has to care for a family member with a serious health condition, he or she would not be entitled to New York paid family leave.

Given all this, there is no statutory obligation under the FFCRA to provide employees with additional paid leave in the unfortunate circumstance that an employee contracts the virus twice. However, this may not always be the answer under state law.

For example, the New York State Department of Health and New York State Department of Labor recently issued guidance providing that health care employees who test positive after a quarantine or isolation may receive paid sick leave for up to two additional periods of quarantine or isolation.

Employers could certainly opt to pay employees during a second quarantine, but they are not required to under the current federal law. Alternatively, employers could provide unpaid time off, if the employee has exhausted his or her paid time off.

An employer may also be obligated to consider leave as a reasonable accommodation for individuals whose disabilities put them at greater risk from COVID-19, unless such an accommodation would cause an undue hardship on the employer.

So that ends the inquiry, right? Again: wrong.

What’s an employer to do?

We are always wary of simple answers to tricky questions. One answer to the questions posed above is deceptively simple: If an employee has exhausted her 80 hours of FFCRA leave, it is exhausted, and she is not entitled to a second round of leave.

While that position is straightforward and legally defensible, it misses a bigger context. If an employee is not entitled to additional leave but has contracted COVID-19 twice (or more), a sensible employer, or at least, one that is interested in avoiding getting sued by other employees, will not allow the sick employee to return to work. But if an employer takes the position that an employee ordered to stay home is not entitled to pay, it opens up a whole other can of worms.

One policy arguably underlying the pay protection provisions of the FFCRA is to encourage candor: Employees will be less likely to ignore or minimize their own symptoms, and to tell their employers about what is going on, if they are not concerned about losing compensation as a reward for their honesty.

And with federal unemployment benefits of $600 per week in addition to the normal level of benefits still in place, an employee may well consider continuing to stay home or eventually finding another job.

These concerns underscore why many larger employers who are not subject to the FFCRA’s coverage because of their size have gratuitously offered pay protection to sick employees: You want to know that employees are sick, tell them to stay home to avoid community spread in the workplace, and — perhaps most importantly to your longer-term business goals — actually retain a workforce you hope can return soon enough in full force.

Obviously, employers must first and foremost ensure compliance with applicable law, including the FFCRA. But navigating the pandemic is not just a question of strict compliance. Arguably, protecting continuity of operations, the health of the workforce and an employer’s long-term investment in its workforce is at least as important as ensuring any shorter-term compliance.

While this article cannot address how a specific employer will weigh those potentially competing concerns, smart employers consider all of those impacts in deciding whether or not to maintain a leave policy that may exceed, not just meet, the requirements of the FFCRA.

Regardless of whether the U.S. is in the first or second wave, the possibility is now evident that employees may get the coronavirus for a second time, while having already exhausted the leave entitlements under the FFCRA, state leave laws and the employer’s PTO policy. Employers should be prepared to face this new obstacle, particularly as cases in the U.S. are not abating.


Mark A. Konkel is a partner and co-chair of the labor and employment practice group at Kelley Drye & Warren LLP.

Maria B. Biaggi is an associate at the firm.

Nicholas J. Kromka is an associate at the firm.

The opinions expressed are those of the author(s) and do not necessarily reflect the views of the firm, its clients, or Portfolio Media Inc., or any of its or their respective affiliates. This article is for general information purposes and is not intended to be and should not be taken as legal advice.

The New Normal….Pandemic Insurance Products

It was only a matter of time before insurers began to develop products to cover pandemics.  The products range from traffic monitor apps that pay insureds based on a minimum threshold to relapse coverage that protects businesses forced to shut down a second time.  The complete article from Reuters is below.

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Insurers are creating products for a world where virus outbreaks could become the new normal after many businesses were left out in the cold during the COVID-19 crisis.

While new pandemic-proof policies might not be cheap, they offer businesses from restaurants to film production companies to e-commerce retailers ways of insuring against disruptions and losses if another virus strikes.

The providers include big insurers and brokers adding new products to existing coverage, as well as niche players that see an opportunity in filling the void left by mainstream firms that categorize virus outbreaks like wars or nuclear explosions.

Tech firm Machine Cover, for example, aims to offer policies next year that would give relief during lockdowns. Using apps and other data sources, the Boston-based company measures traffic levels around businesses such as restaurants, department stores, hairdressers and car dealers.

If traffic drops below a certain level, it pays out, whatever the reason.

“This is the type of coverage which … businesses thought they had paid for when they bought their current business interruption policies before the coronavirus pandemic,” the company’s founder Inder-Jeet Gujral told Reuters.

“I believe this will be a major opportunity because post-COVID, it would be as irresponsible to not buy insurance against pandemics as it would be to not buy insurance against fire.”

The company is backed by insurer Hiscox and individual investors, mostly from the insurance and private equity world.

Restaurants in Florida’s Miami-Dade County, where Mayor Carlos Gimenez on Monday ordered dining to shut down soon after reopening, are now reeling, said Andrew Giambarba, a broker for Insurance Office of America in Doral, Florida.

“It’s been like they made it to the ninth round of the fight and were holding on when this punch came out of nowhere,” said Giambarba, whose clients include restaurants that did not get payouts under their business interruption coverage.

“Every niche that is dealing with insurance that is affected by business interruption needs every new product they can have.”

Filling the Void

Pandemic exemptions have helped some insurers emerge relatively unscathed and the sector has largely resisted pressure to provide more virus cover. Indeed, some insurers that paid out for event cancellations and other losses have removed pandemics from their coverage.

British risk managers association Airmic said last week that the pandemic had contributed to a lack of adequate insurance at an affordable price and most of its members were looking at other ways to reduce risk.

To help fill the void in a locked-down world, Lloyd’s of London insurer Beazley Plc, started selling a contingency policy last month to insure organizers of streamed music, cultural and business events against technical glitches.

“These events are completely reliant on the technology working and a failure can be financially crippling,” said Mark Symons, contingency underwriter at Beazley.

Marsh, the world’s biggest insurance broker, has teamed up with AXA XL, part of France’s AXA, and data firm Arity, which is part of Allstate, to help businesses such as U.S. supermarket chains, restaurants and e-commerce retailers cope with the challenges of social distancing.

With home deliveries surging, firms have hired individual drivers to meet demand, but commercial auto liability insurance for “gig” contractors with their own vehicles is hard to find.

Marsh and its partners devised a policy based on usage with a price-by-mile insurance, which can be cheaper than typical commercial auto cover as delivering a pizza doesn’t have the same risks as driving people around.

“Even when the pandemic is over, we believe last-mile delivery will continue to grow,” said Robert Bauer, head of Marsh’s U.S. sharing economy and mobility practice.

A report by consultants Capgemini showed that demand for usage-based insurance has skyrocketed since COVID-19 first broke out and more than 50% of the customers it surveyed wanted it.

However, only half of the insurers interviewed by Capgemini for its World Insurance Report said they offered it.

Bespoke Cover

Since businesses are only now learning how outbreaks can affect them, some new products are effectively custom-made.

Elite Risk Insurance in Newport Beach, California, has been offering “COVID outbreak relapse coverage” since May for businesses forced to shut down a second time, its founder Jeff Kleid said.

The policies are crafted around specific businesses and only pay out when certain conditions are met, Kleid said.

For film and television production companies that could be when a cast member contracts the virus, forcing them to stop shooting. Another client, which raises livestock for restaurants, is covered for a scenario in which it would be impossible to get animal feed.

Such policies do not come cheap. A $1 million policy could cost between about $80,000 to $100,000 depending on the terms.

“The insurance … is costly because it covers a risk that does not have a historical basis for calculating the price,” Kleid says.

And in March, when COVID-19 ravaged northern Italy, Generali’s Europ Assistance offered medical help, financial support and teleconsultations for sufferers when discharged from hospital, on top of regular health insurance.

It sold 1.5 million policies in just two weeks and now has 3 million customers in Europe and United States.

Some insurers are also working on changes to employee compensation and health insurance schemes. With millions of workers not expected to return to offices anytime soon, some large insurers in Asia are preparing coverage to account for that, according to people familiar with those efforts.

At least one Japanese insurer has started work on a product to cover employees for injury while working at home, they said.

“Working from home will be the new normal for years to come. That would make the scope of the employee compensation scheme meaningless if a person suffers an injury while at home,” said a Hong Kong-based senior executive at a European insurer.

(Reporting by Noor Zainab Hussain in Bengaluru, Suzanne Barlyn in Washington Crossing, Pennsylvania, Carolyn Cohn in London and Sumeet Chatterjee in Hong Kong; additional reporting by Muvija M; Editing by Tomasz Janowski and David Clarke)

https://www.insurancejournal.com/news/international/2020/07/10/575081.htm

 

As COVID-19 Spreads, Beware of EPL Risks

As businesses of all sizes strive to protect their employees and preserve cash flow during the coronavirus pandemic, likely the last thing on most of their minds is employment practices liability (EPL) exposures. But EPL risks are higher during pandemics and other periods when employers are more likely to furlough, lay off or ask employees to work from home.

Despite federal legislation aimed at relieving financial burdens on workers and their employers, many businesses face difficult choices – and more complicated record keeping.

The Families First Coronavirus Response Act (FFCRA), which takes effect April 1, permits workers to take paid public health emergency leave to care for themselves or their children through the end of 2020. The law requires employers with fewer than 500 employees to provide up to 12 weeks of paid leave for employees who cannot work due to the closure of their children’s school or child-care provider during the public health emergency. The law generally requires employers to restore the employee to his or her former job after leave, unless the employer has 25 or fewer workers, or the position no longer exists due to economic conditions resulting from the public health emergency (source 12).

Several EPL risks for businesses can arise from the current coronavirus (COVID-19) outbreak. These include:

Wage-and-hour issues. Employers should carefully track employees’ working time, especially in work-from- home arrangements, as well as during a furlough. Work hours are common tipping points for eligibility under an employer’s employee benefits plan.

“A lot of employment issues arise from COVID-19. Frequent questions I get from employers concern furloughs, layoffs, and working from home,” said Kunal Shah, Of Counsel at Wilson Elser Moskowitz Edelman & Dicker LLP in Dallas. “If a business temporarily closes its doors, or significantly reduces its staff and hours, how do we navigate employee compensation and benefits? Insureds need to be mindful that furloughs, if not handled properly, can lead to significant wage-and-hour claims.”

If an employer requires employees to take unpaid leave through furlough, problems can arise if employees are asked to spend even a little bit of that time working, Shah cautioned. “An employer can furlough an exempt employee, but if the employee does one second of work, he or she is entitled to full pay for the entire pay period under the Fair Labor Standards Act,” he said.

“Employers need to be mindful of local and state ordinances, too. Employees of businesses that are deemed non- essential should not be working if they are under a shelter-in-place order,” Shah said.

Hours spent working matter, to workers and their employers. “Benefit plans may no longer provide benefits if hours fall below a certain threshold,” Shah explained. “For example, if a full-time employee goes below a certain hours minimum required for benefits under their group health plan, he or she may trigger coverage under COBRA,” or the Consolidated Omnibus Budget Reconciliation Act, a federal law that allows workers to obtain group health insurance temporarily, usually for up to 18 months.

“The reverse can also happen, where an employee works more hours than agreed upon, thus making him or her eligible for certain benefits otherwise not agreed to. For these reasons, timekeeping and logging hours are important steps for every employer, especially in a working-from-home arrangement,” Shah advised. Relying on employees to track their own time can be risky. “Asking employees to report their hours daily, even in an e-mail, is a good way to document work time if an employer lacks a logging system for remote workers,” Shah suggested.

“Also, employees who are on unpaid leave or working less hours due to furlough can still apply for unemployment benefits. An employer must be mindful of these sorts of situations to avoid wage-and-hour claims,” Shah advised.

Wrongful termination. Reductions in force (RIFs) are an unfortunate fact during economic downturns, such as the one that is occurring due to COVID-19. RIFs often lead to wrongful termination claims, and potentially even class-action lawsuits.

Because the coronavirus so far poses greater health risks to people over age 65, people with obesity and underlying uncontrolled health conditions such as diabetes or liver disease, and pregnant women, employers must proceed carefully with terminations. The Centers for Disease Control & Prevention offers information resources to help business and employers slow the spread of COVID-19 (source).

It might seem logical to some employers to lay off workers at greater risk of contracting COVID-19, but that is problematic and could invite lawsuits alleging discrimination and wrongful termination.

Americans With Disabilities Act (ADA) issues. The U.S. Equal Employment Opportunity Commission enforces anti- discrimination laws, including the ADA and the Rehabilitation Act. With the stress and anxiety over COVID-19, employees with disabilities might make more requests for reasonable accommodations under the ADA. Employers should consider any accommodation requests during the pandemic in the same manner in which they otherwise would. The EEOC also has published guidance for employers on COVID-19 (source).

The ADA allows employers to seek certain information about employees’ health and disabilities, insofar as such information is job-related and consistent with “business necessity,” but employers must remain aware of their obligations to apply it consistently and keep information confidential.

“Because we are dealing with a pandemic, it is now OK for employers to take employees’ temperatures or send an employee home if he or she is exhibiting COVID-19 symptoms, but any information an employer collects about an employee’s health must be treated as a confidential medical record,” Shah said. “During a pandemic like COVID-19, employees exhibiting symptoms consistent with the virus post a direct threat under the ADA, warranting an employer’s questions out of business necessity. Employers should remember that all other aspects of the ADA remain in effect. There is still the potential for retaliation claims under the ADA and other laws.”

Third-party discrimination. Another form of EPL exposure is third-party discrimination. Such claims may come from customers or others. For example, refusal of service or preferential treatment could be construed as third-party discrimination.

“Businesses all over the United States have been mandated to practice social distancing and not put their employees or customers in jeopardy. Businesses can’t prevent claims, but they may have lots of meritorious defenses,” Shah said.

Original article posted by CRC Group Wholesale & Specialty

Pandemic Roiling D&O Marketplace

As the coronavirus pandemic continues to grow, the directors and officers of public and private organizations are facing risks on two fronts: the economic impacts of COVID-19 and litigation. Adding to the challenge is a hardening insurance marketplace.

D&O liability insurance was already undergoing a market correction before the pandemic, after years of poor results and growth in claims. The uncertainties that COVID-19 is bringing to all sectors of the economy will undoubtedly lead to further changes – not only in the form of higher rates, but also tighter terms and conditions, as well as additional exclusions.

These trends will make navigating a complex line of coverage even more challenging, but they are not unprecedented. D&O insurers similarly tightened their underwriting during the financial crisis in 2008, then eased coverage restrictions after the global recession ended.

Times of crisis historically make directors and officers more frequent targets of litigation, as plaintiffs scrutinize organizations’ decisions. Generally, D&O allegations tend to fall into three categories: disclosures, particularly for public companies; mismanagement, especially when companies post results or their share prices drop precipitously; and insolvency. Even when a lawsuit is found to have no merit, organizations still must defend it, and those expenses can quickly mount.

D&O LAWSUITS OVER COVID-19

The Securities and Exchange Commission has encouraged public companies to disclose the impact of the coronavirus on their operations and financial condition, even as the SEC notes the future impact is uncertain. But public statements can get companies into hot water, as recent litigation shows.

Several lawsuits naming organizations and their directors and officers have already been filed with allegations relating directly to the coronavirus pandemic.1 A sampling of lawsuits include class actions against:

  • Norwegian Cruise Line Holdings Ltd. In March, plaintiffs filed a federal securities lawsuit alleging, among other things, that the cruise line made false and misleading statements about the impact of COVID-19 on the company’s operations and business prospects. The lawsuit also cited media reports of leaked internal memos directing the cruise line’s sales staff to lie about the coronavirus.2
  • Inovio Pharmaceuticals Inc. Also in March, plaintiffs filed a securities lawsuit alleging the biotechnology company made false and misleading statements that it had designed a vaccine for COVID-19 in three hours. A research firm called on the Securities and Exchange Commission to investigate Inovio’s statement, suggesting it was “ludicrous and dangerous.”3

Article originally posted on CRC Group Wholesale & Specialty Group 

COVID-19’s Impact on the PEO Industry: Flash Survey by LL Roberts Group

PEOs Dealing with the Coronavirus

This PEO Flash Survey regarding how PEOs are dealing with the Coronavirus outbreak involved several interviews with PEO owners and executives, PEO brokers, Insurance brokers serving PEOs, bank representatives that work with PEOs and other vendors associated with the PEO Industry.  This confidential survey was conducted by LJ Roberts of the LL Roberts Group in a conversational or interview manner.  All parties interviewed in conjunction with this survey have been assured that their opinions, observations and comments will be kept confidential.  However, what I can share is that the PEOs, companies, agencies, and organizations interviewed are located and operate from coast-to-coast.  As a result, these observations and opinions are representative of a national perspective concerning the Coronavirus and its impact on PEOs and business in general.

The comments, opinions, insights, plans, and observations of those interviewed are presented as bullet points below:

  • “As a longtime veteran of the PEO Industry, I’ve never seen anything like this and believe that we are a long way from seeing the worst of it” was a comment made by one mid-sized PEO executive.  This observation was echoed by several of those interviewed.  This observation indicated that those interviewed are in uncharted waters and are now making difficult decisions on challenges not previously experienced by their organizations.

 

  • “I expect this to last for 6 months” was a comment made by one PEO owner and was consistent with many of the remarks made by the survey’s interviewees.

 

  • “We are preparing for worst case scenarios” shared one PEO owner as he is having daily meetings with his senior staffers.

 

  • “This is the most overblown event that I have ever witnessed in my life” stated one PEO owner.  He went on to speculate that the Media was using this as a draw for viewers and readers.  He also feels that there are political factors at play (why the Coronavirus outbreak is so overblown in his opinion).

 

  • “We are reaching out to the state unemployment commission so that we can properly instruct clients on how their employees can get unemployment benefits quickly. While we are always thinking about fighting unemployment claims, this situation is different” shared one PEO owner.

 

  • “This Coronavirus situation will impact how we do business after it’s all over” was a comment made by one PEO representative.  Other interviewees expressed similar observations.

 

  • One PEO owner stated that “most of our client companies cannot go weeks without operating, so we are expecting several clients to simply go out of business”.  Clients going out of business was a possibility that several interviewees shared.

 

  • “This is going to be much worse that the 2008 economic crash” and “this will be the worst SUTA crash the PEO Industry has ever seen” were the comments from one PEO owner.  He also mentioned reports that he attributed to federal government representatives on TV that predicted a possible 20% unemployment rate on the other side of this crisis. He went on to say that he’s grateful that a lot of his clients are priced on client-based SUTA.

 

  • An expectation that the Millennials will be the most impacted from a psychological standpoint. Comments to the effect that the Millennials have never been “economically tested” were shared as a concern.

 

  • A big concern for most interviewees was “communication”, both internally and with their clients. “we need to double-down on our communication processes and initiatives” was one comment made.  Daily phone meetings with work at home employees will be crucial, shared one PEO executive.

 

  • “I can foresee us needing to call upon our rarely used credit line at our banks” was one PEO owner’s expressed expectation.

 

  • “We better be concerned with and thinking about our technology” stated one PEO owner who just placed an order for 6 laptops for possible assignment to work from home staffers.

 

  • “This is a time when leaders show what they are made of and new leaders or key players emerge” was a wise statement or insight

 

  • It was reported that numerous client companies of the PEOs represented in this survey have totally suspended operations or dramatically limited such.  The client company industries that seem to have been mostly impacted are restaurants and the hospitality industry at large, transportation companies and retailers.

 

  • Already, according to a couple the PEO owners interviewed, clients are requesting PEO rate reductions due to the crisis.  One PEO owner expressed concern with this becoming a growing request or expectation of his client base.

 

  • One PEO with an overweighed hospitality industries book of business was especially concerned.  Already mandated closures of restaurants and bars has impacted that PEO’s business, but how long will it be before people are comfortable going out to eat or to go to bars after the crisis is dealt with?—that was the concern expressed.

 

  • “Rotating staff” was a common initiative referenced by the PEO representatives interviewed.  Cutting their internal staffs at the office in half (or more) by having a rotation of having employees work one day at home and the next at the offices.  This was seen as a effort to support “social distancing” and to minimize the number of employees working at the office at one time.

 

  • “Certain job functions cannot or should not be performed by staffers from home” was a comment from one PEO representative.

 

  • “We expect that some of our clients and even our PEO will be taken advantage of by some workers that simply see this crisis as a opportunity to take time off from work” stated one PEO representative.

 

  • One crucial factor to consider when determining if PEO staffers will be allowed or instructed to work from home is the quality of their internet connectivity and computers.  Some employees lack either or both internet connectivity and/or a home computer or laptop. A few of the PEO representatives stated that they were assigning laptops to some staffers and a couple had recently bought extra laptops for this very purpose.

 

  • A PEO representative stated that they were having their staffers working from home use their office voiceover IP phones at home.  This was allowing them to receive and initiate calls from their office phone lines while working at home. Another PEO was having the office phones and extensions for staffers working at home forwarded to the employee’s cell phone while they are working from home.

 

  • “Core crews” will be needed at the PEO’s base of operations were consistent responses with all the interviewees. When pressed for what team members at the PEO would be classified as “core” the common response was “our leaders” and those associated with getting printed checks and reports out to the clients. Payroll, IT, HR, and accounting were the types of personnel that would be called upon most during the Coronavirus outbreak according to most interviewees.

 

  • “Hyper-hygiene” was another practice that was referenced by several survey interviewees.  Emails, bulletins, texts, posters, handouts are all being utilized with the PEO’s internal staff and with their clients. Handwashing, using disinfectant cleansers, covering your mouth and nose when coughing or sneezing, etc… are all tips and practices being promoted.

 

  • Most of the PEO owners and executives interviewed stated that they have internal (PEO) planned staff reductions. Some have already implemented reductions and are considering more. The common observations is that revenues are dropping rapidly due to client company payroll reductions or total suspensions. “It’s easy math” said one PEO owner referencing that the PEO’s staff size and payroll are a factor of the revenue generated, which is based on client companies processing payrolls through the PEO.

 

  • “I’m focused on assessing the probable economic impact on our PEO and what I need to do now to prepare for a dramatic reduction in revenue” was shared by one PEO owner, however other interviewees expressed the same concern.

 

  • At least two of the PEO owners interviewed stated that they have not yet considered internal PEO staff layoffs but acknowledged that that would be a possibility.

 

  • A few of those interviewed said that they have already heard of PEOs that were contemplating closure.  Others predicted that there will be PEOs that “go out of business” as a result of the Coronavirus crisis.  At least one of the PEO owners interviewed said that he will be looking for a “fire sale of PEOs prior to them going under”.

 

  • After speaking with PEO bank representatives and the PEO representatives that work with treasury management, there does not seem to be any concern with banking.  Bank representatives confirmed that they are implementing their own “work from home” initiatives, reducing operating hours, and utilizing minimal branch staffs during this Coronavirus outbreak. The bankers feel like they are a crucial and required facet of not just serving the PEO Industry, but in supporting the worldwide economy and society—as a whole. No changes in how PEOs are served are planned at this time by the bank representatives interviewed.

 

  • An optimist PEO owner said that this is “SARS 2.0”.  He went on to state that his PEO had done very well since the last declared virus outbreak.

 

  • Increasing “cloud-based file share processes” was another initiative that some of the PEO representatives shared.  Those respondents stated that they already had such practices in place but would add staff members to that access and expand capacity to utilize this type of resource.

 

  • Some of the PEO owners expressed pride in how their key employees were stepping up and declaring their commitment to the PEO and the clients.  Volunteers for staying at the office (as part of the aforementioned “core crew”) were noted. At the same time, one PEO owner stated that this situation has been “enlightening” to him as it pertains to various staff members.

 

  • A question that asked (or fear expressed) was that WSEs that become infected with the Coronavirus will be eligible for workers’ compensation benefits.  This was a particular concern for those PEOs with large deductibles associated with the PEOs’ workers’ comp polices. One workers’ comp broker expressed that he expects that to end-up being the case (i.e. that Coronavirus claims will be compensable under workers’ comp). While SUTA rate increase were commonly fears and expected as a result of this crisis, might experience modifiers for the PEOs to be impacted as well, was at lease one PEO owner’s concern.

 

  • “Our leaders need to work hard to keep spirits up (referring to the PEO’s internal staff)” was a PEO owner’s comment.

 

  • A push to promote pay cards and direct deposits to those client companies that still issue paper checks is underway at some of the PEOs interviewed. A mild concern that FedEx might suspend operations was expressed by a couple of PEO representatives.

 

  • PEO representatives shared they are keeping a close eye on what the federal government is doing in the way of any “economic relief package”.

 

  • Asking PEO sales reps to stay away from the office was a precaution one PEO reported.  This is due to the salespeople moving amongst different locations (prospects and clients) stated the interviewee.

 

  • “During and after this crisis, we will be considering our expanded use of outsourcing non-client facing functions for our PEO (back office functions like reconciliations and payroll processing were mentioned)” was shared by one PEO owner.  He said that he thinks that this type of outsourcing (to India) could reduce the costs associated with those functions by as much as 50%.

 

  • “We are looking at every cost cutting measure that we can take in order to deal with lost revenue” stated a PEO owner.  He mentioned staff reductions, elimination of travel and entertainment expenses, and reduced hours for part time workers.

 

  • Interestingly, a couple of the PEO owners are planning “sales promotions” such as “no admin fees” for one, two and even three months for new accounts that come onboard during this crisis.  Also, sales promotions are being implemented by some PEOs in the form of bonuses on new business to be paid to the agents or brokers.

 

  • The PEO brokers seem to be the most stunned as they feel that they have no control and are dependent on the PEOs to tell them what is happening and what will happen moving forward.  Of course, PEO commissions to brokers are based on payrolls processed and typically do not involve any form of “base salary”.

 

  • Some PEO vendors and insurance brokers expressed that the adverse impact on them will likely be somewhat delayed as reported workers’ comp premium collections are not immediate and PEO failures are not yet identified or reported. They seem to feel a bit “powerless” in assisting their PEO clientele.

We will continue to communicate with our survey respondents and will look to provide an update later during this Coronavirus crisis in order to keep our PEO friends and affiliates aware of Industry veterans’ experiences, observations, and opinions.  Please let us know if you have any questions or additional comments that you want to share.

LL Roberts Group

 

Department of Labor Issues Final Rule to Allow Associations and PEOs to Sponsor Retirement Plans

REIT
Final rule defines a PEO as an employer under ERISA and clarifies rules for PEOs to offer retirement benefits

On July 29, 2019, the Department of Labor (the “Department”) issued a final rule to facilitate and expand the availability of multiple employer defined contribution plans (“MEPs”). The final rule provides clarity regarding the types of “bona fide” groups or associations of employers as well as professional employer organizations (“PEOs”) that are permitted to sponsor retirement plans.

NAPEO supports the rule, as it is another step in in formalizing the legal framework for PEOs to provide benefits for their client’s shared employees. This action, along with the passage of the Small Business Efficiency Act contained in the Tax Increase Prevention Act (H.R. 5771, Public Law 113‐295) which created the voluntary IRS PEO Certification Program, demonstrates the federal government’s recognition of the PEO industry and the important role it plays in supporting our nation’s small businesses.

With respect to PEOs, the final rule does two things. First, it states that a “bona fide” PEO is capable of establishing a MEP. The rule then creates a safe harbor criteria for determining whether a PEO that sponsors a MEP is performing essential employment functions.

A copy of the final rule can be found here.

A summary of the final rule can be found here.

A detailed analysis on this issue from the Groom Law Group can be found here.

A recording of a NAPEO-sponsored webinar on this issue can be found here.

A copy of NAPEO’s comments on the proposed rule can be found here.
NAPEO Article can be found:

https://www.napeo.org/advocacy/what-we-advocate/federal-government-affairs/peos-retirement-regulation/dol-meps-finalrule