COVID-19: FAQs About Employee Benefits During Business Closures

Developments occur rapidly with COVID-19. The information in our blogs is current as of the publication date.

In the past few weeks, we’ve shared a lot of information about continuing business operations through the COVID-19 pandemic, but on March 24 Gov. Tony Evers announced that effective March 25, all nonessential Wisconsin businesses must close their doors to customers until April 24 to slow the spread of the virus.

Organizations providing “essential care or services” will remain open and workers, including healthcare workers, family caregivers, grocery store employees, etc., are allowed to continue to travel to and from work. For a list of essential businesses or to inquire if your business is considered essential, visit the Wisconsin Economic Development Corporation website.

Nonessential businesses that have their workers or contractors performing remote work exclusively at home are allowed to continue to operate during the Safer at Home order.

Some organizations—retail shops, theatres, gyms, salons, etc.—have been voluntarily closing in the past few weeks for public safety due to the nature of their work, but this order requires many other businesses to temporarily shutter their doors. 

Companies now face some very tough employment decisions. No doubt every organization wants to provide stability for workers during a temporary closure—and retain talented employees for reopening—but some businesses simply don’t have the financial means to make that possible.  

We have put together answers to the questions that are plaguing business owners who need to shutter their doors. Whether you can continue to compensate employees during this challenging time, or you need to part ways, there are solutions available to you.

 Frequently Asked Questions for Business Closures

We have the means and would like to continue paying employees their usual wages during the Safer at Home order. Are we allowed to do this?

Yes. There is no law that prohibits you from providing paid leave to employees in whatever increments you want. You may have heard of employers like Netflix offering unlimited PTO and vacation days.

You should have a written leave policy (even temporary leave) that clearly defines your rules, and the rules need to be consistently applied to workers. Employers cannot select employees for different treatment based on race, color, religion, sex, national origin, age, disability or any other prohibited factor.

In addition, the Wisconsin Compensation Rating Bureau has established a new zero dollar rate code for payroll to employees in the state of Wisconsin who are paid wages or salary by their employer as a gesture of goodwill, but who perform absolutely no services on behalf of their employer.

Can employees remain on the health plan if they are not actively working?

It depends; continuation of benefits is usually outlined in the Summary Plan Description (SPD) or combination of the employer application and the insurance certificate. Most insurance carriers have announced some flexible provisions in light of the pandemic, but those provisions vary, and they don’t last forever. Your advisor or account manager will be able to help you understand your options, but generally there are three ways employees can stay on a group health plan:

No. 1 Actively at Work

• The majority of health insurance carriers and stop loss carriers have relaxed actively at work guidelines for a defined period of time due to COVID-19 related employment changes. If employees have reduced hours, are laid off, have extended PTO/Sick Days, or are furloughed, most carriers are allowing employees to remain on the group health plan as an active employee.
• Essentially, as long as the premiums are paid, employees can remain as active. Guidelines are changing rapidly, so check with your insurance carrier or advisor often to determine how these provisions impact your employees.
• Employers can be flexible in how they collect the employee portion of the premium during this time. Those who have the ability to do so intend to work out a payment plan for employees over several weeks or once employees are back to work full time.

No. 2  Family and Medical Leave Act (FMLA) or Emergency FMLA Expansion Act

• Employees under FMLA are entitled to the continuation of group health insurance coverage under the same conditions as coverage would have been provided if the employee had been continuously employed during the leave period.
• Traditional FMLA guidelines remain in effect and are still unpaid.
• The new Emergency Family and Medical Leave Expansion Act goes into effect April 1, 2020.
  • Temporarily expands entitlement to federal FMLA leave to employees who are unable to work or telework because they need to care for their child (under 18 years of age) if the child’s school or place of care is closed or the childcare provider is unavailable due to a public health emergency for the remainder of this calendar year.
  • Employees must be actively working and have worked for employer for 30 days prior to leave to be eligible.
  • Expansion Act requires employers to pay eligible employees a partial wage during Emergency FMLA leave.
    • First 10 days could be unpaid. Remainder of Emergency FMLA leave would be paid at two-thirds of the employee’s regular rate.
    • Act includes tax credit to reimburse employer amount of pay to no more than $200 per day and $10,000 total.
  • See our guide Families First Response Coronavirus Act: What does it mean for you? for detailed outline of leave options.

No. 3 Consolidated Omnibus Budget Reconciliation Act (COBRA)

• If you determine you need to permanently lay off or terminate employees, COBRA will need to be extended.
• COBRA has various payment options. When employees are terminated, they are typically responsible for the entire cost of the COBRA premium, but employers have the option to cover some or all of the COBRA premium if they choose.
• Terminated employees may have additional health insurance options available through the Marketplace and could potentially qualify for subsidies.

We have short-term disability insurance. Can employees use that if they are not ill but can’t work because of a mandatory closure? 

Short-term disability is changing rapidly, so you will want to consult your advisor to understand your options. Traditionally, short-term disability is used for an employee’s own physical illness or injury (and recovery time) and the worker must be actively working or on PTO when the injury occurs. Some disability policies cover mental illness and mental health conditions, which could be a factor when dealing with COVID-19 isolation.

If an employee is eligible for FMLA, short-term disability insurance could be used concurrently with leave, essentially turning unpaid leave into partially paid leave.

Again, you should consult your advisor or broker to understand your options.  

We don’t know when we will re-open and we need to lay off workers. Must we payout any unused vacation/PTO?

It will depend on how your vacation/PTO policy is worded. Wisconsin employers are not required to provide fringe benefits such as vacation or holiday pay. When an employer creates a benefit policy, the employer is free to impose any conditions it chooses. If your policy doesn’t address payout at the end of employment, it could imply a contract to pay. If your policy says you won’t pay, then you don’t need to pay.

Will workers be able to collect unemployment insurance (UI) benefits?

The Wisconsin Department of Workforce Development (DWD) has provided a COVID-19 FAQ for unemployment benefits on its website.

Wisconsin UI benefits are available to any individual who is unemployed through no fault of his/her own. If an employer must lay off employees due to coronavirus, individuals may be eligible for unemployment benefits if they meet the monetary criteria and the weekly eligibility criteria.

If employees meet the criteria, they will not be required to perform a mandatory work search due to an emergency order by Gov. Evers. He has also asked the legislature to appeal the one-week waiting period. So far a bill has been drafted that would allow the DWD secretary to suspend the one-week waiting period for up to a year if it is needed to respond to a declared state of emergency. 

Noteworthy, the Emergency Unemployment Insurance Stabilization and Access Act of 2020 (part of the Families First Coronavirus Act signed into law March 18) provides $1 billion for emergency grants to help states offset the costs of unemployment insurance benefits.

Additional Guidance

There are no easy answers here, but the team at McClone is standing by to help you answer your specific questions and concerns. We continue to monitor the evolving situation and we will update our guidance as more information becomes available.

In the meantime, we encourage you to reach out to our knowledgeable team. We are here to help you navigate this difficult and challenging time.