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COVID-19 & Your Automobile Dealership: Resources and Dealer FAQs

Automobile dealers are facing multi-faceted challenges as they manage the outbreak of COVID-19 and its effect on their dealerships. Below we’ve answered frequently asked questions for dealers and compiled key resources to stay up to date on the current coronavirus outbreak.

Answers to Frequently Asked Automobile Dealer Questions:

Is my automobile dealership an essential business under Governor Inslee’s “Stay Home, Stay Healthy” Proclamation?

Under the current Proclamation, and Governor Inslee’s additional Guidance Bulletin, your dealership’s service department, as well as your parts department in its support of the service department, is considered an essential business and is excluded from the order prohibiting people in Washington State from leaving their residence. In addition, employees carrying out the minimum activities necessary to maintain and secure the dealership inventory, equipment, and building, process payroll and employee benefits, and facilitate any employees being able to continue to work remotely from their residences are also excluded. It is important to note that sales departments are not included as an essential business. Unless additional guidance or changes are received from the Governor’s office, sales departments should not be continued after midnight on March 25th.

For those with essential businesses or employees carrying out minimum basic operations as described, you must practice social distancing and have sanitation measures in place.

Which employers are covered under the Families First Coronavirus Response Act (FFCRA)?

The FFCRA applies to (1) certain public employers and (2) all private employers with fewer than 500 employees. The Department of Labor also has the option of exempting companies with fewer than 50 employees if providing paid leave “would jeopardize the viability of the business as a going concern.” Rulemaking is underway to provide guidance on how the Department will determine who meets that threshold. Certain health care providers and emergency responders may be excluded. Additionally, employers with less than 25 employees may not have to restore employees to their previous positions if certain criteria are met. To see more about the FFCRA, read here.

Can I still terminate or lay off employees, even with the enactment of the FFCRA and Governor Inslee’s Stay Home, Stay Healthy Order?

Yes. An employer’s right to terminate or lay off an employee has not, as of this writing, changed. An employer can terminate or lay off an employee because business has slowed and the employer has made the decision to reduce its workforce. It can also terminate employees for performance issues or other such reasons. Employers cannot, however, terminate or lay off an employee for a reason which would violate federal, state, or local anti-discrimination or anti-retaliation laws (including an employee’s request for leave related to COVID-19). Governor Inslee has stated he is working on legislation to protect vulnerable workers and provide them the “legal right to stay home” related to COVID-19, but no such legislation is pending or enacted as of yet. Employers also should consider any applicable employment agreements or collective bargaining agreements which may affect their ability to terminate employees.

Can I put employees on standby (a temporary layoff) and what happens if I do?

Yes, you can put employees on standby. Standby is a temporary layoff status employers can elect instead of a permanent layoff. Standby allows employees to claim unemployment during their temporary layoff without the requirement to look for other work during the layoff. The temporarily laid-off employees need to remain available for any work their employer may offer while they are on standby. Standby is usually limited to eight weeks in a claim year, but under the Washington Employment Security Department’s new emergency rules, temporary shut-downs related to COVID-19 are considered extraordinary circumstances and grounds for an extension of the eight-week time limit. Employers who temporarily lay off their employees due to COVID-19 may be eligible to receive reimbursement of unemployment benefits instead of charging those benefits to the employer’s experience rating account if the employee is temporarily laid off as a consequence of COVID-19, the employer requests the employee be put on standby status, and the employee returns to the same employment he or she had prior to the temporary layoff. The new emergency measures have also waived the one-week waiting period for unemployment claims and have extended standby status to part-time employees.

What options do employers have if they’re considering cutting employees’ hours due to COVID-19?

To be eligible for partial unemployment, where an employee would not have to look for work while receiving unemployment benefits, an employee must have a reduction of hours of no more than 60%, earn a certain amount less than their weekly benefit amount, and be expected to return to full-time work within 4 months. For more information, on benefit and earnings deduction calculations, ESD has provided the following resources: benefits calculator and earnings deduction chart. It is possible that an employer could lower an employee’s hours, but not in an amount significant enough to qualify that worker for unemployment benefits.

If I decide to lay off employees, how do I comply with WARN Act requirements in light of COVID-19?

Employers who are typically subject to the federal WARN Act (i.e., those with 100 or more full-time employees, subject to certain caveats) must provide 60 days’ notice of an “employment loss” if there is a closure, layoff or furlough impacting 50 or more employees for six or more months. One exception to the 60 day notice requirement is for situations when the layoffs occur due to unforeseeable business circumstances. What constitutes an “unforeseeable business circumstance” is not defined in the Act, but business impacts from COVID-19 may qualify. The exception still requires the employer to provide as much notice as practicable, and a brief explanation of why the 60 day notification period cannot be met. Employers who believe they may be subject to WARN should consult with legal counsel to determine whether WARN is triggered and whether the exception applies, and also to ensure appropriate notices are provided even if a notice exception can be supported.

Can employees use their Washington sick/safe leave or their PTO to care for children when schools and daycares are closed due to COVID-19?

Yes. Washington’s sick/safe leave permits employees to use accrued paid sick leave if their child’s school or place of care is closed for a health-related reason, although employers cannot require employees to use this sick/safe leave. Also, the FFCRA requires most employers to provide certain paid leave, in addition to leave already offered, during absences due to school closure arising from COVID-19. Please see our article here for more information on FFCRA requirements.

What are other resources Washington State automobile dealers can turn to regarding employer concerns and obligations?

Local & Federal Resources:

Ryan Swanson Alerts:

If you have questions, please feel free to contact Kari Brotherton at [email protected] or Shannon Lawless at [email protected].

This webpage is provided for general informational purposes only and does not constitute legal advice.

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