Updated March 22, 2019

In response to the coronavirus, many cities throughout California are issuing emergency orders and placing temporary restrictions on certain business, such as restaurants, bars, movie theaters, bowling alleys, arcades, and gyms.  Los Angeles City has issued an order to temporary close these type of establishments until March 31, 2020.  If an employer is temporarily closing its operations to comply with these orders, there are a few employment issues that must be considered:


There may not be a need to issue employees a paycheck at the time they are being informed of a temporary shutdown if the employer expects a continuing employment relationship.  But this issue is one that must be approached carefully.

Employers should make clear that the employment relationship is expected to continue, and should endeavor to provide an expected return date, subject to reconsideration as circumstances develop.

California Labor Code has very specific requirements regarding final pay checks for terminated employees.  Employers should consult legal counsel to ensure compliance with these requirements.

Filing for Unemployment Insurance

If an employer reduces hours or shut down operations due to coronavirus, employers can encourage employees to file an Unemployment Insurance (UI) claim. UI provides partial wage replacement benefit payments to workers who lose their job or have their hours reduced, through no fault of their own. The EDD’s website provides, “Workers who are temporarily unemployed due to COVID-19 and expected to return to work with their employer within a few weeks are not required to actively seek work each week. However, they must remain able, available, and ready to work during their unemployment for each week of benefits claimed and meet all other eligibility criteria.”  For more information, see: https://edd.ca.gov/Unemployment/Filing_a_Claim.htm

Paid Sick Leave Under State and Local Laws

Employees may be eligible to use paid sick leave under state and local law.  For example, California’s Labor Commissioner has issued FAQs on California’s paid sick leave law during the coronavirus epidemic and explains, “Paid sick leave can be used for absences due to illness, the diagnosis, care or treatment of an existing health condition or preventative care for the employee or the employee’s family member.  Preventative care may include self-quarantine as a result of potential exposure to COVID-19 if quarantine is recommended by civil authorities.” For more information about California paid sick leave, see the Labor Commissioner’s FAQ here: https://www.dir.ca.gov/dlse/2019-Novel-Coronavirus.htm.

Federal Bill: Families First Coronavirus Response Act

The U.S. House of Representatives passed the Family First Coronavirus Response Act the evening of Monday, March 16, 2020.  The bill, as currently drafted, requires employers to provide employees with two weeks of paid sick leave during the coronavirus epidemic, and also expands the Family and Medical Leave Act (FMLA) to provide up to 12 weeks of job-protected leave.  After the employee has taken the two weeks of paid leave, they will be able to take the additional FMLA leave at two-thirds of the employee’s usual pay.  The bill requires employers to pay the employees during these leaves, and then provides reimbursement of this cost through a refundable tax credit.  Some Senators have expressed concerns that the paid sick leave requirement will burden businesses too much during this already trying time.  The Senate is reviewing the bill this week.

[Our analysis of the final Family First Coronavirus Response Act signed by the President can be found here.]