Many employers have been forced to consider employee layoffs, furloughs or salary reductions as a way to manage some of the financial hardship created by COVID-19. Companies should keep in mind existing federal, state and local anti-retaliation and anti-discrimination laws applicable when taking these actions with respect to employees who are directly impacted by COVID-19.

Legislative Framework

Federal law prohibits discrimination or retaliation against employees who have an illness or take protected medical leave. To that end, the Americans with Disabilities Act of 1990 (ADA) prohibits discrimination against individuals with disabilities, including illnesses, which would cover COVID-19 related accommodations. In addition, the Family and Medical Leave Act (FMLA) prohibits retaliating against an individual for exercising his or her right to take protected medical leave. With respect to the ADA, the Equal Employment Opportunity Commission has recently issued guidance regarding COVID-19 and the ADA and about pandemic preparedness in the workplace.

States and local municipalities have their own anti-discrimination and anti-retaliation laws that apply to individuals impacted by COVID-19. For example, states such as New York and California have clarified on their states' websites that existing federal, state and local laws that prohibit employers from discriminating against employees with a disability and that require employers to provide a reasonable accommodation as a result of a disability apply to employees who are impacted by COVID-19.

COVID-19 Developments

In addition to protections under existing laws, there have been federal and state law developments regarding protections for employees who are directly or indirectly affected by COVID-19 specifically.


New federal legislation under the Families First Coronavirus Response Act protects employees against retaliation, including job loss, discipline or discrimination for using emergency paid sick time or emergency paid family leave due to COVID-19. Engaging in any of these prohibited acts may result in civil or criminal penalties under the Fair Labor Standards Act or the FMLA and provide the impacted employee with a right of action against the employer.

State Emergency Orders

While some states are clarifying the application of employee protection laws to employees who are directly or indirectly impacted by COVID-19, certain states are enacting emergency orders and regulations specifically regarding COVID-19 protected leave.

For example, under a new immediately effective rule, adopted on an emergency basis by the New Jersey Department of Labor and Workforce Development, Division of Wage and Hour Compliance, New Jersey employers are prohibited from terminating or penalizing an employee for requesting or taking time off because the employee has (or may have) contracted COVID-19 during the Public Health Emergency and State Emergency declared by the Governor of New Jersey.[1] The rule is intended to protect employees and serve the public by encouraging employees who may be infected to remain home.

For the rule to apply, the employee must have the written recommendation of a medical professional to take leave because the employee has or is likely to have an infectious disease (which does not have to be COVID-19). Upon return from leave, the employee must be restored to the position held immediately prior to the commencement of the protected leave (or an equivalent position, if such position was filled), with "no reduction in seniority, status, employment benefits, pay or the terms and conditions of employment." An aggrieved employee may file a complaint with the Commissioner of the New Jersey Labor and Workforce Development or in the New Jersey Superior Court. If an employer is found to have violated the rule, the employer will be required to reinstate the employee in the position held prior to the retaliation (or an equivalent position, if filled) and will be subject to a $2,500 fine per violation.

Certain employer actions are not prohibited under the rule. Specifically, the protections of the rule will not apply: (1) if the employer implements a reduction in force that would have affected the employee had he or she not been on leave, or (2) if the employee would have been affected by a bona fide layoff or recall system under a collective bargaining agreement that would not have entitled him or her to a position upon return.

New Jersey is not alone. States such as Michigan and Washington have enacted emergency orders regarding retaliation against employees who request or take leave as a result of COVID-19, as well.

Our Take

Companies should use caution when implementing layoffs, furloughs or salary reductions that include employees who request or take leave due to COVID-19. We expect to see more states following the approach of early adopters, particularly if states continue to extend shelter-in-place orders and remain in a state of emergency. If employee cost reductions are necessary, employers should be thoughtful about who is included in the cost reduction programs and seek waivers or releases where appropriate to mitigate liability from potential employee claims. For a discussion of termination considerations in the wake of COVID-19, please see our client publications, " Key Considerations in Employee Terminations," " Employee Furlough Considerations" and " Considerations when Reducing Executive Salaries."


1 Act of March 20, 2020, ch. 9, N.J. P.L. 2020; N.J.A.C. 12:70 (2020). The rule is effective from April 1, 2020 through May 31, 2020, was published in the New Jersey Register on April 20, 2020 and is subject to comment until May 20, 2020.

Article orignally published on 22 April 2020

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