On March 24, 2020, the federal Department of Labor (“DOL”) published a Frequently Asked Questions (“FAQ”) document providing guidance relating to the Families First Coronavirus Response Act (“FFCRA”), which provides for both emergency paid sick leave and emergency family and medical leave in response to the COVID emergency. The DOL will also be implementing FFCRA regulations in the near future. This Alert summarizes the key points of the DOL’s March 24 Guidance.
Importantly, the DOL’s Guidance does not address any of the employer tax benefits of the FFCRA, including the payroll tax credits that are provided for in the law.
Effective Date. The FFCRA is effective on April 1, 2020 and applies to leave taken between April 1, 2020, and December 31, 2020.
The 500-Employee Threshold. The FFCRA applies only to businesses with fewer than 500 employees, and to most public entity employers. In making this calculation, the DOL states that employers should use the following guidelines:
- A corporation is typically considered to be a separate employer, even where one corporation has an ownership interest in another corporation. However, if two corporations are found to be either a joint employer under the FLSA, or an integrated employer under the FMLA, then the common employees must be counted towards the 500 employee threshold.
- Employees on a leave of absence are included in the count.
- Temporary employees jointly employed with another company are included in the count.
- Day laborers supplied by a temporary agency are included in the count if there is a continuing employment relationship.
- Independent contractors are excluded from the count.
Business Jeopardy Exemption. The FFCRA states that businesses with fewer than 50 employees may qualify for an exemption if complying with the law would jeopardize the viability of the business as a going concern. The “business jeopardy” exemption must be granted by the DOL on a case-by-case basis. The DOL has not yet determined the criteria that it will use to implement this exemption. For now, the DOL requests that an employer seeking the exemption should “document” the reasons for the exemption. The DOL requests that employers not send it any materials when seeking an exemption.
Employee Eligibility. Eligible employees include any employees employed by the employer for at least 30 calendar days before the date the leave begins. Any time spent as a temporary employee is included in this calculation.
Calculating Paid Sick Leave Hours for Part-Timers. Part-time employees must be provided with two-weeks of paid sick leave based on the number of hours the employee was scheduled to work during the leave. For part-timers who work a variable schedule, the employer should use a six-month average of hours work to determine the employee’s average daily hours worked.
Sick Leave Granted Before April 1, 2020. An employer cannot deny an eligible employee a qualifying leave after April 1, 2020 (the effective date of the FFCRA), simply because the employer granted an employee sick leave before April 1, even if the earlier leave was related to COVID-19. The FFCRA creates an entirely new leave right that is effective on April 1, 2020.
Considering Overtime Hours. Overtime hours must be included when determining the pay due to employees under the FFCRA. However, the Emergency Paid Sick Leave Act only requires paid sick leave up to 80 hours over a two-week period. Thus, for example, if an employee was scheduled to work 50 hours, the employee would be entitled to 50 hours of paid sick leave for that week. But, in the second week, that same employee would only be eligible for 30 hours of paid sick leave (up to a total of 80 hours). Further, the Guidance confirms that employers do not need to pay any premium pay for overtime hours as either paid sick leave or paid family and medical leave.
Hourly Rate for Paid Sick Leave. The pay rate required for emergency paid sick leave is keyed to the higher of the following amounts: (1) the employee’s regular rate of pay; (2) the federal minimum wage; or (3) the applicable state or local minimum wage. However, the actual hourly rate to be paid depends on the specific qualifying reason for the leave, and is subject to both daily and aggregate caps depending on the reason for the leave.
FFCRA Regular Rate. The FFCRA regular rate is the employee’s average regular rate for the six-month period before the start of the leave. The regular rate includes commissions, tips, and piece rates.
Only 80 Hours of Paid Sick Leave. An employee can only take 80 hours of paid sick leave, even if the employee experiences multiple qualifying reasons.
30-day non-enforcement period. The announced 30-day non-enforcement period runs from March 18 to April 18. Under this policy, the DOL will not bring an enforcement action against any employer for violations of the FFCRA so long as the employer has acted reasonably and in good faith to comply with the Act. The DOL will instead focus on compliance assistance during the 30-day period.
We will continue to provide updates on this important new law as guidance becomes available. In the meantime, should you have any questions about the FFCRA and its relevance to your business, please contact us.
This AALRR publication is intended for informational purposes only and should not be relied upon in reaching a conclusion in a particular area of law. Applicability of the legal principles discussed may differ substantially in individual situations. Receipt of this or any other AALRR presentation/publication does not create an attorney-client relationship. The Firm is not responsible for inadvertent errors that may occur in the publishing process.
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