To help our clients navigate the coronavirus (COVID-19) crisis, Keane & Beane is providing numerous Legal Alerts on a variety of issues. The information contained in this Legal Alert is applicable as of today, March 27, 2020. Many situations are so fact specific and nuanced that this Legal Alert only addresses some of the more pressing ongoing issues. The discussion below is therefore general and does not address all considerations and specific analyses that may need to be undertaken prior to taking action.
On March 24, 2020, the United States Department of Labor (“DOL”) issued Guidance on the Families First Coronavirus Response Act (“FFCRA”). Specifically, the DOL issued Questions and Answers, as well as a Fact Sheet for Employees and a Fact Sheet for Employers. We previously advised our clients of the requirements of the FFCRA in a Legal Alert shortly after its enactment, which can be found here.
Under the FFCRA, employees are entitled to paid leave, without charge to accruals, due to certain COVID-19 related absences, such as being under quarantine or caring for a family member under quarantine, seeking a diagnosis of COVID-19 after experiencing symptoms of the virus or caring for a family member who has experienced such symptoms and is seeking diagnosis, and/or caring for a child whose school or place of care is closed due to COVID-19 precautions. For a detailed description of the leave entitlements under the FFCRA, please see our Legal Alert.
The vast majority of the information in the DOL’s Fact Sheets is already covered in our Legal Alert. However, the Guidance issued by the DOL, the Questions and Answers in particular, does contain important new information and/or clarifications, the highlights of which are set forth below:
Effective date of the FFCRA
The FFCRA provided that it was effective no later than fifteen (15) days after its enactment on March 18, 2020, allowing for an effective date of April 2, 2020, at the latest. However, the DOL has clarified that the effective date of the FFCRA is April 1, 2020, with an expiration date of December 31, 2020.
Calculating the 500 employee threshold
The FFCRA applies to most public employers regardless of size and private employers with less than 500 employees. The Guidance clarifies that employees on leave, temporary employees jointly employed by an employer and another employer (regardless of which payroll the employee is maintained on), and day laborers supplied by a temporary agency all count towards the 500 employee threshold. The Guidance also confirms that independent contractors do not count toward the 500 employee threshold.
The Guidance further clarifies that a corporation (including its separate establishments or divisions) is considered a single employer and all of its employees are counted towards the 500 employee threshold. However, where a corporation has an ownership interest in another corporation, the two corporations are considered separate employers unless they are deemed joint employers under the Fair Labor Standards Act (“FLSA”). If the corporations are found to be joint employers, all common employees are counted towards the 500 employee threshold for both corporations.
Finally, two or more business entities are considered separate employers under the FFCCRA unless they meet the “integrated employer test” under the Family and Medical Leave Act (“FMLA”). If separate entities are an “integrated employer” under the FMLA, then all their employees will be counted towards the 500 employee threshold for each entity.
Employee rate of pay
Under the FFCRA, an employee’s regular rate of pay is utilized to calculate an employee’s paid leave entitlement. The Guidance confirms that in calculating an employee’s “regular rate of pay,” commissions, tips, and piece rates should be incorporated into the regular rate calculation.
The Guidance also provides that overtime hours should be included for the purposes of calculating the amount of leave available to an employee. For example, under the Emergency Paid Sick Leave Act (“EPSLA”) of the FFCRA, a full time employee who is scheduled to work fifty (50) hours a week may take fifty (50) hours of paid leave in the first week and thirty (30) hours of paid leave in the second week (the EPSLA caps paid leave at eighty (80) hours for full time employees). However, employers are not required to pay a premium for the overtime hours (i.e. the employee who received fifty (50) hours of paid leave in the first week would not receive ten (10) hours of pay at overtime rates). Moreover, the daily and aggregate caps in compensation under the EPSLA and the Emergency Family and Medical Leave Expansion Act would continue to apply (“FMLEA”).
Employees are eligible for paid leave under both the Emergency Paid Sick Leave Act and the Emergency Family Medical Leave Expansion Act
The Guidance also confirms that employees who need leave due to a lack of child care caused by COVID-19 are entitled to paid leave under the EPSLA and as well as under the FMLEA (provided they qualify for leave under the FMLEA). For example, full time employees would be eligible for eighty (80) hours of paid leave under the EPSLA, which would run concurrently with the first two (2) weeks of unpaid leave under the FMLEA, and then would be eligible for up to ten (10) weeks of paid leave under the FMLEA at two thirds (2/3) of their regular rate of pay (subject to the daily and aggregate caps).
The Guidance provides that employers must require employees seeking to utilize leave under the EPSLA and/or the FMLEA to provide documentation demonstrating their eligibility for leave. The documentation should include: the employee’s name, qualifying reason for requesting leave, statement that the employee is unable to work, including telework, for that reason, and the date(s) for which leave is requested. In addition, documentation substantiating the reason for the requested leave must also be provided. For example, the Guidance states that a copy of the Federal, State or local quarantine or isolation order related to COVID-19 or written documentation by a health care provider advising to self-quarantine due to concerns related to COVID-19, would be acceptable for leave due to quarantine under the EPSLA. For leave due to the lack of childcare caused by COVID-19 under either the EPSLA or the FMLEA, any notice of a school or childcare provider closure would be acceptable, including notices published on a website, published in newspaper or send via email.
Employers seeking to claim tax credits for paid leave provided under the FFCRA must retain any such documentation submitted by their employees.
Intermittent leave under both the EPSLA and the FMLEA for the purpose of caring for a child due to school or childcare provider closures is permitted if agreed upon by the employer. Likewise, intermittent leave under the EPSLA for any reason, where the employee is telecommuting, is also permitted if agreed upon by the employer. While the Guidance does not provide that employers are required to permit such intermittent leaves, the DOL “encourages” employers and employees to collaborate to achieve maximum flexibility and is supportive of such “voluntary arrangements.”
However, employees taking paid leave under the EPSLA for any reason other than school or childcare closures must take such leave continuously until either: (1) they use the full amount of paid leave; or (2) they no longer have a qualifying reason for taking the leave. Employees who no longer have a qualifying reason for taking paid leave before they exhaust their paid leave entitlement may take any remaining paid leave at a later time, until December 31, 2020, if another qualifying reason occurs. The Guidance states that the foregoing limitation on the use of leave under the EPSLA is based upon the intent of the FFCRA, which is to provide paid leave to employees as necessary to keep them from spreading the virus to others when they are sick or possibly sick with COVID-19, or caring for an individual who is sick or possibly sick with COVID-19.
Supplementing or adjusting paid leave under the FFCRA with paid leave accruals provided by employers
The Guidance provides that an employer may allow employees to supplement the paid leave mandated under the FFCRA with existing paid leave accruals provided by the employer. However, employers are not required to permit employees to supplement their paid leave under the FFCRA with existing paid leave accruals, nor may they require employees to do so. Moreover, employers eligible for tax credits for providing paid leave under the FFCRA may not claim, and will not receive, tax credit for such supplemental amounts.
Temporary Non-Enforcement Period
The Guidance provides that the DOL will observe a temporary period of non-enforcement for the first thirty (30) days after the FFCRA takes effect, so long as the employer has acted reasonably and in good faith. For the purposes of the non-enforcement provision, “good faith” exists when violations are remedied and the employee is made whole as soon as practicable by the employer, the violations were not willful, and the DOL receives a written commitment from the employer to comply with the FFCRA in the future.
Prior Keane & Beane Covid-19 Legal Alerts
Keane & Beane, P.C. has prepared several Legal Alerts concerning the Federal and State response to COVID-19 and the impacts on employers and local governments. Our Legal Alerts are available here.
Consult Counsel Regarding Specific Questions
Given the fluidity of this rapidly developing situation, we encourage you to reach out to a member of the Keane & Beane Public Sector Practice Group with questions regarding specific situations. We note that there are legislative developments in Congress and New York which impact each of these questions, which we are closely monitoring. Because of the frequent developments, you should consult counsel regarding specific questions.
For questions on employment and labor issues contact William Kang or Lance H. Klein and on general municipal issues contact Nicholas M. Ward-Willis or Drew Victoria Gamils or any other attorney in our Public Law Sector Practice Group.