Coronavirus Benefits Webinar FAQs: Work-From-Home Expenses, Plan Coverage, Exempt Pay, and Other Answers

This blog post can also be found on our Coronavirus Resource Center.

In our March 19 webinar, Coronavirus: Supporting Your Employees, Their Benefits, and a Legal Perspective (available on-demand now), we presented the latest information on the employee and legal aspects of COVID-19 affecting employers. Although this information is changing daily, the webinar highlights what employers can do now to stay ahead of the curve. Below is a summary of the key topics that are top of mind for employers.

Note: The information below, as responded to by the respective experts on the webinar, is current as of 3/24/20. The COVID-19 situation, including associated legislation, coverage, and best practices, is fluid. Check with your appropriate counsel and advisors for the latest information and guidance for your organization.

Work From Home (WFH): Pay and Expenses

We received many questions on how to reimburse employees for expenses incurred during WFH time periods. Below are several primary topics to consider for expense reimbursement.

Employer Responsibility

If an employee is working from home as they have taken that option and the employer supports it, then yes, you do need to reimburse for expenses, including everything from cell phone expenses to printer ink. If an employee is already a 100% remote from home worker then you would not need to reimburse additional expenses. If they are 90% work from home you would need to reimburse for the additional 10% of time.

Reasonable Work-Related Expenses Should be Reimbursed

You are required by law to reimburse any work-related expenses which includes internet and cell service. You can, however, put parameters around what is "reasonable" and limit the types of expenses allowed. For instance, a monitor. If the employee already has their laptop but they would like a second monitor so they purchase one, you would not need to reimburse for that unless you have told employees they are allowed to purchase additional monitors. You could also allow employees to purchase an additional monitor but put a price limit on that. You may also choose to allow them to take home company equipment for work-related activities.

Cell Phone and Internet Expenses Should Be Reimbursed

In the case where (most) employees already have home internet and cell service, you will need to reimburse for the amount of work time dedicated to the internet or cell phone for the month. There is no objective way to measure this so the recommendation is to allow employees to make a reasonable estimate of the percent of the month's usage that was work-related and reimburse for that. If more than one person in the household was also using the internet and cell service for their work purposes that should also be taken into consideration. We have heard talk that some internet carriers are providing unlimited use, but have not seen it implemented yet. You can only reimburse employees for amounts they actually incur.

CA Law for Reimbursing Expenses

CA law requires you to reimburse for all necessary expenditures or losses incurred by the employee in the course of the job, as well as for expenses incurred at the employer's directive. You can reimburse for actual expenses via expense reports. If you give a per diem, monthly allowance or provide a WFH bonus, you still must expense any incurred costs over and above those amounts. See California Labor Code Section 2802.

How to Reimburse Expenses

While you can have employees submit individual expense reports, one option is paying a one-time bonus to cover expenses. The bonuses are processed through payroll and they are taxable. Reimbursement through expense reports is non-taxable. Larger companies are considering the bonus in lieu of expense reports as the cost to process the expense reports may be high.

The bonuses we are seeing are in the range of $100–$1,000. You would need to assess what equipment your employees have been provided that can be used at home as well as the services needed for access. For employers that are providing laptops and other equipment, this amount may be lower.

The bonus is just an alternate to expense reports. For companies with a large number of employees, the bonus may be more efficient to issue than processing all those expense reports. Even if you choose to issue a bonus, employees can expense anything above the bonus amount. And yes, bonuses are taxed so keep that in mind when determining the amount of the bonus.

You can also choose to provide a subsidy. Keep in mind that even with the subsidy, an employee can expense any amount incurred over the amount of the subsidy.

Pay for Exempt Employees

Following are answers to questions related to pay for exempt employees, how long they are required to work, and if they can cut back on hours.

Exempt Employee Pay

Exempt employees must be paid their full salary for any work week in which they performed any work (even minimal work such as responding to a few emails). They can substitute sick pay or other PTO for missed days during the week.

Employers can reduce salaries of exempt employees and or reduce their hours in order to cut labor costs; however, in California the salary cannot fall below the minimum of $54,080 annualized in order to remain exempt.

Employee Benefits Coverage

We've had a number of questions as to how their employee benefits plan would be impacted by this event. In general, we advise you to contact your broker and carrier for specifics as rules and regulations are changing rapidly. We have summarized key questions and responses below.

Are plans required to offer testing AND coverage for coronavirus (COVID-19) at 100%? Or do they have flexibility around coverage (copays/coinsurance)?

Testing for COVID-19 is covered at 100% under the prescribed criteria and treatment will be paid as other illnesses.

Coverage for Furloughed Employees

Carriers are allowing furloughed (and in some cases laid off employees) to continue coverage, as long as the premiums are paid.

Daycare Expenses

If an employee's daycare closes, it is a qualifying life event for FSA Childcare, but how does that work when we don't know how long the daycares will be closed? What documentation is required? Daycare closure is not a qualifying event. These may be modified with future legislation. However, when the daycare re-opens, that may count as a qualifying event and allow the employee to adjust their contribution. Stay tuned for more developments.

Waiver for CA EDD

The waiver for CA EDD must be categorized that the layoff is due to Coronavirus.

What about cost impacts to level funded health plans?

We expect that employers will see coronavirus costs against their "pool" and that costs will increase.

Are there special claim forms now for COVID-19 for life insurance, STD or LTD?

You should just use the regular forms.

Could Short-term disability (STD) cover mental health issues due to COVID-19?

There has been talk about how the crisis is causing anxiety attacks and/ or sleep cycle issues with staff. But it is not likely for STD to apply. However, this is developing and regulations or direction could modify provisions. This is to be determined.

Are video conferences with doctors the same cost as in-person office visit?

Not always. In the case of COVID-19, some (but not all) carriers are waiving the patient’s copayment (cost-sharing) for telehealth visits.

What happens if employees become or potentially become sick?

What happens if you get sick with coronavirus during a shelter in place order?

If you get sick during a shelter in place order you should immediately reach out for care. The current recommendation is to reach out to your primary doctor by phone and they will let you know what next steps to follow. Many doctors are currently offering telehealth services and that is being encouraged so that you do not expose yourself or others at medical facilities.

Do these "shelter in place" or shut down orders count as "quarantine" or not?

Shelter in place orders are asking people to stay at home except for essential services. Quarantine is being used when someone has the virus or has been exposed and the person is isolating from others for a period of time.

What quarantine concept should we use for employees returning from personal travel, domestic and international? Are there specifics out there for each?

Currently most employers are requiring self-quarantine (which can include work from home) for 14 days. Recent thought is that the virus may not be symptomatic for up to 21 days so you may want to consider expanding the self-quarantine period.

The Families First Act

We received numerous questions regarding sick leave, employer size, paid family leave and related questions. The federal government issued the Families First Coronavirus Response Act: Employee Paid Leave Rights on 3/20/2020, which states:

The Families First Coronavirus Response Act (FFCRA or Act) requires certain employers to provide employees with paid sick leave or expanded family and medical leave for specified reasons related to COVID-19. The Department of Labor's (Department) Wage and Hour Division (WHD) administers and enforces the new law's paid leave requirements. These provisions will apply from the effective date through December 31, 2020.

Additional updated guidance and notices for employers to post, issued on 3/26/2020, can be found on this DOL website.

For more detailed information on the impact of this law, please see the post by the law offices of Snell & Wilmer.

The WARN Acts

Employers are concerned about layoffs, but also about compliance with changing federal and state regulations. We have provided a general answer for how employers must comply with WARN Acts, and some of the steps that California has taken to address this matter.

General answer:

Employers must follow the federal WARN Act and their state's individual WARN Act if there is one. California's Governor Newsom's order did not eliminate WARN notices. Instead, it basically incorporated the exemption for "unforeseeable business circumstances" exception that is part of the federal WARN Act.

Given this exemption in California, employers falling under it still need to give WARN notices but they need to give them "as soon as practicable" instead of a full 60 days prior to the triggering event.

For employers looking for an alternative to layoffs, they may consider a work-sharing program. Here is information about the Work Sharing Program and other programs available through the EDD: https://www.labor.ca.gov/coronavirus2019/

Employers with unionized workers must also follow their collective bargaining agreements.

Workers' Compensation

To what extent is the employer responsible for work from home set ups and making sure these are ergonomic? What about Catastrophe riders? Does this expand potential claims coverages?

General response:

This will vary on a case-by-case basis, so you may want to give some allowance as discussed with any exceptions to be reviewed by you. In regards to catastrophic riders, states oversee the specific rules of workers' comp and what qualifies as a work-related injury, which would be the first question that needs to be answered. Any coverage enhancements beyond that would only come into play once an injury is deemed related to the employment.

Also read our blog post, Employer's Guide on the COVID-19 Outbreak & Workers' Compensation Claims.

Stay Informed About COVID-19 with Woodruff Sawyer Insights

We’ve created an ongoing FAQ for your latest compliance-related coronavirus questions, Employee Benefits Frequently Asked Questions About Coronavirus. You can also find the FAQ and other advice on protecting your business and people on our dedicated resource page, Coronavirus: Your Business and People Risks.