The U.S. Department of Labor’s Wage and Hour Division (WHD) announced its first round of published guidance to provide information to employees and employers about how each will be able to take advantage of the protections and relief offered by the Families First Coronavirus Response Act (FFCRA) when it takes effect on April 1, 2020. Note, this is change from the original proposed effective date of April 2, 2020.
The guidance is provided in a Fact Sheet for Employees, a Fact Sheet for Employers and a Questions and Answers document. It addresses critical questions, such as how an employer must count the number of its employees to determine coverage, how small businesses can obtain an exemption, how to count hours for part-time employees and how to calculate the wages employees are entitled to under this law.
This guidance is just the first round of information and compliance assistance to come from WHD. A workplace poster required for most employers will be published later this week, along with additional fact sheets and more Q&A.
The guidance addresses many of employers' preliminary questions; however, it still doesn't address some key issues, such as how employers of health care workers can claim an exemption (if they need to at all), if it applies to furloughed employees or if employees in locations where a shelter-in-place has been ordered are considered under an isolation order and eligible for paid sick leave. The agency mentioned that future guidance is forthcoming, which we hope will address some of these questions.
Of particular note in the guidance issued today:
- Q: Are the paid sick leave and expanded family and medical leave requirements retroactive?
A: No. Additionally, the guidance states that any paid leave provided prior to the effective date of the law (even for reasons covered under the law) would not count towards the new requirements (and would therefore most likely not be eligible for tax credits under the law).
- Q: Can I take 80 hours of paid sick leave more than once?
- Q: How is the 500-employee threshold calculated?
A: Employers should include employees on leave, temporary employees who are jointly-employed with another employer (regardless of whether the jointly-employed employees are maintained on only your or another employer’s payroll) and day laborers supplied by a temporary agency (regardless of whether you are the temporary agency or the client firm if there is a continuing employment relationship). 1099 independent contractors need not be counted.
With respect to joint employers, employers should review possible joint employment liability under the Fair Labor Standards Act (FLSA).
With regard to common ownership, etc., when counting, the Family and Medical Leave Act (FMLA) uses an “integrated employer test.” Factors to be considered in determining if separate businesses are an integrated employer include common management, interrelation between operations, centralized control of labor relations and the degree of common ownership or financial control.
For purposes of determining employer coverage under the FMLA, the employees of all entities making up the integrated employer must be counted. Per previous Department of Labor (Department) guidance, “a determination of whether or not separate entities are an integrated employer is not determined by the application of any single criterion, but rather the entire relationship is to be reviewed in its totality. All four criteria need not be present in all cases, but… the first three criteria [are considered] to be the most important.”
Both the joint and integrated employer tests under the FMLA are complicated and involve a critical analysis of specific facts. Employers with questions about how these tests may apply to their specific situation should contact their labor and employment counsel. There's also an excellent magazine article from the Federal Bar Association on the analysis.
- Q: How do I claim the under 50 employee exemption?
A: To elect this small business exemption (i.e., complying would jeopardize the viability of my business as a going concern), you should document why your business with fewer than 50 employees meets the criteria set forth by the Department. It will be addressed in more detail in forthcoming regulations.
Additionally, in the footnotes, it mentions that “every dollar of expanded family and medical leave (plus the cost of the employer’s health insurance premiums during leave) will be 100% covered by a dollar-for-dollar refundable tax credit available to the employer. For more information, please see the Department of the Treasury’s website."
This guidance comes on the heels of preliminary guidance issued by the Internal Revenue Service (IRS) last Friday on how employers may claim payroll tax credits for providing paid sick leave or paid EFMLEA. Hopefully, the IRS will also provide additional guidance in the coming days.
Additionally, the Department will be issuing a temporary non-enforcement policy that provides a period of time for employers to come into compliance with the Act. Under this policy, the Department won't bring an enforcement action against any employer for violations of the Act so long as the employer has acted reasonably and in good faith to comply with the Act. The Department will instead focus on compliance assistance during the 30-day period.