Category Archives: COVID-19

U.S. DOL Issues Guidance on the FFCRA “Small Employer” Exemption and “Viability” Definition

Contributed by Carlos Arévalo, March 30, 2020  

At the time of passage of the Families First Coronavirus Response Act (FFCRA), the Department of Labor (DOL) was tasked with issuing guidance on how a “small employer” might be exempt from providing paid sick leave and expanded FMLA benefits if doing so affected the business’s viability. The DOL has now issued guidance that addresses how this viability exemption can be met. Specifically, the DOL states that an employer, which includes religious or nonprofit organizations, with fewer than 50 employees (small business), is exempt from providing paid emergency sick leave and expanded FMLA paid leave pursuant to the FFCRA if doing so “would jeopardize the viability of the small business as a going concern” as determined by an authorized officer of the business. This determination is based on said officer finding that one of the three following conditions exists:

  • The provision of paid sick leave or expanded family and medical leave would result in the small business’s expenses and financial obligations exceeding available business revenues and causing the small business to cease operating at a minimal capacity;  
  • The absence of employees requesting paid sick leave or expanded family and medical 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 employee or employees requesting paid sick leave or expanded family and medical leave, and these labor or services are needed for the small business to operate at a minimal capacity.

In sum, a small business may be exempted from FFCRA requirements if it can show that there is not enough revenue coming in to afford the expanded benefits, not enough skilled workers to do the specialized work critical to the business, or not enough available workers to do the work to keep the business going. 

It should be noted, however, that the DOL’s guidance on the small employer exemption also “encourages” employers and employees to collaborate to reach the best solution for maintaining the business and ensuring employee safety.   Also, the DOL’s guidance may give the small business protection today, but time may change the analysis. 

While the initial say on the business’s viability is the employer’s call, employers will likely be scrutinized down the road. 

BOTTOM LINE:  Any business contemplating the “small employer” exemption to the FFCRA should seek advice and counsel from competent labor law counsel. 

U.S. DOL Issues Guidance on “Health Care Provider” and “Emergency Responder” Definitions for FFCRA Exclusions

Contributed by Steven Jados, March 30, 2020

Studio macro of a stethoscope and digital tablet with shallow DOF evenly matched abstract on wood table background copy space

On March 28, 2020, the U.S. Department of Labor (DOL) issued an update to its “Families First Coronavirus Response Act: Questions and Answers” to address, among other things, the Families First Coronavirus Response Act (FFCRA) provisions that allow employers of “health care providers” and “emergency responders” to exclude such employees from the FFCRA’s emergency sick leave and expanded FMLA provisions. The specific questions that address the provisions for health care providers and emergency responders shown in this article can be found on the DOL website and read as follows:

Who is a “health care provider” who may be excluded by their employer from paid sick leave and/or expanded family and medical leave?

For the purposes of employees who may be exempted from paid sick leave or expanded family and medical leave by their employer under the FFCRA, a health care provider is anyone employed at any doctor’s office, hospital, health care center, clinic, post-secondary educational institution offering health care instruction, medical school, local health department or agency, nursing facility, retirement facility, nursing home, home health care provider, any facility that performs laboratory or medical testing, pharmacy, or any similar institution, employer, or entity. This includes any permanent or temporary institution, facility, location, or site where medical services are provided that are similar to such institutions. 

This definition includes any individual employed by an entity that contracts with any of the above institutions, employers, or entities institutions to provide services or to maintain the operation of the facility. This also includes anyone employed by any entity that provides medical services, produces medical products, or is otherwise involved in the making of COVID-19 related medical equipment, tests, drugs, vaccines, diagnostic vehicles, or treatments. This also includes any individual that the highest official of a state or territory, including the District of Columbia, determines is a health care provider necessary for that state’s or territory’s or the District of Columbia’s response to COVID-19.

To minimize the spread of the virus associated with COVID-19, the Department encourages employers to be judicious when using this definition to exempt health care providers from the provisions of the FFCRA.

The DOL also defined “emergency responder” for purposes of the FFCRA exclusions:

Who is an emergency responder?

For the purposes of employees who may be excluded from paid sick leave or expanded family and medical leave by their employer under the FFCRA, an emergency responder is an employee who is necessary for the provision of transport, care, health care, comfort, and nutrition of such patients, or whose services are otherwise needed to limit the spread of COVID-19. This includes but is not limited to military or national guard, law enforcement officers, correctional institution personnel, fire fighters, emergency medical services personnel, physicians, nurses, public health personnel, emergency medical technicians, paramedics, emergency management personnel, 911 operators, public works personnel, and persons with skills or training in operating specialized equipment or other skills needed to provide aid in a declared emergency as well as individuals who work for such facilities employing these individuals and whose work is necessary to maintain the operation of the facility. This also includes any individual that the highest official of a state or territory, including the District of Columbia, determines is an emergency responder necessary for that state’s or territory’s or the District of Columbia’s response to COVID-19.

To minimize the spread of the virus associated with COVID-19, the Department encourages employers to be judicious when using this definition to exempt emergency responders from the provisions of the FFCRA.

Employers having employees fitting the definitions above need to remember that the health care provider and emergency responder exclusions are discretionary, not automatic. As such, and in order to avoid confusion (and litigation down the road), we recommend that employers that intend to use either exclusion provide a short, simple notice to their employees to inform them of the fact that because they are included within the DOL’s definition of “health care provider” and/or “emergency responder,” and are essential to the fight against COVID-19, they are not eligible for emergency sick leave or expanded FMLA leave under the FFCRA. Such a notice should also advise employees that these exclusions do not affect their eligibility for FMLA leave under the terms of the FMLA in place prior to FFCRA enactment.    

And all employers should bear in mind that the fairly expansive definition of health care provider discussed above does not apply to the definition of a health care provider who can certify an employee’s need for FMLA leave. That definition remains limited to, essentially, licensed doctors of medicine, nurse practitioners, and certain others as discussed in FMLA regulations in place prior to FFCRA enactment.

While there is some “chatter” from Washington concerning potential “hazard pay” for these workers, employers who use these exclusions are permitted to implement their own policies and benefit programs unique to their workers. Employers should also remember to keep in mind any local or state paid leave mandates currently in place or that may develop in the coming weeks.

Can Employers Use Existing Paid Leave Benefits to Offset Emergency Paid Sick Leave under the FFCRA?

Contributed by Suzanne Newcomb and Brian Wacker, March 27, 2020

On March 18, President Trump signed into law the Families First Coronavirus Response Act (FFCRA). A component of the FFCRA is the Emergency Paid Sick Leave Act (EPSLA), which requires covered employers to provide employees with paid sick leave or expanded family and medical leave for specified reasons related to the COVID-19 corona virus starting April 1. 

Generally, EPSLA requires covered employers to provide all employees with two weeks (up to 80-hours) of paid sick leave at the regular rate of pay when the employee is unable to work because he/she is quarantined pursuant with governmental or doctor’s orders and/or experiencing COVID-19 symptoms and seeking a medical diagnosis. Additionally, if the employee is unable to work due to a bona fide need to care for someone else under quarantine, or a child whose school is closed for COVID-19 related reasons, then the employer is required to provide two weeks of paid sick leave at the rate of two-third (2/3) the employee’s regular rate of pay.

The question, however, for many employers is whether any employer provided, or local/state government mandated, paid sick leave policy or other paid time off (PTO) benefits can be used to meet the EPSLA mandate and if not, whether an employer can require employees to first use previously earned/accrued sick leave prior to availing themselves of this new ESPLA benefit. 

The answer to both questions is NO. The EPSLA states that an employer “may not require an employee to use other paid leave provided by the employer to the employee before the employee uses the paid sick time.” The EPSLA does not expressly state paid sick leave in this limitation, but newly published guidance from the DOL clarifies that paid sick leave and expanded family medical leave under the FFCRA is in addition to employees’ preexisting leave entitlements. Accordingly, earned/accrued sick leave or other paid leave existing prior to April 1, 2020 cannot be used to offset or substitute for the mandates under the FFCRA.

Of course, existing employer provided, or local/state government mandated, paid sick leave or other PTO benefits can be used to cover absences that occur prior to April 1st or to extend the period of paid leave beyond FFCRA mandates. Employers may also choose to allow (but cannot require) employees receiving 2/3 pay under FFCRA’s paid sick leave or paid family and medical leave provisions to use existing paid leave to supplement the 2/3 pay up to the amount of the employee’s normal earnings.

So You Want Some of the Fed Money? The Potential Price for Mid-Sized Businesses: A Labor Union

Contributed by Beverly Alfon, March 27, 2020

The U.S. Senate unanimously passed the CARES Act, and it is up for vote TODAY before the U.S. House of Representatives, with a promise of swift passage. You need to pay attention. This is about more than emergency relief.

Look at page 524 of the bill, which would apply to any mid-sized business that takes a loan under this Act:

“Any eligible borrower applying for a direct loan under this program shall make a good-faith certification that— ….

(X) that the recipient will remain neutral in any union organizing effort for the term of the loan.”

This means that if you employ between 500 and 10,000 employees and you take a loan under the Coronavirus Aid, Relief, and Economic Security Act (CARES Act), you would be required to remain neutral when a union tries to organize your employees.  In other words, by taking this loan, you would agree to not communicate with your employees – at all – about your preference to stay non-union, any of the drawbacks of union representation, or even respond to any stretched truth that the union throws at your employees to sway them to support the union. Although there are still questions about what “remain neutral” means under the CARES Act and whether that could include card checks – at the very least – we know it would mean that employees who are being organized by a union will only hear one side of the story.

The expectation is that this language will lead to union pressure on employers to enter into neutrality agreements to memorialize certain terms, which often include “card check” provisions. When there is a card check, the union merely has to obtain signatures from a majority of employees in a company to become the exclusive bargaining representative for all workers. This is a significant concession to the labor unions because it takes away the employees’ existing right to vote for or against the union, by secret ballot election conducted by the National Labor Relations Board (NLRB). Rather, a card check amounts to open voting because a union representative simply gets to ask the employee for his/her signature.  Opponents of the card check process argue that this can lead to unlawful interference with the employee’s right to freely choose for or against union representation.

The inclusion of this neutrality language comes on the heels of a November 2019 decision from the General Counsel of the National Labor Relations Board (NLRB), in Embassy Suites by Hilton, Seattle Downtown Pioneer Square, 19-CA-227623, in which he shifted on the legality of neutrality agreements by finding that a neutrality agreement amounted to unlawful employer assistance to the union and unlawful acceptance of aid by the union. This was a significant departure from the current law which generally views these neutrality agreements as legal.  This was viewed by management-side attorneys as a good basis to resist pressure from unions to enter into such agreements. This CARES Act provision appears to be a direct shot at that. 

The bottom line is BEWARE. Read the fine print or this loan could get you.

As of publication, the CARES Act language is still subject to change. We will continue to monitor the bill’s progress through the House and will update as necessary.

Regular Rate of Pay under the FFCRA – It’s Not Necessarily the Base Wage

By Sara Zorich and Michael Wong, March 27, 2020

wage and hour

For purposes of the Families First Coronavirus Response Act (FFCRA), the regular rate of pay used to calculate an employee’s paid leave is not necessarily the employee’s base wage or salary.  According to the Department of Labor (DOL) FAQs regarding the FFCRA, the pay rate for an employee’s FFCRA leave is the average of the employee’s regular rate over a period of up to six months prior to the date the employee takes the leave.  If the employee has not worked for the employer for at least six months, the regular rate used to calculate any FFCRA paid leave is the average of the employee’s regular rate of pay for each week the employee has worked for the employer.

In order to determine an employee’s regular rate for a workweek under the Fair Labor Standards Act (FLSA), the formula is: Total compensation in the workweek (except for statutory exclusions) ÷ Total hours worked in the workweek = Regular Rate for the workweek.

*Note, some states may have different regular rate calculations and items that are “excludable”.

For purposes of the FFCRA regular rate, employers have 2 options:

  • An employer can review the weekly regular rate for a period of up to six months prior to the date the employee takes the leave and average all of those regular rates; OR
  • An employer can compute the regular rate by adding all compensation that is part of the regular rate for the period of up to six months prior to the date the employee takes the leave and divides that sum by all hours actually worked in the same period.

Note, when determining the regular rate, if an employee is paid with commissions, tips, or piece rates, non-discretionary bonuses, those wages will be also need to be incorporated into the regular rate of pay calculation.

Under the FLSA, the following can be excluded from the regular rate IF there is no connection to hours worked and the employer has not agreed to include them as hours worked: gifts, business expenses, travel expenses, discretionary bonuses, vacation pay, holiday pay, illness pay, gym memberships, parking, wellness programs, profit sharing plans, employer contributions to retirement plans, stock options and premium overtime pay. (See Fact Sheet #56A for additional information). However, employers should review their policies and procedures to determine if they have any agreements to include otherwise excludable items in an employee’s regular rate of pay.

EXAMPLES –

  • On April 1, 2020, Joe is diagnosed with COVID-19 and quarantined.  He is entitled to Paid Sick Leave and makes $100,000 per year for working 40 hours a week. Under the FFCRA, he is entitled to two weeks at 100% of his regular rate, but not more than $511.00 per day.  Joe’s only compensation was his salary. When an employee is paid solely on a weekly salary, the employee’s regular rate is computed by dividing the salary by the number of hours which the salary is intended to compensate.  Joe’s regular rate is $50,000 ÷ 26 weeks (6 months) ÷ 40 hours per week = $48.08 per hour.  Under the FFCRA he would get $384.62 per day or $1,923.08 – which would be his normal salary because his salary is not above the $511 cap.
  • John advises his employer that he has to stay home to care for his children because their school is closed under state order.  He makes a base salary of $50,000 per year for working 40 hours a week and gets quarterly bonuses of $10,000 based on meeting performance goals. Under the FFCRA, he is entitled to two weeks at 2/3 his regular rate, but not more than $200.00 per day.  Since John receives a non-discretionary quarterly bonus of $10,000, that must be included in calculating his regular rate. During the past 6 months, John’s compensation would be $25,000 in salary wages and $20,000 in non-discretionary bonuses. John’s regular rate is $45,000 ÷ 26 weeks (6 months) ÷ 40 hours per week = $43.27 per hour/$346.15 per day.  Under the Paid Sick Leave he would get 2/3 of his regular rate so $346.15 x 2/3 = $230.77 per day – However, since it is above the cap of $200 per day, he would receive the max of $200 per day or $1,000 per week.

In summary, when an employee requests FFCRA leave, the employer will at that time need to determine the employee’s regular rate of pay for the paid FFCRA leave.

Senate Passes CARES Act – Bringing Relief to Many of Your Businesses!

We are diligently reviewing the CARES Act for the sections that will most affect small and mid-sized businesses across the country. As we dive ever deeper into the Act, we will post individual section summaries to our web page. We know you are craving information on changes to small business loans and tax policy which could bring some relief to your business so we started with those.

PAYCHECK PROTECTION PROGRAM – FINANCIAL ASSISTANCE THROUGH “FORGIVABLE” SBA LOANS

The CARES Act expands eligibility for small business loans made under section 7(a) of the Small Business Act by enacting a new Paycheck Protection Program (the “Program”). Program loans will be 100% guaranteed by the Federal government. The Program is in effect for the period of February 15, 2020 through June 30, 2020. Read more…

THE CARES ACT IMPACT ON CORPORATE AND BUSINESS TAXES

The CARES Act has several key provisions that are meant to give corporations and business (including sole proprietorships, partnerships and S-corporations) credits, payment delays, loss carrybacks, and interest deductions to help businesses to generate cash flow and liquidity to keep business open and maintain payroll. Read more…

Read all our CARES summaries for businesses

See all our COVID-19 Task Force Content