The Effect of COVID-19 on Employee Benefits: Considerations in Italy and the United States

Troutman Pepper
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Troutman Pepper

Published in the European American Chamber of Commerce® New York (EACC-NY) Labor Post-Pandemic Series. Reprinted here with permission.

The United States and Italy have both been, and continue to be, deeply affected by the global coronavirus pandemic. Italy was one of the first countries to be seriously hit, and the national emergency status has recently been extended until October 15, 2020. During the course of the pandemic, the Italian Government enacted a series of measures aimed at supporting and protecting employees, granting them certain benefits in terms of working flexibility and economic support. In the U.S., federal, state, and local governments have enacted laws that provide employees leave for various COVID-19 related reasons. While laws govern part of employers’ response, there remain a number of key areas that are largely ungoverned by law, and instead, are at the discretion of individual employers. This article discusses some of the key employment benefit areas that have been affected by COVID-19 in the U.S. and Italy, and the anticipated landscape going forward.

Smart and remote (work from home) work.

Italy: In a country where the use of agile working was extremely rare, in order to guarantee social distancing, Italian emergency regulations clearly encouraged remote working. Indeed, until October 15, 2020 – the current expiration of the emergency status – employees may be allowed by the employer to work remotely even in the absence of a specific written agreement between the parties, which is normally mandatory. In addition, according to previous emergency provisions, all employees with children under 14 years of age were entitled to work remotely (without the employer’s permission), but their right was subject to the suspension of schools and educative services. After the schools’ reopening, the categories of employees entitled to work from home will be (i) disabled employees; (ii) those who assist a disabled family member; (iii) employees that, based on the company’s physician assessment and due to their age or condition (e.g. resulting from immunodepression or oncological pathologies) are most at risk of infection.

United States: Pre-pandemic, while remote working was not as rare as in Italy, it was certainly not commonplace, and most employees worked on-site. Throughout the initial months of the pandemic, many local and state governments enacted ordinances prohibiting all businesses from operating on-site (with the exception of essential businesses). As a result, many companies allowed employees to work remotely, to the extent possible. As U.S. businesses re-open on-site operations, many employers continue to allow and in many cases, encourage, employees to continue working remotely where possible. This serves a variety of purposes, including: reducing the burden on employers to ensure workplaces are safe for returning employees (i.e. if they are less people in the office, it is easier to ensure social distancing); allowing more flexibility for employees who are concerned about returning to work for health reasons; and allowing more flexibility for employees who must supervise remote learning and/or care for children at home.

Employers who have non-exempt employees working remotely should be especially focused on wage and hour compliance. Employers need to ensure that employees are still keeping track of their working and break time accurately, and are taking the proper meal and rest breaks. Many employees who are working remotely during the pandemic are working different hours than in the office, and thus accurate timekeeping is essential, so that employers can ensure employees are correctly paid for all time worked, and are taking all required breaks.

Parental leave.

Italy: During temporary closure of schools, employees with children under 12 years of age or with disabled children were entitled to a compensatory leave of up to 15 days (later extended to 30 days) overall for both parents, paid with an indemnity equal to 50% of their monthly remuneration. As an alternative to this paid leave, employees were entitled to choose a bonus of EUR 600 (later increased to 1000) in order to cover costs of babysitting services. At the same time, employees who cared for children from 12 to 16 years of age were entitled to unpaid leave for the period of school closures and, for the relevant period of time, they enjoyed a temporary dismissal ban (provided that there was no other parent who is a beneficiary of income support instruments for suspension or cessation of activity and that there is no other non-working parent). With schools’ reopening on September 14, these provisions have expired. A few days ago, a new provision was approved by the Government: until December 31, 2020, employees with a child under 14 who is quarantined, are entitled to work from home during the relevant period (or to opt for a paid leave with a remuneration equal to the 50% of their monthly salary).

United States: Laws providing for parental leave related to COVID-19 have been enacted at the federal, state, and local level. At the federal level, the Families First Coronavirus Response Act (“FFCRA”) applies to employers with less than 500 employees, and provides those employees with up to 12 weeks of partially paid leave if they must care for a child whose school or place of care has closed due to COVID-19. For employers with 500 or more employees, there may be local or state laws that provide for similar leave as under the FFCRA. In addition to legally-required leave, many employers have created formal and informal programs to assist their employees who are balancing work with childcare. For example, some employers have established “core hours” during which employees must be online and available (such as 10:00 a.m. to 2:00 p.m.), and give employees flexibility with respect to their other working hours. Some employers have also provided employees with the option to take additional unpaid leave beyond what is mandated by law, if employees cannot work (whether on-site or remotely) due to childcare obligations.

Health and Safety at the workplace and health surveillance.

Italy: The Government and the Trade Unions, favoring the method of social dialogue, set out special measures concerning Health and Safety at the workplace and recommended the adoption of safety protocols to be followed by employees as well as by external visitors, in order to guarantee an adequate level of protection through the maintenance of hygiene standards, the observation of social distancing of at least one meter, the use of personal protection equipment such as masks and hands sanitizers, the suspension of unnecessary meetings and the ban to have access to the company premises for those whose body temperature is higher than 37.5C.

Lastly, the company doctor is now entitled to suggest the adoption of any diagnostic means he/she should deem appropriate for the containment of the spread of the virus at the workplace, such as serological tests. Moreover, the company doctor will also be required to help identify any possible employee with a higher exposure risk, or who is more fragile than other employees. Infected and quarantined employees are indemnified under regular sick leave provisions (which will be paid by the employer but offset by the National Social Security Agency).

In addition, the Italian legislature extended the protections guaranteed by the National Agency for Insurance against the Risk of Injuries at Work (INAIL) to those employees who contracted the COVID-19 virus – or have been under mandatory quarantine or fiduciary homestay – “in occasion of work” (i.e. during the execution of the working activity or while going from home to the workplace and vice-versa). For certain categories of employees (nurses first responders, etc.) the law provides for a presumption that they have contracted COVID-19 at the workplace.

United States: Like leave laws, in the U.S., health and safety laws are governed at the federal, state, and/or local level. The Center for Disease Control (“CDC”) has provided regular guidance on return-to-work best practices. These guidelines change often, so employers should continually review the latest guidance. In addition to the CDC, state and local health departments also provide requirements and guidelines for re-opening, and how to make the workplace as safe as possible.

Workers’ compensation is governed by each state, and whether employees who contract COVID-19 in the workplace are eligible for workers’ compensation differs by state. As in Italy, some states have created a presumption that essential workers (nurses, first responders, etc.) are presumed to have contracted COVID-19 in the workplace. Other states have not enacted COVID-19 specific provisions, so employees have the burden of proof to show that they contracted COVID-19 from work.

Ban on dismissals.

Italy: Many Italian employees are currently protected from dismissals. After a period of general dismissal ban on terminations for redundancy, the Italian Government has lastly introduced a mobile system of variable duration, closely linked to the use of furlough programs by employers. Pursuant to the last approved decree, employers who have not fully used furlough schemes will not be able to proceed with dismissals for redundancy (i.e. for economic and/or organizational reasons) both collective and individual, until the furlough schemes are exhausted. The ban on dismissal does not apply in case of: (i) permanent termination of the business activity due to liquidation (in absence of transfer of a going concern or of its portion); (ii) bankruptcy without the temporary exercise of the business; (iii) execution of collective company-level agreement signed by the more representative trade unions at National level, providing incentives to terminate the employment relationships. This provision has been highly debated in Italy since based on the most widespread interpretation, it seems that employers that do not intend to request access to the furlough cannot proceed with a collective or individual dismissal for justified objective reasons until December 31, 2020 (the last date for requesting access for the furlough).

United States: Unlike Italy, there are no U.S. laws that explicitly protect employees from termination for reasons related to COVID-19. Employment in the U.S. is at-will, meaning the employment relationship can be ended at any time, so long as it is not for a discriminatory reason. In an attempt to avoid permanent layoffs, many employers have done furloughs, which is equivalent to an unpaid leave period. Many furloughed employees are eligible for unemployment benefits, which provide partial wage replacement during the furlough. Employers who have employees on a furlough longer than 6 months may be subject to notice obligations under the Worker Adjustment and Notification Act, which requires employers to provide 60 days’ notice for certain mass layoffs and plant closings.

Conclusions.

Unfortunately, in both Italy and the United States, the pandemic is ongoing, and is still far from being overcome. Therefore, employers should continue to exercise flexibility with respect to remote work, leaves, and other benefits, with the goal of keeping employees engaged and productive, while also acknowledging the difficult impact of COVID-19 on employees’ personal and working lives. Employers should also assess whether any of the COVID-19 measures have been successful such that they should continue after the pandemic. For example, if remote work has generally been successful, employers could consider permanently offering remote work either on a part-time or full-time basis.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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