Paid Leave Rules Under the FFCRA
On April 2, 2020, the US Department of Labor brought into effect their temporary regulation governing the new paid family and sick leave requirements introduced under the Families First Coronavirus Relief Act (FFCRA). Below I will discuss the five critical issues that your business needs to know in order to comply with the rule. Failure to comply with the FFCRA is treated as a violation of federal minimum wage laws. However, the DOL is currently providing a 30-day grace period where businesses who fail to properly comply with the law will be offered counselling in lieu of a fine.
Do the new paid family and sick leave policies apply to my business?
If you are an employer of fewer than 500 employees (excluding properly classified independent contractors, freelancers, and family members’ of the employer engaged in agricultural activities) your company is subject to the requirements. There is a potential exemption for businesses with fewer than 50 employees for the extended paid child care leave portions of the FFCRA, but that is all. When determining employment levels, the law looks at the amount of employees you have on the payroll at the time that the leave request is made. The paid leave requirements of the FFCRA are in effect between April 1-December 31,2020.
Employers must post and keep a notice on their premises informing employees of their rights under the FFCRA.
What employees are covered?
All employees, whether they are full or part time, are eligible for paid sick leave. Any employee who has worked more than 30 calendar days for your business is entitled to the expanded family and medical leave provisions.
What are the reasons for the leave that would trigger my obligation to provide pay?
There are six (6) circumstances under which you would have to provide paid leave to a covered employee:
(1) the employee is subject to a government quarantine or isolation order related to COVID-19;
(2) the employee has been advised to self-quarantine by their healthcare provider due to concerns about the disease
(3) the employee believes they may be ill with COVID-19 and are seeking a medical diagnosis;
(4) the employee is caring for an individual who has received quarantine order or advisement because of COVID-19;
(5) the employee must care for a son or daughter (including incapacitated children over 18 or a child under guardianship) whose school, day care, or typical child care provider, has closed due to the outbreak;
(6) any substantially similar circumstance as determined by the Secretaries of HHS, Treasury, and DoL.
These reasons are subject to certain limitations. Employees who are taking sick leave because of a government order (reason #1) are only entitled to paid leave if, without the order being in place, they would otherwise be able to perform work remotely or at the place of business. The temporary rule also states that, if as a result of the isolation order the employer doesn’t have anything for the employee to do, that employee is not entitled to paid sick leave under the FFCRA.
The employee is only entitled to paid sick leave because of advice from a healthcare provider (reason #2) if they cannot otherwise perform their work duties remotely. If an employee is taking paid leave in order to obtain a medical diagnosis (reason #3), they are only entitled to compensation for the time spent making, waiting for, or attending an appointment for a COVID-19 test. Employees who are taking paid leave to care for an individual who has been ordered or advised to quarantine (reason #4), must have a close personal relationship to the infected individual (ex. a family member, someone they live with, or a romantic partnership). Additionally, an employee is only entitled to paid leave under the “taking care of” provisions (reasons #4 &5), if they employer would otherwise have work for the employee to perform either at the place of business or via telework. Employees who are taking paid leave in order to care for a son or daughter (reason #5), are only entitled to compensation if no other “suitable person” is available to care for the child during the period of such leave. However, who constitutes a suitable person is not defined in the regulation.
How much needs to be paid out?
There are two components to the FFCRA: two weeks of fully Paid Sick Leave, followed by ten weeks of partially paid Expanded Family and Medical Leave. The amount of Paid Sick Leave will depend on whether the employee is full-time or part-time and whether they are taking personal sick leave (reasons #1-3) or family leave (reasons #4-6). An employee is considered “full time” if they are regularly scheduled to work 40 hours a week, or over the past 6 months (or less if they are a newer hire) have worked an average of 40 hours a week. Full time employees are entitled to 80 hours of paid leave. Part time employees are entitled to the amount of hours they are regularly scheduled for during a two week period. If the part time employee does not have a regular schedule, they are entitled to 14X the average amount of daily hours they have worked over the past six months. If the part-time employee has worked less than six months, then they are entitled to 14X the average amount of daily hours they have worked for the duration of their employment.
If the employee is taking personal sick leave (reasons #1-3) they are entitled to the full amount of their regular hourly rate, including tips and commission, for the duration of their covered paid leave. This is capped at the amount of $510/day and $5110 in aggregate. If the employee is taking family sick leave (reasons #4-6), the amount is capped at $200/day for 10 days and $2000 in aggregate.
In addition to this two week period, an employee is entitled to take an additional ten weeks of “Expanded Family and Medical Leave”, between April 1,2020 and December 31, 2020, in order to care for a son or daughter whose normal child care is cancelled because of COVID-19. This EFML is paid at two-thirds of the regular rate of the employee times the scheduled number of hours for the day, with a daily cap of $200 and an aggregate cap of $10K. Scheduled number of hours is determined either by: first, the employee’s schedule; or second, the average number of hours per day they worked over the past six months; or third, the average agreed upon or actual average number of hours the employee worked per day during the duration of their employment. However, if an employee has already taken time off under the existing Family and Medical Leave Act during the past twelve month period, that time off is calculated against their benefits under the EFML.
An employee may take their total twelve week allotment of leave intermittently, but only with the agreement of their employer. In addition to the paid leave provisions, the FFCRA also requires employers to maintain the same healthcare coverage of employees who are on leave, as they would receive if they were working normally.
The two weeks of coverage for Paid Sick Leave, are in addition to any other paid sick leave the employee is otherwise entitled to, or other paid leave policies that the employer had in effect prior to April 1, 2020.
What are the exemptions under the FFCRA?
Over the past several weeks there has been discussion of exemptions for businesses with fewer than 50 employees for the paid leave requirements. However, this exemption only extends to the additional 10 week of paid leave for taking care of a son or daughter whose child care has been impacted by the COVID-19 outbreak. It does not extend to the first two weeks of full Paid Sick Leave requirements. This exemption is granted, if an officer of the business determines that providing the additional 10 weeks of partial paid leave would: (1) create a financial hardship for the business such that it could not maintain operations, (2) the employee is so critical to the business that their leave would endanger the financial health or operational capabilities of the business, or (3) there are not enough available workers at the time and place needed, because of the employee(s) requesting the EFML, to perform the labor necessary for the business to operate at minimal capacity. A business must document that a determination has been made based on one of these criteria and retain those records in its files. However, no documentation needs to nor should be sent to the Department of Labor.
What support is the government providing to help my business pay for these new benefits?
The Department of Treasury has instituted a system of advancement payment of tax credits to employers. Employers can automatically claim and retain the value of any Paid Sick Leave or Expanded Family and Medical Leave benefits, up to the daily and aggregate caps, against any payroll taxes that they would otherwise pay to the IRS in a given quarter. If the tax credit from payment of FFCRA benefits exceeds the amount of payroll taxes that the employer would otherwise pay to the IRS, such excess is treated as an overpayment and refunded to the employer. Employers should file Form 7200 with the IRS to receive these funds.
Gregory Parnas, Esq., is an attorney based in Washington, DC and a principal of the DC Beverage Law Group. He specializes in working with breweries and other craft beverage producers to meet their needs in the areas of alcohol regulation, trademarks, corporate governance, and contract law. He can be reached by e-mail at Greg.Parnas@dcbeveragelaw.com
Disclaimer: This article does not constitute legal advice nor create any type of attorney client relationship with the author. Please consult with your CPA and legal counsel if you have any further questions.