August 16, 2021

COVID-19 Carrots Increase Costs (and Liability)

Some employers are dangling a variety of proverbial carrots to entice qualified candidates to accept jobs and current employees to return to jobs working onsite.  Those carrots come with liability, too.

FLSA. That is what one employer learned as announced by the U.S. Department of Labor. Under the Fair Labor Standards Act (FLSA), a non-exempt employee must be paid 1.5 times the employee’s regular rate of pay for all hours worked over 40 in a work week.  This employer failed to include bonuses they paid to “essential” workers during the pandemic in those employees’ regular rate of pay for overtime calculations. Oops.

Paid Sick Leave. Myriad states and local jurisdictions have enacted paid sick leave laws. Most require a covered employer to pay the employee’s “regular” rate of pay for sick leave.  Like FLSA overtime described above, employers should read these statutes to determine if the regular rate includes incentive, “hazard” or other pay provided for COVID-19 related reasons.

ADA. Such incentives might also give rise to a violation of the Americans with Disabilities Act (ADA). An individual with a disability might adversely impacted if the employee cannot work onsite due to an underlying medical condition and cannot earn the bonus. Click here and see Questions #K16 and #K18 under Section K.

The same as above might hold true for an older workers with a disability, creating liability under the Age Discrimination in Employment Act (ADEA) or a pregnant employee under the Pregnancy Discrimination Act, and more.

Lessons Learned? Ensure you know how and why your benefits and perks are job-related and consistent with business necessity (a favorite phrase of the EEOC). Talk to your company’s employment counsel to determine if and how you should monitor for adverse impact.