Beginning on March 24, the Department of Labor (DOL) has been steadily releasing information and guidance on the Families First Coronavirus Response Act (FFCRA). We have been reviewing those releases to find the important information employers need to comply with the FFCRA and have summarized our analysis below.
What is the FFCRA?
On March 18, Congress passed the FFCRA, which creates two significant entitlements for paid leave related to COVID-19 for certain employees at private employers with less than 500 employees.
First, the FFCRA enacts the Emergency Paid Sick Leave Act (EPSLA), establishing a new “Emergency Paid Sick Leave.” This emergency paid sick leave provides up to two weeks of fully paid leave to employees who are unable to work or telework for one of six COVID-19 related reasons: (1) the employee is subject to a federal, state, or local quarantine or isolation order, (2) the employee has been advised by a health care provider or public health agency to self-quarantine, (3) the employee is experiencing COVID-19 symptoms and seeking a medical diagnosis, (4) the employee is caring for an individual subject to a quarantine order or advice, (5) the employee is caring for a child whose school or childcare facility is closed due to COVID-19 precautions, or (6) substantially similar reasons as specified by the Department of Health and Human Services.
Second, the FFCRA amends the Family Medical Leave Act (FMLA) to include the Emergency Family and Medical Leave Expansion Act (EFMLA) establishing a new “Public Health Emergency Leave.” This public health emergency leave provides up to twelve weeks of partially paid leave for employees who cannot work or telework because they must care for their children (including adopted and foster children, stepchildren, legal wards, children for whom the employee is standing in loco parentis, and disabled adult children who are incapable of self-care) because the child’s school or childcare facility is closed due for a COVID-19 related reason.
The FFCRA also provides a tax credit from the federal government for employers to cover the full cost of these leaves provided to their employees. Leave benefits provided in excess of the leave mandated by the FFCRA do not qualify for a tax credit. The tax credit may be applied to offset payroll taxes equal to the amount of qualifying leave that an employer paid, rather than deposit that amount with the IRS. The payroll taxes available for retention include: withheld federal income taxes, the leave taking employees’ shares of Social Security and Medicare taxes, and the employer share of Social Security and Medicare taxes with respect to all employees.
What new information did the DOL publish?
On March 24, the DOL issued an official Frequently Asked Questions (“FAQs”) with fourteen answers to 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. The DOL subsequently added twenty-three more questions and answers to the FAQs on March 27 and another twenty-two questions on March 28.
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. Employers should be aware, however, that employees could still bring their own lawsuits for violations occurring beginning on April 1, 2020.
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 by April 2, 2020). Covered employers will accordingly need to be prepared to provide the expanded FMLA leave, referred to as public health emergency leave, and the new 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.” Thus, 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. It is still unclear, however, whether seasonal employees who are not actively working should be counted.
To determine whether an individual has been jointly employed for the purposes of the FFCRA calculation (and should thus be counted as an employee by two separate entities), 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. In the case of separate employers who share “joint employees” under the FLSA joint employer test, each separate employer must count all of their common employees in determining whether that employer exceeds the 500-employee limit.
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 FMLA. If they satisfy the integrated employer test, then they must count all the employees of the integrated entities to determine coverage for the purposes of public health emergency leave under the EFMLA. It does not appear, however, that the integrated employer test is applied for counting employees to determine coverage under the EPSLA’s requirement to provide emergency paid sick leave. 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.
Who qualifies 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.” The DOL did not initially elaborate on how it would analyze and process exemption requests.
In its March 28 update to the FAQs, the DOL provided some much needed guidance to small businesses, but a few lingering questions remain.
First, it appears that the DOL will 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 likely being April 1 or perhaps the date of an exemption application. The DOL has expressly rejected the 20-week test used in the FMLA (whereby the relevant question is the number of employees in 20 or more workweeks in the current or preceding calendar year) for the purposes of counting to the 500 employee threshold, making the adoption of that test for the small business exemption unlikely.
Second, the DOL identifies three circumstances that would satisfy the requirement that compliance with the FFCRA would “jeopardize the viability of the small business as a going concern”:
Providing paid sick leave or emergency FMLA leave would result in expenses and financial obligations exceeding available business revenues, and would cause the business to cease operating at a minimal capacity:
The absence of an employee or employees on leave would entail a substantial risk of a similar effect of expenses and financial obligations exceeding revenues; or
Providing leave would result in insufficient available workers to keep the business operating at a minimal capacity.
Third, the DOL stated that a small business may claim the exemption where an authorized officer has concluded that the business meets the above requirements. This guidance suggests that the DOL does not currently intend to second guess the good faith business judgment of a small business as it weighs the financial impact of FFCRA compliance.
Which employees are eligible for leave?
In determining which employees are eligible for leave, both the EPSLA and EFMLA apply the definition of employee found in the FLSA, which applies the same economic reality test used to determine an independent contractor discussed above. Thus all U.S. (including Territorial) employees who meet this definition are eligible for leave under the FFCRA, including full-time and part-time employees, and “joint employees” working on your site temporarily and/or through a temp agency.
Under the EPSLA there is no limitation to eligibility based on the length of time an employee has been with the employer. To be eligible for public health emergency leave under the EFMLA, however, an employee must have been employed for at least 30 calendar days by the employer. Additionally, employees who are laid off on or after March 1, 2020, and re-hired before the FFCRA sunsets on December 31, 2020, will not have to complete 30 days of employment in order to be eligible for public health emergency leave.
Both laws also allow employers to exclude “health care providers” and “emergency responders” from the leave requirements. The precise definition for these types of employees is defined in the next two sections.
Which “health care providers” may be excluded from emergency paid sick leave and/or public health emergency leave?
The DOL takes an expansive approach in the FAQs as to which employees qualify as “health care providers” whom employers may treat as exempt from the emergency paid sick leave and public health emergency leave requirements of the FFCRA. The DOL’s apparent rationale is to provide health care providers discretion in balancing the need for providers to combat COVID-19 and the risk of infected providers further spreading the virus.
“Health care providers” include:
Anyone employed at a doctor’s office, hospital, health care center, clinic, nursing facility, retirement facility, or home health care provider;
Anyone employed at a college/university providing health care instruction, or at a medical school;
Anyone employed by a facility that performs lab or medical testing;
Anyone employed by a pharmacy;
Anyone employed by a contractor that provides services to any of the foregoing entities;
Anyone employed by an entity that is involved in making COVID-19 related medical equipment, tests or other diagnostic tools, drugs, vaccines, or treatments; and
Anyone that a state governor determines is a “health care provider.”
The only qualification provided by the DOL to this very expansive definition is that employers are encouraged to be judicious in the application of this definition to minimize the spread of the virus. The DOL thus appears to be leaving employers of health care providers with substantial discretion in balancing the need for providers against the risk of infected providers further spreading COVID-19.
Which “emergency responders” may be excluded from emergency paid sick leave and/or public health emergency leave?
The DOL similarly takes an expansive approach to the definition of “emergency responders,” and includes any employee necessary to provide transport, care, health care, comfort and nutrition to COVID-19 patients, or whose services “are otherwise needed to limit the spread of COVID-19.” The FAQs provide a non-exhaustive list of employees who may fall within this broad definition, including:
Doctors and nurses;
EMTs and paramedics;
Emergency management personnel, public health personnel, and 911 operators;
Public works personnel and other needed to assist with a declared emergency;
Military and the national guard; and
Law enforcement officers and fire fighters.
The DOL similarly leaves employers of emergency responders with discretion in applying this definition in balancing the need for emergency responders against the risk of infected providers further spreading COVID-19.
How does an employer calculate the total hours of leave benefits under the EPSLA?
Under the EPSLA, 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.
The amount of emergency paid sick leave an employer must grant to eligible employees 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 an 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 emergency paid sick leave in the first week and 30 hours of such leave in the second week.
How does an employer calculate the total hours of leave benefits under the EFMLA?
Under the EFMLA, a covered employer must provide twelve weeks of public health emergency leave, the first two weeks unpaid and the subsequent ten weeks 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 twelve weeks of total leave under the FFCRA are required. Thus, after taking two weeks of emergency paid sick leave under the EPSLA, an employee would only be eligible for the remaining ten weeks of public health emergency leave under the EFMLA.
Like emergency paid sick leave, the amount of public health emergency leave an employer must grant to eligible employees depends on how many hours the employee works, on average, and is calculated in the same manner discussed above.
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 public health emergency 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 public health emergency leave is capped at a maximum of $200 per day or $10,000 for the ten weeks.
What documentation is needed to support leave benefits and reimbursement?
In order to take advantage of tax credits available under the FFCRA, employers providing their employees emergency paid sick leave or public health emergency leave should be sure to collect the information needed for tax credit applications down the road.
For emergency paid sick leave, employers must require their employees to provide the following information supporting their leave: the employee’s name, qualifying reason for requesting leave, statement that the employee is unable to work, including telework, for that reason, and the date(s) for which leave is requested. Documentation of the reason for the leave will also be necessary, such as the source of any quarantine or isolation order, or the name of the health care provider who has advised the employee to self-quarantine. This documentation may include, for example, a copy of the Federal, State or local quarantine or isolation order related to COVID-19 applicable to the employee or written documentation by a health care provider advising the employee to self-quarantine due to concerns related to COVID-19.
For public health emergency leave, employers must require their employees to provide the following information supporting their leave: the employee’s name, qualifying reason for requesting leave, statement that the employee’s child’s school or place of care is closed, or child care provider is unavailable, due to COVID-19. Again documentation for this information will be required, such as, for example, a notice that has been posted on a government, school, or day care website, or published in a newspaper, or an email from an employee or official of the school, place of care, or child care provider.
What does it mean for an employee to be “unable to work” (including telework) under the FFCRA?
An employee is “unable to work” when one of the COVID-19 qualifying reasons for leave (including the need to care for a child) prevents the employee from being able to perform their normal amount of hours of work at the worksite, from home, or from another location.
An employee is not “unable to work” if the employee and employer reach an agreement to allow the employee to work a normal number of hours on an adjusted schedule (such as early in the morning or late at night) or if the employee is able to telework whilecaring for a child. If an employee is able to work or telework and paid normal wages, that employee is not entitled to paid leave under the FFCRA.
Can leave be granted intermittently?
Yes. Both paid emergency paid sick leave and public health emergency leave can be taken intermittently if a COVID-19 qualifying reason prevents employees from either working or teleworking on their normal schedule. Whether to allow intermittent leave is generally left to the employer’s discretion.
For teleworking, intermittent leave can be taken in any increment, so long as the employee and employer agree (e.g., alternating between telework and leave every 90 minutes).
For working at the normal worksite, intermittent public health emergency leave must be taken in full-day increments (e.g., working Tuesday and Thursday and taking leave Monday, Wednesday, and Friday), unless the employer and employee agree to a different schedule (e.g., working in the morning and taking leave in the afternoon). However, once an employee takes emergency paid sick leave, unless they are able to telework, they must keep taking leave each day until they either (1) use the full amount of paid sick leave or (2) no longer have a qualifying reason for sick leave.
If an employee no longer has a qualifying reason for taking emergency paid sick leave before exhausting that leave, the employee may take any remaining emergency paid sick leave at a later time if another qualifying reason occurs, at least until the FFCRA expires on December 31, 2020.
Are furloughed employees, employees at closed worksites, or employees with reduced hours entitled to leave?
No. Emergency paid sick leave and public health emergency leave are not available to employees whose worksite closed before April 1, 2020, regardless of whether the closure was caused by lack of work or a government order. Similarly, if a worksite is closed while employees are on paid leave, the employer must pay for all leave used before the closure but does not have to pay for leave going forward after the closure. This is true regardless of whether the employer plans to reopen at some point.
Employees who are furloughed on or after April 1, 2020, are not eligible for paid leave. Likewise, employees whose hours are reduced are not eligible for intermittent paid leave for the hours they are no longer working.
In each of these cases, the employees may be eligible for unemployment benefits instead.
Can both FFCRA leave and employer provided leave be used concurrently?
In general, no. Employees may not use their employer provided paid time off benefits and FFCRA leave for the same hours. The employee must choose which type of leave they would like to use.
If an employer and employee agree, they may combine FFCRA leave and employer provided paid time off up to an employee’s full normal earnings. For example, an employee being paid at two-thirds their regular rate in public health emergency leave may supplement the remaining third with employer provided paid time off. The employer, however, is not required to offer this option nor can it mandate the employee supplement FFCRA leave.
What protections do employees have while on leave?
First, most employees have a right to return from FFCRA leave to the same (or a nearly equivalent) job. An employer, however, may refuse to return a highly compensated “key” employee as defined under the FMLA to their same position. A key employee under the FMLA is “a salaried, FMLA-eligible employee who is among the highest-paid 10 percent of all of the employer’s employees within 75 miles.”
Additionally, an employer who has fewer than 25 employees (who did not obtain a small business exemption), may refuse to return an employee to the same position following public health emergency leave if all four of the following hardship conditions exist: (1) the position no longer exists due to economic or operating conditions that affect employment and due to COVID-19 related reasons during the period the leave; (2) the employer made reasonable efforts to restore the employee to the same or an equivalent position; (3) the employer makes reasonable efforts to contact the employee if an equivalent position becomes available; and (4) the employer continues to make reasonable efforts to contact you for one year beginning either on the date the leave related to COVID-19 reasons concludes or the date 12 weeks after the leave began, whichever is earlier.
Second, employees are protected from being fired, disciplined, or otherwise being discriminated against because of taking emergency paid sick leave or public health emergency leave or because of filing any type of complaint or proceeding under the FFCRA. An employer is not prohibited, however, from taking employment actions that would have occurred regardless of the leave or filing.
How do these new benefits effect an employer’s obligations under the FMLA and other leave laws and policies?
The FFCRA imposes a new but related 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 emergency sick paid leave obligations under the EPSLA. However, traditional FMLA leave already taken in the 12-month period used by the employer for calculating FMLA leave does reduce the amount of public health emergency leave available under the EFMLA. For example, an employee who has taken four weeks of FMLA leave during the relevant 12-month period would only be eligible to take eight weeks of public health emergency leave, and an employee who has already taken twelve weeks of FMLA leave may not take any additional leave under the EFMLA.
Similarly, taking public health emergency leave under the EFMLA is counted against the twelve weeks of traditional unpaid leave under the FMLA to which an employee would otherwise be entitled. The two weeks of emergency sick paid leave provided under the EPSLA do not count against the twelve weeks cap for traditional unpaid leave under the FMLA, but if an employee takes emergency paid sick leave concurrently with the first two weeks of public health emergency leave, which may otherwise be unpaid, then those two weeks do count towards the 12 weeks in the 12-month period.
The FFCRA does not require that leave for traditional FMLA-qualifying circumstances (not otherwise qualified under the FFCRA) be paid.
Emergency paid sick leave under the EPSLA is in addition to other leave provided under Federal, State, or local law, an applicable collective bargaining agreement, or an employer’s existing company policy. Therefore, taking emergency paid sick leave should not be counted against or run concurrently with any of those other obligations.
What “health care providers” are authorized to advise an employee to self-quarantine in order to trigger FFCRA leave?
Any health care provider who was previously authorized to issue an FMLA certification can be relied upon to direct an employee to self-quarantine for purposes of FFCRA leave.