March 28, 2020 Department Of Labor Provides Guidance On Emergency Coronavirus Legislation

In our E-Update issued on March 22, 2020, we summarized key provisions of the Families First Coronavirus Response Act (“FFCRA”), which provides for Paid Sick Leave and expanded family and medical leave, which we will refer to as Paid Family Leave, for certain employees who are unable to work due to the COVID-19 pandemic. As we noted, the FFCRA left many questions about how the new requirements would be interpreted.

On March 24, 2020, the Department of Labor (“DOL”) answered some of those questions when it published initial guidance, including a Frequently Asked Questions (“FAQ”) document and a model workplace poster. Two days later, the DOL supplemented the FAQ with additional guidance. All of the DOL’s current materials on the FFCRA can be found here.

In addition, on March 27, 2020, President Trump signed into law the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”). This is a sweeping bill which focuses primarily on providing economic support, including unemployment benefit enhancements for workers affected by the pandemic. However, the CARES Act also includes some amendments to the FFCRA, which are included in the discussion below.

Questions Answered by the DOL’s Guidance (through March 27)

Taking all of the new DOL materials and the CARES Act amendments to the FFCRA together, here’s what we now know:

1. When does the FFCRA go into effect?

April 1, 2020. This is a change from the original date of April 2, 2020.

2. Do employers receive credit for paid time off benefits provided to employees before April 1?

No. The benefits are new, and become effective on April 1. Benefits provided before April 1 do not count toward the FFCRA’s mandates. The Paid Sick Leave (80 hours) and Paid Family Leave (up to 10 weeks) must be provided to all eligible employees with a qualifying reason for leave beginning April 1. Moreover, employers are not entitled to the FFCRA’s payroll tax credit for any paid leave provided before April 1.

3. How and when do employers measure the 500-employee threshold for determining coverage under the Act? 

The employee count is determined at the time an employee’s leave is to be taken. Included in the count are all full-time and part-time employees in the United States (including its territories). It also includes employees on leave, temporary employees who are jointly employed, and day laborers supplied by a temporary agency. It does not include independent contractors, as defined in the Fair Labor Standards Act.

Typically, a corporate entity with multiple establishments or divisions is considered to be a single employer and, as a result, all of its employees are counted towards the 500-employee threshold. To determine coverage under the new Paid Family Leave portion of the FFCRA, employers should look to existing FMLA rules for determining whether two or more entities are an integrated employer for purposes of counting employees. In contrast, the new Paid Sick Leave is governed by the rules under the Fair Labor Standards Act (“FLSA”).

4. How do employers determine if an employee meets the 30-days of employment eligibility requirement for Paid Family Leave benefits?

Although all employees of a covered employer are eligible for Paid Sick Leave under the FFCRA, employees must be employed for at least 30 days to be entitled to the Paid Family Leave benefits. An employee meets this requirement if he or she was “on the employer’s payroll” for the 30 calendar days immediately prior to the day the leave would begin. Notably, this includes any time spent in temporary employee status (e.g., through a staffing company) before being hired directly by the employer as a regular employee. The DOL did not explain whether “on the employer’s payroll” would include time on an unpaid leave of absence or furlough.

In addition, the CARES Act expanded the FFCRA by including within the definition of “employed for at least 30 calendar days” any employees who were laid off not earlier than March 1, 2020, had worked for the employer for not less than 30 of the last 60 calendar days prior to the employee's layoff, and who were rehired by the employer.

5. How do small employers (under 50 employees) apply for the financial hardship exception?

The FFCRA states that employers with fewer than 50 employees may seek an exemption from providing Paid Sick Leave and Paid Family Leave benefits to employees who are caring for a child whose school or day care is closed or unavailable due to COVID-19, if doing so would jeopardize the continuing viability of the business. The DOL did not provide any specifics on how small employers might obtain this exemption determination from the DOL. The guidance merely advises small employers to document why complying with the FFCRA would jeopardize the viability of their business, and to await forthcoming regulations. It stressed that small employers should not submit any documentation or other information at this time.

6. How much Paid Sick Leave or Paid Family Leave do part-time employees get?

Part-time employees who are unable to work (including remotely) for a qualifying reason are entitled to be paid for their average number of work hours in a two-week period. If normal hours scheduled are unknown, or if the part-time employee’s schedule varies, employers should use a six-month average to calculate the employee’s average daily hours. A qualified part-time employee may take Paid Sick Leave for this number of hours per day for up to two-weeks, and may take Paid Family Leave for the same number of hours per day, for up to ten additional weeks.

7. How do employers calculate the employee’s pay to be provided as the benefit?

When calculating the Paid Family Leave benefit, an employer must pay the employee for all hours he or she would have been normally scheduled to work, including any overtime hours that are part of the employee’s normal schedule. As with part-time employees, if normal hours scheduled are unknown, or if the employee’s schedule varies, employers should use a six-month average to calculate the average daily hours.

When calculating the Paid Sick Leave benefit, an employer need only pay the employee up to 80 hours over a two-week period. For example, if an employee normally works 50 hours per week, she would be paid 50 hours of pay during the first week of Paid Sick Leave eligibility, but only the remaining 30 hours during the second week. 

For both Paid Sick Leave and Paid Family Leave, the employee’s hourly benefit is calculated as their “regular rate of pay,” using the average regular rate over a period of up to six months prior to the date on which the employee takes leave. The FFCRA directs that the regular rate be calculated using the same rules that are used for calculating overtime pay under the Fair Labor Standards Act (“FLSA”), which includes commissions, tips, piece rates, and non-discretionary bonuses. In general, this is determined by adding up all compensation paid to the employee per workweek and dividing that sum by the total hours worked in the workweek. California employers should note that the FLSA regular rate calculation is different from how the regular rate is determined for California employees, which (for full-time employees) divides the total weekly pay by 40 hours, instead of the total hours worked.

8. What are the limits of the Paid Sick Leave and Paid Family Leave benefits?

The CARES Act clarifies the limits on both Paid Family Leave and Paid Sick Leave. Paid Family Leave is limited to $200 per day, and $10,000 in the aggregate, per employee. Paid Sick Leave is limited to $511 per day, and $5,110 in the aggregate, for each employee who takes a leave because they are subject to a government quarantine or isolation order, are self-quarantining based on the advice of a health care provider, or are experiencing COVID-19 symptoms and seeking a diagnosis; or $200 per day, and $2,000 in the aggregate, for each employee who takes a leave to care for someone who is subject to a governmental quarantine or isolation order or is self-quarantining based on the advice of a health care provider, or is caring for their child whose school or day care is closed or unavailable based on COVID-19.

9. Is an employee entitled to up to 80 hours of Paid Sick Leave each time they have a new, qualifying reason under the Act?

No. An eligible employee may take a total of 80 hours of Paid Sick Leave between April 1 and December 31, 2020, regardless of the reasons that may qualify them for this benefit.

If an employee is entitled to both Paid Sick Leave and Paid Family Leave to care for a child whose school or day care is closed, the combined leave may not exceed 12 weeks, with the first ten days covered by Paid Sick Leave, after which the employee may receive two-thirds of their regular rate of pay for the hours they would have been scheduled to work in the subsequent 10 weeks.

10. What documentation may employers require from employees seeking Paid Sick Leave or Paid Family Leave benefits?

Employers may require documentation from employees to verify their qualifying need for paid leave. For example, this may take the form of:

  • a federal, state or local quarantine or isolation order related to COVID-19;
  • written documentation by a health care provider advising the employee to self-quarantine due to concerns related to COVID-19; or
  • 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.

Moreover, the DOL guidance states that if an employer wishes to take the tax credit for the cost of paid leave benefits provided, it must obtain and retain both documentation verifying the need for leave, as well as the following information:

  • 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; and
  • the source of any quarantine or isolation order, or the name of the health care provider who has advised self-quarantine.

The DOL has also noted that all of the certification requirements under the FMLA remain in effect if an employee is taking leave for any of the previously-existing reasons under the law (e.g., if an employee is taking leave for a serious health condition unrelated to COVID-19).

11. How will employers receive the promised 100% tax credit for Paid Sick Leave and Paid Family Leave benefits paid to employees?

For details on how the tax credit will work, the DOL points employers to newly published guidance from the IRS. This IRS guidance reiterates statements from Congressional lawmakers that employers will receive “100% reimbursement for paid leave” provided to employees pursuant to the FFCRA, including health insurance costs. The guidance also states that employers will “face no payroll tax liability” because they may take “an immediate dollar-for-dollar tax offset against payroll taxes.”

As detailed in the guidance, eligible employers who pay qualifying benefits to employees under the FFCRA will be able to retain an amount of the payroll taxes ordinarily deposited with the IRS for each payroll run, equal to the amount of the qualifying benefits that they paid, rather than deposit them with the IRS.

The payroll taxes that are available for retention include withheld federal income taxes, the employee share of Social Security and Medicare taxes, and the employer share of Social Security and Medicare taxes with respect to all of the employer’s employees.

Further, if there are insufficient payroll taxes to cover the cost of FFCRA benefits paid out, employers will be able file a request for an accelerated refund payment from the IRS.

Additional details on this refund process and other aspects of the tax credit administration are expected from the Department of the Treasury in the coming week.

12. Do employers have to maintain employees’ health benefits while they use FFCRA benefits?

Yes. Employees are entitled to continued group health coverage during any period of Paid Sick Leave or Paid Family Leave on the same terms as if they continued to work. This includes continuing to make any normal contributions to the cost of their health coverage. As noted above, employers may include their portion of health coverage expenses while providing FFCRA leave benefits to employees in the employer’s payroll tax credit calculation.

13. May an employee simultaneously use FFCRA paid leave benefits and their preexisting sick leave or vacation time?

Only if the employer permits, employees may use preexisting paid sick leave or vacation to supplement the 2/3 of normal wages that the employee receives under some FFCRA leaves. However, an employer may not require employees to use other paid sick leave or vacation time to supplement their FFCRA benefits.  

14. May an employer who is part of a multiemployer bargaining agreement satisfy its obligations under FFRCA through contributions to a multiemployer fund, plan or program?

Yes, if the fund, plan or program allows employees to obtain the benefits provided under the law.

15. May an employee take Paid Sick Leave or Paid Family Leave intermittently while working remotely (i.e., teleworking)?

Yes, if allowed by the employer and the employee is unable to telework for a qualifying reason under the FFCRA.

16. May an employee take Paid Sick Leave or Paid Family Leave intermittently if they are working on site?

Only if the leave is needed to care for a child whose school or day care is closed or whose child care provider is unavailable due to COVID-19 related reasons, and the employer agrees. For employees taking Paid Sick Leave for any other qualifying reason, they must use the paid leave in a continuous block.

17. If an employer closes its worksite, are its employees eligible for Paid Sick Leave or Paid Family Leave benefits?

No. If the employer shuts down and stops paying employees either before or after April 1, its employees are not eligible for benefits under the FFCRA. They would be eligible for unemployment benefits.

18. If an employee has already begun receiving Paid Sick Leave or Paid Family Leave benefits and the employer closes the worksite, is the employee eligible to continue to receive benefits?

No. The employer is only required to provide the benefits through the date the worksite is closed. After that, the employee is eligible for unemployment benefits.

19. If an employer’s worksite remains open but it furloughs an employee after April 1 due to lack of work, is the employee eligible for Paid Sick Leave or Paid Family Leave benefits?

No. If an employer furloughs an employee because it does not have enough work or business, the employee is not entitled to the benefits. The employee would be eligible for unemployment benefits.

20. May employees whose hours are reduced use Paid Sick Leave or Paid Family Leave for hours they are no longer scheduled to work? 

Not unless the employee’s hours were reduced for a qualifying reason. If an employee’s hours are reduced due to lack of work or a work site closure, the employee would not be entitled to benefits under the FFCRA. In addition, as described above, FFCRA benefits may only be used intermittently in limited circumstances, and only when approved by the employer.

21. May employees collect unemployment benefits for time they are not working but receiving Paid Sick Leave or Paid Family Leave benefits?

No.

Questions That Remain Unanswered

Despite the welcome clarification from the DOL on various aspects of the law, some questions remain unanswered. One question of particular concern is whether employees subject to state or local “stay at home” orders and who cannot work remotely are entitled to Paid Sick Leave benefits under the FFCRA. The DOL guidance does not address this crucial question. Information available from the CDC and Department of Health and Human Services (“HHS”) seems to suggest the answer is “no.” Under current CDC and HHS definitions, “isolation” is used to separate ill persons who have a communicable disease from those who are healthy. “Quarantine” is used to separate and restrict the movement of well persons who may have been exposed to a communicable disease to see if they become ill. Neither definition specifically covers individuals who are healthy but homebound due to state or local mandate. Thus, it is unclear whether these individuals are eligible for the 80 hours of Paid Sick Leave. Undoubtedly, many of them may expect to be covered based on all of the popular media reporting about the new law.

FFCRA Employee Notice Requirements

The FFCRA requires employers to “post and keep posted, in conspicuous places on the premises of the employer where notices to employees are customarily posted” a notice prepared by the Secretary of Labor of the requirements described in the FFCRA. On March 25, the DOL published the required notice, in the form of a poster, which can be accessed here. This should be posted by the FFCRA’s effective date, April 1.

  • Along with the poster, the DOL has provided Q&As related to the posting requirement, which can be accessed here. Highlights of this guidance include:
  • An employer “may satisfy” the posting requirement by emailing or direct mailing this notice to employees, or posting the notice on an employee information internal or external website. Notably, neither the statute nor the DOL guidance requires anything other than physically posting the notice on the employer’s premises.
  • As with other required postings, the notice must be posted in all locations where employees report to work.
  • At this time, the notice need not be posted in any languages other than English.

The notice need only be provided to current employees, not applicants or former employees, even if recently laid off.

More Guidance Expected

Many other questions remain about how the new Paid Family Leave benefits integrate with existing FMLA rules, how the reinstatement rules will be interpreted under the new family leave provisions, and which employees in the health care industry may be exempted from coverage, among others.

The DOL understands that employers have many questions about these complex new requirements and has actively solicited questions from the employer community. PPSC attorneys are involved in submitting questions and requests for further DOL clarification. The DOL is continuing to update its guidance. The DOL has also stated it will be issuing regulations in April.

In addition, the Department of the Treasury is expected to issue guidance to employers regarding the payroll tax credits and the process for applying for an expedited refund for the costs of FFCRA benefits that exceed available payroll tax credits.

PPSC will continue to provide updates as new guidance is published.

What This Means

The new DOL guidance provides some welcome clarity on critical questions about the FFCRA. However, several questions remain, and we hope the DOL's continuing clarification and guidance will assist employers who must begin grappling on April‌ 1st with the implementation of the new Paid Sick Leave and Paid Family Leave requirements.

PPSC has issued this E-Update to provide information on new legislation as a courtesy. It contains general information and does not constitute legal advice, nor does it create an attorney-client relationship. Application of any law is always fact-specific, so you should consult with legal counsel before taking any actions based on the new law.

AUTHORS
   
     
Denise Brucker Fred Plevin Mike Sullivan

For more information about this or any other issue impacting your business, please contact any of the above attorneys, or or any other Paul, Plevin attorney, by calling (619) 237-5200.