By: Michelle De Oliveira, Esq.

As you may already know, the Families First Coronavirus Response Act (FFCRA), effective on April 1, 2020, requires employers with fewer than 500 employees to provide paid sick leave and expanded family and medical leave to certain eligible employees. Although many questions remain unanswered, the Department of Labor (DOL) has issued helpful guidance in the form of Questions and Answers to clarify certain aspects of the FFCRA.1

We discuss key clarifications from the DOL below.

The FFCRA Is Not Retroactive

The DOL has definitively answered one question many employers were asking: the FFCRA is not retroactive. It is in effect from April 1, 2020 through December 31, 2020.

Small Business Exemption: Limited To Leaves Related to Lack of Childcare and/or School Closures

We expect that the forthcoming regulations will explain, with specificity, how an employer with fewer than 50 employees may be exempt from providing paid leave under the FFCRA.2

The DOL has begun providing insight on this issue—and its recent guidance suggests that small business exemptions will be limited to providing paid sick leave to employees because of the lack of childcare and/or school closure due to COVID-19. A small business may elect an exemption for providing such leave if doing so would jeopardize the viability of the business. To elect the exemption, the employer will need to document why the business meets the criteria that will be addressed in forthcoming regulations.

To claim this limited school closure / childcare exemption, the employer, through an authorized officer of the business, would need to determine that:

  • Providing the 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;
  • he absence of the employee or employees requesting these forms of 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 these forms of leave, and these labor or services are needed for the small business to operate at a minimal capacity.

Employers do not need to submit documentation to the DOL. Rather, the employer will need to retain such records internally.
Evidently, this additional information from the DOL suggests that small businesses will not be able to elect an exemption if the reason for the leave is that:

  • 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 is seeking a medical diagnosis;
  • The employee is caring for an individual who is subject to a quarantine or isolation order or advised to self-quarantine by a health care provider; or
  • The employee is experiencing any other condition substantially similar to COVID-19, as specified by the U.S. Department of Health and Human Services (HHS).

Which employees should businesses count toward the 500-employee count?

In addition to full-time and part-time employees on a businesses’ payroll, the following employees also count toward the 500-employee threshold: (a) employees on leave; (b) temporary employees, including those who are jointly employed by an employer and on another employer’s payroll; and (c) day laborers supplied by temp agencies.

Independent contractors (properly classified under the Fair Labor Standards Act) do not count toward the 500-employee threshold.

It is also important to consider potential joint and/or integrated employer relationships. As to a potential joint employer relationship, a corporation, along with its separate divisions, is generally considered a single employer and all employees must be counted toward the 500-employe threshold. If, however, a corporation has an ownership interest in another corporation, then the two entities are separate employers unless they are joint employers under the FLSA.3  If two entities are joint employers, then their common employees count toward the 500-employee threshold.

Similarly, two or more entities that fall under the FMLA’s integrated employer test need to count all of their employees toward the 500-employee threshold under the FFCRA. Factors assessed to determine whether two entities are an integrated employer include: (a) common management; (b) interrelation between operations; (c) centralized control of labor relations; and (d) degree of common ownership or financial control.

FFCRA Leave Does Not Run Concurrently With Preexisting Leave Entitlements

Leave under the FFCRA is an additional employee benefit that cannot run concurrently with other forms of paid leave an employer provides. However, an employee can use a preexisting form of paid leave to supplement the employee’s pay during the FFCRA leave if—and only if—the employer agrees.

For example, if an employee is earning 2/3 of the employee’s normal earnings while caring for someone else during FFCRA leave, the employee may (if the employer agrees) use the preexisting paid leave to get the remainder 1/3 of the normal pay.

If an employer agrees to supplement the employee’s pay, the employer is only eligible for tax credits on the amount required to be paid to the employee under the FFCRA. In the example above, the tax credit is limited to 2/3 of the employee’s normal wages.

Total Available Leave Under The FFCRA & FMLA, Combined, is 12 Weeks

Employers who were covered under the FMLA before April 1, 2020 are only required to provide employees with 12 weeks of leave under the FFCRA and FMLA, combined. So, for example, if an employee took two weeks of FMLA leave following a surgical procedure in January 2020, then the employee has 10 weeks of leave available for use under the FFCRA (or FMLA).

The DOL notes, however, that this analysis does not apply to employers that become eligible for FMLA on April 1, 2020—but the DOL guidance does not explain what analysis would apply. We expect that more guidance will be issued on this point.

Depending on the Circumstances, Employees May End Up With 12 Weeks of Paid Leave

The FFCRA is an amendment to the FMLA. Under the FMLA, the total leave allotment is 12 weeks in a benefit year for eligible employees. For this reason, an employee who needs paid leave due to a school closure and/or lack of childcare and because of any the reasons under the Emergency Paid Sick Leave Act (in the bullet points above) may end up with 12 weeks of paid leave.

Part-time Employees & Counting Hours Worked

Part-time employees are entitled to leave for the average number of hours worked in a 2-week period. According to the DOL, hours are to be calculated based on the number of hours that the employee is normally scheduled to work.

In circumstances in which the schedule varies and/or the hours are unknown, there are two options:

First, for employees employed for at least 6 months: the employer may use a 6-month average to calculate the employee’s daily hours. The employee then can take paid sick leave for that number of hours (based on the calculation) per day for a 2-week period; and can take expanded family and medical leave for the same number of hours per day up to 10 weeks after that.

Second, for employees not yet employed for at least 6 months: the employer can use the number of hours that the employee agreed to work at the time of hire. If the employee never agreed to work a certain number of hours at the time of hire, then the employer can calculate the number of hours based on the average hours per day that the employee worked during the course of the employee’s employment.

Calculation of Pay Due to Employees & Overtime

For leaves under the Emergency Family and Medical Leave Expansion Act (e.g., due to school closure and/or lack of childcare because of COVID-19): employers must include overtime when calculating pay due if the employee was normally scheduled to work more than 40 hours in a week.

For leaves under the Emergency Paid Leave Act (e.g., due to quarantine, COVID-19 diagnosis/symptoms, to care for individual subject to quarantine or isolation order), the employee is entitled to payment of up to 80 hours over a two-week period.

Pay does not, however, include a premium for overtime hours.

Regular Rate of Pay

The regular rate of pay under the FFCRA to calculate paid leave is the average of the employee’s regular rate over a period of up to 6 months before the date the employee takes the leave. This includes: commissions, tips or piece rates.

Employees who have not been employed for 6 months with an employer will have their regular rate of pay calculated based on the average of the employee’s regular rate of pay for each week the employee worked.

Paid Sick Leave Under the Emergency Paid Sick Leave Act is Capped at 80 hours

The maximum an employee can receive as paid leave is 80 hours for any of the following reasons for leave under the Emergency Paid Sick Leave Act:

  • 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 is seeking a medical diagnosis;
  • The employee is caring for an individual who is subject to a quarantine or isolation order or advised to self-quarantine by a health care provider;
  • The employee is caring for a son or daughter whose school or care provider is closed or unavailable due to COVID-19 precautions; and
  • The employee is experiencing any other condition substantially similar to COVID-19, as specified by the U.S. Department of Health and Human Services (HHS).

Recordkeeping for Tax Credits

Employers will be eligible for reimbursements of the costs of paid leave through refundable tax credits. To obtain these credits, employers must retain the appropriate documents and records. The IRS will be making the necessary forms available, and employers should speak with their accountants to ensure that they retain the proper documentation and forms.

Intermittent Leave

There are two circumstances in which intermittent leave is available under the FFCRA.

First, employees who are teleworking may take intermittent FFCRA leave if they are unable to work their normal schedule because of one of the reasons protected under the FFCRA. Second, employees who are not teleworking may also take intermittent FFCRA leave if the employer agrees.

The DOL has noted that it “encourages employers and employees to collaborate to achieve flexibility and meet mutual needs, and the Department is supportive of such voluntary arrangements that combine telework and intermittent leave.”

Intermittent leave is not, however, allowed 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;
  • Advised by a health care provider to self-quarantine due to concerns related to COVID-19;
  • Experiencing symptoms of COVID-19 and seeking a medical diagnosis;
  • Caring for an individual who either is subject to a quarantine or isolation order related to COVID-19 or has been advised by a health care provider to self-quarantine due to concerns related to COVID-19; or
  • Experiencing any other substantially similar condition specified by the Secretary of Health and Human Services.

According to the DOL, the FFCRA’s intent is to provide employees with paid sick leave to prevent the employee from spreading COVID-19. With this intent in mind, once an employee goes out on paid sick leave for any of the reasons above, then the employee needs to continue taking the paid sick leave until the employee: (a) uses the full amount of paid sick leave; or (b) no longer has a qualifying reason for taking paid sick leave.

What Happens If A Business Shuts Down?

If a business shuts down because it is required to close pursuant to a federal, state or local directive, or because there is no work available, employees cannot obtain paid leave under the FFCRA. This applies if the shutdown occurs both before and after April 1 (the FFCRA’s effective date).

If, however, a business shuts down while an employee is already receiving paid leave under the FFCRA, the employer must pay the employee the paid leave used before the business shut down.

What Happens If An Employee is Furloughed?

If a business remains open but furloughs an employee because there is no work available for that employee, then the furloughed employee is not entitled to take paid leave under the FFCRA.

What Happens If An Employee’s Schedule is Reduced?

If an employee’s hours are reduced, the employee cannot take paid leave under the FFCRA for the hours that the employee is no longer working—unless the employee’s hours are reduced because the employee is unable to work a full schedule for one of the reasons protected under the FFCRA.

Health Insurance

Employers must continue to provide health insurance benefits to employees on FFCRA leave on the same terms and conditions prior to the leave. In other words, if an employee elected an employer-provided group health coverage prior to going out on FFCRA leave, then the employer needs to continue such coverage during the leave.

Eligibility requirements, including requirements to complete a waiting period for coverage, apply while an employee is on leave the same they would apply if the employee were working.

Job Restoration

The DOL clarifies that although employees are generally entitled to job restoration to the same or equivalent following FFCRA leave, the employee “is not protected from employment actions, such as layoffs, that would have affected [the employee” regardless of whether [the employee] took leave.” Employers may layoff an employee who went out on leave for legitimate business reasons, including the closure of a worksite. In these circumstances, the employer will need to demonstrate that the employee would have been laid off even if the employee did not take the leave.

Additionally, an employer may refuse to restore an employee’s position if: (a) the employee is a highly compensated “key”4 employee under the FMLA; or (b) the employer has less than 25 employees and the employee took leave to care for a son or daughter whose school or place of care was closed, or whose child care provider was unavailable, and the following hardship conditions exist:

  • the position no longer exists due to economic or operating conditions that affect employment and due to COVID-19 related reasons during 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 employer 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 began, whichever is earlier.
 
  1. See https://www.dol.gov/agencies/whd/pandemic/ffcra-questions.
  2. A Temporary Rule has been published, and the Final Rule is expected to be published any day now.
  3. “Under the FLSA, an employee may have—in addition to his or her employer—one or more joint employers. A joint employer is any additional “person” (i.e., an individual or entity) who is jointly and severally liable with the employer for the employee’s wages.” According to the DOL, if an employee who performs work for one entity that benefits another individual or entity, then a four-factor test is used to assess whether the entity benefiting from the employee’s work is a joint employer. The four-factor test assesses whether the joint employer: (a) hires or fires the employee; (b) supervises and controls the employee’s work schedule or conditions of employment to a substantial degree; (c) determines the employee’s rate and method of payment; and (d) maintains the employee’s employment records. See https://www.dol.gov/agencies/whd/flsa/2020-joint-employment/fact-sheet.
  4.  “A key employee is a salaried, FMLA-eligible employee who is among the highest-paid 10 percent of all of the employer’s employees within 75 miles.” An employer may deny job restoration to a key employee if it would cause substantial and grievous economic injury to its operations. See https://www.dol.gov/sites/dolgov/files/WHD/legacy/files/whdfs28a.pdf.

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