Franchises Face New Sick Leave Rules Amid COVID-19 Spread
As cities and states across the country order the temporary shutdown of bars, restaurants, gyms and other public gathering places in an attempt to slow the spread of COVID-19, franchise business owners are grappling with how and if they can continue to pay workers—and wondering what requirements new legislation could impose.
In Minnesota, where Franchise Times is based and where Gov. Tim Walz announced Monday, March 16, the closure of all places of “public accommodation and amusement” such as bars, restaurants and movie theaters through March 27, the state is eliminating a one-week waiting period to enable laid off and furlough workers to start receiving unemployment benefits immediately.
Minnesota is among nearly 30 states that have announced similar shutdowns in recent days, with restaurants in these states now scrambling to shift their businesses to takeout and delivery models. The four major third-party delivery services, DoorDash, Grubhub, Uber Eats and Postmates, have all announced various measures to provide relief to operators, ranging from a suspension of commission payments to waiving delivery fees.
There’s undoubtably more to come at the federal level as the House on Monday passed major changes to a paid leave bill, the Families First Coronavirus Response Act, that it originally approved Saturday, March 14.
During the first in a series of webinars focused on governmental updates and coronavirus-related topics, the International Franchise Association and attorney Jim Paretti, a shareholder at employment and labor law practice Littler Mendelson, discussed the bill and its potential impacts.
“I want you to know, we’re advocating at the highest levels of government for all of you,” said Mike Layman, the IFA’s VP of federal government relations as he noted the “unique and stressful time” for franchise businesses. “Our CEO, Robert Cresanti, spoke with President Donald Trump on a phone call just this morning.”
Layman stressed the association is advocating that the federal government help fund and manage any new paid sick leave requirements and “should not be doing this on the backs of small businesses.”
Before digging into the bill, Paretti noted franchisors and franchisees need to remember “we’re in a very fluid situation,” and already the White House is seeking $850 billion for a broader stimulus package.
What’s in the bill
As it stands, the House bill applies only to employers of fewer than 500 employees but does allow Labor Secretary Eugene Scalia to exempt businesses with fewer than 50 employees if, as Paretti put it, providing paid leave “would jeopardize their viability” as a business. Scalia could also exempt healthcare providers such as hospitals and nursing homes.
A portion of the bill, essentially an emergency expansion of the Family and Medical Leave Act, said Paretti, “targets employees who need to stay home to take care of a child because a school is closed or childcare is closed.” It allows for 12 weeks of paid family leave, at two-thirds the usual pay rate with a cap of $200 per day, but eligibility is tightened from the previous version which more widely covered workers caring for those impacted by COVID-19.
Employers with 500 or fewer workers would also have to provide two weeks of paid sick leave for employees affected by the coronavirus who have worked at the company for at least a month. This sick leave would be paid at the usual pay rate, with a cap at $511 per day.
Paretti noted fully refundable tax credits would be available for employers required to provide this FMLA or paid sick leave, but “that’s not necessarily going to help in the here and now as employers are trying to make payroll.”
The Senate is working on its version of the bill, said Layman, and while nothing is final yet, “there is a lot of political will to enact this bill in some form very quickly.”
“We are taking the presumption that this will be law very soon,” he said. And many states, including New York and California, are already working on their own paid leave bills.
The IFA is developing an ongoing series of webinars and providing government activity updates on its coronavirus information page.