Labor and Employment E-lert: Families First Coronavirus Response Act (FFCRA) Enacted in Response to COVID-19

As we reported last week, on March 18, 2020, President Trump signed into law a bill with two significant provisions impacting employers with fewer than 500 employees and public employers (regardless of their size). While the FFCRA is to become effective "no later than" 15 days after it is enacted, we expect that it will not become effective until the last of the 15 days, which is April 1, 2020. The FFCRA  sunsets on December 31, 2020. The FFCRA is not retroactive. The full text of the final bill can be viewed here.

The FFCRA provides some tax relief for private employers. Public employers are excluded from the tax relief provisions.

We participated in the Department of Labor’s (DOL) town hall (virtual) which was held on Friday, March 20, 2020. The DOL was seeking public input on areas of the FFCRA that the participants felt needed clarification. The DOL confirmed that it will issue regulations to address certain provisions in the FFCRA. We expect it will issue guidance for other provisions but that has not been confirmed. Given the short time until implementation of the FFCRA, we may not see the guidance until after the FFCRA is effective.

The DOL and the IRS issued News Releases late last week that provide some additional clarification on what we can expect as the FFCRA goes into effect. These resources are available at: https://www.dol.gov/newsroom/releases/osec/osec20200320 and at https://www.irs.gov/coronavirus.
The DOL has stated that it will be issuing a temporary non-enforcement policy that provides a period of time – expected to be 30 days - for employers to come into compliance with the FFCRA. According to the DOL, it will not bring an enforcement action against an employer who violates the FFCRA "so long as the employer has acted reasonably and in good faith to comply" with the FFCRA; instead, the DOL will focus on compliance assistance during this  30-day period.

We have provided a brief overview of FFCRA law below with some provisions updated from the last e-lert to address and clarify the law based on additional information we have obtained. We are glad to answer any questions and help you navigate these difficult issues. Please reach out to your GrayRobinson employment law team contact with any questions you may have.

FFCRA Employer Requirements

Division C – Emergency Family and Medical Leave Expansion Act

• Amends the FMLA to include a qualifying need related to a public health emergency and requires up to ten (10) weeks of paid leave.
• Defines "eligible employee" as an employee who has been employed for at least 30 calendar days by the employer with respect to whom leave is requested.
• Sets the "employer threshold" as private employers who employ "fewer than 500 employees." (This language replaces "50 or more employees for each working day during each of 20 or more calendar workweeks in the current or preceding calendar year")  The remaining definitions of an "employer" under the FMLA were not changed; therefore this FMLA emergency leave also applies to public employers as it did before this amendment.
• Defines "qualifying need related to a public health emergency" as a situation where the "employee is unable to work (or telework) due to a need for leave to care for the son or daughter under 18 years of age of such employee if the school or place of care has been closed, or the child care provider of such son or daughter is unavailable, due to a public health emergency."
• Defines "public health emergency" as "an emergency with respect to COVID-19 declared by a Federal, State, or local authority."
• Requires employers with less than 500 employees, and public employers, to provide up to 12 weeks of FMLA leave due to a qualifying need related to a public health emergency.
  • Employees must provide notice as practicable if the need for leave is foreseeable.
  • The first 10 days of such leave may consist of unpaid leave.
    • However, an employee may choose to use any accrued vacation, personal, sick, or medical leave during the initial 10 days of leave.  The employer may not require the use of the accrued paid leave.  And while the DOL has been asked to confirm this in its guidance, it appears that an employee may use Emergency Paid Sick Leave for this initial 10 days (see below).
  • The employer must pay at least two-thirds of an employee’s normal wages for the remainder of the FMLA leave (which is up to the remaining ten (10) weeks of leave).
    • The above amount is calculated based on two-thirds of the employee’s regular rate of pay and the number of hours an employee would otherwise be normally scheduled to work.
    • When an employee’s hours vary, the employer averages the number of hours that an employee was scheduled per day over the immediate 6 month period.
      • If the employee did not work over the previous 6 month period, then the employer must use the reasonable expectation of the employee at the time of hiring of the average number of hours per day that the employee would normally work.
    • However, paid leave shall not exceed $200 per day and $10,000 in the aggregate.
• Employers with 25 or more employees must restore an employee to the employee’s pre-leave position or equivalent position in accordance with the normal requirements of the FMLA.
  • The restoration requirements of the FMLA shall not apply to employers with less than 25 employees under the following conditions:
    • The position no longer exists due to the economic and/or operating effects of a public health emergency during the period of leave.
    • Employer makes reasonable efforts to place the employee in an equivalent position.
    • The employer makes reasonable efforts to contact the employee for a period of 1 year when an equivalent position becomes available.
• The Secretary of Labor (via the DOL) is to issue regulations which exclude certain health care providers and first responders from eligibility under the Act. Clarifying definitions are expected. The regulations will also address the standards for determining an exemption for certain small businesses with fewer than 50 employees the ability to forgo the above amendments to the FMLA if imposition of such requirements would jeopardize the viability of the business. Small business has not been defined so it is not clear if this definition encompasses only private employers or if small public entities may also be eligible for an exemption.
• Expressly provides that employers of health care providers as defined in the FMLA or emergency responders may elect to exclude such employees from the requirements of the above amendments to the FMLA.
• Employers that do not have 50 or more employees are not subject to private action under the FMLA. The DOL, however, can bring an enforcement action against the employer.
• Effective no later than 15 days after enactment; April 2, 2020.
• Sunsets and expires on December 31, 2020.

Division E – Emergency Paid Sick Leave Act

• Requires covered employers to provide employees with two (2) weeks of emergency paid sick leave.
• Defines "covered employers" as private employers with fewer than 500 employees or public agencies or other public employers who employ 1 or more employees.
  • Available to all employees of a covered employer regardless of how long the employee has been employed.
  • Employer of a health care provider or emergency responder may elect to exclude such employee from the application of the paid sick time requirement.
• Covers employees who are in need of leave for the following six (6) reasons:

1. The employee is subject to a Federal, State, or local quarantine or isolation order related to COVID-19.
2. The employee has been advised by a health care provider to self-quarantine due to concerns related to COVID-19.
3. The employee is experiencing symptoms of COVID-19 and seeking a medical diagnosis.
4. The employee is caring for an individual who is subject to an order as described in 1 or 2 above.
5. The employee is caring for a son or daughter of such employee if the school or place of care has been closed or the child care provider is unavailable due to COVID-19 precautions.
6. The employee is experiencing any other substantially similar condition.

• Covered employers must compensate full-time employees who take leave for reasons 1 through 3 above at their regular rate of pay for 80 hours or, for part-time employees, the number of hours such employees work on average over a two-week period. (Shall not exceed $511 per day and $5,110 in the aggregate)
  • Compensation for reasons 4 through 6 above is at two-thirds of the 2 week compensation amount. (Shall not exceed $200 per day and $2,000 in the aggregate)
• Employers may not require that an employee find coverage for the employee’s missed shifts due to the use of emergency paid sick leave.
• Employers must post notice of the availability of emergency paid sick leave in conspicuous places and such model notice will be provided by the Secretary of Labor within 7 days of enactment of this Act. We expect this model notice to be issued on Wednesday, March 25, 2020.
• Employers may not require that an employee use other paid leave prior to the use of the emergency paid sick leave. Rather, the employee has the option to decide what available paid leave it will use.
• It is unlawful for employers to discharge, discipline, or discriminate against an employee who takes leave under the Emergency Paid Sick Leave Act or files a complaint or proceeding related to the Emergency Paid Sick Leave Act.
• Violations of the provisions for emergency paid sick leave are considered the same as either an employer’s failure to pay minimum wages under the FLSA (29 U.S.C. 206) or considered retaliation in violation of 29 U.S.C. 215(a)(3).
• The Emergency Paid Sick Leave Act provides the Secretary of Labor the authority to issue regulations which allow employers to exclude certain health care providers first responders from eligibility under the Emergency Paid Sick Leave Act and to certain small businesses with fewer than 50 employees the ability to forgo the above requirements if imposition of such requirements would jeopardize the viability of the business. This small business exemption is only available for the requirements to provide leave to care for a child whose school is closed or child care is unavailable in cases where the viability of the business is threatened. See number 5 in the above list of reasons for leave.
• Effective no later than 15 days after enactment; April 2, 2020.
• Sunsets and expires on December 31, 2020.

Division G – Tax Credits for Paid Sick and Paid Family and Medical Leave

The tax credits are available only for private employers. Key takeaways from the DOL regarding this provision are as follows:

• Complete Coverage
  • Private employers receive 100% reimbursement for paid leave pursuant to Emergency Family Medical and Leave Expansion Act and the Emergency Paid Sick Leave Act.
  • Health insurance costs are also included in the credit.
  • Employers face no payroll tax liability.
  • Self-employed individuals receive an equivalent credit.??
• Fast Funds
  • Reimbursement will be quick and easy to obtain.
  • An immediate dollar-for-dollar tax offset against payroll taxes will be provided.
  • Where a refund is owed, the IRS will send the refund as quickly as possible.
  • To take immediate advantage of the paid leave credits, businesses can retain and access funds that they would otherwise pay to the IRS in payroll taxes. If those amounts are not sufficient to cover the cost of paid leave, employers can seek an expedited advance from the IRS by submitting a streamlined claim form that will be released next week.

For more information refer to the resources referenced above and look for further updates from us.