What Rights do Employers Have to Lay Off or Terminate Employees During the COVID-19 Crisis?

March 24, 2020 - 12:35 PM
I have been asked to comment on the right of Employers to lay off or furlough employees and, on the other hand, the right of Employers that are exempt from quarantine orders to require employees to work and terminate any who refuse.

Furlough vs. Lay Off
At this point in time, we are not aware of a legally significant difference between these two terms, although there is some sense that employees who are furloughed will return to work while those who are laid off are less likely to do so. Some Employers who "furlough" employees continue some benefits during the hiatus but there is no law I am aware of that would require doing so. Collective bargaining agreements and Employer plans, policies or practices might dictate otherwise, however.

Is Unemployment Compensation available for employees laid off due to COVID-19?
As with any other reason for a loss of work, all regional state governments will examine applications for UC on a case by case basis but, generally, the answer will be "yes." UC benefits likely will be available for loss of a job or, perhaps, even a reduction in hours caused by COVID-19 quarantine orders.
Are there any legal consequences to laying off or terminating employees due to the financial effects of COVID19?
As to this one, it depends. If an employer ceases operations completely due to the financial effects of a COVID-19 related order, generally, there is no liability that arises strictly from that closure. Employers subject to a collective bargaining agreement or who have severance plans or policies will have to review their agreements, plans, and policies to determine if any contractual obligations arise due to a shut down, as well as any WARN or MiniWARN Act obligations. New Jersey Employers especially will have to consider their State's MiniWARN Act obligations as well as obligations under the State's paid leave law. (You can read my previous alert on this issue here) If an Employer does not completely shut down, but employees stop working due to quarantine orders, in addition to the foregoing, Employers will have to consider the new federal law (You can read my previous alert on federal legislation online here)

If an Employer is exempt from Closure Orders, may it lawfully terminate an employee who refuses to work because of COVID-19 concerns?
Here we enter into somewhat of a Brave New World. Normally, the employment of an at-will employee may be terminated with or without cause without any liability to the Employer other than contractual obligations. Employers do have liability, however, for terminating an employee (or taking any other adverse employment action) if doing so would violate a state or federal whistleblower law. Here, New Jersey stands at the head of the class. Under New Jersey's Conscientious Employee Protection Act, an Employer may not retaliate against an employee who objects to or refuses to engage in any activity that the employee reasonably believes is a violation of a law, rule or regulation, is a crime or fraud, or is not compatible with a clear mandate of public policy related to the public's health or safety, or the protection of the environment. 

"Reasonably" should not be read as a limiting factor, but as one that might broaden coverage. That is, the employee's belief need only be "reasonable," not correct. If an employee reasonably believed that his Employer's business was not exempt from a quarantine order, refused to work, and was fired for that reason, a claim might exist under this New Jersey law. New Jersey law also specifically prohibits discrimination or retaliation against an employee who takes or requests time off based on the written recommendation of a New Jersey licensed medical professional. (You can read my prior alert on this topic here)

Pennsylvania and Delaware also have Whistleblower Acts, but they are limited in coverage to employees who perform services for a "public body" (PA) or "state public employees" (DE). 

Finally, federal law prohibits discrimination against an employee who takes COVID-19-related paid sick leave. (See my more detailed alert on this subject here)

Given these laws, any Employer who contemplates terminating the employment of an employee who refuses to work due to COVID-19 concerns must think through that decision very carefully. Regardless of whether the Employer is dealing with a New Jersey employee, it should be certain it is an exempt business from any quarantine order; that it has clearly communicated that to its employees; and that the employee's refusal to work does not fall under the protection of any applicable state or federal laws.

If you have any questions, or would like additional information, please contact Bob Small, Partner in Reger Rizzo & Darnall’s Employment Practices Group,  at 215.495.6541, or via email at rsmall@regerlaw.com.

We are working with clients to field inquiries and provide advice and guidance in a wide range of areas and industries during the COVID-19 outbreak. Please be sure to check back regularly for updated information. If you have an immediate need, please contact your attorney directly, or email us at info@regerlaw.com, and one of our dedicated attorneys will get back to you shortly.