For the second installment of our COVID-19 Planning webinar series we spoke with Lee Jacobs, an attorney in New York City.
Jacobs is a partner at Helbraun Levey, a law firm that serves the hospitality and cannabis industries. He’s also the chair of the firm’s employment practices group.
Several topics were discussed, such as: terminations versus layoffs; the Families First Coronavirus Response Act; the Coronavirus Aid, Relief and Economic Security (CARES) Act; crowdfunding donations for employees; and transitioning to offer only delivery and takeout.
If you were unable to join the webinar live or would like to watch it again to digest all the information provided, please click here. Below are key takeaways from the webinar.
Termination vs. Furlough vs. Layoff
As an operator, it’s important to understand the differences between these three terms:
- Termination: The employer-employee relationship is over.
- Furlough: A layoff with an implied temporary status that indicates the possibility of rehire.
- Layoff: A separation without the expectation of rehire.
Levey has advised his clients to avoid using furloughs and only terminating or laying off employees. He also notes that some states may have different definitions of these terms, so it’s important operators connect with their attorneys to understand those differences.
Unfortunately, in Levey’s opinion, the passing of the Families First Coronavirus Response and Coronavirus Aid, Relief and Economic Security (CARES) acts are examples of government officials moving slowly. Many operators made the heart-wrenching decision to terminate employees—people who are like family to operators and other team members—to protect their businesses.
The Families First Coronavirus Response Act is complicated and spurred business owners across industries to terminate employees rather than keep them on the payroll. The bill guarantees 10 days of emergency paid sick leave for employees diagnosed with COVID-19 or who were quarantined (not stay-at-home orders), something that can easily cripple small business owners. At the time, terminations were the best advice.
Now, Levey advises operators to tell their terminated or laid-odd employees to “apply, apply, apply” for unemployment benefits. The requirements and application process are dictated by individual states, and the sooner employees apply, the better off they’ll be.
Paid Sick Leave
Under the CARES Act, as it stands at time of publication, an employee would qualify for paid sick leave if one of the following conditions is met:
- They are subject to a Federal, State, or local quarantine or isolation order related to COVID-19. This is not the same as a stay-at-home order, which does not qualify an employee for paid sick leave;
- They have been advised by a health care provider to self-quarantine related to COVID-19;
- They are experiencing COVID-19 symptoms and are seeking a medical diagnosis;
- They are caring for an individual subject to an order described in (1) or self-quarantine as described in (2);
- They are caring for a child whose school or place of care is closed (or child care provider is unavailable) for reasons related to COVID-19; or
- They are experiencing any other substantially-similar condition specified by the Secretary of Health and Human Services, in consultation with the Secretaries of Labor and Treasury.
Because both the Families First Coronavirus Response and CARES acts are complicated and can be difficult to navigate, Levey advises all owners and operators to seek advice from their experts, like their attorney(s) and accountant(s).
Several operators have turned to crowdfunding to provide for their employees. Levey strongly suggests that any operator who pursues such a campaign be fully transparent.
According to him, rule number one is simple: Follow the rules of the crowdfunding platform (like GoFundMe). Along with that, maintain detailed, accurate records about what money is coming in and where it’s going.
That advice applies to maintaining contact with employees as well. Document calls, both attempted and completed, and act in good faith. To drive home that point, Levey asks clients a question: Why did Martha Stewart go to prison? Most people answer, “Insider trading.” That’s incorrect—she went to prison for lying about insider trading. This illustrates the importance of being honest and transparent about documents, donations, loan applications, etc.
Delivery & Takeout
Bar and restaurant operators who have pivoted to delivery and/or takeout operations must treat their businesses like medical offices. Perform deep cleans every morning, clean surfaces regularly, keep the risks in mind.
For example, if employees request safety equipment, it must be provided. And if an employee says they don’t feel safe when they’re at work, they must be sent home and the employer must pay them for that shift. According to the CDC and OSHA, if someone on staff says they have COVID-19, everyone who was within six feet of them—meaning they weren’t practicing social distancing, points out Levey—must be sent home.
However, there is a positive: all that deep cleaning and sanitizing should be communicated. Operators should make it clear to guests that they’re being meticulous, safe and clean, mentioning it via social media and even on their menus. When people can safely return to bars and restaurants, Levey predicts that they’ll be incredibly choosy and seek the venues they perceive are the cleanest and therefore safest.
Stay Positive, Stay Strong
Last week, a massive number of Americans filed new unemployment claims: 3.4 million. We’ve gone from an all-time low rate to careening toward 20 percent unemployment. Such a number can strike fear in even the most optimistic person.
As webinar host and Nightclub & Bar Show conference director Jeremiah Batucan pointed out, owners and operators must do their best to avoid giving into fear. The virus and its spread will eventually be contained. The nation will eventually return to normalcy. Eventually—sooner that we think, hopefully—stay-at-home orders will be rescinded.
When people are free to safely return to their normal live, bars and restaurants must anticipate a huge influx of guests. When polled, more than half of webinar participants indicated they were confident about reopening their businesses.
The webinar and this accompanying article do not constitute legal advice. Anyone seeking legal advice and the answers to legal questions should contact an attorney in their area who specializes in employment and hospitality industry issues.