11 Dec Cannabis Employers and COVID-19: Four Common Questions Answered

Congress passed The Families First Coronavirus Response Act (FFCRA) and the Coronavirus Aid, Relief and Economic Security (CARES) Act earlier this year, but many cannabis businesses continue to have questions on whether their business qualifies to receive COVID-19 employee benefits and potential tax credits. With COVID-19 cases rising dramatically during the holidays, many essential cannabis businesses are struggling to balance customer demand with protecting the health and wellbeing of their employees. As published in Marijuana Business Daily, here are some common questions they have received regarding cannabis employers and COVID-19.

Please note: the following is not considered legal advice. Businesses should always consult with legal counsel for guidance on cannabis laws and compliance.

Cannabis Employers and COVID-19 FAQs

Does the FFCRA require employers to provide additional paid leave to employees? If so, what employees are eligible?

Yes. The FFCRA created two additional paid leave provisions for employers with fewer than 500 employees: Emergency Paid Sick Leave (EPSL) and Emergency Paid Family and Medical Leave (EPFMLA). These provisions apply from April 1 through Dec. 31, 2020.

Employees are eligible to take EPSL leave for a total of two weeks after their first day of employment. An employee can only take EPSL leave if they are unable to work or telework because the employee:

• Is subject to a quarantine or isolation order related to COVID-19.
• Has been advised by a health-care provider to self-quarantine because of COVID-19.
• Is experiencing symptoms of COVID-19 and is seeking a medical diagnosis.
• Is caring for an individual subject or advised to quarantine or self-isolate.
• Is caring for a son or daughter whose school/child-care provider is unavailable.
• Is experiencing substantially similar conditions as specified by the secretary of the Department of Health and Human Services.

Employees who have been employed for at least 30 days prior to their leave request might also be eligible for an additional 10 weeks of partially paid leave under EPFMLA if they are unable to work or telework based on reason No. 5 above.

Please note that businesses with fewer than 50 employees are exempt from certain EPSL and EPFMLA requirements related to school or child-care provider unavailability for coronavirus-related reasons if providing an employee such leave would jeopardize the viability of the business. Additional guidance is available through the U.S. Department of Labor.

Get extra guidance on submitting leave requests under the FFCRA, EPFMLA, and EPSLA with this Personnel Action Checklist. 

What are employers’ duties to employees who do not feel comfortable coming (and are unwilling to come) to work due to concerns over COVID-19 exposure?
Firstly, all employers should make every effort to adhere to Centers for Disease Control and Prevention sanitation guidelines and social-distancing guidelines. To help alleviate employee concerns, all employers should have regular communication with their employees regarding the steps your business is taking to support its employees during COVID-19 and maintain a healthy and safe workplace.

If employees are still uncomfortable appearing for work, but do not qualify for EPSL, employers may allow the employee to utilize any available benefits (such as paid time off) or provide unpaid leave before they return to work.

Alternatively, companies are permitted to ask employees to continue to appear for work. Additional state laws might also impact employers’ duties.

What options are available to employers that need to reduce their workforce?
The three primary options are layoffs, short-term unpaid leave because of lack of work (also known as “furlough”) and reducing employees’ hours and/or pay.

For layoffs, contact state unemployment agencies to see if laid off workers can receive unemployment benefits. There may be flexible options available due to the pandemic.

Furloughed employees might be able to maintain certain benefits such as health insurance; however, receipt of paid-leave benefits might render an employee ineligible for the expanded unemployment benefits included in the CARES Act. Check with your benefits administrator on the options available to furloughed workers.

Are cannabis employers able to access financial relief through U.S. Small Business Administration (SBA) loans under the CARES Act or employer tax credits under the FFCRA?
Cannabis companies that grow, produce, process, distribute or sell marijuana or marijuana products cannot access SBA loans made available under the CARES Act. Hemp and ancillary companies that do not violate federal law might be eligible; however, consult with legal counsel of federal funding is still available.

Both the FFCRA and the CARES Act provide favorable tax credits to employers, including a 50% refundable tax credit for wages paid to employees of businesses that have been closed because of a governmental order (capped at $5,000 per employee)—Sections 7001 and 7003 of the FFRCA—and delay of payroll tax payments that could benefit the cannabis industry—Section 2301 of the CARES Act.

However, it is unclear whether these tax credits are applicable to cannabis employers that are subject to section 280E of the Internal Revenue Code. Employers should consult with their CPA or tax counsel for further guidance.

Work with a Dedicated HR Provider & Legal Counsel to Navigate COVID-19

COVID-19 added another layer of responsibilities to your business’ workload. On top of running your business and following cannabis laws regarding operations, your business needs to also adhere to COVID-19 workplace and employee law compliance, train employees on health and safety protocols, and offer benefits to support your employees during the pandemic.

OROleafhr understands that the above responsibilities are a significant undertaking and is available to help offload your COVID-19 compliance workload. We are current with COVID-19 workplace health and safety regulations, are knowledgeable with the tax credits available to your business, and can help your business remain compliant in a changing legal landscape. As a full-service HR provider, OROleafhr assists your cannabis business with payroll, employee benefits, tax services, risk management, and legal services. Partner with OROleafhr and experience an increase in workplace profitability and productivity without worrying about the impacts of COVID-19.