On March 18, 2020, in response to the COVID-19 pandemic, the President signed into law the Families First Coronavirus Response Act (FFCRA), which imposes emergency sick leave and emergency family and medical leave requirements on many employers. In a previous post, we answered key questions for private employers about the FFCRA leave requirements.
Since then, the Department of Labor has issued a series of guidance documents for employers on how to apply the FFCRA leave provisions. The newly enacted Coronavirus Aid, Relief, and Economic Security Act (CARES Act) also contains some minor revisions to the FFCRA. In light of this new information and the upcoming compliance deadline, below are answers to more key questions for private employers about how to manage the leave requirements under the FFCRA. For specific applications of these new requirements to your workforce, when in doubt, consult experienced employment law counsel.
When do the new paid leave laws go into effect?
April 1, 2020. The paid sick leave requirements are outlined in the section of the FFCRA known as the Emergency Paid Sick Leave Act. The new family and medical leave requirements are set forth in the section entitled the Emergency Family and Medical Leave Expansion Act. Both of these laws state that they are to take effect “not later than 15 days after the date of enactment,” which would have been April 2, 2020, given the March 18, 2020 enactment date. Nevertheless, the DOL guidance makes clear that the effective date for the new leave laws is April 1, 2020.
What if my company paid for leave taken before April 1? Does that count?
No. The DOL guidance states that the FFCRA applies to leave taken between April 1, 2020, and December 31, 2020.
How is the “fewer than 500 employees” threshold calculated?
The FFCRA only applies to private employs if they have fewer than 500 employees. A frequent question since the FFCRA’s enactment has been how this threshold is calculated.
According to the DOL guidance, the following workers should be included in the employee headcount:
- full-time and part-time employees in the U.S. and its territories
- employees on leave
- temporary employees who are jointly employed by the company and another employer
- day laborers supplied by a temporary agency
Independent contractors are not considered.
The DOL guidance also states that the “joint employer” test will apply to determine whether the headcounts of separate companies should be combined for purposes of the threshold. Whether a joint employer relationship exists between two companies is a fact-specific analysis. According to the DOL, a four-factor balancing test should be applied, considering whether the potential joint employer:
- hires or fires the employee
- supervises and controls the employee’s work schedule or conditions of employment to a substantial degree
- determines the employee’s rate and method of payment
- maintains the employee’s employment records
The amount of weight that a company should give each factor will vary depending on the particular circumstances.
In addition, the DOL guidance notes that the “integrated employer” test under the FMLA also applies. Under that test, the following factors apply to evaluate whether separate entities are sufficiently related so that their headcounts should be combined:
- common management
- interrelation between operations
- centralized control of labor relations
- degree of common ownership/financial control
Determining whether separate entities meet the joint employer or integrated employer tests requires careful analysis of the facts and circumstances related to the companies and employees at issue. While the application of these doctrines normally works to expand the obligations of potential joint or integrated employers, if those doctrines are applied to the FFCRA to put companies over the 500-employee threshold, they would limit employer obligations. Companies making judgment calls regarding whether to apply these doctrines for purposes of determining the FFCRA threshold should also consider the potential ramifications of adopting such a position in other circumstances—e.g., exposure to potential employee overtime claims under the FLSA.
Can employees take emergency paid sick or family and medical leave intermittently?
Yes, if the company and the employee agree. While intermittent leave will more often apply in telework situations (e.g., an employee is able to telework during certain periods of the day, but needs to take leave during other periods of the day to care for a child at home due to a school closure caused by the pandemic), it could also be used for on-site workers who have child care obligations (e.g., an employee might work Monday, Wednesday, and Friday on-site and take leave to care for a child at home due to school or daycare closure on Tuesdays and Thursdays). The DOL guidance “encourages employers and employees to collaborate to achieve flexibility and meet mutual needs.”
What if my company shuts down while an employee is on emergency paid sick or family and medical leave?
The DOL guidance explains that, if the company closes while an employee is out on paid sick or family and medical leave, the company must pay the employee for any qualifying leave used before the closure. During the closure, the employee would no longer be entitled to paid sick leave or paid family and medical leave, but may be eligible for unemployment benefits. According to the DOL, this is true whether the company closes for lack of business or because it was required to close pursuant to a federal, state or local directive.
Are furloughed employees eligible for emergency paid sick or family and medical leave?
According to the DOL, if an employee is furloughed because the company does not have enough work or business, the employee is not entitled to then take paid sick leave or paid family and medical leave. The employee may, however, be eligible for unemployment benefits.
Is an employee who is on emergency paid sick or family and medical leave protected from being laid off?
The DOL guidance explains that, in most instances, an employee will be entitled to be restored to the same or an equivalent position upon return from paid sick leave or paid family and medical leave. A company therefore cannot fire, discipline or otherwise discriminate against an employee because the employee took leave or because the employee filed a complaint or participated in proceedings related to the FFCRA. Nevertheless, the DOL guidance confirms that employees are not protected from employment actions, such as layoffs, that would have affected them regardless of whether they took leave. According to the DOL, this means that a company can lay off such an employee for legitimate business reasons if it can demonstrate that the action would have been taken even if the employee had not taken leave.
What if my company was already covered by the normal FMLA? Does FMLA leave that an employees has already taken this year count against the 12 weeks of leave under the FFCRA’s emergency family and medical leave provisions?
Yes, if your company was covered by the normal FMLA prior to April 1, 2020, and an employee has already used a portion of his or her 12 weeks of FMLA leave, then those weeks would count toward the employee’s allotment of emergency paid family and medical leave time. The DOL guidance provides the following useful example:
[A]ssume you are eligible for preexisting FMLA leave and took two weeks of such leave in January 2020 to undergo and recover from a surgical procedure. You therefore have 10 weeks of FMLA leave remaining. Because expanded family and medical leave is a type of FMLA leave, you would be entitled to take up to 10 weeks of expanded family and medical leave, rather than 12 weeks. And any expanded family and medical leave you take would count against your entitlement to preexisting FMLA leave.
My business has fewer than 50 employees. Has there been further guidance from the DOL regarding an exemption from the FFCRA leave requirements that jeopardize the viability of my business as a going concern?
According to new DOL guidance, if a company has fewer than 50 employees and emergency paid sick leave or paid family and medical leave is requested because the employee’s child’s school or place of care is closed, or child care provider is unavailable, due to COVID-19 related reasons, then the employer is exempt from providing such leave when doing so would jeopardize the viability of the business as a going concern. The DOL explains that, for a company to claim such exemption, an authorized officer of the business must determine the following:
- The provision of paid sick leave or expanded family and medical leave would result in the company’s expenses and financial obligations exceeding available business revenues and cause the company to cease operating at a minimal capacity;
- The absence of the employee or employees requesting paid sick leave or expanded family and medical leave would entail a substantial risk to the financial health or operational capabilities of the company 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 or employees requesting paid sick leave or expanded family and medical leave, and these labor or services are needed for the company to operate at a minimal capacity.
When and where do companies need to post notice of employee rights under the FFCRA?
Companies need to post the Notice by April 1, 2020. The Notice must be posted in a conspicuous place on the company’s premises. In light of the current prevalence of employees working remotely, the DOL explains that companies may satisfy this requirement by emailing or mailing the Notice to employees, or posting the notice on an employee information internal or external website.
How did the CARES Act modify the requirements of the FFCRA?
The CARES Act clarifies that the per diem and aggregate caps on paid emergency sick and family and medical leave under the FFCRA are to be applied on a per-employee basis.
The CARES Act also provides that, in determining whether a worker has been employed for 30 days for purposes of qualifying for benefits under the emergency family and medical leave provisions of the FFCRA, companies should include an employee who was laid off by the company not earlier than March 1, 2020, had worked for the company for not less than 30 of the last 60 calendar days prior to the employee’s layoff, and was rehired by the company.
If my company acts in good faith but makes a mistake in applying the new leave provisions under the FFCRA, will we be subject to a DOL enforcement action?
The DOL has announced that it will observe a temporary period of non-enforcement of the FFCRA for the period of March 18 through April 17, 2020. During this period, the DOL will not pursue enforcement actions, provided that the employer has made reasonable, good faith efforts to comply with the FFCRA. To qualify for non-enforcement protection during this period, the following criteria must be met:
- The company must remedy any violations, including by making all affected employees whole as soon as practicable.
- The violations must not have been “willful”—i.e., with knowing or reckless disregard of the law.
- The company must provide the DOL with a written commitment to comply with the FFCRA in the future.
The Hirschler Recovery Team: It may soon be a rare business enterprise that is able to insulate itself from the negative economic effects of the COVID-19 pandemic. While we hope the economy will rebound once the pandemic begins to abate, until then, the Hirschler Restructuring and Creditors Rights Group stands ready to assist clients in addressing the financial challenges of these economically unsettled times. Whether you are facing the loss or interruption of business, challenging financing relationships, the need to downsize or restructure, or other creditors’ rights issues, the Hirschler team will work with you toward a successful outcome. Contact us to understand your options and devise a recovery strategy that protects your business and financial health.
Kristen M. Chatterton