A Deeper Dive into Questions Asked by Employers Regarding the Families First Coronavirus Relief Act
On March 26th, DeWitt attorney Jim Kremer wrote a brief overview on questions frequently asked by employers in relation to FFCRA. What follows is a much deeper dive into those questions and more.
The Families First Coronavirus Relief Act (FFCRA) requires employers with fewer than 500 employees to provide paid leave to employees for certain reasons related to the COVID-19 virus. The law creates two new types of paid leave applicable from April 1 until December 31 of 2020 – Emergency Paid Sick Leave (80 hours) and Extended Family Medical Leave (up to 12 weeks):
- Emergency Paid Sick Leave: Applies to first 10 days of employee leave for qualifying virus-related reasons.
- If an employee requires leave because she (a) is subject to a government quarantine or isolation order, (b) has been advised by a health care provider to self-quarantine for virus-related issues, or (c) is experiencing virus symptoms (dry cough, fever, difficulty breathing) and seeking a medical diagnosis, she is entitled to up to 80 hours of emergency paid sick leave if a full-time employee or the number of hours normally worked over a two-week period if a part-time employee. The paid benefit amount is at the employee’s regular rate of pay, subject to a limit of $511/day and $5,110 in the aggregate.
- If an employee requires leave because she (a) is caring for someone who is subject to a quarantine order or has been advised by a health care provider to self-quarantine, or (b) is caring for a son or daughter whose school or child care provider has been closed or is unavailable because of the virus, then the same amount of paid leave as above is available – but the amount is limited to two-thirds of the employees regular rate of pay subject to a $200 daily and $2,000 aggregate cap.
- Extended Family Medical Leave: Employees can take up to 12 weeks of leave when an employee is unable to work (or telework) due to a need to care for his/her children (under age 18) if the children’s school or place of care has been closed or the child care provider is unavailable due to the virus.
- The first 10 days of any such leave is unpaid, but employees can choose to use available PTO during this time.
- Leave after the first 10 days is paid at an amount not less than two-thirds of the employee’s regular rate of pay for the number of hours the employee would normally be scheduled to work, subject to a cap of $200/day and $10,000 in the aggregate.
On March 24th the Department of Labor (DOL) published guidance and answers to questions regarding the Emergency Paid Sick Leave and Expanded Paid FMLA COVID-19 Leave provision under the Families First Coronavirus Response Act (FFFCRA). The DOL also published the following written notice on March 25th, which must be posted by all employers.
On March 28th, the DOL issued updated and expanded FFCRA questions and answers.
When Does the Law go into Effect? April 1, 2020
When Does the Law Terminate? Absent an extension through further legislative action, the Emergency Paid Sick Leave and Expanded FMLA Leave terminate on December 31, 2020. These leave benefits are intentionally temporary in nature and do not extend into next year.
What about employers with fewer than 500 employees that also have related business entities? Do all employees of the related entities count for purposes of determining if the employer has 500 or more employees?
The new leave law only applies to employers with fewer than 500 employees. Large employers with 500 or more employees are not subject to these leave requirements. To determine how many employees one has for purposes of ascertaining whether the new leave provisions apply an employer must count all full-time, part-time, and temporary employees (including any employees who are currently on leave) at the time the employee’s leave is taken.
If an employer has related business entities that have more than 500 employees in the aggregate, the business enterprise may be tempted to effectively treat the related entities as one employer to get to the 500-employee threshold and avoid the paid leave requirements. Whether employers can aggregate employees across different but related corporate entities entails a complex analysis under joint or integrated employer standards. Employers should seek legal guidance in this regard. Aggregating employees across separate but related entities requires navigating tricky waters which can have unintended consequences in other business and employment related areas.
Are there possible exemptions for employers with fewer than 50 employees?
Yes. The FFCRA authorizes the Secretary of Labor to issues regulations exempting “small businesses with fewer than 50 employees from the requirements of [the new paid leave provisions] when the imposition of such requirements would jeopardize the viability of the business as a going concern.” In its March 28th updated guidance, the DOL provides additional information regarding the small business exemption and its applicability.
With respect to (a) paid sick leave due to school or place of care closures or child care provider unavailability for COVID-19 related reasons and (b) expanded family and medical due to school or place of care closures or child care provider unavailability for COVID-19 related reasons, the DOL states that a small business (fewer than 50 employees) may claim this exemption if an authorized officer of the business has determined that:
- The provision of paid sick leave or expanded FMLA leave would result in the small business’s expenses and financial obligations exceeding available business revenues and cause the small business to cease operating at a minimal capacity;
- The absence of the employee or employees requesting paid sick leave or expanded FMLA leave would entail a substantial risk to the financial health or operational capabilities of the small business because of their specialized skills, knowledge of the business, or responsibilities; or
- There are not sufficient workers who are able, willing, and qualified, and who will be available at the time and place needed, to perform the labor or services provided by the employee or employees requesting paid sick leave or expanded FMLA, and these labor or services are needed for the small business to operate at a minimal capacity.
Small businesses seeking to claim the exemption should carefully and thoroughly document the exemption criteria they are invoking, the process they went through and information they considered in assessing the applicability of this criteria, and the complete rationale for the determination that the criteria has been satisfied. Such contemporaneous and thorough documentation will be critical if and when one or more employees or the DOL challenges the legitimacy of the employer’s exemption claim. Further, it would be prudent for an employer invoking the exemption to obtain and document pertinent legal, accounting and finance advice underlying and/or relating to its determination. The exemption analysis and determination document should be signed by an officer of the company.
In addition to the foregoing, it would be prudent for a small business to engage with employees regarding its exemption analysis and determination to control employee expectations, address questions and concerns, and hopefully minimize the prospect of challenges to the company determination. Unexpected surprises are often the stuff of which regulatory complaints and/or litigation are made. Particularly where, as in the current circumstances, friends and family members of employees may receive the statutory paid leave benefits through their employers - it is imperative to timely and effectively communicate to your employees that certain of the same paid benefits will not be available to them and why.
Finally, businesses should note that the small business exception, if claimed and applicable, only applies to paid sick leave or expanded FMLA leave due to school or place of care closures or childcare provider unavailability for COVID-19 related reasons. It does not apply to other qualifying COVID-19 related paid sick leave, including a need for leave because (a) the employee is subject to a Federal, State, or local quarantine or isolation order; (b) the employee has been advised by a health care provider to self-quarantine due to concerns related to COVID-19; (c) the employee is experiencing symptoms of COVID-19 and seeking a medical diagnosis; (d) the employee is caring for an individual who is subject to a quarantine/isolation order or has been advised by a health care provider to self-quarantine; or (e) the employee is experiencing any other substantially similar condition specified by the Secretary of Health and Human Services.
Are all employees, regardless of their tenure with the company, entitled to Emergency Paid Sick Leave and Expanded FMLA Leave?
Yes, with respect to Emergency Paid Sick Leave, but No under Expanded FMLA Leave. All employees, regardless of length of service with the employer, are entitled to Emergency Paid Sick Leave. But an employee must have been employed for at least 30 calendar days immediately prior to the day leave would begin to be eligible for Expanded FMLA Leave.
In determining whether the 30-calendar-days of employment eligibility requirement has been satisfied for an employee who worked as a temporary employee and was thereafter hired on a full-time basis, the period of time previously worked as a temporary employee counts toward the 30-day eligibility period.
How do you count hours worked by employees for purposes of paid leave? Must overtime hours be included?
You calculate hours of leave based on the number of hours the employee is normally scheduled to work. For a full-time employee that will typically be 40 hours per week. A part-time employee is entitled to leave for his or her average number of work hours in a two-week period. If normal scheduled hours are unknown or a part-time employee’s schedule varies from week to week , you may use a six-month average to calculate the average daily hours. If an employee has not worked with the employer for 6 months, then (a) use the number of hours it was agreed the employee would work upon hiring, or (b) if there was no agreed upon number of hours upon hiring use the average number of daily hours the employee worked during the entirety of his employment with the employer.
In counting work hours to determine the amount of paid leave due an employee, an employer must include any overtime hours the employee would have been normally scheduled to work (subject to the 80 hour cap for Emergency Paid Sick Leave as well as the daily and aggregate dollar caps).
Can employees take more than one paid sick leave of 80 hours for different qualifying reasons? What if an employee doesn’t use all 80 hours of paid sick leave on the first occasion for leave and then has a later reason to take additional paid sick leave?
No. Employees cannot stack and take multiple 80-hours emergency paid sick leaves for different reasons specified in the law. An individual employee has a total of 80 hours of emergency paid sick leave that he or she is entitled to use from April 1 thru December 31 of 2020.
Multiple paid sick leaves may be taken by an employee for different reasons from April 1 until December 31 but only so long as the total aggregate number of paid sick leave hours taken does not exceed 80 hours. For example, an employee could take 40 hours of paid sick leave in April for qualifying childcare reasons and an additional 40 hours of paid sick leave in June if then required to self-quarantine. The number of qualifying leave events is not limited, but the total number of paid sick leave hours is capped at 80 hours per employee.
What is the total number of paid leave weeks available under the FFCRA?
The total number of leave weeks available to an employee between Emergency Paid Sick Leave (first two weeks) and Expanded FMLA for childcare purposes only (next 10 weeks) is 12 weeks. An employee does not get two weeks of Emergency Paid Sick Leave and then, in a childcare situation, an additional 12 weeks of FMLA. It’s one pot of 12 total weeks. The Expanded FMLA only applies to childcare situations when the employee must be off work to care for a child under 18 whose school has closed or childcare provider is unavailable for reasons related to the virus.
I allowed my employee to take paid leave for a reason covered by the new law before April 1, 2020. Do I have to provide an additional paid leave benefit for qualifying reasons once the new law goes into effect on April 1?
Yes. If you provided paid leave to an employee for a reason covered in the Emergency Paid Sick Leave provision before the law went into effect you cannot deny the same employee additional statutory paid leave once the law goes into effect. In other words, employers don’t get credit for any paid leave already provided to an employee before April 1. As of April 1, such an employee then becomes eligible for the statutory leave that must be provided.
Does the new law turn traditional FMLA leave from unpaid into paid leave?
No. The Expanded FMLA provision does NOT make traditional FMLA leave paid leave. The new paid leave component only applies to the childcare scenario (school closing, childcare provider unavailable). If you have an employee who needs leave because he or she is suffering from the virus or needs to care for a family member with the virus, that employee would get paid for the first two weeks of the leave under the Emergency Paid Sick Leave provision but any additional leave time thereafter, up to ten weeks, (unless its needed to care for a child whose school has closed or child care provider is unavailable due to the virus) would be unpaid, traditional FMLA leave.
What records should you keep when an employee takes FFCRA Leave?
Employers intending to seek reimbursement of FFCRA leave costs through refundable tax credits (everyone should do this) are directed to the IRS for required documentation and procedures to follow to obtain the credit. The DOL and IRS jointly issued interim guidance on the FFCRA and tax credit relief on March 20. In addition, the IRS has a COVID-19 website where it is publishing guidance as it is developed.
Further IRS guidance and direction is expected in the near future. In the interim, employers should document and retain the following for each employee seeking or taking leave under the FFCRA: (1) the date and substance of the employee’s leave request, including the stated reason for the leave as well as communications with the employee related to the same (emails, texts, or other written communications, as well as a summary of any oral communications); (2) any backup documentation and information sought and received from the employee to support the leave request; (3) documentation of the employer’s approval or disapproval of the leave request (including the reasons for any disapproval); (4) calculation of the employee’s regular rate of pay for purposes of the paid leave; and (5) payroll records denoting the sums paid to the employee and designated as statutory paid leave.
We recommend that when an employee’s statutory paid leave request is granted, the employer confirm the same in writing to the employee. The written confirmation should note the following: (1) the date of the employee’s leave request; (2) the reason for the leave request; (3) the type of statutory paid leave being granted (Emergency Paid Sick Leave, Expanded FMLA, or possibly both); (4) the duration of the paid leave; (5) the employee’s regular rate of pay being used to calculate paid leave benefits; and (6) the amount of paid leave the employee will be paid per pay period and in the aggregate (subject to the daily and aggregate caps), together with a brief explanation of how the employer arrived at these amounts.
What documents can you request from your employees?
The DOL states that an employee must provide to its employer “documentation in support of [the employee’s] paid sick leave as specified in applicable IRS forms, instructions, and information.” At this point, however, the IRS has not issued specific forms and instructions for this purpose. In the meantime, we suggest employer’s follow the documentation guidance set forth in the immediately preceding topic discussion.
With respect to Expanded FMLA Leave to care for a child whose school or place of care is closed or whose care provider is unavailable for COVID-19 related issues, the DOL say an employer “may require [its] employee to provide [the employer] with any additional documentation in support of such leave” to the extent permitted under the certification rules for traditional FMLA. As examples, the DOL states that such documentation could include “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 if an employee on Paid Sick Leave for her own COVID-19 related health issue or to care for a family member with a COVID-19 related health issue needs more than two weeks of leave? Is such an employee entitled to additional leave time and, if so, is that additional leave time paid or unpaid?
The Emergency Sick Leave component of the FFCRA only provides paid leave benefits for essentially the first two weeks (up to 80 hours) of an employee’s leave. Extended paid leave after the first two weeks, in the form of Expanded FMLA Leave, is only available to care for a child whose school or place of care is closed or whose care provider is unavailable for COVID-19 related issues – it is not available for the other qualifying reasons under the Emergency Sick Leave provision.
When an employee exhausts his or her two-week paid sick leave entitled because of the employee’s own serious COVID-19 related health condition or to care for a family member with such a condition, the employee may be entitled to an additional 10 weeks of unpaid leave as a form of traditional FMLA leave. An employer should follow its normal medical certification and FMLA administrative processes to document the need for, assessment and approval of any such leave request. In other words, the same rules and procedures for traditional FMLA leave requests continue to apply to COVID-19 related leave requests.
What happens if an employee who is authorized and able to telework becomes unable to do so because of COVID-19 related reasons? Is such an employee entitled to paid leave under the FFCRA?
Yes. An employee who has been working remotely but has to stop teleworking for a qualifying COVID-19 related reason is entitled to take paid sick leave. This includes an employee who is prevented from teleworking because of the need to care for a child whose school or day care provider has closed or whose day care provider is unavailable for COVID-19 related reasons.
That being said, if an employee is able to telework while caring for his or her child, paid sick leave and expanded FMLA leave is not available.
Can Paid Sick Leave or Expanded FMLA Leave be taken intermittently?
Yes, but only if the employer agrees and only under certain circumstances. The latest DOL guidance suggests that taking leave on an intermittent basis is not a right under the FFCRA paid leave provisions, although the DOL encourages employers and employees to “collaborate to achieve flexibility and meet mutual needs.” It does not appear, therefore, that employers must afford teleworking or non-teleworking employees the opportunity to use FFCRA paid leave intermittently.
The DOL guidance states that unless an employee is teleworking (and even then only with the employer’s agreement), paid sick leave for qualifying COVID-19 related reasons “must be taken in full-day increments.” It also emphasizes that FFCRA paid leave cannot be taken intermittently by a non-teleworking employee if the leave is being taken because:
- The employee is subject to a Federal, State, or local quarantine or isolation order related to COVID-19;
- The employee has been advised by a health care provider to self-quarantine due to concerns related to COVID-19;
- The employee is experiencing symptoms of COVID-19 and seeking medical diagnosis;
- The employee is caring for an individual who is either subject to a quarantine or isolation order or has been advised by a health care provider to self-quarantine due to concerns related to COVID-19; or
- The employee is “experiencing any other substantially similar condition specified by the Secretary of Health and Human Services.”
Once an employee who is not teleworking begins taking paid sick leave for one or more of the above qualifying reasons, the employee must continue to take paid sick leave each day until the employee either (1) uses the full amount of available paid sick leave, or (2) no longer has a qualifying reason for taking paid sick leave. The reason for this is to keep employees who are sick and may have the virus, or who are caring for someone who is sick and may have the virus, out of the workplace to prevent spreading of the virus.
Keep in mind that an employee who has used some but not all of his or her paid sick leave allotment cannot be required to use up all 80 hours (or two weeks) of paid sick leave if the employee’s need for paid sick leave ends before all paid sick leave time has been exhausted. Any unused paid leave time as of the date the needed leave ends will remain available to the employee for a subsequent COVID-19 related qualifying reason for the balance of 2020.
Except as noted above, employers and employees are permitted to agree between them that Paid Sick Leave and/or Expanded FMLA Leave may be taken on an intermittent basis and establish a schedule on which intermittent leave will be taken. The point here is that allowing employees to take FFCRA paid leave on an intermittent basis is permissive, rather than mandatory, under circumstances other than those when it is necessary for the employee to remain away from the workplace to avoid potential spread of the virus.
What happens to paid leave benefits if employees are laid off or an employer needs to close operations temporarily or permanently?
The right to FFCRA paid leave benefits terminates on the date of layoff or closure. FFCRA paid leave benefits are only available to employees when they are unable to work for COVID-19 related qualifying reasons. Employment layoff or termination is not a qualifying reason. Therefore, employees are not eligible for FFCRA paid leave benefits if any of the following apply:
- The employer closed the employee’s worksite before April 1, 2020 (the effective date of the FFCRA);
- The employer closes the employee’s worksite after April 1, 2020 but before the employee’s need for leave arises (even if the closure is intended to be temporary);
- The employer remains open but furloughs the employee on or after April 1, 2020;
- The employer closes the employee’s worksite with the intent to reopen it in the future;
- The employer reduces the employee’s scheduled work hours because it does not have work for the employee to perform.
Finally, if the employer closes while an employee is out on FFCRA paid leave the employer’s paid leave obligations ends on the date it closes. This is true whether the employer closes for lack of business or other financial reasons, or because the employer is required to close pursuant to a Federal, State or local directive.
In short, when an employer shuts down, furloughs or lays off employees, the FFCRA paid leave entitlement for the affected employees ends. In those circumstances, employees should seek unemployment benefits. Note that in Minnesota (and other jurisdictions) the rules for receipt of unemployment benefits have loosened to permit employees who have lost their jobs because of the COVID-19 crisis to receive timelier and often increased benefits. In addition, the Minnesota Executive Order addressing unemployment benefits makes it clear that the experience rating tax generally applicable to taxpaying employers who pay into the state unemployment fund will not be applied with respect to COVID-19 related unemployment benefits. In other words, such employers will not be forced to directly bear the financial burden of the unemployment benefits paid to their employees who received COVID-19 related unemployment benefits.
Are employers required to continue group health insurance benefits for employees out on paid FFCRA leave?
Yes. Under the FMLA, an employer who provides group health coverage is required to continue such coverage for the duration of FMLA leave on the same terms and conditions as if the employee continued to work. Similarly, the DOL states that an employee on FFCRA paid sick leave is entitled to continued health insurance coverage under HIPAA. If an employee on Expanded FMLA Leave does not return to work at the end of the leave, continued coverage on the employer’s group health plan will depend on the terms of the plan. If an employee in such circumstances is not eligible for continuing group health coverage without returning to work (which is common), an employee may be eligible for continuing coverage under COBRA. Employers subject to COBRA should make sure to provide the required COBRA notice in these circumstances.
How do FFCRA paid leave benefits and separate employer provided paid leave benefits interact and work with each other? Do such leave benefits and payment obligations run concurrently?
Employees may not use employer provided paid leave benefits and FFCRA paid leave benefits concurrently absent the employer’s agreement. The DOL guidance states: “If you are eligible to take paid sick leave or expanded family and medical leave under the FFCRA, as well as paid leave that is already provided by your employer, unless your employer agrees you must choose between one type of leave to take. You may not simultaneously take both, unless your employer agrees to allow you to supplement the amount you receive from [FFCRA paid leave], up to your normal earnings, with preexisting leave.” In short, employers may permit employees on FFCRA paid leave to use preexisting employer-provided paid leave to supplement the FFCRA payment amount but only up to the employee’s full normal pay.
Keep in mind that the FFCRA prohibits employees from compelling employees to use their employer-provided paid sick leave or other PTO benefits in lieu of or in addition to FFCRA paid leave benefits. Therefore, the choice of using FFCRA paid benefits or other employer-provided paid leave benefits is up to the employee.
If an employer permits employees to supplement their FFCRA paid leave benefits with other employer-provided leave benefits up to their normal compensation, the employer will not be entitled to a tax credit for any amount paid in excess of the FFCRA paid benefit amount.
Are employees who take FFCRA paid leave entitled to reinstatement upon the conclusion of the leave?
Generally, yes. Employees returning from FFCRA paid leave are entitled to return to the same position they occupied at the time of the leave or a substantially equivalent position. Employees cannot be fired, disciplined, or otherwise discriminated against because they took FFCRA paid leave.
There are exceptions to the job reinstatement obligation. If an employee on FFCRA leave would have been laid off or terminated for legitimate business reasons regardless of the leave, there is no right to reinstatement. If adverse business and other financial circumstances resulting from the COVID-19 crisis require employers to downsize, care should be given to ensure that the selection of employee’s for layoff does not disparately impact employees who happen to be off work on FFCRA leave. If selections between comparable employees must be made to determine who to retain and who to layoff, any FFCRA leave taken by an employee must be ignored and the employer must be able to reasonably and rationally demonstrate that its termination decisions were made in a non-discriminatory manner.
The Expanded FMLA Leave provision (care for a child whose school or place of care has closed, or whose care provider is unavailable, due to COVID-19 related reasons) also includes a limited job reinstatement exception for employers with fewer than 25 employees if all four of the following hardship conditions exist:
- The employee’s position no longer exists due to economic or operating conditions that affect employment and due to COVID019 related reasons during the period of the leave;
- The employer made reasonable efforts to restore the employee to the same or an equivalent position;
- The employer makes reasonable efforts to contact the employee if an equivalent position becomes available; and
- The employee continues to make reasonable efforts to contact the employee for one year beginning either on the date the leave related to COVID-19 reasons concludes or the date 12 weeks after the leave begins, whichever is earlier.
If an employee has used up her 12 weeks of traditional FMLA leave time prior to April 1, 2020 is she entitled to use FFCRA paid leave time?
The FFCRA Paid Sick Leave of up to two weeks in duration (or 80 hours) is a leave entitlement that is independent of the FMLA and is not a form of FMLA leave. Therefore, an employee who has used up her FMLA leave time remains entitled to FFCRA Paid Sick Leave.
However, the Expanded FMLA Leave does not increase the total FMLA leave entitlement in a one-year period beyond 12 weeks. Consequently, if an employee has no available FMLA leave time at the time he or she requests Expanded FMLA Leave, there is no obligation to grant the leave request.
The updated guidelines from the Department of Labor remain a work in process. We are still waiting on implementing regulations from the DOL and IRS. In the meantime, if we can be of assistance to you in addressing FFCRA or other questions as we work through this unprecedented crisis together, please don’t hesitate to reach out. More importantly, stay safe and healthy. We’ll get through this together.