Natural disasters such as Hurricane Katrina raise a myriad of legal issues for employers and their employees. Employees affected by this type of natural disaster may seek relief from previously established assistance programs, such as unemployment insurance or the federal Disaster Unemployment Assistance program, or may obtain relief from measures enacted in direct response to this event, such as the Katrina Emergency Tax Relief Act of 2005 (KETRA). Additionally, affected employees may also be eligible for leave under the Family and Medical Leave Act and the Americans with Disabilities Act.
Individuals who lost their jobs as a result of Hurricane Katrina may apply for regular unemployment insurance benefits (UI) through their state unemployment office, or may be eligible for federal Disaster Unemployment Assistance (DUA).
The Department of Labor's regular UI programs provide unemployment benefits to eligible workers who :
Became unemployed through no fault of their own;
File a claim with the State Unemployment Insurance Agency as soon as possible;
Meet the state requirements for wages earned or time worked during the one-year period specified by state law;
Meet other state law requirements;
Register for work.
Benefits are based on a percentage of the individual's earnings over a recent 52-week period, up to a state maximum amount, and can be paid for a maximum of 26 weeks, with certain exceptions during times of high unemployment. Any monetary relief is subject to Federal tax laws.
However, those whose jobs have been lost or interrupted as a direct result of the hurricane, but who do not qualify for state unemployment benefits - for example, if they have not worked somewhere for at least one year or are self-employed - may be eligible for DUA benefits.
Unemployed individuals must register with the state's employment services office to apply for the DUA benefits, which can extend up to 26 weeks after the affected area is declared a disaster area. The deadline for filing claims for DUA benefits in Alabama, Louisiana, and Mississippi is November 30, 2005.
To be eligible for DUA benefits, an individual must be ineligible for regular unemployment benefits, and must be unable to work because the hurricane:
Caused physical damage or destruction to his or her place of business;
Caused a bodily injury;
Resulted in closure of the place of employment by the federal government, rendering the workplace inaccessible;
Caused the death of the head of household and resulted in the surviving family member becoming the household's breadwinner or major support contributor.
For participants in group health and disability plans who lived or worked in designated disaster areas in Alabama, Louisiana, and Mississippi, and their beneficiaries, certain deadlines and time periods will be disregarded or postponed from August 29, 2005, through February 28. These include:
The 30-day deadline for special enrollment rights under the Health Insurance Portability and Accountability Act (HIPAA);
The 63-day break in coverage period used to determine whether a pre-existing condition limitation will apply under HIPAA;
The 60-day deadline for electing continuation health benefits coverage under the Consolidated Omnibus Budget Reconciliation Act (COBRA);
The 60-day time period for notifying a plan administrator of an event that would qualify the individual for COBRA continuation coverage;
All deadlines for filing claims and appeals under group health and disability plans.
The requirements have also been relaxed for affected individuals who have retirement assets in qualified employer plans, such as 401(k) and 403(b) plans. The type of relief provided by IRS guidance and the Katrina Emergency Tax Relief Act of 2005 (KETRA) includes:
The 10% penalty will be waived for early withdrawals from retirement plans between August 25, 2005, and December 31, 2006, and these distributions will not be subject to the mandatory 20% withholding which normally applies to rollover distributions;
Plans must extend a one-year grace period for repayment of any plan loan that an individual is due to pay between August 25, 2005, and December 31, 2006;
A 401(k) or other qualified plan may allow individuals to take hardship distributions or loans for needs arising from Hurricane Katrina;
For new loans from 401(k) or other qualified plans made between September 23, 2005, and December 31, 2006, the maximum loan amount is increased to 100% of the account balance or $100,000, whichever is less.
Employees affected by Hurricane Katrina may be entitled to leave under the Family and Medical Leave Act (FMLA) or Americans with Disabilities Act (ADA) for a serious medical condition caused by the hurricane. In addition, employees who must care for a child, spouse, or parent with a serious medical condition may also be entitled to leave under the FMLA. Although often covered, it is helpful to review these policies (note: although certain states may impose more substantial family and medical leave obligations on employers, Mississippi, Louisiana and Alabama do not).
FMLA applies to employees who:
Employees of all public agencies and employees of private companies with 50 or more employees who are each working at least 20 calendar weeks in the current or preceding calendar year. Public and private employees must also have worked at least 12 months for the employer and at least 1,250 hours during the 12 months immediately before the leave starts.
Have a serious health condition or are taking care of a family member who has a serious health condition. The FMLA defines a serious health condition as "an illness, injury, impairment, or physical or mental condition" that involves either inpatient care or continuing treatment by a healthcare provider.
The ADA applies to employees who:
Suffer from a physical or mental impairment that substantially limits one or more major life activities. Mental impairments are defined as any mental or psychological disorder such as Post-Traumatic Stress Disorder, major depression or panic disorders, all of which could have been brought on by the effects and aftermath of the hurricane.
Published November 1, 2005.