Newsroom Article

Coronavirus and Schools: Pennsylvania Senate Bill 751 and the CARES Act


Posted on in Press Releases and Announcements

Another week, another brand new landscape for our clients to navigate. Last week, both Harrisburg and Washington, D.C., took action relevant to schools. While the legislation has helped answer some questions, they have also raised additional ones.

The state legislation, Pennsylvania S.B. 751, amends the school code in a variety of ways. From a labor perspective, the most significant amendment is the inclusion of the requirement that “[n]o employee of any school entity who was employed as of March 13, 2020, shall receive more or less compensation than the employee would otherwise have been entitled to receive from the school entity had the pandemic of 2020 not occurred.” While this language squarely answers one question our clients faced – non-teaching employees must continue to be paid their full wages – it leaves unanswered several others. Specifically, we have been asked about supplementals, substitutes, and contractors. We will address those seriatim.

Supplementals, that is additional pay for those who volunteer to coach or act as advisers to student clubs and the like, are generally speaking year-to-year obligations by the district which can be reassigned or canceled in any given year. For all school employees who were already appointed a supplemental position for the spring of 2020, we think the language of 751 clearly gives them a right to full payment of the supplemental. We emphasize this point since we had previously advised clients to pro-rate the stipend. Furthermore, while it is a closer call, we believe that even non-school employees who were appointed to those coaching or adviser positions would have a claim for full payment. We take this position primarily based on the fact that PSERs explicitly treats the stipends as “compensation” for such appointees. However, we do want to emphasize that there may be circumstances where no compensation is owed. For example, if a chess club adviser was appointed, but the deadline to sign up was March 10 and no students signed up and the district would therefore not normally pay the supplemental, it should not do so this year either. In other words, if there is some reason other than the school closure that the supplemental would not have been paid, then it still should not be paid.

Treatment of substitutes will be fact specific. Some districts have building substitutes who are expected to be present every day. These substitutes should be fully paid. For other day to day substitute teachers, we believe that the default position is that such employees would not be paid. If there is no guarantee that an employee would work any given day, they cannot claim they are “entitled” to that compensation as required by the act. However, for any substitute who can establish a consistent pattern of earning, we think they might well succeed in a claim. Thus, as an example, if a specific day-to-day substitute has worked 120-130 days a year for the last four years, it seems possible that they could make a claim for 120 days of pay.

Finally, the passage of S.B. 751 in Harrisburg and the CARES Act in D.C. has added to the confusion around payments to third-party contractors. S.B. 751 includes specific language authorizing districts to renegotiate contracts with transportation contractors. Under general principles of statutory construction, this suggests that districts may not have the legal authority to continue to pay other contractors who are not still providing work to the districts: if the law singles out one category of contractor, all other categories are excluded. Obviously any contractor who continues to provide work should continue to be paid.

However, the CARES Act includes the provision of $30,750,000,000 in funds for educational entities. These funds will provided to each state in the same proportion as Title I funds were allocated in the prior fiscal year. The law also directs that up to 2% of the funds may be allocated off the top for specific federal programs. Of the remainder, 43.9% will then be allocated to states, or approximately $13,229,265,000. Each state will then make subgrants to school entities, again based on the allocation of Title I funds in the prior fiscal year. Each state must use at least 90% of its grant for these subgrants. We go through this tedious math because the same section also includes the following provision:

“SEC. 18006. A local educational agency, State, institution of higher education, or other entity that receives funds under ‘Education Stabilization Fund’, shall to the greatest extent practicable, continue to pay its employees and contractors during the period of any disruptions or closures related to coronavirus.”

From a legal perspective, it is not at all clear how this language will be interpreted. It is quite possible that a specific district will not “receive” subgrant funds until after the closure is over. The statute requires states to make application within thirty days, but then the money must be disbursed at the state level. On its face, Sec. 18006 would appear to impose an obligation to continue paying contractors only when the district receives its funds, meaning that districts could decide not to pay in the meantime. In fact, as noted above, districts may lack the legal authority under state law to keep paying contractors. On the other hand, the clear intent of the act as a whole, and this Section specifically, is to encourage employers to keep employees on the payroll, so it is possible it will be interpreted retroactively. Furthermore, the phrase “to the greatest extent practicable” is an invitation to argument – who knows what this phrase may mean – but we imagine that contractors might argue that it means to the extent funds are available to keep paying.

The ambiguity of the language in the federal CARES Act does, we think, provide districts with the legal authority to continue paying contractors during a closure. Whether a district decides to do so should include a guess as to what funds might be allocated to your district in a subgrant. If the ballpark figure for this calculation suggests that any grant would be less than the district would save by stopping payment to third-party contractors, then the district can decide not to pay, and argue about the implications later. If the math suggests that the subgrant would be greater than those savings, it might make sense to pause before deciding not to pay. We will continue to seek guidance from the relevant agencies on this issue and we are always available to walk through an individual client’s analysis. We also note that another $2,953,230,000 will be made available for the most affected educational entities, but those funds will be allocated under a different formula and do not appear to subject to Sec. 18006, so we do not discuss it at this time.

One post-script. In an earlier guidance concerning the amendment to the FMLA, we suggested that COVID-19 leave would count against the 12 week cap for other FMLA leave. This is not the case. Up to 12 weeks of COVID-19 leave is available in addition to any existing FMLA leave. What this will mean in terms of calculating work hours for future FMLA eligibility we leave for another day. As always, we are ready and able to discuss any specific issues with which you may be struggling.