DOL updates guidance on Families First Coronavirus Response Act
Questions answered regarding paid leave for employees due to COVID-19
TAX ALERT |
After the enactment of the Families First Coronavirus Response Act (FFCRA) on March 18, 2020, the U.S. Department of Labor (DOL) began issuing guidance on the law’s new paid sick leave and paid family leave requirements applicable to employers with fewer than 500 employees. Effective April 1, 2020, these mandatory paid leave requirements are designed to assist individuals impacted by the COVID-19 pandemic.
On March 24, 2020, the DOL published fact sheets for employees and employers and a questions and answers document (Q&A), as described in our prior Tax Alert. The original Q&A document contained 14 questions and answers; the DOL has now expanded the document to cover 79 questions and answers.
The updated Families First Coronavirus Response Act: Questions and Answers revises some prior DOL guidance and adds new guidance. Here is a summary of the revised and new provisions.
Private sector employers/related employers (Q&A 2). The prior DOL Q&A document addressed which private sector employers have fewer than 500 employees and are required to provide paid leave. However, confusion remained regarding counting employees for the 500-employee threshold for related employers, such as when one entity owns all or part of another entity. This is because the paid sick leave provisions of the FFCRA are based on the Fair Labor Standards Act of 1938 (FLSA) whereas the paid family leave provisions are based on the Family and Medical Leave Act of 1993 (FMLA). This led to a potential difference in treatment whereby related employers were separate entities under the FLSA for counting employees for paid sick leave, but aggregated under the FMLA for paid family leave if they met the FMLA ‘integrated employer’ test.
However, the DOL has now exercised its authority to issue guidance to ensure consistency between the paid sick leave and paid family leave rules, and it is applying the integrated employer test to both types of leave for the 500-employee count. In revised Q&A 2, the DOL indicates that entities that are an integrated employer under the FMLA count employees of all the entities for paid sick leave and paid family leave purposes. See the Employer's Guide to the Family and Medical Leave Act (page 11) for more information about determining integrated employers. The DOL states that employers should use the number of employees on the day an employee’s leave would start to determine whether the employer has fewer than 500 employees.
Public sector employers (Q&A 52-54). The DOL confirms that employees of public agencies such as cities, counties, states and certain federal governmental entities are entitled to paid sick leave and paid family leave under the FFCRA.
Small employers (Q&A 58-59). The FFCRA authorized the DOL to exempt small businesses from the paid sick leave and paid family leave requirements if providing this leave would jeopardize the viability of the business as a going concern. A small business is any employer, including a religious or nonprofit organization, with fewer than 50 employees. In its updated guidance, the DOL gives small businesses with going concern issues a partial exemption from the paid sick leave requirements and a full exemption from the family leave requirements, if certain conditions are met.
A small business with fewer than 50 employees is exempt from the paid sick leave and paid family leave requirements if:
- The leave is requested because the employee is caring of a son or daughter because the school or place of care has been closed, or the childcare provider is unavailable, due to COVID-19 related reasons; and
- An authorized officer of the business has determined at least one of the following conditions is met:
- The provision of paid sick leave and paid family leave would result in the small business’s expenses and financial obligations exceeding available business revenues and cause the small business to cease operating at a minimal capacity;
- The absence of the employee or employees requesting paid sick leave or paid family leave would entail a substantial risk to the financial health or operational capabilities of the small business because of their specialized skills, knowledge of the business or responsibilities; or
- There are not sufficient workers who are able, willing and qualified, and who will be available at the time and place needed, to perform the labor or services provided by the employees requesting paid leave, and these labor or services are needed for the small business to operate at a minimal capacity.
As noted in Q&A 4, a small business makes this exemption determination themselves and should retain documentation that the business meets this criteria. No materials need to be sent to the DOL when seeking a small business exemption from the childcare-related leave requirements.
Employers in multiemployer collective bargaining agreements (Q&A 35-37). Employers subject to multiemployer collective bargaining agreements may have to fulfill their requirements under the FFCRA by paying into a multiemployer fund, plan or program based on the hours of paid sick leave or paid family leave to which their employees are entitled. Employees covered by a multiemployer collective bargaining agreement may receive their paid sick leave or paid family leave from these multiemployer funding sources.
Closed worksite or lack of work (Q&A 23-28). In general, employees are not entitled to paid sick leave or paid family leave if the employees’ worksite closes, and the employer sends the employees home and stops paying them because it does not have work for them to do. This is the case whether the employer closes the worksite for lack of business or because it is required to close pursuant to a federal, state or local directive. Employees who are not receiving paid leave of any kind may be eligible for unemployment insurance benefits.
According to the DOL guidance, an employee will not be eligible for paid sick leave or paid family leave under the FFCRA in the following circumstances:
- The employee’s worksite closed before April 1, 2020 (the effective date of the FFCRA).
- The employee’s worksite closes on or after April 1, 2020, but before the employee goes on leave. If an employee is already on paid leave when the worksite closes, the employee ceases to be eligible for paid leave as of the date of the closure. However, the employee must be paid for FFCRA paid leave used before the worksite closed. If an employee’s worksite subsequently reopens and the employee resumes work, the employee would then be eligible for paid sick leave or paid family leave as warranted.
- The employee is furloughed due to lack of work on or after April 1, 2020, but the employee’s worksite remains open.
- The employee’s scheduled work hours are reduced due to lack of work.
Eligible employees (Q&A 38, 56-57, 76-77). The DOL indicates that all U.S. (and territorial) employees are eligible for paid sick leave and paid family leave. This includes all full-time and part-time employees and ‘joint employees’ (including those employed through a temporary employment agency). However, employers can exclude health care providers and emergency responders from FFCRA paid leave. An employee is immediately eligible for paid sick leave (i.e., no length of service requirement), but must have been employed for 30 calendar days in order to qualify for paid family leave. In general, employees who are receiving workers’ compensation or temporary disability benefits because they are unable to work are not eligible for paid sick leave or paid family leave.
Paid sick leave reasons (Q&A 60-73). The DOL has provided additional guidance regarding the six reasons an employee can take paid sick leave:
- The employee is subject to a federal, state or local quarantine or isolation order related to COVID-19. The DOL indicates that a shelter-in-place or stay-at-home order issued by any of these governmental agencies also qualifies if it causes the employee to be unable to work (or telework). However, it cautions that employees may not take paid sick leave if their employers do not have work for them to do because of a shelter-in-place or stay-at-home order, such as when the employee’s worksite is closed.
- The employee has been advised by a health care provider to self-quarantine due to concerns related to COVID-19. An employee unable to work (or telework) is eligible for paid sick leave if a health care provider directs or advises the employee to self-quarantine or stay home because the health care provider believes the employee may have COVID-19 or is particularly vulnerable to COVID-19. Per Q&A 55, a health care provider for this purpose is a licensed doctor of medicine, nurse practitioner or other provider permitted to issue a certification for purposes of the FMLA.
- The employee is experiencing symptoms of COVID-19 and seeking a medical diagnosis. According to the DOL, an employee who self-quarantines without seeking a medical diagnosis or advice from a health care provider generally is not eligible for paid sick leave, even if experiencing COVID-19 symptoms.
- The employee is caring for someone quarantined under a federal, state or local quarantine or isolation order related to COVID-19, or who has been advised by a health care provider to self-quarantine due to COVID-19 concerns. The person the employee is caring for must be an immediate family member, someone who regularly resides in the employee’s home or an individual who expects or depends on the employee’s care.
- The employee is caring for a son or daughter if the school or place of care has been closed, or the childcare provider is unavailable, due to COVID-19 precautions. The DOL states that the child must be under the age of 18 or disabled.
- The employee is experiencing any other substantially similar condition specified by the Department of Health and Human Services (HHS). To date, HHS has not identified any other conditions that would allow an employee to take paid sick leave.
Intermittent leave (Q&A 21-22). The DOL notes that employees working at their normal workplace (as opposed to teleworking) are eligible to take intermittent paid sick leave and paid family leave only for care for a child whose school or place of care is closed, or whose childcare provider is unavailable, because of COVID-19 related reasons. These employees cannot take intermittent paid sick leave for any of the other five qualifying reasons. Instead, the paid sick leave must be taken in full-day increments. Employees must continue to take the paid sick leave each day until they use the full amount of paid sick leave available under the FFCRA, or no longer have a qualifying reason for taking the leave. Employees returning to work before exhausting their paid sick leave can use the remaining balance until Dec. 31, 2020, if another qualifying reason occurs.
Teleworking (Q&A 17-20). Employees who are teleworking during the COVID-19 public health emergency are not eligible for FFCRA paid leave since they are receiving their normal wages. However, employees unable to telework due to one of the six COVID-19 qualifying reasons become entitled to paid sick leave. Employees unable to telework will also be eligible for paid family leave if they meet the criteria. The DOL guidance permits teleworkers to take their paid leave intermittently, if allowed by their employer.
Coordination of paid leave policies (Q&A 9-12, 32-33, 43-47). The latest DOL guidance adds many Q&A’s regarding the coordination of paid sick leave with paid family leave. In addition, it addresses the interaction of paid leave under the FFCRA with an employer’s other paid leave policies, the FMLA and state and local paid leave laws. It also addresses the rights of employees to return to work in the same or equivalent jobs.
Health insurance (Q&A 30 and 51). The DOL indicates that employees are entitled to continue their group health plan coverage through their employers while on FFCRA paid leave on the same terms as if the employee continued to work. Further information is provided in the Q&A’s regarding employees’ health care rights under other federal laws.
Employee records (Q&A 15-16). The DOL describes the records employers should keep when employees take paid leave, and the documentation that employees should provide to their employers regarding the need for leave.
The expanded Q&A’s from the DOL provide welcome guidance to employers subject to the FFCRA paid leave requirements. The DOL also issued Field Assistance Bulletin 2020-1 that provides for a temporary period of non-enforcement of the FFCRA through April 17, 2020, if certain conditions are met.
Employers also recently received guidance from the IRS regarding the payroll tax credits applicable to paid sick leave and paid family leave. For more information on the IRS FAQs, see RSM’s Tax Alert.
To stay up to date on the latest information from RSM regarding the coronavirus public health emergency, visit our Coronavirus Resource Center.