To stop the spread of COVID-19, Harris County and City of Houston officials have issued the “Stay Home, Work Safe” order. This email is intended to provide answers to common questions about the order.
Where does the order apply and for how long?
The “Stay Home, Work Safe” order applies to Harris County and the City of Houston. It took effect at 11:59 PM on March 24, 2020, and will remain in force until at least 11:59 PM on Friday, April 3, 2020. The cities of Austin, Dallas, El Paso, San Antonio, and Waco have also issued stay home orders. In addition, Bell, Bexar, Collin, Dallas, Denton, Hays, Hunt, McClennan, Tarrant, Travis, and Williamson Counties have issued orders of their own.
What does this mean for the businesses of Harris County/Houston?
All businesses, except “Essential Businesses”, are required to cease all activities at facilities located within the County/City. Businesses may continue operations if their employees or contractors are working exclusively from home.
What is an “Essential Business?”
Essential Businesses perform work necessary to the operation and maintenance of the 16 critical infrastructure sectors identified by the U.S. Department of Homeland Security National Cybersecurity and Infrastructure Security Agency (CISA). These 16 sectors are the Chemical, Commercial Facilities, Communications, Critical Manufacturing, Dams, Defense Industrial Base, Emergency Services, Energy, Financial Services, Food and Agriculture, Government Facilities, Healthcare and Public Health, Information Technology, Nuclear Reactors, Materials, and Waste, Transportation Systems, and Water and Wastewater Systems sectors. More detail on the types of businesses within each critical infrastructure sector can be found here.
“Essential Business” also includes: Essential Government Functions; Essential City of Houston Government Functions; Essential Healthcare Operations; Essential Retail; Providers of Basic Necessities to Economically Disadvantaged Populations; Essential Services Necessary to Maintain Essential Operations of Residences or Other Essential Businesses; News Media; Childcare and Adult Care Services; Infrastructure, Development, Operation and Construction; Transportation; Labor union functions; NASA and Port of Houston; Airports and related operations; and Professional services, such as legal or accounting services. The order offers more detail on the types of businesses within each of these categories.
Do Essential Businesses have to follow certain rules?
Yes. Essential Businesses must comply with the six-foot social distancing guidelines to the greatest extent possible. They must also implement a precautionary screening process to identify employees with presumptively positive cases of COVID-19 and avoid potential exposure to unaffected employees.
In addition, Porter Hedges has prepared a best practices guide for Essential Businesses to adhere to the Centers for Disease Control, the Equal Employment Opportunity Commission, and the Occupational Safety and Health Administration guidelines for preventing the spread of infectious diseases. (see What Measures Should Employers Implement to Ensure a Safe Working Environment in Response to COVID-19?).
For a business required to close, what is the effect on paying employee wages?
To answer this question, we have to understand a few key concepts from the Fair labor Standards Act (FLSA). Generally, the FLSA requires private, for-profit employers to pay “covered, non-exempt” employees at least minimum wage. The majority of employees in the United States are covered under the FLSA. See if any of your employees are not covered according to the U.S. Department of Labor (“DOL”) here. The critical question is whether an employee is exempt from the FLSA? The most common exempt employees are those employed as bona fide executive, administrative, professional and outside sales employees, as well as certain computer employees. The DOL provides a more detailed list here.
For non-exempt hourly employees, employers are not obligated to pay for hours not worked. However, hourly employees are still entitled to benefits. Employers must pay at least time and one half the regular rate of pay for more than 40 hours of work in a workweek, i.e. overtime.
Exempt salaried employees generally must receive their full salary in any week in which they perform any work, subject to certain very limited exceptions.
Can a business require salaried employees to expend their accrued paid time off (PTO)?
Yes, if the employer offers a bona fide benefits plan or vacation time to its employees. Employers can not only require exempt salaried employees to use their accrued PTO but also require that such accrued PTO be taken on a specific day(s). This will not affect the employee’s salary basis of payment as long as the employee still receives payment equal to their guaranteed salary.
Employers who require employees to use PTO should be mindful of their employees’ amount of accrued benefits. Where an employee has no accrued benefits in the leave bank account, or has limited accrued leave and the reduction would result in a negative balance in the leave bank account, employers still must pay the employee’s guaranteed salary for any absence(s) occasioned by the office closure. See here. Improper salary reductions for exempt employees may result in loss of the exemption for the employer. Accordingly, we recommend consulting with a Porter Hedges employment attorney before making any decision to reduce exempt employees’ compensation.
Can a salaried employee's compensation be deducted due to the employee's "absence" as a result of a business closure?
No. An employee is not paid on a salary basis if his or her employer makes deductions from the employee’s predetermined compensation for absences occasioned by the employer or by the operating requirements of the business. "If an employee is ready, willing and able to work, deductions may not be made for time when work is not available." 29 C.F.R. § 541.602(a).
What advice can you give businesses considering laying off or furloughing employees?
Recommendations on layoffs or furloughing employees require a case-by-case analysis.