On March 18, 2020, President Trump signed the Families First Coronavirus Response Act (FFCRA) which, as we discussed in an earlier blog post, provides for paid emergency sick leave and paid emergency family leave in certain circumstances. The portion of the FFCRA that provides for paid emergency family leave is referred to as the Emergency Family and Medical Leave Expansion Act (EFMLEA) and the portion that provides for paid emergency sick leave is referred to as the Emergency Paid Sick Leave Act (EPSLA).
On March 24, 2020, the United States Department of Labor issued its first guidance documents regarding the implementation of EFMLEA and EPSLA. They consist of a Fact Sheet for Employees, a Fact Sheet for Employers, and a Questions and Answers document. In this post we will summarize some of the important takeaways from these guidance documents.
The EFMLEA and EPSLA were both set to take effect on April 2, 2020, unless the government specified otherwise. The guidance documents clarify that the laws will take effect on April 1, 2020, and will apply to leaves taken between that date and December 31, 2020.
The requirements of EFMLEA and EPSLA are not retroactive.
Employers qualify for dollar-for-dollar reimbursement of of all qualifying wages paid under EMFLEA and EPSLA through refundable payroll tax credits. The guidance documents clarify that employers will also be entitled to reimbursement for costs paid or incurred to maintain employees’ health insurance coverage during the period of leave.
EFMLEA and EPSLA apply to all private employers with less than 500 employees (and some government employers). The guidance documents clarify that, in determining whether the 500-employee threshold is met, an employer must consider the number of part-time and full-time employees it has within the United States or any of its territories on the date the employee takes leave. This includes: (1) employees on leave; (2) temporary employees even if jointly employed and maintained on another entity’s payroll; and (3) day laborers supplied by a staffing agency.
Joint and Separate Employers
The guidance documents shed light on the circumstances in which different entities will be considered joint employers for the purposes of determining whether the 500-employee threshold is met.
When one corporation has an ownership interest in another, the two entities are separate employers unless they are considered joint employers for purposes of the Fair Labor Standards Act (FLSA). If they are joint employers under those rules, then all of their common employees must be counted in determining coverage under EFMLEA and EPSLA.
Separately, two or more distinct corporate entities are generally regarded as separate employers unless they meet the integrated employer test under the Family and Medical Leave Act of 1993 (FMLA). If two or more entities do satisfy this test, then all of their employees must be counted in determining coverage under the EFMLEA.
Whether entities meet the joint employer criteria under FLSA and/or FMLA is an analysis that is best undertaken with the assistance of counsel.
Small Business Exemption
Employers with less than fifty employees may be exempt from providing paid child-care related leave under EPSLA and EFMLEA if compliance would jeopardize a business’ continuing viability. The guidance documents do not provide instructions on how a business can take advantage of this potential exemption. Rather, they state that businesses will need to document why they meet the relevant criteria, but that they should await the issuance of forthcoming regulations before sending anything to the Department of Labor.
Determining an Employee’s Regular Rate of Pay
EPSLA and EFMLEA both contemplate that an employee will be paid at his or her regular rate of pay (or the federal or applicable state minimum wage, if such wage is greater), subject to certain monetary caps. The guidance documents clarify that an employee’s regular rate of pay is the average of the employee’s regular rate over the six months preceding the date on which leave is taken. This includes commissions, tips and or piece rates as the case may be.
If an employee has been employed for less than six months prior to taking leave, the regular rate of pay is the average of the employee’s rate of pay for each week he or she has worked for the employer.
Alternatively, an employee’s regular rate can be determined by adding up all compensation that is part of the regular rate over the applicable time period, and dividing that sum by the hours actually worked during that time.
Where an Employee Has Multiple Qualifying Reasons for Sick Leave
The guidance documents clarify that employees are entitled to a maximum of eighty-hours of paid sick leave (for full-time employees) from April 1, 2020 through December 31, 2020. Therefore, by way of example, if an employee is subject to a government order of quarantine for two weeks and exhausts eighty hours of sick leave during this time, he or she cannot later take additional paid sick leave in order to care for a family member who becomes subject to a government order of quarantine.
On the other hand, if an employee only uses some of the paid leave to which he or she is entitled for one qualifying reason, he or she may take the remainder of the available paid leave later for a different qualifying reason. By way of example, if a full-time employee uses eight hours of paid sick leave to seek a diagnosis while experiencing symptoms of COVID-19, he or she can later use the remaining seventy-two hours of paid leave to care for a child whose school is closed due to the COVID-19 pandemic.
Effect of Previous Paid Leave
The guidance documents clarify what most lawyers knew already: if an employer voluntarily provided paid leave to an employee prior to April 1, 2020, that does not relieve the employer of the obligation to provide paid leave under EFMLEA or EPSLA after April 1, 2020.
The guidance documents provide important information that employers need to know to ensure compliance with EFMLEA and EPSLA. Some questions still abound, but hopefully they will be answered when formal regulations are issued in the days ahead.