All articles in this COVID-19 Response Resource issue are effective as of April 3, 2020.
On April 1, 2020, the Department of Labor (“DOL”) issued regulations regarding the Families First Coronavirus Response Act (“FFCRA”). These highly anticipated regulations clarified several issues that employers were questioning when only the text of FFCRA was available. We’ve highlighted several of the new regulations below. However, Democrats Patty Murray, Ranking Member, Senate Committee on Health, Education, Labor, and Pensions, and Chair, Rosa L. Delauro House Appropriations Subcommittee on Labor, Health and Human Services, Education, and Related Agencies, have issued a letter to the Department of Labor disagreeing with the DOL’s regulations and interpretation of the FFCRA, including the Nine Takeaways addressed in this article. That letter requested that the DOL immediately revise the regulations; therefore, this article is only current as of April 3, 2020. Parsons Behle and Latimer will issue another article if additional or amended regulations are issued. If you have any questions about the effect of the letter’s explicit disagreement with the DOL regulations, the DOL regulations as currently written, or any other aspect of the FFCRA, please contact us.
1. The Small Business Exemption is Narrow
The new regulations make clear that if an employer has less than 50 employees, it may be exempt from providing paid sick leave and family leave under FFCRA in a narrow circumstance. Specifically, the small business exemption applies only if an employee is trying to take leave to care for a child whose school or daycare has closed due to COVID-19 reasons. The exemption will not apply when an employee is seeking to take paid sick leave for any other qualifying reason under the Paid Sick Leave provision of FFCRA. For example, even if an employer only has four employees, it is required to give an employee paid sick leave if the employee needs such leave for a qualifying reason under FFCRA.
Under DOL’s regulations, when an employee is seeking leave due to a school or place of care closure or childcare unavailability, the small business employer is exempt from providing paid sick leave and family leave under the FFCRA “when the imposition of such requirements would jeopardize the viability of the business as an ongoing concern” (emphasis added) and the employer has fewer than 50 employees. To claim the exemption, an authorized officer of the business must determine the following:
(1) the paid sick leave or expanded family and medical leave under the FFCRA would result in the employers’ “expenses and financial obligations exceeding available business revenues and cause the small business to cease operating at a minimal capacity;”
(2) the absence of the employee(s) requesting leave under the FFCRA 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”
(3) the employer does not have enough 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(s) requesting leave under the FFCRA, and such labor or services “are needed for the small business to operate at a minimal capacity”
To elect the small business exemption, only one of the above three factors must be determined to be present for the conditions for an exemption to be satisfied. Additionally, the employer must document that a determination under any of the above three factors has been made. The documentation should be retained in the employer’s records for four years, but does not need to be given to the DOL. Finally, even if an employer chooses to exempt one or more of its employees from the leave provided under the FFCRA, the employer must still post a notice in the workplace regarding the employees’ rights under the FFCRA.
2. Determining Whether the FFCRA Applies to Your Business
The DOL’s regulations set forth the method for counting employees to determine if an employer is subject to the FFCRA because the employer has “less than 500 employees.” For purposes of the FFCRA, the following employees are counted:
- Full-time and part-time employees
- Employees on any kind of leave
- Temporary employees who are jointly employed by the employer and another employer
- Day laborers supplied by a temporary placement agency.
Additionally, the employees must be employed within the United States to be counted. For example, if an employer has 1,000 employees in North America, but only 250 are employed in the U.S., the employer will be considered to have 250 employees and is subject to the FFCRA. The employer does not need to count any independent contractors or employees who have been laid off or furloughed that have not been rehired.
The DOL has also made clear that the fact-intensive Fair Labor Standards Act’s test for joint employer status applies in determining who is a joint employer for purposes of coverage under the paid sick leave provisions of the FFCRA. The fact-intensive Family Medical Leave Act’s test for integrated employer status applies in determining who is an integrated employer for purposes of both the paid sick leave and family leave provisions of the FFCRA. If you have questions about either the joint employer or integrated employer tests, please contact us.
3. FLSA Regulations Governing Hours Worked Are Updated for Teleworking
For employees teleworking for COVID-19 related reasons, a new DOL Regulation authorizes employers to avoid the default rule that all time between performance of the first and last principal activities is compensable work time. Instead, employers may agree with their employees on an intermittent schedule spread over the course of the day — paying the employee only for hours worked. For example, if an employee agrees to work from 8 a.m. to 10 a.m., 12 p.m. to 4 p.m., and 6 p.m. to 8 p.m., the employer would only be required to pay for the 8 hours actually worked, not the 12 total hours between the initial work at 8 a.m. and the end of the work day at 8 p.m. Businesses that have employees working from home due to COVID-19, should consider reviewing their employment policies to ensure they are compatible with this updated guidance from the DOL.
4. Workers May Take Intermittent Leave Under Limited Circumstances
In keeping with the FFCRA’s intended objective to contain COVID-19, an Employee may take intermittent paid sick leave or expanded family and medical leave. The following guidelines apply to intermittent leave:
- Both the employee and employer must agree to intermittent leave.
- A written agreement or memorandum is recommended to establish the agreement, including identifying the increments of time in which leave may be taken.
- While teleworking, the employee may take leave intermittently, in any agreed increment of time for any qualifying reason.
- While coming into the worksite, an employee may take paid sick leave or expanded family and medical leave intermittently only to care for the employee’s child whose school or place of care is closed, or whose childcare provider is unavailable for reasons related to COVID-19. This is to prevent the spread of COVID-19.
- Employees may not take intermittent leave for any of the other qualifying paid sick leave or expanded family and medical leave reasons.
- Only the amount of leave taken intermittently is counted towards the employee’s leave entitlements.
5. You May Want to Prospectively Update Your Leave Policies
Recently-adopted federal regulations make clear that employers may not diminish, reduce or eliminate any right or benefit an employee is entitled to under federal, state, or local law; under any collective bargaining agreement; or under any employer policy that existed prior to April 1, 2020, because the employee took paid sick time provided by the FFCRA. Even if an employee took paid sick time for a COVID-19 reason before April 1, 2020, that employee will still be entitled to the full amount of paid sick time under the FFCRA. But these limitations do not prohibit an employer from “prospectively terminat[ing] a voluntary additional paid leave offering as of April 1, 2020, or thereafter …” In doing so, the employer “must pay employees for leave already taken under such an offering before it is terminated, but the employer need not continue the offering in light of the” FFCRA taking effect.” Should you have questions about how safely to alter any paid leave policies in light of the new laws, please contact us.
6. Regulations Are in Tension about When Employers May Require Concurrent Use of Accrued Leave During Amended FMLA Leave
There is internal conflict in new DOL regulations about when an employer may require an employee taking FFCRA FMLA Leave to take accrued leave. One section appears to allow employers to require concurrent use of leave that could be used for childcare, including accrued vacation, personal leave or paid time off. But another section appears to prohibit this. Stay in contact with your employment counsel to get any updates on future guidance in this area. Notwithstanding this tension, the regulations are clear that an employee must be allowed to take any FFCRA Sick Leave for which they are eligible before being required to take any other leave.
7. Regulations Change Scope of Discrimination Liability, Creating Tension with the Statute
Under Department of Labor regulations, an employer is prohibited from discharging, disciplining, or otherwise discriminating against an employee because the employee took FFCRA Sick Leave. Discharging, disciplined or discriminating against an employee for filing a complaint, instituting or causing a proceeding to be instituted, or testifying (or being about to testify) in any such proceeding is also prohibited.
These regulations appear to broaden the grounds for potential employer liability. The statutory text of the FFCRA includes the conjunctive ‘and’ suggesting that discrimination liability exists only for discrimination that involves both taking sick leave together with filing a complaint, instituting a proceeding or testifying at a proceeding. The new DOL regulations read this ‘and’ as creating two separate categories of prohibited conduct. Accordingly, employers must be careful to avoid any form of discrimination arising from an employee’s decision to take sick leave under the FFCRA.
8. Employers of Health Care Providers May Claim an Exemption
Although everyone is interested in understanding the scope of the Health Care Provider exemption, it’s important for employers to understand that this exemption applies to employees—not employers. Put differently, all private employers with 500 or fewer employees (“Covered Employers”) have at least some obligations under the FFCRA, and this includes the employers of health care providers. Among these requirements, Covered Employers must provide notice of the FFCRA’s requirements. Covered Employers must also create and retain documentation that the FFCRA requires. With this caveat in mind, the DOL regulations expansively define the categories of employees that may be exempted from the benefits under the FFCRA. The list includes:
- Doctor’s office
- Health care center
- Post-secondary educational institution offering health care instruction;
- Medical school
- Local health department or agency
- Nursing facility
- Retirement facility
- Nursing home
- Home health care provider
- Any facility that performs laboratory or medical testing
- Or any similar institution, Employer, or entity
The definition also includes “any permanent or temporary institution, facility, location or site where medical services are provided that are similar to such institutions.” And it also includes “any individual employed by an entity that contracts with any of these institutions described above to provide services or to maintain the operation of the facility where that individual’s services support the operation of the facility.” And this includes “anyone employed by any entity that provides medical services, produces medical products, or is otherwise involved in making the COVID-19 related medical equipment, tests, drugs, vaccines, diagnostic vehicles, or treatments.” Lastly, the “highest official of a State” (including territories and D.C.) may determine that others are “health care provider[s] necessary” in the “response to COVID-19.”
DOL gives employers discretion to exempt these employees from benefits in order to ensure that the health care system has the staffing it needs to fight the coronavirus pandemic. DOL asks employers to be judicious in deciding which employees to exclude from benefits. In some cases, affording benefits may protect health care employees by keeping a sick individual away from work. Employers are encouraged to take a case-by-case approach.
Because employers have broad discretion, they should be extra careful to ensure they put in place neutral policies for applying that discretion to avoid running afoul of federal, state or local antidiscrimination laws of general applicability. Don’t hesitate to contact your employment law counsel if you have questions.
9. Employers Must Maintain Leave Documentation for Four Years
An employer is required to keep documentation related to request for leave – regardless of whether it was denied or granted – for four years. The required documentation includes records of any conversations or oral statements made by an employee to support a request for paid sick leave or expanded family and medical leave under the FFCRA. If an Employee’s request is denied, the Employer must document the determination by its “authorized officer” that it is eligible for the exemption. Additionally, in order to claim tax credits, the employer should maintain the following records:
- Records of work, paid work, and expanded family and medical leave that show how the employer determined the amount of lead paid.
- Documentation to show how the employer determined the amount of qualified health plan expenses allocated to wages.
- Copies of IRS Form 7200.
- Copies of IRS Form 941 OR Records of documentation sent to third party payers regarding employer’s entitlement to the credit claimed on Form 941.
- Other documents required by the IRS to request tax credits.
For questions about this or other employment-related matters, contact John Cutler by calling (208) 528-5223 or send an email to firstname.lastname@example.org; Liz Mellem at (406) 333-0530 or send an email to email@example.com; or (Susan Motschiedler at (801) 536-6923 or send an email to firstname.lastname@example.org.