Government issues guidance on Families First Coronavirus Response Act

Mar 25, 2020
Mar 25, 2020
0 min. read

Paid leave for employees due to COVID-19 begins April 1, 2020

The Families First Coronavirus Response Act (FFCRA) was enacted on March 18, 2020, to help individuals and businesses impacted by the COVID-19 public health emergency. As summarized in our prior Tax Alert, FFCRA has three main components that directly affect employers:

  • The Emergency Paid Sick Leave Act that requires certain employers to provide paid sick leave to eligible employees, and incorporates some terms from the Fair Labor Standards Act of 1938 (FLSA).
  • The Emergency Family and Medical Leave Expansion Act that requires certain employers to provide paid family leave to eligible employees, and amends the Family and Medical Leave Act of 1993 (FMLA).
  • The Tax Credits for Paid Sick and Paid Family and Medical Leave section that adds new tax credits for employers that provide paid sick leave or paid family leave to employees. It also provides tax credits for self-employed individuals. 

On March 24, 2020, the U.S. Department of Labor (DOL) published much-needed guidance to help employers comply with these new requirements that go into effect on April 1, 2020. The DOL indicated that this guidance is the first round of compliance assistance and that more information will be released in the near future. 

Current DOL guidance regarding mandatory paid leave for employees consists of three sources of information: (1) a fact sheet for employees, (2) a fact sheet for employers, and (3) a questions and answers document. The two fact sheets use the terminology “expanded family and medical leave” to incorporate both the paid sick leave and the paid family leave included in the FFCRA.

Fact sheet for employees

The fact sheet for employees describes the employers subject to the FFCRA and the employees who are eligible for paid leave. It also explains the leave benefits, the qualifying reasons for leave, the amount that employees receive while on leave and the duration of those payments. In addition, the fact sheet describes the notice that employees should provide to their employers to request and maintain their paid leave.

Fact sheet for employers

The fact sheet for employers generally covers the same items as the fact sheet for employees. However, it also discusses the notice requirement, discrimination prohibitions and penalties and enforcement actions applicable to employers. In addition, the fact sheet briefly describes the tax credits employers can receive on paid leave wages. 

The fact sheet indicates that employers need to post a notice about the paid leave in a conspicuous place on its premises. The DOL has provided a model notice for this purpose.

Questions and answers

The Families First Coronavirus Response Act: Questions and Answers (Q&A) document provides additional details beyond the fact sheets. In particular, it clarifies the following issues:

  • Effective date. The FFCRA’s paid leave provisions are effective on April 1, 2020, and only apply to leave taken between April 1, 2020, and Dec. 31, 2020. The paid leave requirements are not retroactive and end on Dec. 31, 2020.
  • Private sector employers. The Q&A document addresses which private sector employers are required to provide paid leave, and explains how these employers determine if they have fewer than 500 employees. In calculating the number of employees, all employees (full-time and part-time) employed in the U.S. (or in any U.S. territory or possession) are counted at the time an employee takes leave. The count includes employees on leave and certain employees jointly employed by two employers. The DOL noted that the FFCRA does not apply to private sector employers with 500 or more employees.
  • Related employers. A common question is how the 500-employee count is determined when companies are related, such as when one entity owns all or part of another entity. It is important to note that the paid sick leave portion of the FFCRA uses definitions from the FLSA whereas the paid family leave portion of the FFCRA uses definitions from the FMLA. Because of this, an employer may be subject to the paid sick leave requirement but not the paid family leave requirement. 

In general, two or more entities are separate employers under the FLSA, even if related. Therefore, each company would typically count only its own employees for purposes of the 500-employee threshold to determine whether it is required to provide paid sick leave to its employees. Special rules apply when two companies are joint employers of an employee. 

Generally, two or more entities are also separate employers under the FMLA, unless they meet the “integrated employer” test. This is a fact-specific test and may vary greatly from company to company. Factors taken into account under the integrated employer test include: (1) common management, (2) interrelation between operations, (3) centralized control of labor relations, and (4) the degree of common ownership or financial control. If two or more entities are an integrated employer, the employees of all the entities are likely to be aggregated for the 500-employee count to determine if the entities must provide paid family leave to employees. For more information about determining employers covered by the FMLA, see The Employer's Guide to The Family and Medical Leave Act.

Note, the FFCRA does give the DOL authority to issue regulations to ensure consistency between the paid sick leave and paid family leave rules. Although the DOL’s current guidance is helpful, it does not adequately address these differences so questions remain. Since the FLSA and FMLA are labor laws, consultation with legal counsel may be advised. 

  • Small employers. Small businesses with fewer than 50 employees may be eligible for an exemption from the paid sick leave and paid family leave requirements if the imposition of the requirements would jeopardize the viability of the business as a going concern. The DOL intends to issue simple and clear criteria for employers to make this determination themselves, and expects employers to retain appropriate supporting documentation. Employers will not need to submit materials to the DOL when seeking a small business exemption from the paid leave requirements.
  • Employee hours and pay. The Q&A document also discusses how to determine an employee’s hours and pay rate when calculating the dollar amount of paid sick leave or paid family leave to which an employee is entitled.
  • Coordination of paid leave policies. Several of the questions in the DOL guidance address the coordination of paid sick leave with paid family leave. It clarifies that paid sick leave is available to eligible employees for two weeks. Paid family leave is available for an additional 10 weeks if the applicable COVID-19 criteria is met. Consequently, some employees may be eligible for up to 12 weeks of paid leave (but subject to daily and aggregate dollar limits). The Q&A document also touches on the relationship between these new paid leave rules and employers’ current leave policies. Keep in mind that some states or localities have their own mandated leave policies, which also may apply.


The DOL’s trio of documents give important guidelines to employers for implementing the paid sick leave and paid family leave provisions of the FFCRA. Many outstanding questions from employers will likely be answered in forthcoming DOL guidance. 

Employers also have many questions about the tax credits they can obtain for providing paid sick leave and paid family leave to employees. The IRS issued a news release on March 20, 2020, as a first step in supplying guidance. The news release indicates that the IRS will issue additional guidance soon. In addition, the IRS has established a dedicated webpage devoted to updates regarding coronavirus tax relief.

To stay up to date on the latest information from RSM regarding the coronavirus public health emergency, visit our Coronavirus Resource Center.

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