Employers have been facing unprecedented issues  with very little guidance from federal or state authorities. Although the Occupational Safety and Health Administration (OSHA), the Centers for Disease Control and Prevention (CDC) and Equal Employment Opportunity Commission (EEOC) have provided guidance for COVID-19 screening and business reopening protocols, inevitable wage and hour implications have been largely left out.  Moreover, courts provide little guidance since these are new issues that have not made their way through the courts. Therefore, employers are left to guess and make decisions, with potentially costly consequences, in the hope that these decisions will minimize future health exposure.

On-Site and Off-Site Temperature Screenings

Recently, the EEOC updated its guidance addressing return to work issues related to COVID-19 concerns.  In the accompanying technical assistance questions and answers (FAQs), the EEOC announced that employers may measure employees’ body temperature before allowing employees to return to work. According to the CDC, an employer can alternatively ask employees to take their own temperature before arriving at work.

Notably absent from the EEOC, the CDC or any other state materials, is any guidance regarding wage and hour compliance for COVID-19 screenings.

  • On-Site Screenings

Although courts in California have not specifically addressed whether time spent screening employees for COVID-19 symptoms is compensable (mainly because this issue has not been present long enough to make its way through the courts), one recent California Supreme Court opinion arguably holds that employees must be compensated for screenings.

In Frlekin v. Apple, Inc., the court held that employers are required to pay its employees for time spent on premises waiting for and undergoing mandatory exit searches of their personal belongings[1]. The court reasoned that this time was compensable because the searches were required, occurred at the workplace, involved a significant degree of control, were imposed for the employer’s benefit, and were enforced through threat of discipline.  Thus, the employees were under the “control” of their employer.

Based on the Freklin ruling, the safest and best approach for employers in California is to pay employees for time spent on premises waiting for and undergoing COVID-19 screenings.  Employers should consult specific state laws.

  • Off-Site Screenings

As an alternative, employers may opt for self-assessed, at-home COVID-19 screenings before reporting to work.  One of the benefits of this option is the reduced possibility of infection at the workplace.  However, there is a considerable drawback from the wage and hour perspective because employers are still required to compensate for at-home screenings.  This creates an administrative nightmare associated with accurately and timely paying employees for time spent conducting at-home COVID-19 screenings. Employers are advised to require all employees conducting at-home screenings to promptly and accurately report their time.

Additional Compensable Time

Employers should make sure that employees complete COVID-19 required activities before clocking out for required meal and rest breaks.  Otherwise, employers may become liable for premium pay if COVID-19 specific activities , such as extra handwashing and putting on and taking off personal protective equipment (PPE) occur after the fifth hour or is part of employees’ 30 minute or 10 minute meal and rest breaks.  Since employees are not relieved of all duties when they are accomplishing these tasks, it is compensable time.  In order to avoid this pitfall, employers should ensure employees do not clock out for rest or meal periods until these activities are completed and should ensure employees clock back in before commencing these activities and resuming their work. Employers should also inform all employees that these activities are compensable.

Employers will also want to pay employees waiting time for additional time spent getting to and from the office due to robust state and local stay at-home orders and COVID-19 distancing measure.  For instance, many local COVID-19 orders include specific directives that apply to office tenants, including limiting the number of individuals that may ride in an elevator at the same time, reducing the number of individuals that may take the stairwells, and requiring temperature checks upon entering buildings. These measures result in increased waiting time getting to and from the office, and under California law, this is compensable time. Employers are advised to identify a method of accurately capturing and compensating this time.

Employee Reimbursement

Employers are advised to reimburse employees for all costs associated with at-home COVID-19 screenings.  Under California Labor Code section 2802, employers must reimburse employees for all monies that they necessarily expend or lose, directly related to performing their duties or following employers’ directions.  This means, that employers  who require home temperature checks and the use of PPE in the office, must reimburse employees for thermometers and/or PPE.

Reducing Employee Pay for Exempt Employees

Yet another unsurprising consequence of business closures and wide-ranging stay at-home orders, is reduced business revenue.  Naturally, reduced business revenue leads to business closures, reduction of employment workforce, and/or pay reduction.  For employers wanting to avoid layoffs, pay reduction is the most appealing option. How pay reduction is accomplished depends on the employees’ classification: exempt (salaried) versus non-exempt (hourly).

As long as employees’ wages are not reduced below minimum wage, reducing non-exempt employees’ salary is fairly easy with sufficient advance notice.  For exempt employees, it is more complicated.

In California, if an employer has 26 or more employees,  the state minimum wage is $13.00 as of January 1, 2020. However, the minimum wage will increase to $14.00 per hour on January 1, 2021.  Therefore, each employer must ensure it is meeting its state’s minimum wage requirements when making pay reduction decisions.

With regard to exempt employees, in California, to qualify as exempt, the employee must earn a monthly salary equivalent to no less than two times the state minimum wage for full-time employment (otherwise known as the “salary basis test”).  Therefore, although an employer can reduce employee salaries, there is a floor based on the applicable minimum wage.  Based on the $13.00 per hour California minimum wage, this means that the an employee’s salary cannot drop below $4,506.67 per month or $54,080 per year for 2020.  Starting January 1, 2021, salaries cannot drop below $4,853.33 per month, or $58,240 per year.

The employee must also meet the strict job duties tests particular to each exemption. Usually, an employee will satisfy the strict job duties test if the employee’s primary duties consist of administrative, executive, or professional tasks; and, the employee’s job duties involve the use of discretion and independent judgment. It is important to note that some professions have different exemption requirements.  Employers are advised to consult state laws specific to the employee’s profession.

It is also advisable that the employer provide advance notice of the pay reduction—employers should consult state and local law regarding applicable notification requirements.  The employer should also advise all salaried employees impacted by the pay reduction that their duties will not change and they will continue to be primarily engaged in duties that meet the test of the exemption.  If the employer plans to reduce an exempt employee’s salary and change the duties, the employer should consult legal counsel to ensure the positon still meets the strict duties test in California or other applicable states.

 

[1] Frlekin v. Apple Inc. (2020) 8 Cal.5th 1038