COVID-19 and Legal Considerations in Michigan

On Tuesday, March 10, Governor Whitmer declared Michigan a state of emergency, as the first positive case of COVID-19 was confirmed. While a state of emergency enables the state to quicken response efforts, this can bring with it a lot of questions regarding employment and legal issues. Below is some information regarding common legal issues that might arise due to the recent COVID-19 outbreak. 

COVID-19 and the Fair Labor Standards Act (“FLSA”): 

• The FLSA generally applies to hours actually worked. If hourly-paid employees only work a partial week due to COVID-19, the employer is not required to pay them for the hours they would have otherwise worked.
• A private employee may direct exempt staff to take vacation days in the case of an office closure provided the employees receive in payment an amount equal to their guaranteed salary. If an employee does not have enough vacation days or limited accrued leave, they still must receive their guaranteed salary for any absence(s) occasioned by the office closure in order to remain exempt.
• While the Wage and Hour Division (“WHD”) has not released an official order, the WHD does encourage employers to be accommodating and flexible if an employee is under government-imposed quarantine. 
• If an employer is requiring employees to telework, the employees must be paid the same hourly rate or salary. Similarly, if an employee has to pay additional costs in order to work from home, employers may not require employees who are covered by the FLSA to pay or reimburse the employer if doing so reduces the employee’s earnings below the required minimum wage. 

If you are a business owner and have been concerned about potential layoffs in response to COVID-19, the Department of Labor and Economics has provided guidance to Michigan employers on how to avoid this. The main suggestion is that employers place employees on temporary leave and advise the worker that they expect to have work available within 120-days as opposed to termination. Additional information and resources can be found at: https://www.michigan.gov/coronavirus/0,9753,7-406-98163-522113–,00.html. 

COVID-19 and the Family and Medical Leave Act (“FMLA”):

• An employee who is sick or whose family member is sick may be entitled to leave under the FMLA in certain circumstances. For example, if complications arise that create a “serious health condition,” as defined by the FMLA, this may qualify an employee for leave. 
• There is currently no federal law covering non-government employees who take off work to care for healthy children, and employers are not required to provide leave to employees caring for children who have been dismissed from school or childcare. However, employers are encouraged to provide increased flexibility to employees and their families. 
• Leave taken by an employee for the purpose of avoiding exposure to COVID-19 is not protected under the FMLA. However, employers are encouraged to support mitigation strategies and should consider flexible leave policies for their employees.  

Expansions in Unemployment Eligibility and Cost-Sharing Under the Michigan Employment Security Act (Executive Order 2020-10):

In response to the COVID-19 outbreak, Governor Whitmer issued Executive Order 2020-10 to temporarily expand eligibility requirements for unemployment benefits and cost-sharing with employers. The key provision(s) of the Order include, 

• An individual must be considered to have left work involuntarily for medical reasons if they leave work because of self-isolation or self-quarantine in response to COVID-19 due to being immunocompromised, displaying the symptoms of COVID-19, having contact in the last 14 days with someone with a confirmed diagnosis of COVID-19, the need to care for someone with a confirmed diagnosis of COVID-19, or a family care responsibility as a result of a government directive.
• An individual must be deemed laid off if they become unemployed because of self-isolation or self-quarantine in response to COVID-19 due to being immunocompromised, displaying the symptoms of COVID-19, having contact in the last 14 days with someone with a confirmed diagnosis of COVID-19, the need to care for someone with a confirmed diagnosis of COVID-19, or a family care responsibility as a result of a government directive.
•  An individual on a leave of absence due to displaying the symptoms of COVID-19, having contact in the last 14 days with someone with a confirmed diagnosis of COVID-19, the need to care for someone with a confirmed diagnosis of COVID-19 must be considered to be unemployed, or a family care responsibility as a result of a government directive, unless the individual is already on sick leave or receives a disability benefit.
• An individual who becomes unemployed because self-isolation or self-quarantine in response to elevated risk from COVID-19 due to being immunocompromised, displaying the symptoms of COVID-19, having contact in the last 14 days with someone with a confirmed diagnosis of COVID-19, the need to care for someone with a confirmed diagnosis of COVID-19, or a family care responsibility as a result of a government directive, and files a claim for unemployment benefits within 28 days of the last day worked must be considered to have filed on time
• An employer or employing unit must not be charged for unemployment benefits if their employees become unemployed because of an executive order requiring them to close or limit operations.
• Under the Executive Order, tipped workers who become unemployed or take a leave of absence [as specified in the Executive Order] are eligible for unemployment benefits.

Michigan Small Business Relief Program:

The Michigan Small Business Relief Program will provide up to $20 million in support for small businesses negatively impacted by COVID-19. The funding is divided between $10 million in small business grants and $10 million in small business loans to support businesses facing drastic reductions in cash flow and the continued support of their workforce. Funds for the program are expected to be available no later than April 1, 2020.

To be eligible for grants, the company has to meet the following requirements:

• The company is in an industry outlined in Executive Order 2020-09 or demonstrates it is otherwise affected by the COVID-19 outbreak, that meets one or more of the following: provides support to impacted employees, is located in a downtown district or high impact corridor or has 50 employees or less, or is a company that provides services to companies outlined in the EO and requires additional employees to support to companies or employees impacted by EO; 
• The company has 50 employees or less; 
• The company needs working capital to support payroll expenses, rent, mortgage payments, utility expenses, or other similar expenses that occur in the ordinary course of business; and 
• The company is able to demonstrate an income loss as a result of the EO, or the COVID-19 outbreak. 

To be eligible for loans, the company has to meet the following requirements:

• The company is in an industry outlined in Executive Order 2020-9 (“EO”), or demonstrates it is otherwise affected by the COVID-19 outbreak, or is a company that provides goods and services to companies to the aforementioned; 
• The company has fewer than 100 employees; 
• The company needs working capital to support payroll expenses, rent, mortgage payments, utility expenses, or other similar expenses that occur in the ordinary course of business; 
• The company can demonstrate that it is unable to access credit through alternative sources; and
• The company can demonstrate an income loss as a result of Executive Order 2020-9. 

Because additional information is still forthcoming, business owners are encouraged to check the MEDC website at https://www.michiganbusiness.org/covid19/. 

Restrictions on Price Gouging (Executive Order 2020-8):

 In response to the COVID-19 outbreak, Governor Whitmer issued Executive Order 2020-8 to impose enhanced restrictions on the excessive pricing of goods, materials, emergency supplies, and consumer food items. The key provision(s) of the Order include,

• If an individual/business has acquired any product from a retailer, the person must not resell that product in this state at a price that is grossly in excess of the purchase price at which the person acquired the product.
• A business/individual must not offer for sale or sell any product in this state at a price that is more than 20% higher than what the person offered or charged for that product as of March 9, 2020, unless the person demonstrates that the price increase is attributable to an increase in the cost of bringing the product to market.
• A willful violation of this order is considered a misdemeanor. 

In addition to the above information, the CDC has provided employers with guidance on how to plan and respond to COVID-19. This includes:

• Encouraging sick employees to stay home;
• Ensuring that sick leave policies are flexible and consistent with public health guidance and that employees are aware of these policies;
• Separating sick employees if they come to work with acute respiratory illness symptoms or develop these symptoms during the workday;
• Performing routine cleanings of frequently touched surfaces in the workplace, such as workstations, countertops, and doorknobs; and 
• Advising employees before traveling to take certain steps. 

Additional resources for employers and workers can be found at: https://www.michigan.gov/coronavirus/0,9753,7-406-98178_98179—,00.html.