DOL Issues Updated FFCRA Regulations

Contributed by Peter Hansen, September 14, 2020

The U.S. Department of Labor announced revised regulations interpreting the Families First Coronavirus Response Act (FFCRA) in response to a New York federal court decision declaring some FFCRA regulations invalid.  The revised regulations become effective September 16, 2020, and include several changes and clarifications that employers should be aware of:

The Health Care Provider Exception.  The DOL limited the “health care provider” exception (which excluded certain employees from FFCRA eligibility) to employees who are “capable of providing health care services,” including “diagnostic services, preventive services, treatment services, or other services that are integrated with and necessary to the provision of patient care.”  The DOL also provided a non-exhaustive list of employees who are not health care providers:  “information technology (IT) professionals, building maintenance staff, human resources personnel, cooks, food service workers, records managers, consultants, and billers.”  Accordingly, employers in the health care industry must now undertake a position-specific analysis to determine which employees meet the new definition of “health care provider.”

Requiring Documentation Before FFCRA Leave. Employers cannot require the employee to submit documentation prior to the commencement of FFCRA leave.  Employers can, however, continue to require employees to provide documentation supporting their need for FFCRA “as soon as practicable.”

The DOL also doubled down on two of the four significant regulations the New York federal court invalidated:

Work Availability Requirement. FFCRA leave continues to be available only if the employer has work available for the employee to perform. So, if the employer has no work for the employee (due to a furlough, business closure, etc.), then the employee is not entitled to FFCRA leave even if they would otherwise qualify. 

Intermittent FFCRA Leave Only with Employer’s Consent.  Intermittent use of FFCRA leave continues to be available only if the employer allows it – however, the DOL clarified that the “employer-approval condition would not apply to employees who take FFCRA leave in full-day increments to care for their children whose schools are operating on an alternate day (or other hybrid-attendance) basis.” Put another way, “[f]or the purposes of the FFCRA, each day of school closure constitutes a separate reason for FFCRA leave that ends when the school opens the next day.”

The revised regulations include additional rationale for retaining the “work availability” and “employer consent for intermittent leave” requirements, but another lawsuit challenging them is certainly possible and perhaps even likely.  In the meantime, employers should consult with employment counsel on any request for FFCRA leave, especially before denying a request based upon the “health care provider” exception or lack of work available to the employee.

DOL Clarifies FFCRA Child Care Leave – More FFCRA Guidance Expected

Contributed by Suzanne Newcomb, September 10, 2020

e-learning concept. schooldesk and chalkboard on the laptop keyboard. 3d

The Families First Coronavirus Relief Act or “FFCRA” requires employers with less than 500 employees to provide paid leave to employees unable to work (or telework) for various COVID-related reasons. Particularly relevant as many schools open either virtually or with combination of in person and virtual instruction is FFCRA’s mandate for paid leave to care for children not in school or daycare due to COVID-19.

On August 27, 2020 the DOL added FFCRA FAQs 98-100 clarifying that:

  • FFCRA is not triggered if the child’s school is open for in-person instruction but the family chooses an e-learning option unless the e-learning option was chosen because the child is under a quarantine order or has been advised by a health care provider to self-isolate or self-quarantine. See FAQ #99
  • A hybrid in-person / e-learning schedule triggers FFCRA for the child’s assigned e-learning days (those days when the school is effectively closed to that child although open to others) if the employee is needed to care for the child and no other suitable person available to do so. FAQ #98
  • The fact that the district is monitoring the local situation and may reopen to in-person instruction does not impact FFCRA coverage. FFCRA is triggered when the employee is needed to provide care because the school is not open to the child for in-person learning. FAQ #100

While helpful, the FAQs leave some questions unanswered. What if school is open only half days? What if school is open but the child must quarantine due to possible exposure? If the child is not experiencing symptoms and therefore has not sought a diagnosis does the parent’s absence trigger FFCRA? Absent further guidance to the contrary, consider these absences as FFCRA-covered anytime the school is effectively closed to that child.  

In other FFCRA news, back on August 5, 2020 we reported that a U.S. District Court for the Southern District of New York struck down portions of the DOL’s final rule implementing the FFCRA. The court invalidated the work availability requirement, much of the health care provider exception, the employer consent rule for intermittent leave, and employers’ right to require documentation in advance of leave. No word yet on whether the DOL will appeal the ruling (because a U.S. government agency is a litigant, the parties have 60 days to appeal rather than the normal 30 days). However, on September 3, 2020, the DOL sent a revised final rule on the FFCRA to the White House for review. Presumably revisions were made in response to this ruling.  Absent further guidance to the contrary, consider absences as FFCRA-covered anytime employees must care for their child because the school is effectively closed to that child. 

How to Combat Negative Publicity During COVID-19

Contributed by guest author Ryan Jacobson, September 9, 2020

Feedback in form of emotions, smileys, emoji. User experience. Customer feedback. Review of consumer.

With the prevalence of online consumer reviews and merciless labor organizations, companies and their executives are vulnerable to attack for good reason, bad reason or no reason at all. Managing the expectations of your consumers, and of your workforce, is an important place to start. Executives who identify the problem and work diligently to arrive at viable solutions will gain a head start toward preserving the status quo. Media coverage will no doubt accelerate the harm; it is never too late to challenge the story line with a well-crafted statement from the company president or outside counsel. Companies should be prepared to act swiftly and trust their network of advisors to preserve the reputation it took them decades to build.

To illustrate, a company who suffers the loss of an employee to COVID-19 may have to refute unsupported allegations that the victim was infected on the job and counter fears that other workers were exposed. That may lead to the assumption that the company is unwilling to invest in personal protective equipment, or it was otherwise lax in its sanitization procedures – all of which may be patently false. Any related news coverage may likewise impact the company’s image with its customers.

The best way to combat this unexpected publicity is to tackle the problem head-on. Make it clear that the safety and health of your employees at work is a top priority. Instead of unhinging each blade of the rumor mill, explain that fear leads to assumptions, and those as­sumptions interfere with your ability to message the rigorous safety measures the organization has employed to keep its workforce and their families safe.

Explain that these are unprecedented times. That you are doing your best to research and comply with the guidelines put out by local, state and federal agencies considered experts in the field. Be specific and stand firmly behind the authorities you have relied upon, and the steps you have taken to rectify the problem. Alert those concerned that you are routinely monitoring the situation and staying abreast of any changes in the law or recommended best practices. Do not speak generically of your plan; rather, draft a comprehensive, safety protocol with a cover letter to your workforce summarizing the key measures undertaken. Consider providing to the probing reporter a copy of the protocol to demonstrate his source spared some of the key details. It will also reinforce that your organization had a plan in place before the story broke.

Ultimately, everyone wants to be ‘heard,’ which means repeating the concern and explaining the steps the business has taken to reconcile the perceived problem. Debating each false accusation lets the accuser control the narrative. Clear up any material misunderstanding but focus your response (or press release) on the efforts it has (or will) undertake to correct the problem. Use this opportunity to educate the misinformed and instill confidence in the detractors that you have the situation under control.

DOL Issues Opinion Letter Confirming that the Fluctuating Workweek Method of Calculating Overtime Pay Can Apply to Employees Who Only Work 40 Hours or More Per Week

Contributed by Allison P. Sues, September 3, 2020

Calendar and clock

On August 31, 2020, the U.S. Department of Labor issued a new opinion letter shedding light on the application of the fluctuating workweek method for paying overtime wages required under the Fair Labor Standards Act (FLSA).  

Under the FLSA, employers must pay nonexempt employees at least one and half times their regular rate for all hours in excess of 40 worked in an actual workweek.  For employees who work variable hours each week, the employer may use the fluctuating workweek method to compute the amount of overtime pay owed to a nonexempt employee as long as the following criteria are met:

  • The employee’s hours of work fluctuate from week to week;
  • The employee receives a fixed salary that does not vary with the number of hours worked;
  • The amount of the fixed salary is sufficient to satisfy the applicable minimum wage rate for every hour worked in those workweeks in which the number of hours the employee works is greatest;
  • The employee and the employer have a clear, mutual understanding that the fixed salary is compensation (not including overtime premiums) for the total hours worked each workweek; and
  • The employee receives appropriate compensation in addition to the fixed salary for all overtime hours.

Under the fluctuating workweek method, the employee’s regular rate for purposes of overtime calculations is determined by dividing the number of hours worked in a particular workweek by the amount of the weekly salary.  The regular rate must be determined separately each week based on the number of hours that were actually worked that week. 

The DOL’s recent opinion letter answered the question of whether the fluctuating workweek method can be applied to employees whose weekly hours vary but who never work less than 40 hours per week  – for example, an employee who is always expected to work 50 or more hours per week.  The DOL’s answer is yes.  The fluctuating workweek method can be applied to employees whose workweek fluctuates only beyond 40 hours per week, and there is no requirement that the employee’s variable schedule include weeks where his or her hours dip below 40 hours.

The opinion letter also reminded employers that the fluctuating workweek method must consistently use the employee’s regular weekly salary when computing the employee’s regular rate. This is so even if the employee had unpaid absences that particular week. For example, if an employee took an unpaid sick day because he had exhausted his sick bank on Monday, and then worked 48 hours Tuesday through Thursday, the employer must pay the employee overtime and calculate the employee’s regular rate for that week by dividing 48 hours by the employee’s set weekly rate regardless of the employee’s unpaid absence that week. The DOL noted one small exception: employers may take occasional disciplinary deductions from an employee’s salary for willful absences or for other infractions of major work rules.

An opinion letter is an official, written opinion by the DOL’s Wage and Hour Division analyzing how the FLSA applies in a specific circumstance. Opinion letters are useful in understanding the DOL’s position on an application of the FLSA but are not dispositive and do not serve as binding precedent. 

Register Now! Complimentary Program: 2020 & Beyond: Sixth Annual Labor & Employment Fall Seminar

Join us on Wednesday, September 23 from 9:00 AM – 11:30 AM CT for our sixth annual complimentary Labor & Employment Fall Seminar! Our attorneys will discuss the topics that are always on your mind, from COVID-19 to employee benefits, and everything in between.

As with most other events this year, we’ve pivoted to an online format. We’re excited to be able to offer you our conference this year as a live stream of our panel from the comfort of your home.

Is there a question or topic you’d like discussed by our panel? Submit it when you register!

We hope you can join us for this virtual live streamed event!

IRS Issues Limited Guidance on Payroll Tax Deferral Option

Contributed by Kelly Haab-Tallitsch and Rebecca Dobbs Bush, August 31, 2020

payroll salary accounting payment wages money calculator icon symbol vector

On August 28, the IRS issued Notice 2020-65 providing brief guidance on the payroll tax deferral announced in a Presidential Memorandum issued on August 8th. The Memorandum directed the Treasury Department to issue guidance for a deferral of the withholding and payment of the employee portion of Social Security taxes to be “made available” to employers.  The IRS Notice, with very limited details, establishes the ability of an employer to defer the payroll tax, but leaves many questions unanswered.

Is it Required or Voluntary?

Under the Presidential Memorandum and IRS Notice, the deferral of payroll taxes is optional for employers. There is no penalty for employers that choose not to take advantage of the deferral. The Presidential Memorandum also specifies that the Memorandum does not create an enforceable legal right to a benefit.  In other words, an employee does not have the right to initiate legal action to force an employer to permit the payroll tax deferral.

Which Employees Can Be Eligible for Deferral?

Employers may defer the withholding and payment of the employee portion of Social Security taxes from September 1 through December 31, 2020 for employees that are paid less than $4,000 in a bi-weekly pay period (or the equivalent amount with respect to other pay periods). Eligibility for the deferral must be determined on a pay-period by pay-period basis.  No deferral is available for any bi-weekly pay period in which an employee earns $4,000 or more.

“Deferral” Does Not Mean the Tax Liability is Eliminated

Employers must withhold and pay any deferred taxes ratably between January 1 and April 30, 2021. This means employees would be subject to withholding of the deferred taxes (from the last four months of 2020) on top of regular tax withholding during the first four months of 2021. The Notice provides that an employer may make “other arrangements” to collect the deferred taxes from an employee if necessary, although it is unclear what this means.

Employer Liability

It is important to note that the Memorandum and Notice do not relieve an employer of the obligation to ultimately pay the relevant payroll taxes. Employers remain liable for the payment of deferred taxes regardless of whether an employer is able to collect the deferred taxes from an employee. For example, no specific relief is provided under the Notice to an employer in the event an employee is not employed in the first quarter of 2021 and the employer is unable to withhold the deferred taxes at that time. Interest and penalties will begin to accrue to the employer on any unpaid taxes beginning May 1, 2021.

The Bottom Line

Without additional clarification and guidance, employers deferring payroll taxes this fall run the risk of having to impose what will seem like an additional tax on employees or potentially face other liability next spring. Furthermore, employers should consider the administrative complexity of reviewing employee eligibility on a pay-period basis and the communication required to ensure employees understand they will be subject to additional withholdings before moving forward.

Form I-9 Update – Employers May Accept an Alternative to an Employment Authorization Document in Light of Governmental Delays

Contributed by Sara Zorich, August 25, 2020

book with words immigration law and glasses.

On August 19, 2020, U.S. Citizenship and Immigration Services (USCIS) announced that due to delays in production of certain Employment Authorization Documents (EAD’s – Form I-766) that employees may use Form I-797, Notice of Action as valid List C #7 document for Form I-9 purposes. To be valid, the Notice of Action must have a notice date on or after December 1, 2019 through and including August 20, 2020. If an employee presents a Form I-797, Notice of Action as a List C document, then the employees MUST also present a List B document. The Form I-797, Notice of Action is NOT evidence of someone’s identity and cannot be used as a List A or List B document.

Employees may present and employers may accept the Form I-797 Notice of Action showing approval of the employee’s I-765 application as a list C document for Form I-9 compliance until December 1, 2020. By December 1, 2020, employers must reverify employees who presented a valid Form I-797, Notice of Action. Those employees can either provide a List A document or a different List C document for the reverification process.

Additionally, the Department of Homeland Security (DHS) and U.S. Immigration and Customs Enforcement (ICE) announced an extension to the flexibility policy for employers and workplaces that are operating remotely which we previously reported on this past March. The extension of the policy is valid through September 19.

Illinois Releases Disclosure Form for Employers to Report Adverse Judgments and Administrative Rulings Related to Sexual Harassment and Unlawful Discrimination in Advance of October 31st Reporting Deadline

Contributed by Sara Zorich, August 18, 2020

48895877 – hand with pen over form

In August 2019, SB0075  – the Workplace Transparency Act – was signed in Illinois.  The Act created a number of new requirements for employers including, but not limited to, a new reporting requirement regarding adverse judgments and administrative rulings related to sexual harassment or unlawful discrimination brought under the Illinois Human Rights Act (IHRA), Title VII of the Civil Rights Act of 1964, or any other federal, state, or local law prohibiting sexual harassment or unlawful discrimination.

This new reporting obligation begins on July 1, 2020 for the period from January 1, 2019 to December 31, 2019. The filing deadline for this disclosure period is October 31, 2020. This reporting requirement is applicable to any employer that employs one or more employees in Illinois; however, only employers who actually had an adverse judgment or administrative ruling during the reporting period will need to file a reporting form.

An “adverse judgment or administrative ruling” is defined by the IHRA as any final and non-appealable judgment that finds sexual harassment or unlawful discrimination, where the ruling is in the employee’s favor and against an employer. (775 ILCS 5/2-108). Reportable adverse judgments or administrative rulings include those in the State of Illinois and any other jurisdiction nationwide. Employers will only need to provide the number of adverse judgments or administrative rulings and the basis of each—but employers do not need to provide any further details regarding the specific matters. Further, employers do not need to report settlements as part of this annual disclosure.

The IHRA disclosure form can be downloaded online  and either physically filed or emailed to the IDHR at IDHR.Section2-108@Illinois.gov. Going forward, the disclosure deadline will be July 1st each year. The Illinois Department of Human Rights has also published a FAQ to assist businesses with the reporting requirements.

Any employer that has one or more employees in Illinois should review their litigation and administrative matters from 2019 to determine if their company needs to file the IHRA reporting form by October 31st.

Save the Date! Complimentary Webcast August 19: Race, Religion, and Politics in the Workplace: What Employers Need to Know

In today’s society, discussions about politics, race, and religion will inevitably enter the workplace. How can employers maintain order and respect in the workplace in the face of free speech?

Join Beverly Alfon and Heather Bailey on Wednesday, August 19 at Noon CT as they discuss what employers should be aware of when responding or reacting to these topics in the workplace, how to identify conduct that is severe enough to trigger lawful discipline, and what legal parameters are at play.

California Court Re-Classifies Independent Drivers as Employees Pursuant to AB5

Contributed by Carlos Arévalo, August 11, 2020

close up of hand with transparent smartphone and virtual car sharing icons over black background,

On Monday August 10, 2020, Judge Ethan Schulman of the California Superior Court issued an injunction against Uber and Lyft ordering them to classify drivers as employees and not as independent contractors. The order follows a preliminary injunction lawsuit filed this spring by the State of California, along with a number of large cities in the state, where it was alleged that Uber and Lyft were in violation of California’s Assembly Bill 5 (“AB5”). A new state law that went into effect on January 1, 2020, AB5 codified what is known as the “ABC” test, which is commonly used to determine whether a worker is an employee as opposed to an independent contractor.

Specifically, under AB5, a person providing labor or services for remuneration shall be considered an employee rather than an independent contractor unless the hiring entity demonstrates that all of the following conditions are satisfied:

  1. The person is free from the control and direction of the hiring entity in connection with the performance of the work, both under the contract for the performance of the work and in fact.
  2. The person performs work that is outside the usual course of the hiring entity’s business.
  3. The person is customarily engaged in an independently established trade, occupation, or business of the same nature as that involved in the work performed.

In his order, Judge Schulman found that neither Uber nor Lyft would be able to establish the B prong of the ABC test and as a result, the likelihood that California will ultimately prevail in its action against Uber and Lyft is “overwhelming.”  Judge Schulman also found that any costs to Uber and Lyft related to restructuring and proper worker classification to come into compliance with AB5 are outweighed by the harm to the drivers, businesses and the public associated with workers being deprived of “the panoply of basic rights and protections to which employees are entitled under California law.”  The court’s opinion is not surprising in light of AB5’s prohibition of engaging anyone as an independent contractor who is critical to and part of a company’s business operations.  In short, prong B creates a burden that is very difficult for any business to meet.

The order represents the latest development in an ongoing battle regarding the classification of drivers. After the enactment of AB5, Uber filed a federal lawsuit challenging the law’s constitutionality. Uber, Lyft and others have also championed Proposition 22, a ballot initiative in the November 2020 election to define app-based transportation (rideshare) and delivery drivers as independent contractors.  Just last week, California’s Labor Commissioner Lilia García-Brower alleged in separate lawsuits against Uber and Lyft that they are “committing wage theft by misclassifying drivers as independent contractors” and that “freelance workers [are being] deprived of a host of legal protections in violation of California labor law.”  The lawsuit is in response to nearly 5,000 claims from drivers for lost wages.

While pending in California, these actions illustrate how critical it is to ensure workers are properly classified under applicable state law. Employers should be mindful to ascertain what test is used in their state for various laws, and how workers are evaluated against such standards. Counsel should also be utilized to analyze and craft independent contractor agreements that do more than simply label the relationship as independent contractor, but also incorporate elements necessary to demonstrate that the contractor truly meets the applicable standards.