On April 1, 2020, the U.S. Department of Labor (“DOL”) Wage and Hour Division (“WHD”) posted a temporary rule issuing regulations pursuant to the FFCRA, effective immediately. These regulations clarify and expand upon the FFCRA, and were issued by the WHD within two-weeks of President Trump signing the FFCRA, which, among other things, amended the Family and Medical Leave Act (“FMLA”) and enacted a separate Emergency Paid Sick Leave Act. The FFCRA was passed to address the unprecedented impacts of the COVID-19 (coronavirus) on the U.S. workforce. You can read our initial alert analyzing the FFCRA, the Emergency Family and Medical Leave Expansion Act (“EFMLEA”), and the Emergency Paid Sick Leave Act (“EPSLA”) here.
FFCRA – Quick Summary
The FFCRA requires covered employers to provide employees with paid sick leave and expanded family and medical leave for specified reasons related to COVID-19 and the current global pandemic. The WHD administers and enforces the FFCRA’s new paid leave requirements, which will be in effect from April 1, 2020, until December 31, 2020.
Generally, the FFCRA provides that employees of covered employers are eligible for:
- Two weeks (up to 80 hours) of paid sick leave at the employee’s regular rate of pay where the employee is unable to work because the employee is quarantined (pursuant to Federal, State, or local government order or advice of a health care provider), and/or experiencing COVID-19 symptoms and seeking a medical diagnosis; or
- Two weeks (up to 80 hours) of paid sick leave at two-thirds the employee’s regular rate of pay because the employee is unable to work because of a bona fide need to care for an individual subject to quarantine (pursuant to Federal, State, or local government order or advice of a health care provider), or to care for a child (under 18 years of age) whose school or child care provider is closed or unavailable for reasons related to COVID-19, and/or the employee is experiencing a substantially similar condition, as specified by the Secretary of Health and Human Services, in consultation with the Secretaries of the Treasury and Labor; and
- Up to an additional 10 weeks of paid expanded family and medical leave at two-thirds the employee’s regular rate of pay where an employee, who has been employed for at least 30 calendar days, is unable to work due to a bona fide need for leave to care for a child whose school or child care provider is closed or unavailable for reasons related to COVID-19.
Under the FFCRA, all private employers with fewer than 500 employees are covered by the paid sick leave and expanded family and medical leave provisions of the Act. However, small businesses with fewer than 50 employees may qualify for an exemption to the requirements regarding leave due to school closings or child care provider closings/unavailability if the leave payments would jeopardize the viability of the business as a going concern.
FFCRA – Are you a Covered Employer?
The WHD’s recent regulations clarify that the threshold calculation of employees regarding the application of the FFCRA to private employers with less than 500 employees, including not for profit employers, is at the time the employee’s potentially covered leave is initiated. Thus, employers who are near the 500 employee threshold should be sure to carefully calculate the number of employees currently employed to determine the applicability of the FFCRA each time an employee initiates potentially qualifying leave.
The WHD has explained that all full-time and part-time employees working in the United States, territories of the United States, or Washington D.C., count towards this 500 employee threshold. This includes any employees who are working and/or on leave, temporary employees who are “jointly employed,” and day laborers supplied by any temporary agencies. Employees working outside of the United States, territories of the United States, or Washington D.C. do not count toward this threshold for employers. Moreover, employees who have been laid off or furloughed and not subsequently reemployed do not count toward the 500 employee threshold.
FFCRA – Small Business Exemption
The FFCRA carves out an exemption for small businesses with less than 50 employees when compliance with the requirements of the Act—specifically those regarding leave due to school or place of child care closings, or if a child care provider is unavailable, due to COVID-19 related issues—would jeopardize the viability of the business as a going concern. The WHD’s regulations set forth the following criteria when a small employer is exempt from the requirements to provide such leave:
(1) when such leave would cause the small employer’s expenses and financial obligations to exceed available business revenue and cause the small employer to cease operating at a minimal capacity;
(2) the absence of the employee or employees requesting such leave would pose a substantial risk to the financial health or operational capacity of the small employer because of their specialized skills, knowledge of the business, or responsibilities; or
(3) the small employer cannot find enough other workers who are able, willing, and qualified, and who will be available at the time and place needed, to perform the labor or services the employee or employees requesting leave provide, and these labor or services are needed for the small employer to operate at a minimal capacity.
The regulations clarify that, for the reasons enumerated above, an employer with less than 50 employees may deny paid sick leave or expanded family and medical leave only to those otherwise eligible employees whose absence would cause the small employer’s expenses and financial obligations to exceed available business revenue, pose a substantial risk, or prevent the small employer from operating at minimum capacity, respectively. As the small business employer determines the applicability of this exemption at the time of the potentially qualified leave, the WHD has instructed employers to retain and document the facts and circumstances supporting each such denial, for a period of at least four years thereafter.
FFCRA – Paid Leave Entitlements
The WHD has also clarified the qualifying reasons for taking leave under the FFCRA. Under the FFCRA, an employee may take paid sick leave only if the employee is unable to work because of any one of six the following qualifying reasons related to COVID-19:
Qualifying Reason (1) – the employee is subject to a Federal, State, or local quarantine or isolation order related to COVID‐19
The regulations issued by the WHD explain that, in this first qualifying reason for leave, “quarantine or isolation orders” include a broad range of governmental orders, including orders that advise some or all citizens to shelter in place, stay at home, quarantine, or otherwise restrict their own mobility. An employee may only take paid sick leave under this qualifying reason if, being the subject of one of these orders, prevents him or her from working or teleworking—the question posed is whether the employee would be able to work or telework, “but for” being required to comply with a quarantine or isolation order. Moreover, an employee subject to one of these orders may not take paid sick leave when the employer does not have any work for the employee, including instances where the closure of the business or lack of work was substantially caused by a stay-at-home order. Additionally, an employee subject to a quarantine or isolation order is able to telework and may not take paid sick leave if: (a) his or her employer has work for the employee to perform; (b) the employer permits the employee to perform that work from the location where the employee is quarantined or isolated; and (c) there are no extenuating circumstances preventing the employee from performing that work.
Qualifying Reason (2) – the employee has been advised by a health care provider to self‐quarantine due to concerns related to COVID‐19
Under the second qualifying reason for leave, the health care provider’s advice to self-quarantine must be based on the provider’s belief that the employee has COVID-19, may have COVID-19, or is particularly vulnerable to COVID-19. Self-quarantining must prevent the employee from working. As such, an employee self-quarantining may not take paid sick leave if he or she can telework and (a) his or her employer has work for the employee to perform; (b) the employer permits the employee to perform that work from the location where the employee is quarantined or isolated; and (c) there are no extenuating circumstances preventing the employee from performing that work.
Qualifying Reason (3) – the employee is experiencing symptoms of COVID‐19 and seeking a medical diagnosis
The regulations further explain that the symptoms identified in the third qualifying reason for leave include symptoms for COVID-19 such as fever, dry cough, shortness of breath, or other symptoms as identified by the U.S. Center for Disease Control and Prevention. Paid sick leave taken for this reason is limited to the time the employee is unable to work because he or she is taking affirmative steps to obtain a medical diagnosis, including time spent making, waiting for, and attending an appointment for a COVID-19 test. The employee may not take paid sick leave to self-quarantine without seeking a medical diagnosis. Additionally, an employee who has been tested and is awaiting the results of a COVID-19 test is deemed able to telework and thus may not take paid sick leave if: (a) his or her employer has work for the employee to perform; (b) the employer permits the employee to perform that work from the location where the employee is quarantined or isolated; and (c) there are no extenuating circumstances preventing the employee from performing that work, such as serious COVID-19 symptoms. An employee may continue to take leave while experiencing any of the symptoms above, or may continue to take leave after testing positive for COVID-19, regardless of symptoms, if a health care provider advises the employee to self-quarantine. If an employee is exhibiting symptoms of COVID-19 and seeks medical advice, but is told he or she does not meet the criteria for testing and is advised to self-quarantine, he or she is eligible for leave under the second reason, provided he or she meets these requirements.
Qualifying Reason (4) – the employee is caring for an individual who is subject to an order as described in subparagraph (1) or has been advised by a health care provider as described in subparagraph (2)
The WHD has explained that this fourth qualifying reason only applies if but for the need to care for an individual, the employee would be able to perform work for his or her employer. Accordingly, an employee may not take paid sick leave if the employer does not have work for him or her. Further, there must be a genuine need to care for the individual. Paid sick leave may not be taken to care for someone with whom the employee has no personal relationship—the individual being cared for must be an immediate family member, roommate, or similar person with whom the employee has a relationship with that creates an expectation the employee would care for the person if he or she self-quarantined or was quarantined.
Qualifying Reason (5) – the employee is caring for a son or daughter if the school or place of care of the son or daughter has been closed, or the child care provider of such son or daughter is unavailable due to COVID‐19 precautions
The regulations to the FFCRA again explain that the employer must have work for the employee for the employee to take such leave under this fifth qualifying reason. Further, an employee may only take paid sick leave to care for his or her child only when the employee needs to, and actually is, caring for the child. Generally, an employee does not need to take such leave if another suitable individual—such as a co-parent, co-guardian, or usual child care provider—is available to care for the child’s needs.
Qualifying Reason (6) – the employee is experiencing any other substantially similar condition specified by the Secretary of Health and Human Services in consultation with the Secretary of the Treasury and the Secretary of Labor
This sixth reason for leave applies if the employee is unable to work because the employee is experiencing any other substantially similar condition specified by the Secretary of Health and Human Services in consultation with the Secretary of the Treasury and/or the Secretary of Labor.
FFCRA – Recordkeeping and Notice Requirements
All covered employers are required to retain all documentation and information concerning leave under the FFCRA for a period of at least four years, regardless of whether such leave was granted or denied. If an employee provided oral statements to support the request for paid sick leave or expanded family and medical leave, the employer is required to document and retain such information for at least four years. Moreover, as outlined above, if an employer denies an employee’s request for leave pursuant to the small business exemption, the employer must document its authorized officer’s determination that the prerequisite criteria for that exemption was satisfied and retain such documentation for at least four years. Additionally, to qualify for certain tax credits administered by the Internal Revenue Service, employers must maintain these records, among other items, for at least four years.
Covered employers are also required to post and keep notice of the FFCRA’s requirements in a conspicuous place, where employees or job applicants at a worksite may view it. An employer may distribute the notice to employees by e-mail, or post the required notice electronically on an employee information website to satisfy this requirement. An employer may also directly mail the required notice to any employees who are unable to access the information at the worksite, through e-mail, or online. The DOL maintains compliant posters for the FFCRA’s required notice, as well as other potentially applicable federal laws, here.
DOL – Abstained Enforcement
The DOL will not bring any enforcement actions against any public or private employers for violations of the FFCRA occurring within 30 days of its enactment, i.e. March 18, 2020, through April 17, 2020, provided that the employer has made reasonable, good faith efforts to comply with the Act. For the purposes of this non-enforcement, the DOL has explained that an employer who is found to have otherwise violated the FFCRA acts “reasonably” and “in good faith” when all of the following facts are present:
- The employer remedies any violations, including by making all affected employees whole as soon as practicable;
- The violations of the Act were not “willful” based on the criteria set forth in McLaughlin v. Richland Shoe, 486 U.S. 128, 133 (1988) (the employer “either knew or showed reckless disregard for the matter of whether its conduct was prohibited…”); and
- The Department receives a written commitment from the employer to comply with the Act in the future.
Note, that after April 17, 2020, the DOL will lift this limited stay of enforcement and fully enforce violations of the FFCRA.
CARES Act – New Guidance Issued
The U.S. Department of Treasury issued additional guidance regarding the Paycheck Protection Program (“PPP”) under the CARES Act on March 31, 2020. As of April 3, 2020, small businesses (with 500 or fewer employees, with some exceptions) can apply for and receive loans to cover their payroll and other expenses through existing SBA lenders. Starting April 10, 2020, independent contractors and self-employed individuals can apply for and receive loans to cover their payroll and other certain expenses through existing SBA lenders.
The PPP authorizes up to $349 billion in forgivable loans to small businesses to pay their employees during the COVID-19 crisis. All loan terms will be the same for everyone. Additionally, these loan amounts will be forgiven as long as the proceeds are used to cover payroll costs, and most mortgage, interest, rent, and utility costs over the 8-week period after the loan is made; and employee and certain compensation levels are maintained. Note, payroll costs are capped at $100,000 on an annualized basis for each employee. The Department of Treasury further cautioned that, due to the likely high subscription, it is anticipated that no more than 25% of the forgiven amount may be for non-payroll related costs.
The proceeds of loans under the PPP may be used for payroll costs, including benefits; interest on mortgage obligations incurred before February 15, 2020; rent, under lease agreements in force before February 15, 2020; and utilities, for which services began before February 15, 2020. You can start your application by completing this form.
- Paid Leave under the Families First Corona Virus Response Act, 29 CFR 826
- COVID-19 and the American Workplace
- Workplace Posters
- Paycheck Protection Program Information Sheet (Borrowers)
- Paycheck Protection Program – Borrower Application Form
For more information on how this could impact your business, contact:
- Felicity Fowler, Partner (email@example.com, 214-307-6961)
- Daniel Atkinson, Attorney (firstname.lastname@example.org, 214-307-6963)
- or another member of the McGinnis Lochridge Employment, Labor & Employee Benefits Practice Group
 Note, an employee must have been employed for at least 30 calendar days before they are eligible under the EFMLEA to take such leave to care for a child.
 The regulations explain that the Fair Labor Standards Act’s test for joint employer status applies in determining who is a joint employer for purposes of FFCRA coverage.