As the spread of COVID-19 continues to upend our day-to-day routines and creates new questions for employers and employees alike, the U.S. Department of Labor (DOL) has issued and updated guidance on the Families First Corona Response Act (FFCRA), which became effective on April 1, 2020. The FFCRA provides for two types of paid leave: leave under the Emergency Paid Sick Leave Act (EPSLA) and leave under the Emergency Family and Medical Leave Expansion Act (EFMLEA). As a follow-up to our recent blog post, which explored the new legislation in-depth, this article identifies and explains the key points in the DOL’s most recent guidance on the FFCRA’s leave provisions.
Which Employers Must Comply with FFCRA’s Paid Leave Provisions?
Employers who have fewer than 500 employees at the time an employee requests to take leave are governed by the FFCRA. In calculating the number of employees for coverage purposes, employers must take into account full-time and part-time employees, employees who are already on leave, temporary employees who are jointly employed with another employer, and day laborers. Independent contractors are not considered employees for purposes of calculating the 500-employee threshold. Generally, two or more entities are separate employers for purposes of the 500-employee threshold, unless the entities meet the integrated employer test under the Family and Medical Leave Act (FMLA), in which case employees of all entities that make up the integrated employer count towards the 500-employee threshold. Employers should note that a different calculation is used to calculate employees under the CARES Act.
The DOL’s guidance clarified two important exemptions to the FFCRA’s leave provisions: the small business exemption and the healthcare provider and emergency responders exemption.
Small Business Exemption
A business with fewer than 50 employees is exempt from the paid sick leave provisions of the FFCRA if it can show that providing such leave would jeopardize the viability of the business as a going concern. The DOL has clarified that such a business may claim this exemption if an authorized officer of the business has determined that one of the following is true:
- The provision of paid leave under the EPSLA and the EFMLEA would result in the small business’ expenses and financial obligations exceeding available business revenues and would cause the business to cease operating at a minimal capacity;
- 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; 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(s) requesting leave under the FFCRA, and these labor or services are needed to the business to operate at a minimal capacity.
(We note that there are also special provisions for small employers with fewer than 25 employees).
Health Care Provider and Emergency Responder Exemption
The DOL has clarified that, to determine employees who may be exempt from the FFCRA’s paid leave provisions, a “health care provider” is anyone employed at a doctor’s office, hospital, health care center, clinic, 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, pharmacy, or any similar institution, employer, or entity, including a permanent or temporary institution, facility, location, or site where medical services are provided that is similar to such institutions. The definition also includes those employed by entities that provide medical services, produce medical products, or are otherwise involved in the making of COVID-19 related medical equipment, tests, drugs, vaccines, diagnostic vehicles, or treatment, and individuals employed by an entity that contracts with any of the above institutions, employers, or entities to provide services or to maintain the operation of the facility. “Health care provider” also includes any individual that the highest official of a state or territory determines to be a health care provider necessary for that state or territory’s response to COVID-19.
An “emergency responder” who may be excluded from paid sick leave or expanded family and medical leave by his or her employer under the FFCRA is an employee who is necessary for the provision of transport, care, health care, comfort, and nutrition of such patients, or whose services are otherwise needed to limit the spread of COVID-19. This definition includes military or national guard, law enforcement officers, correctional institution personnel, firefighters, emergency medical services personnel, physicians, nurses, public health personnel, emergency medical technicians, paramedics, emergency management personnel, 911 operators, public works personnel, and persons with skills or training in operating specialized equipment or other areas needed to provide aid in a declared emergency, as well as individuals who work for such facilities employing these individuals and whose work is necessary to maintain the operation of those facilities. Like the health care provider definition, “emergency responder” also includes any individual that the highest official of a state or territory determines is an emergency responder necessary for that state or territory’s response to COVID-19.
Which Employees Are Entitled to Leave and How Do You Calculate Hours and Wages Due to Qualifying Employees?
The DOL’s guidance clarifies that employers that closed their worksites prior to the effective date of the FFCRA are not required to provide paid leave under the Act. This is so whether the worksite was closed because of lack of business or to comply with a federal, state, or local directive. The same is true for employers who close worksites after the effective date of the Act. An employee who is on paid leave pursuant to FFCRA at the time the employer closes the worksite is entitled to paid leave up to the date the worksite was closed, but not after that date. Employees who are furloughed because there is not enough work for them are not entitled to paid sick leave or expanded family and medical leave under the FFCRA.
Employees are not entitled to other leave provided by the employer (including paid sick leave or vacation time) at the same time that they take leave under the FFCRA, unless the employer agrees to allow it. Employers are permitted to supplement or adjust the pay mandated under the FFCRA with paid leave under its own policies; however, the employee must choose to use the existing leave time. Employers will not be entitled to tax credits for any supplemental amounts they provide employees.
Employers should also be cognizant of the different eligibility requirements for employees requesting leave under the EPSLA and the EFMLEA. While employees are eligible for leave under the EPSLA regardless of length of employment, only those employees who have been employed for 30 calendar days qualify for leave under the EFMLEA. Employers should also be aware that EFMLEA leave is subject to the same time limitations as other leave taken under the FMLA. In other words, employees are entitled only to a total of 12 workweeks of leave during the 12-month period the employer uses for FMLA leave purposes. Thus, if an employee has already exhausted the 12-workweek leave prior to the effective date of the FFCRA, the employee is not entitled to additional leave under the EFMLEA even if he or she would otherwise qualify for the leave. Such an employee would still be eligible for ten workdays of paid leave under the EPSLA regardless of how much leave he or she has taken under the FMLA.
While calculating paid leave hours is relatively straightforward when it comes to full-time employees, those same calculations have proven more complicated for part-time employees and employees who regularly work overtime hours. The DOL guidance sheds some light on these issues.
Part-time employees who qualify for paid leave are entitled to leave equaling the average number of hours the employee works in a two-week period. Thus, leave hours are calculated based on the number of hours the employee is normally scheduled to work. A six-month average may be used to calculate daily hours if the employee’s schedule varies. (If the employee has not been employed for six months and there was no agreement at the time the employment began as to how many hours the employee would work, the average hours per day the employee was scheduled to work over the entire term of employment can be used to calculate leave hours.)
Both the EFMLEA and the EPSLA require employers to take into account overtime hours that employees are scheduled to work. Importantly, however, the DOL guidance makes clear that the 80 hour cap set on paid leave taken under the EPSLA applies even to those employees who were scheduled to work overtime. In other words, to the extent that an employee is paid for more than 40 hours during the first week of leave, his or her pay for the second week of leave cannot be more than the difference between 80 hours and the first week’s pay; the total number of hours paid is capped at 80.
The amount of pay to which a qualified employee is entitled to depends on the type of leave and the reason the employee is taking leave.
With respect to paid sick leave under the EPSLA:
- For each hour of leave a qualifying employee takes because he or she: (1) is subject to a federal, state, or local quarantine or isolation order related to COVID-19; (2) has been advised by a health care provider to self-quarantine due to concerns related to COVID-19; or (3) is experiencing symptoms of COVID-19 and seeking a medical diagnosis, the employee is entitled to the greater of: (1) his or her regular rate of pay; (2) the federal minimum wage in effect under the FLSA; or (3) the applicable state or local minimum wage. Under those circumstances, the employee is entitled to a maximum of $511 per day ($5,110 over the two-week paid sick leave period).
- For each hour of qualifying leave an employee is taking because he or she: (1) is caring for an individual who is subject to a federal, state, or local quarantine or isolation order related to COVID-19 or an individual who has been advised by a health care provider to self-quarantine due to concerns related to COVID-19; (2) caring for a child whose school or place of care is closed or whose child care provider is unavailable to due COVID-19 related reasons; or (3) is experiencing any other substantially similar condition that may arise (as specified by the Secretary of Health and Human Services) is entitled to compensation at a rate of two-thirds of the greater of the amounts above. In this case, the employee is entitled to a maximum of $200 per days ($2,000 over the two-week paid sick leave period).
Importantly, an employee cannot take paid sick leave more than one time under the EPSLA. In other words, if an employee takes ten days of paid sick leave for a qualifying reason (or combination of qualifying reasons), that employee is not entitled to an additional ten-day leave period for a new qualifying reason under the Act.
Qualifying employees who take leave under the EFMLEA may opt to take paid sick leave under the EPSLA, or may substitute accrued vacation leave, personal leave, or medical or sick leave provided under the employer’s policy for the first ten days of the leave period. For the following ten weeks, the employee is entitled to pay at no less than two-thirds of his or her regular rate of pay (which must be at or above the federal minimum wage or applicable state or local minimum wage). EFMLEA leave pay is capped at $200 per day ($12,000 for the twelve-week leave period).
The DOL has also provided guidance regarding intermittent leave. For employees who are teleworking and unable to work their normal schedules of hours due to qualifying reasons under the paid leave provisions, the DOL encourages employers and employees to take paid sick leave intermittently. Intermittent leave can be taken in any time increment (for example, periods of 90-minute leave) as long as it is agreed to by the employer.
Importantly, however, qualifying employees who are working at their regular worksites must take paid sick leave in full-day increments. Further, an employee working at his or her regular worksite may not take leave intermittently if the leave is for any of the following qualifying 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 either 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 (5) the employee is experiencing any other substantially similar conditions specified by the Secretary of Health and Human Services.
If agreed to by an employer, an employee is permitted to take leave under the EFMLEA intermittently.
Employers that provide leave pursuant to the FFCRA’s paid leave provisions are eligible for reimbursement for the costs of that leave by way of refundable tax credits. To the extent that employers intend to claim those tax credits, they should be diligent in retaining the appropriate documentation and records and consult IRS guidance on this subject. (Note that an employer is not required to provide leave to an employee who has not provided materials sufficient to support the applicable tax credit.)
If you have any questions regarding this blog, please feel free to contact an attorney in the Gibbons Employment & Labor Law Department.