The U.S. Department of Labor (DOL) issued the first in what is anticipated to be a series of guidance regarding the leave provisions contained in the Families First Coronavirus Response Act (FFCRA). In our previous alert, we explained that the FFCRA creates two forms of leave—Emergency Paid Sick Leave (EPSL) and FMLA-Public Health Emergency Leave—for eligible employees of private-sector employers with fewer than 500 employees and certain public agencies regardless of size.
On March 24, 2020, the DOL issued written guidance for employers and employees, and also published a set of Frequently Asked Questions (FAQs), which it updated on March 27. Together, these documents provide insight on various issues with which employers have been grappling over the last week related to FFCRA leaves. The DOL stated that such guidance will continue to be issued on a rolling basis. The DOL also indicated that it will promulgate regulations on an unspecified date in April 2020. In addition, this week, Congress passed the Coronavirus Aid, Relief, and Economic Security Act (CARES Act), which made minor changes to the FFCRA leave provisions.
In light of the DOL guidance and CARES Act amendments, Ballard Spahr updated the model FFCRA policy posted in our COVID-19 Resource Center.
The DOL clarified that the FFCRA leave provisions will take effect on April 1, 2020, a day earlier than the 15-day deadline set in the statute.
500 or Fewer Employees
The DOL clarified that the calculation of the 500-employee threshold under the FFCRA should be done “at the time your employee’s leave is to be taken.” Based on this language, an entity must determine whether it has 500 employees at the time any individual employee is to take leave under the FFCRA. For businesses hovering around the 500-employee mark and considering layoffs, be advised that the 500-employee threshold appears to be a moving target. Thus, any contemplated layoffs that would bring the number of employees below 500, either before or after the April 1 effective date, would trigger FFCRA coverage.
Another question asked by many employers is whether all entities in the corporate family, or employees of staffing entities, are counted when determining the 500-employee threshold. The FAQs explain that two tests are relevant, but not for both types of leave. For EPSL, the test is whether the entities are “joint employers” under the Fair Labor Standards Act (FLSA). For FMLA-Public Health Emergency Leave, there are two tests – the joint employer test under the FLSA or the “integrated employer” test under the Family and Medical Leave Act (FMLA). According to the FAQs, the integrated employer test does not apply to EPSL.
The FLSA’s joint employer test was just amended. In January 2020, the DOL issued final regulations re-defining the test, which took effect on March 16, 2020.
As a result of the differences in the two leave provisions and the tests for multiple entities, it is conceivable that an employer could be deemed an integrated employer for FMLA-Public Health Emergency Leave, but not a joint employer for EPSL. This could lead to situations in which employees of some entities in a corporate family (i.e. those with fewer than 500 employees) are eligible for EPSL, but not for FMLA-Public Health Emergency Leave.
Calculation of Leave Hours
Under the FFCRA, full-time employees are entitled to 80 hours of EPSL. Part-time employees are entitled to the amount of leave equal to their hours in a two-week period. The FAQs provide guidance on how entities should calculate the amount of leave.
According to the DOL, a part-time employee’s leave entitlement is calculated by determining their hours over a two-week period based on the normal number of hours the employee is scheduled to work. If unknown, or a part-time employee’s hours vary week to week, an employer should use a six-month average to determine the daily hours, which yields the number of hours per day the employee can use for the two-week period. The same number of daily hours would be used for the employee’s FMLA-Public Health Emergency Leave entitlement. This approach also is used to determine a full-time employee’s entitlement when the employee works a variable schedule.
For an employee who has not been employed for six months, the employer should use the number of hours in the schedule agreed upon between the employee and employer upon hiring. Absent such an agreement, the employer should calculate the hours of leave based on the average daily hours for that employee over the entire term of employment.
An employee may be entitled to FFCRA leave pay for more than 40 hours in a workweek, if the employee normally would be scheduled for more than 40 hours in a workweek, including overtime hours. The DOL offers an example under which an employee is paid 50 hours of EPSL in a single workweek. However, there is no requirement for payment of EPSL hours at a premium rate.
The DOL also clarified that the employee’s “regular rate of pay,” used for purposes of FFCRA leave, is the average rate of pay over the six-month period prior to the date on which the employee takes leave. In other words, the rate could change if the employee’s pay rate changes, including presumably any pay reductions triggered by the COVID-19 pandemic. Commissions, tips, or piece rates also will be included in the calculation. Employers also can compute the rate of pay by adding all compensation that is part of the regular rate and dividing by all hours actually worked in the period.
Existing Employer Leave Policies and Concurrent Usage
The FAQs clarify that EPSL is not to be denied or reduced based on leave provided by the employer, even if for an EPSL-qualifying reason. According to the DOL, the FFCRA created “a new leave requirement on employers” effective April 1, 2020.
In addition, the FAQs explain that employees cannot use both FFCRA leave and employer-sponsored paid leave concurrently. They must choose one leave type or the other. Employers, however, may agree to allow employees to supplement FFCRA paid leave with employer-sponsored leave to bring employees up to 100 percent of their customary pay, but employers may not require employees to do so. If an employer allows FFCRA leave to be supplemented with employer-sponsored leave, only the FFCRA portion is subject to the tax credit (See Tax Credits below).
Paid Leave Prior to April 1, 2020
The DOL clarified that FFCRA leave is not retroactive. As a result, any paid leave given to employees prior to the effective date of the FFCRA (April 1, 2020), which would have otherwise qualified under the FFCRA leave provisions, will not be counted toward the leave requirements under FFCRA. As such, employees will be entitled to their full entitlement of FFCRA leave as of April 1, 2020.
The DOL explained that employees should provide written notice of the need for leave. Notice must include: the employee’s name; qualifying reason for leave; statement that the employee is unable to work, including telework, for that reason; and the date(s) for which leave is requested.
In addition, employees must provide documentation to substantiate the need for leave and the qualifying reason. For EPSL, documentation will depend on the reason for leave, but may be the health official’s quarantine/isolation order for the employee; or written documentation from the employee’s health care provider advising self-quarantine. For FMLA-Public Health Emergency Leave, documentation may consist of a notice published by the government, school or daycare of the closure, on a website or in the newspaper, or an email from the school or place of care. In addition, the usual FMLA medical certification requirements continue to apply for reasons such as the employee’s own serious health condition or caring for a family member with a serious health condition.
Intermittent or reduced work schedule leave, according to the DOL, is not permitted under the FFCRA, although employers may allow it by policy. In such cases, the employer is free to define the leave increment (e.g., full day). The DOL stated, however, that if an employee uses part of their EPSL entitlement for one reason, returns to work, and then needs the balance for another reason, it must be available to the employee, suggesting that two continuous blocks of EPSL (in no less than full day increments) are allowed if for separate reasons. The DOL did not discuss whether FMLA-Public Health Emergency Leave could be used in the same way.
Unless an employee is teleworking, once the employee begins taking leave for an EPSL-qualifying reason, the employee must continue to take the emergency paid sick leave until the employee either (1) uses the full amount of paid sick leave or (2) no longer has a qualifying reason for taking paid sick leave.
If an employee is not teleworking, employers may permit employees to take either emergency paid sick leave or expanded family and medical leave intermittently if the employee is taking paid sick leave to care for their child whose school or place of care is closed, or whose child care provider is unavailable, because of COVID-19 related reasons. Again, if the employer permits intermittent leave for employees under these circumstances, the employer and employee should agree on the intermittent schedule and/or the length of the increments to be taken.
Layoffs and Furloughs
The DOL clarified common questions related to FFCRA leave as it relates to employees who have been or may be laid off or furloughed.
The DOL explained that if an employer closed its worksite (either before or after April 1, 2020), but prior to the employee requesting leave under FFCRA, the employee is not entitled to leave under FFCRA. Additionally, the guidance states that if the employer closes its worksite during a time when an employee is on leave provided under FFCRA, the employee will no longer be eligible for FFCRA. Further, in the case of a furlough, an employee will not be entitled to leave under FFCRA, even if the employer remains in operation. Finally, if an employer reduces an employee’s hours, the employee may not use leave under FFCRA to supplement for the hours the employee is no longer scheduled to work.
In most, if not all, of the above cases, an employee will likely become eligible for unemployment compensation under applicable state and federal law (as amended by the CARES Act).
The DOL also clarified that employers would not receive a tax credit for amounts they pay over the required payment amounts set forth in the FFCRA leave provisions. For example, if an employer supplements the benefits provided under the FFCRA leave provisions so that its employees receive their full compensation, the employer will not be permitted to take a tax credit for the amounts paid over that which the FFCRA requires.
CARES Act Amendments
The CARES Act provides for a number of small changes and technical revisions to the FFCRA. One is noteworthy -- a provision was added regarding eligibility of rehired employees. An employee will be considered employed for at least 30 calendar days, and therefore eligible for leave under FFCRA, if the employee was: (1) laid off by the employer not earlier than March 1, 2020; (2) had worked for the employer for not less than 30 of the last 60 calendar days prior to the employee’s layoff; and (3) was rehired by the employer thereafter.
Some issues remain unanswered by the DOL’s limited guidance. Employers are wondering how to treat spouses employed by the same employer – are they entitled to one leave entitlement or two? Another common question is whether the FFCRA creates a new FMLA entitlement, or are employees entitled only to the balance of their pre-existing 12-week entitlement under the employer’s leave year rules? What happens to eligibility for FMLA-Public Health Emergency Leave when the school year ends (or on school holidays, like Memorial Day)? We hope these and other important issues are addressed in the DOL’s rolling guidance or regulations.
Ballard Spahr’s Labor and Employment attorneys are well-versed in the FFCRA and following developments hour by hour. Please contact us if we can assist you in understanding the FFCRA and measures to comply with the leave entitlements.
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This alert is a periodic publication of Ballard Spahr LLP and is intended to notify recipients of new developments in the law. It should not be construed as legal advice or legal opinion on any specific facts or circumstances. The contents are intended for general informational purposes only, and you are urged to consult your own attorney concerning your situation and specific legal questions you have.