By Nicole Page (pictured left) and Liz Stork (pictured right)
Of the many industries detrimentally affected by the COVID-19 pandemic, film and television production in the US has almost ground to a halt, causing great hardship for everyone in the business.
Many production companies are facing the difficult reality of having to reduce their workforces, either through permanent layoffs or temporary furloughs.
As new laws and regulations are being enacted almost daily on the state and federal level, understanding compliance requirements is challenging at best.
FURLOUGH VS. LAYOFF VS. RIF
A furlough is a temporary, unpaid leave of absence. A furlough can also involve reduced hours or work days.
A layoff is a full separation from the company, which can be temporary or permanent.
A reduction in force (a “RIF”) is the permanent elimination of a position with no expectation that the employee will return to work, though sometime people refer to layoffs and RIFs interchangeably.
If you place employees on furlough, you may be able to elect to continue employee health benefits during the furlough period. To determine if this is an option for your company, you must consult your company’s benefit plan documents.
It is crucial, especially at this time, to make sure you and your employees understand the impact of a furlough or layoff on their health insurance coverage under your company benefit plans or the Consolidated Omnibus Budget Reconciliation Act (COBRA).
Your company’s particular health and other benefit plans, as well as your company’s employment policies, may address when coverage ends and the extent to which reduction in an employee’s hours or pay—or a temporary lay-off—may be considered a triggering event for COBRA coverage.
WHO TO FURLOUGH?
If you are in the situation of determining who to furlough, you want to ensure that you are not disproportionately affecting employees in legally protected classes—e.g., race, color, pregnancy, sex, age, etc. (The range of “protected classes” varies based on the federal, state, city and local laws that apply.)
Make sure your decisions are based on sound business reasons, are applied to workers consistently, and are well-documented and communicated to staff. If your workforce is unionized, be sure to consult your collective bargaining agreement(s).
Whether employees are entitled or able to collect unemployment insurance during a furlough or following a layoff will depend on their particular state’s unemployment insurance laws and standards.
In general, an employee who is laid off will be able to seek unemployment insurance. Whether a furloughed employee is eligible for unemployment insurance will depend on the circumstances of the furlough.
One thing to note is that if you interrupt an employee’s furlough, and the employee works for you during a furlough, that could jeopardize their ability to collect unemployment insurance for that week.
You may want to permit or require employees to use accrued but unused vacation time and accrued vacation pay during a furlough, though you should check to ensure compliance with applicable state laws regarding part time employment.
The result is that by using this accrued time and unused pay, the commencement of unemployment benefits may be postponed, which may be helpful to the employer.
The federal Worker Adjustment and Retraining Notification Act (“WARN”) and state-law equivalents require advance notice for so-called “plant closings” or “mass layoffs” lasting longer than six months.
Some state-level WARN requirements—in California, for example—have been relaxed in light of COVID-19. States may also require that certain notices be given to employees on termination or before reducing their salaries or hours.
WAGE AND HOUR REQUIREMENTS
The federal Fair Labor Standards Act (“FLSA”) and state-law equivalents require that workers be paid at least minimum wage for all hours worked, and overtime for hours worked over 40 hours in a workweek, unless exempt from overtime requirements. (Other states may have additional wage and hour requirements.)
If furloughed employees perform any work for the employer, the employer must ensure that they are paid for all hours worked, or in the case of salaried, exempt employees, that they are paid their full salaries for any week in which they perform any work.
EMPLOYEES ON LEAVE
In thinking about a furlough or RIF, you need to think about the effect on employees who are already on leave or who have requested leave from the company.
Be careful of laying off employees in a manner that could be construed as discriminatory based on, for example, an employee’s pregnancy, caregiver status, or health issues.
Be mindful of new federal and state leave laws, such as the Families First Coronavirus Response Act, which provide enhanced rights to sick leave and family and medical leave related to the coronavirus.
In this very unfair time, employers must ensure that employees are being treated fairly across the board.
CONTRACTS AND EMPLOYEE HANDBOOKS
Consult any employment contracts and review your company’s Employee Handbook to understand whether there are any obligations or stated policies that would be triggered by a furlough or layoff.
Any employment or other relevant agreement should be consulted prior to any furlough or layoff, to avoid any possible breach.
There are other legal and business factors that will go into decision-making at this time. And of course there is the emotional strain that comes with uncertainty and concern for our staff, friends and loved ones.
This is an incredibly stressful and confusing time for everyone in the entertainment business, and the legal aspects are evolving almost daily.
We know so many in this community personally, and we know how smart, creative and strong you are. We will come out on the other side of this and until then, please stay safe and well.
This article is provided for general information only and may not be relied upon as legal advice. It originally appeared in sister publication Realscreen as part of the non-fiction/unscripted brand’s ‘Need to Know,’ series, which features the perspectives of entertainment lawyers on various issues affecting the production landscape.
Nicole Page (pictured left) is a partner at Reavis Page Jump LLP in New York and practices in the areas of entertainment and employment law. Page provides counsel for film and television production companies and her work encompasses production legal, pre-publication review and negotiation of broadcast and distribution deals. She also counsels companies and individuals on a variety of employment matters including employment and separation agreements, employer legal compliance, workplace discrimination and harassment prevention and other employment matters.
Liz Stork (pictured right) is an associate attorney at Reavis Page Jump LLP and practices in the area of employment law, litigation, arbitration, mediation and dispute resolution. Stork has represented clients in matters involving employment discrimination, misclassification, and other wage and hour claims, with particular expertise in class actions. She also counsels clients on employment and business matters in response to crisis or other unexpected business impact, such as the COVID-19 pandemic and resulting business closures, including continuity plans, employee furloughs, reductions in force and other critical measures.