April 2, 2020

Responding to the Coronavirus 2019 (COVID-19) Pandemic for Texas Companies

As the COVID-19 pandemic unfolds, it is important to understand and comply with existing laws, as well as to keep abreast of emergency actions that are being put into effect by federal, local and state government.  Below is a list of frequently asked questions and responses to help your business manage the pandemic.

1.         My company must close temporarily during the COVID-19 pandemic.   Do I have to continue paying salaries/wages to our employees?  Employees in the State of Texas are employees-at-will and employers may terminate or lay off their employees without notice and without pay.  The exception to this rule is if there is a signed employment agreement or written company policy that states otherwise.  In other words, in the case of at-will employees and absent a signed agreement or company policy to the contrary, an employer may place employees on unpaid leave, lay them off, or terminate them, and is not required to continue paying salary/wages if the employees are not working.

2.         What employment benefits are available for Texas employees who are on unpaid leave while my company is temporarily closed?  Employees who are out long enough to satisfy the test for either partial or total unemployment can apply for unemployment benefits with the Texas Workforce Commission.  Note however that the Governor of Texas granted the Texas Workforce Commission’s request to suspend the one-week waiting period to apply for unemployment benefits.  Workers in Texas will be able to receive benefits immediately after their unemployment benefit applications are approved. For more information, see Especially for Texas Employers online at https://twc.texas.gov/news/efte/ui_law_eligibility_issues.html#defin_of_unemployment).

3.         Do I have to pay for unemployment benefits for my employees?  Under normal circumstances, employers are required to pay some portion of unemployment claims filed by former employees.  However, if a business shuts down due to a closure order from a governmental entity, the Texas Labor Code may allow an employer to ask for chargeback protection.  If that were to happen, you should include a copy of the corresponding shutdown or stay at home order with your response to any unemployment claim and argue that the closure was mandated by a local or state order.

4.         What do I need to know about stay at home orders in Texas?  On March 31, 2020, the Governor of the State of Texas, Greg Abbott, has issued an Executive Order defining Essential Services and Activities Protocols for the entire state of Texas. Accordingly, Texans are directed to minimize non-essential gatherings and in-person contact with people who are not in the same household meaning they should stay at home for the next month unless they are taking part in Essential Services and Activities. This Executive Order renews and amends the prior order enforcing federal social distancing guidelines for COVID-19, including closing schools and instructing Texans to avoid eating or drinking at bars and restaurants. The March 31st Executive Order is in line with the decision by President Trump and the Centers for Disease Control and Prevention (CDC) to enhance social distancing guidelines and extend the deadline for these guidelines to April 30th. Such order goes into effect at 12:01 a.m. on April 2 and lasts until April 30.  A previous executive order by Governor Abbott expanded quarantine requirements for out-of-state travelers effective as of March 30, 2020, restricting travel to Texas from Louisiana, Atlanta, Chicago, Detroit and Miami. Previously, the restriction only applied to California, Washington, New York, New Jersey, Connecticut and New Orleans.  Note that many Texas counties and cities have in fact issued stricter stay at home orders than the state order, the observance of which is legally mandatory.  Any violations of such orders are punishable by fines and/or jail time.  It is important to carefully review the orders and guidelines applicable to your place of business to review whether you qualify for an exemption.  It is of utmost importance that you monitor the orders applicable to your place of business as these are subject to modification given the changing nature of the necessary response to the pandemic.

5.         While my business is open, what legal issues do I need to consider?  Employers have a general duty to keep the workplace safe.  Specific guidance on what this means in the face of the COVID-19 pandemic can be found in Occupational Safety and Health Administration (OSHA) regulations and Centers for Disease Control and Prevention (CDC) guidelines (links to web pages are below).  Employers need to prepare for and respond to situations, such as an employee testing positive for COVID-19, the protection of employees’ health care privacy, and the return of an employee who previously tested positive to the workplace, among other items.   https://www.osha.gov/Publications/OSHA3990.pdf

6.         As an employer, what should I know about the Families First Coronavirus Response Act (FFCRA)?  Employers need to understand that there are requirements under the FFCRA that provide for mandatory sick pay for fulltime employees if certain conditions are met (for companies with less than 500 employees).  In such cases, 100% reimbursement is available for qualifying employers through tax credits.  Businesses with fewer than 50 employees may qualify for exemption from the requirement to provide leave due to school closings or childcare unavailability if the leave requirements would jeopardize the viability of the business as a going concern.  In all cases, each covered employer must post a notice of FFCRA requirements in a conspicuous place on its premises.

7.         Do I have to pay rent if I have closed my business as the result of a shelter-in-place/stay at home order? It is necessary to review the specific terms of your lease to determine whether the lease provides for the suspension of rent based on the pandemic or governmental shut down. If the lease does not provide for suspension of rent in this situation, then tenants should communicate with their landlords regarding available options.

8.         How do I handle loan repayments?  Can repayment be delayed?  Once again, it is important to review the terms of your loan agreement to determine your repayment options given the present situation.  If your business is facing challenges due to the pandemic, you may qualify for relief under the recently enacted Small Business Administration (SBA) stimulus programs and Coronavirus Aid, Relief, and Economic Security (CARES) Act.  For more information visit: https://www.sba.gov/page/coronavirus-covid-19-small-business-guidance-loan-resources.  Assistance is available in the form of the Paycheck Protection Program and Economic Injury Disaster Loan, among others.  Time is of the essence if applying to any relief program as many of these have funding caps.

9.         Has the federal tax filing and payment deadline been extended for businesses?  Yes.  The Secretary of the Treasury has determined that any person with a federal income tax payment or a federal income tax return due April 15, 2020, is affected by the COVID-19 emergency.  The term “person” includes an individual, a trust, estate, partnership, association, company or corporation, as provided in section 7701(a)(1) of the Internal Revenue Code.  Accordingly, the deadlines to FILE and PAY federal income taxes are extended to July 15, 2020.  Filing a request for extension of time to file your return is not required and there is no limit on the amount of the payment that may be postponed.

10.   Are the U.S.-Mexico and U.S.-Canada borders closed to commercial activity and trade?  In order to limit the further spread of coronavirus, the U.S. has reached agreements with both Canada and Mexico to limit all non-essential travel across borders.  These measures were implemented as of March 21, 2020 and will be in place for 30 days subject to extension upon further review by the relevant parties.  Non-essential travel is defined as travel for tourism and recreational purposes.  Travel for essential commercial activity and trade is permitted.

Note: This report was prepared on March 31, 2020. All information regarding COVID-19 is subject to change at any time due to the changing nature of the pandemic.

Contact information:

Robert M. Barnett | rbarnett@ccn-law.com

Marissa S. Rodriguez | msandoval@ccn-law.com

Natalie Cerón Cuellarnceron@ccn-law.com

Carrie Osman | cosman@ccn-law.com.mx