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LITTLER MENDELSON PC: New Pennsylvania COVID-19 Grant Program Helps Employers Provide Hazard Pay to Employees in Life-Sustaining Occupations

PENNSYLVANIA RECORD

Friday, November 22, 2024

LITTLER MENDELSON PC: New Pennsylvania COVID-19 Grant Program Helps Employers Provide Hazard Pay to Employees in Life-Sustaining Occupations

Judgefine

Littler Mendelson P.C. issued the following announcement on July 23.

On July 16, 2020, Pennsylvania Governor Tom Wolf announced the COVID-19 PA Hazard Pay Grant Program—a $50 million grant aimed to help employers provide hazard pay to “front-line” employees working in sectors that are vital to the state during the pandemic. Pennsylvania’s Department of Community and Economic Development (DCED) will administer the Program. The deadline to submit applications for the Program is July 31, 2020.

Eligibility

The Program’s guidelines outline that in order to be eligible to apply for a grant pursuant to the Program, an employer must be a business, healthcare non-profit, public transportation agency, or a certified economic development organization that operates within the following industries:

Health Care and Social Assistance;

Food Manufacturing; Food Retail Facilities;

Healthcare and Social Assistance;

Janitorial Services to Buildings and Dwellings;

Transit and Ground Passenger Transportation; or

Security Services for eligible industries and commercial industries that were not closed as a result of Governor Wolf’s March 19, 2020 Business Closure Order.

For eligible employers, the DCED will evaluate applications under the following criteria: risk of exposure by industry, location and prevalence of COVID-19, and average hourly wage paid by the employer. Importantly, the risk of exposure by industry criteria is evaluated in accordance with the Occupational Safety and Health Administration’s worker exposure risk to COVID-19, which prioritizes the risk of exposure of employers’ industries in the numbered order outlined above (e.g., the Health Care and Social Assistance industry is prioritized as having a higher risk of exposure than the Food Manufacturing; Food Retail Facilities industry). In addition, any employer applying for the Program must have a Data Universal Numbering System (DUNS) number and register with the federal System for Award Management (SAM) prior to applying.

An eligible employee is defined as a full-time or part-time employee in Pennsylvania earning less than $20/hour (excluding fringe benefits and overtime) who was on the “front lines” facing the hazards of COVID-19 and continued to work through Governor Wolf’s March 19, 2020 Business Closure Order for a life-sustaining business or a business that received a business waiver. “Front-line” employees are employees deemed necessary by the employer to report to work during the COVID-19 pandemic for life-sustaining eligible industries. Employees who are teleworking are not eligible for hazard pay under the program.

Limitations on Employer Funding and Disbursement

Eligible employers may apply for up to $1,200 in hazard pay per eligible employee. The eligible employer may only apply for hazard pay for up to 500 eligible employees per location. In other words, an eligible employer can apply for a maximum grant amount of $600,000 per location. Furthermore, the Program limits each employer’s total grant funds to an amount not to exceed $3 million.

Additionally, the hazard pay subject to the Program’s reimbursement is required to be paid to the eligible employees during the 10-week period from August 16, 2020 to October 24, 2020, and as a $3/hour hazard pay increase to each eligible employee’s regular rate of pay (and not as a later-paid lump sum) for hours not exceeding 40 in a workweek. Notably, hazard pay funds from the Program cannot be used to reimburse eligible employees’ overtime compensation that will necessarily increase due to the $3.00 increase in the employees’ regular rate during the time period the employees are receiving hazard pay under the Program.

Employer Requirements

The Program’s guidelines also outline a series of employer requirements in connection with receiving Program funds. Specifically, employers receiving grant funds must certify, under penalty of perjury and fines (see 18 Pa C.S. § 4904), that:

They pay their employees at least the federal minimum wage ($7.25/hour);

They are paying the employer’s share of the Federal Insurance Contributions Act (FICA) for the hazard pay;

They follow Centers for Disease Control guidelines, Department of Health regulations and guidance for reopening under Governor Wolf’s Phased Reopening Plan to protect front-line employees from contracting COVID-19;

They are in compliance with all relevant laws, orders, and regulations during the period of the COVID-19 disaster emergency under the Governor Wolf’s proclamation dated March 6, 2020, and any and all subsequent renewals. The foregoing includes, but is not limited to, orders by the governor, secretary of health, or other commonwealth officials empowered to act during the emergency.

Importantly, any noncompliant businesses will be ineligible for funding under this Program and may be required to return all, or a portion, of the funds awarded. Furthermore, applicants must also covenant and agree that they will continue to remain in compliance with all of the employer requirements noted above during the grant activity period (from August 16, 2020 to October 24, 2020).

In addition, the guidelines provide that employers provided funds pursuant to the Program must maintain full and accurate records related to disbursements of hazard pay and are subject to the DCED’s monitoring for compliance with the guidelines. Moreover, as the Program is funded by the federal Coronavirus Aid, Relief, and Economic Security (CARES) Act, any employer that expends over $750,000 in federal awards (including funds pursuant to the Program) during its fiscal year is required to provide the appropriate single or Program-Specific Audit in accordance with the provisions outlined in 2 CFR § 200.501.

Considerations for Pennsylvania Employers

While the COVID-19 PA Hazard Pay Grant Program assists employers with providing hazard pay to their front-line employees, there are numerous legal and business considerations that an employer should evaluate before applying for and accepting funds pursuant to the Program. Specifically, pursuant to the federal Fair Labor Standards Act, the Program’s hazard pay of $3/hour must be calculated into an employee’s regular rate of pay for purposes of determining overtime rate (one-and-one-half times the regular rate) and compensation for hours work over 40 in a workweek. As a direct result of the Program’s hazard pay increasing the eligible employees’ regular rate of pay, participating employers would be faced with increased overtime rates of pay for eligible employees and therefore overall increased pay obligations. Additionally, pursuant to Pennsylvania’s Wage Payment and Collection Law, employers would also be responsible for providing eligible employees with prior notice of the change in their regular rate of pay that resulted from the $3/hour hazard pay.

Given the complex nature of the COVID-19 PA Hazard Pay Grant Program, and its broader implications related to employment relationships, employers considering applying for the COVID-19 PA Hazard Pay Grant Program are advised to consult with counsel.

Original source can be found here.

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