On March 24 and March 25, the Department of Labor (DOL) released several documents providing various levels of guidance on the Families First Coronavirus Response Act (FFCRA).
Recall that on March 18, Congress passed FFCRA, which includes significant changes to employee entitlements for paid family and sick leave for certain COVID-19 related leaves from work. The leave portions of the FFCRA comprise two different laws: (1) an FMLA amendment, including up to 12 weeks of leave to care for children necessitated by COVID-19 (partially paid); and (2) a paid sick leave provision providing 80-hours of paid leave for certain COVID-19 related circumstances. Covered employers will then receive a tax credit from the federal government for the full cost of these leaves provided to employees.
The new documents from the DOL provide significant additional guidance for employers regarding their obligations under the FFCRA, but unfortunately leave many critical questions still unanswered while employers anxiously await the promised regulations. In the meantime, below are explanations of and links to the new information as well as an analysis of what we now know – and still do not know – from the new documents.
What new information did the DOL publish?
Late on March 24, the Department of Labor (the “DOL”) issued an official Frequently Asked Questions (“FAQs”) that answers some of the major questions employers have been asking about the FFCRA since its passage, including the methods for calculating leave benefits and determining who is covered under the law. The DOL also issued two fact sheets for employees and employers about their rights and obligations under the FFCRA.
Along with the FAQs and fact sheets, the DOL also published Field Assistance Bulletin No. 2020-1, explaining that it will not bring any enforcement actions against employers making reasonable, good faith efforts to comply with the FFCRA through April 17, 2020. Employers attempting to implement the new requirements under the FFCRA will accordingly have some additional time to come into compliance without penalty so long as they are making these reasonable, good faith efforts. The factors for determining reasonable, good faith efforts are (1) the employer remedying any violations as soon as practicable, (2) the violations were not “willful,” and (3) the employer submitting a written commitment to the DOL to comply with the FFCRA in the future.
Finally, the DOL published a Notice Poster on March 25, for employers to use in order to satisfy the FFCRA mandate that covered employers post a notice of its requirements. The DOL also provided a separate Notice - Frequently Asked Questions. As explained in the Notice FAQs, the Notice Poster must be placed in a conspicuous place on an employer’s premises, defined as a place “where notices to employees are customarily posted” or alternatively, the notice posting requirement may be satisfied by emailing or direct mailing the Notice Poster to all of the employer’s employees or by posting it on an employee information internal or external website. The Notice Poster need not be translated into another language nor must the employer provide the notice to any former employees or job applicants, only current or newly hired employees must receive a copy.
When does the FFCRA take effect?
April 1, 2020 (a day earlier than anticipated given the FFCRA’s requirement that it be implemented at least by April 2, 2020). Covered employers will accordingly need to be prepared to provide emergency family and medical leave and emergency paid sick leave pursuant to the FFCRA by April 1. The FFCRA expires by its terms on December 31, 2020.
The benefits are not retroactive, and any paid leave provided prior to April 1 (even if provided for COVID-19 related reasons) does not count toward the FFCRA’s requirements. Additionally, any such leave benefits provided before April 1 will presumably not be eligible for the tax credits.
Who is a “Covered Employer”?
A “Covered Employer” under the FFCRA is any private employer with fewer than 500 aggregate employees “at the time your employee’s leave is to be taken.” Therefore, the relevant time period for calculating an employer’s total number of employees for coverage purposes is the time the employer would be granting the leave.
An employee is defined broadly under the FFCRA to include all full-time and part-time employees, employees on leave, temporary employees who are jointly employed, and day laborers supplied by a temporary agency. To determine whether an individual has been jointly employed for the purposes of the calculation, the DOL has adopted the joint employer test applied under the Fair Labor Standards Act (FLSA), which focuses on (1) hiring and firing, (2) supervision and control of work, (3) method of payment, and (4) maintenance of employee records.
The only individuals excluded from the definition are independent contractors as determined under the FLSA’s six-factor economic reality test. Those six factors are (1) extent the worker’s services are integral to the business, (2) permanency of the relationship, (3) the worker’s investment in equipment, (4) degree of control over the work, (5) the worker’s opportunity for profit, and (6) the level of skill and judgment required of the worker.
The DOL’s guidance further provides that two interrelated but legally separate entities should be treated as separate employers unless they meet the integrated employer test under the Family Medical Leave Act (FMLA). The factors under the FMLA integrated employer test include: (1) common management, (2) interrelation between operations, (3) centralized control of labor relations, and (4) degree of common ownership and financial control. Additionally, in the case of separate employers who share “joint employees” under the FLSA joint employer test noted above, each separate employer must count all of their common employees in determining whether that employer exceeds the 500-employee limit.
Do I qualify for the “small business” exemption?
The FAQs confirm that the DOL intends to provide a small business exemption to the FFCRA’s leave requirements for employers with fewer than 50 employees where compliance would jeopardize “the viability of the employer’s business as a going concern.” Beyond that general statement, the DOL’s guidance thus far is for small businesses to gather supporting information (though it specifically asks employers not to send that information to the DOL). Employers will need to wait and see how exemption requests will be reviewed and processed.
There are fundamental questions that are currently unanswered. It is unclear what time period will be used in determining whether an employer has 50 or fewer employees. The DOL could conceivably adopt the same “snapshot” approach to determine the total number of employees for the exemption as it did for the covered employer determination, with the snapshot date perhaps being either April 1 or the date of an exemption application. The DOL could alternatively adopt the 20-week test used in the FMLA whereby the relevant question is whether an employer had 50 or more employees in 20 or more workweeks in the current or preceding calendar year. Accordingly, if an employer has already laid off employees for business reasons related to COVID-19 and those layoffs brought it under 50 employees, it is currently unclear whether the employer will qualify for the small business exemption.
The DOL also does not elaborate what type of documentation is required to receive the exemption. At a minimum, employers should be prepared with information confirming its total number of employees and demonstrating the financial hardship imposed by the leave requirements would be untenable, but at this time, it is unclear what specific information or documents will be required.
The DOL promises more details and instructions on applying for the exemption will follow, and we will provide further updates as this information becomes available.
How do I calculate the total hours of leave benefits?
Under the FFCRA, a covered employer must provide up to 80 hours of emergency paid sick leave for qualifying reasons at the employee’s regular rate of pay and 12 additional weeks of emergency FMLA at two-thirds of the employee’s regular rate of pay if they have a child whose school or childcare facility is closed due to COVID-19. However, only 12 weeks of total paid leave are required. Thus, after taking two weeks of emergency paid sick leave, an employee would only be eligible for 10 more weeks of emergency FMLA leave.
The amount of paid sick leave an employer must grant to eligible employees who work part-time depends on how many hours the employee works, on average, over a two-week period. For the purposes of determining this number, the DOL directs employers to calculate hours based on the number of hours the employee is normally scheduled to work. For example, if the employee typically works 15 hours per week, then the employee can receive up to 30 hours of emergency paid sick leave over two weeks for qualifying reasons. If the normal hours scheduled are unknown, or if the part-time employee’s schedule varies, the DOL allows employers to use a six-month average to calculate the average daily hours. If the employee has not been employed for six months, the employer may use the number of hours that the employer and employee agreed that the employee would work upon hiring or the average hours per day the employee was scheduled to work over the entire term of employment to calculate the leave benefit.
The DOL’s guidance also explains that employers must pay an employee for all hours the employee would have been normally scheduled to work, even if that number is more than 40 hours per week. Overtime hours (but not overtime premiums) must be included in the calculation of paid leave. The total number of hours for the two weeks, however, is capped at 80, so for example, if an employee is scheduled to work 50 hours a week, that employee may take 50 hours of paid sick leave in the first week and 30 hours of paid sick leave in the second week.
What rates are employees entitled to be paid?
For emergency paid sick leave, the rate an employee is entitled to receive is the greater of (1) his or her “regular rate of pay,” (2) the federal minimum wage under the FLSA, or (3) applicable state or local minimum wages. The sick leave is capped, however, at a maximum of $511 per day or $5,110 over the total paid sick leave period.
An employee’s “regular rate of pay” under the FFCRA is the average of the employee’s regular rate over a period of up to six months prior to the date on which they take leave, and includes commissions, tips, or piece rates, but does not include any overtime premiums. This calculation is notably different from the traditional workweek-by-workweek regular rate calculation used for the FLSA.
For expanded family and medical leave, the employee is only entitled to receive two-thirds of the regular rate of pay discussed above, and the regular rate used to calculate the two-thirds amount must be at or above the applicable federal or state minimum wage. Additionally, this expanded family and medical leave is capped at a maximum of $200 per day or $12,000 for the twelve weeks (including both emergency paid sick leave and expanded family and medical leave if both are taken).
How do these new benefits effect my obligations under the FMLA?
The FFCRA imposes a new set of leave requirements beginning on April 1, 2020. FMLA leave provided prior to April 1, even for COVID-19 reasons, does not reduce the employer’s new leave obligations under the Act. The FFCRA does not require that leave for traditional FMLA-qualifying circumstances (not otherwise qualified under the FFCRA) be paid. It is not yet clear whether either emergency family and medical leave or emergency paid sick leave under the FFCRA would run concurrently with the 12 weeks of unpaid leave required under the FMLA.