There are understandably many questions about the new law. We anticipate receiving additional guidance from the Department of Labor (“DOL”) and the IRS on many of these issues. Nevertheless, to assist employers in preparing for these new requirements, we have prepared a list of Frequently Asked Questions (“FAQs”) regarding the FFCRA.
While the law does not provide specific guidance, a plain reading of the amended FMLA statute suggests that, regardless of reason, an employee is only eligible for “a total of 12 workweeks of leave during any 12-month period.” The Emergency FMLA is a new type of FMLA leave and would seemingly reduce an employee’s eligibility for other types of FMLA.
Thus, unless there is contrary guidance from the DOL, it appears likely that an employee who has already exhausted 12 weeks of leave in conjunction with another qualifying reason (e.g., the birth or adoption of a child), it is likely that employee would not be eligible for Emergency FMLA in the same leave year. If, however, the previous leave related to a “qualifying exigency” or care of a military member, it is possible that the employee could be eligible for additional FMLA (i.e., up to 26 weeks of leave).
FAQ:What about an employee who are currently out on FMLA?
This is a difficult question and not addressed by the new law. As noted above, the employee’s previously-used FMLA in the same leave year would likely be credited against any entitlement for Emergency FMLA. It is not clear, however, whether an employee could convert from one type of unpaid FMLA (e.g., in conjunction with the birth or adoption of a child) to paid Emergency FMLA. Nothing expressly prohibits it, but we will likely need additional guidance from the DOL.
Coverage and Eligibility for Emergency PSL
FAQ:What employers need to provide Emergency PSL?
All businesses with fewer than 500 employees need to provide full-time employees with 80 hours of Emergency PSL on April 2, 2020 (i.e., the effective date of the FFCRA). Part-time employees receive a prorated balance based on the number of hours that they work, on average, over a 2-week period.
For small employers, FFCRA provides the DOL with the authority to exempt employers with “fewer than 50 employees” from the Emergency PSL requirement, if the DOL determines that the requirement would “jeopardize the viability of the business as a going concern.”
FAQ:Who is eligible for Emergency PSL?
The definition of “employee” for purposes of Emergency PSL incorporates Section 3(e) of the FLSA. The FLSA has a broad definition of employee: “any person acting directly or indirectly in the interest of an employer . . . .”
Importantly, for Emergency PSL, there is no “hours of service” requirement, similar to the 30-day service requirement for Emergency FMLA. This likely means that all employees who are employed by a covered employer on April 2, 2020 are entitled to a bank of Emergency PSL based on their hours worked (up to 80 hours).
Unlike many paid sick leave laws, there is no “waiting period” before an employee can use Emergency PSL. Indeed, the FFCRA provides that Emergency PSL “shall be immediately available for use.”
FAQ: How do you determine whether you have 500 or more employees?
Remember, employers with 500 or more employees do not need to provide Emergency FMLA and Emergency PSL.
While the law does not specify how employees are to be counted, the Emergency PSL defines “employee” by reference to the FLSA. The FMLA definition of “employee” similarly incorporates the FLSA definition.
Thus, for counting purposes, employers should look to the broad definition of “employee” under the FLSA – that is, “any person acting directly or indirectly in the interest of an employer.” 29 U.S.C. § 203(e). This would presumably include, for example, any employees who are “jointly employed” by the employer under the DOL’s current definition of “joint employment.”
FAQ:Are there exceptions for small employers?
Yes and no. As noted above, both the Emergency FMLA and Emergency PSL requirements of the FFCRA apply to all employers with 1-499 employees.
However, the FFCRA provides the DOL with the regulatory authority to exempt employers with “fewer than 50 employees” (i.e., 1-49 employees) from either (or both) paid-leave requirements if the DOL determines that “imposition of such requirements would jeopardize the viability of the business as a going concern.” We will therefore have to wait for the regulations from the DOL.
In addition, as noted above, the job-restoration requirements of Emergency FMLA may be waived for employers with fewer than 25 employees, provided certain conditions are met. And, employers with fewer than 50 employees are not subject to private FMLA lawsuits.
FAQ: Are certain types of employees exempt?
Yes, both the Emergency FMLA and the Emergency PSL include exclusions for “Health Care Providers” and “Emergency Responders.” The exclusions basically give their employer the ability to “elect” to exclude the individual from the requirements of each form of leave. There does not appear to be any limit on the employer’s discretion to make this election.
The FFCRA also directs the DOL to provide regulatory guidance on this issue, so we expect further guidance on this.
Employers Subject to Collective Bargaining Agreements
FAQ:Does the FFCRA Apply to Employers with a CBA?
Yes, as noted above, the law would apply to all businesses with fewer than 500 employees, including those who have a CBA.
In fact, the law specifically provides that employers who are signatory to a multiemployer CBA are permitted to satisfy their paid leave obligations under the FFCRA by making contributions to a multiemployer fund, plan, or program. The law makes clear, however, that employees must be able to receive payment from the fund, plan, or program for any paid leave that would have otherwise been paid by their employer.
By specifically providing an alternative method of compliance, the law appears to assume that employers subject to a CBA will be covered, provided that they employ fewer than 500 employees.
FAQ:Do I have to pay “fringes” (health insurance, pension, etc.) on the payments I make to union employees taking Emergency FMLA or Emergency PSL?
Likely no. The payments under both the Emergency FMLA and the Emergency PSL are tied to the definition of “regular rate of pay” under the FLSA (29 U.S.C. § 207(e)). Remember, too, that the amounts are capped per the amounts discussed above.
Under the FLSA, the definition of “regular rate” excludes several amounts, including: “contributions irrevocably made by an employer to a trustee or third person pursuant to a bona fide plan for providing old-age, retirement, life, accident, or health insurance or similar benefits for employees.” 29 U.S.C. § 207(e)(4). Thus, any payments to employees pursuant to the provisions of the FFCRA would, by definition, exclude amounts payable to a pension plan or health and welfare plan.
The Union may claim that the CBA requires payment of fringes on amounts paid pursuant to the FFCRA. While the strength of this argument would likely depend on the text of your CBA, it would be very difficult for the Union to claim that the amounts paid under the FFCRA were contemplated by the parties at the time they negotiated the CBA and, somehow, intended that these amounts be paid to the fund.
FAQ:Is there any other steps that a unionized business must take?
Remember, if you have a current CBA, you’ll need to give the union notice and an opportunity to bargain before implementing any changes that affect employees’ terms and conditions of employment.
However, we recommend having a plan in place for complying with the FFCRA requirements before agreeing to meet with the Union. If the Union reaches out, let them know that you are reviewing the law with labor counsel and will be in contact soon.
Layoffs, Closures, and Other Issues
FAQ:If a jobsite is closed and everyone is laid off, would I still have to provide paid leave?
This is a difficult question and, in the absence of regulatory guidance from the DOL, we can only provide general guidance. Each situation is different and you should seek legal advice before making any decision. Indeed, in addition to your potential obligations under the FFCRA, you may have obligations under other state and federal laws, such as the WARN Act, the FLSA, ERISA, and COBRA.
As an initial matter, employees whose employment is terminated (or employees who are laid off because of lack of work) before April 2, 2020, would likely not be eligible for Emergency PSL or Emergency FMLA. This is because they do not need “leave” for a job that does not exist. The text of the FFCRA appears to assume that (i) work is available and (ii) that the employee is “unable to work (or telework)” because of a qualifying reason. As a result, if there is no work for the employee to perform (because of layoff or termination), there should be no Emergency PSL or Emergency FMLA obligation. The employee would, of course, likely be eligible for unemployment pursuant to the state unemployment statute.
A more difficult question is posed by a situation where an employer decides to close a jobsite (and lay off everyone) on or after April 2, 2020. Akin to the example above, the absence or inability of the employee to work is not effectuated by an employee’s “need for leave” as defined by the FFCRA but rather by the lack of work available (because the employer has closed or the jobsite is closed). Thus, it is likely that Emergency PSL and Emergency FMLA are not available in this circumstance.
This analysis is buttressed by the fact that employees are typically not allowed to use paid sick leave or PTO for times when they are not scheduled to work. Likewise, the FMLA (at least before it was amended) made clear that an employee on leave is entitled to no greater protection from a layoff as any other employee. See 29 C.F.R. § 825.216(a)(1). Thus, an employee on a job-protected FMLA leave (e.g., birth of a child or “serious health condition”) was not protected from termination if the employer made a non-discriminatory decision to conduct a layoff or reduction in force that happened to affect the employee on FMLA. It remains to be seen whether the FFCRA changed this standard, and we will likely need additional regulatory guidance from the DOL before we have a definitive answer.
As you can see, this issue is a difficult one and, given the questions surrounding the new law, it is best to get legal advice regarding your obligations.
Tax Credits and Employers with Cash-Flow Issues
FAQ: How does my company get reimbursed by the IRS?
As to Emergency FMLA, the FFRCA provides that “there shall be allowed as a credit against the tax imposed by section 3111(a) of the Internal Revenue Code of 1986 for each calendar quarter an amount equal to 100 percent of the qualified family leave wages paid by such employer with respect to such calendar quarter.”
There is a cap on the employer’s tax credit for each employee’s paid Emergency FMLA: $200 per employee per day and $10,000 total per employee. As noted above, this aligns with the maximum payout to employees who use Emergency FMLA.
With respect to Emergency PSL, the FFRCA provides that “there shall be allowed as a credit against the tax imposed by section 3111(a) of the Internal Revenue Code of 1986 for each calendar quarter an amount equal to 100 percent of the qualified sick leave wages paid by such employer with respect to such calendar quarter.”
There are, however, caps on the employer’s tax credit:
If you have questions about the FFCRA or any other proposed legislation, please Grant Collins at 612-373-8519 or email@example.com.