The U.S. Department of Labor (DOL) has issued a temporary rule under the Families First Coronavirus Response Act (FFCRA) to combat the effects of COVID-19 on the workplace (the “FFCRA Temporary Rule”). The FFCRA Temporary Rule is effective from April 1, 2020 through December 31, 2020 and extends employee leave protections and relief offered by the FFCRA to certain American workers and employers. This temporary rule will reimburse private employers that have fewer than 500 employees with tax credits for the cost of providing COVID-19-related leave to its employees. The DOL intends for the rule to permit covered employers to keep workers on payroll, while also ensuring workers are not forced to choose between their paychecks and applicable public health measures necessary to combat COVID-19.
COVERED EMPLOYERS AND EMPLOYEES
The FFCRA Temporary Rule applies to private sector employers with fewer than 500 employees and certain public sector employers. When calculating the total number of employees that a private employer currently employs, the employer must count the following: (1) all full-time employees; (2) all part-time employees; (3) any employees on leave of any kind; (4) employees of temporary placement agencies that are jointly employed under the Fair Labor Standards Act; (5) day laborers supplied by a temporary placement agency; and (6) all common employees of joint employers. Independent contractors are excluded from the calculation. The employer must calculate the number of its employees at the time the employee would take the leave.
Note that while certain public sector employees may be eligible for FFCRA leave, a number of exclusions apply (e.g., U.S. Postal Service employees, part-time employees, employees under a temporary appointment, and Federal employees not covered by Title II of the Family and Medical Leave Act). Further, the Office of Management and Budget has the authority to exclude categories of employees in the U.S. Government Executive Branch. The DOL issued Q&A’s that provide guidance on FFCRA leave, including which public employees may be eligible for FFCRA leave.
Additionally, employers may choose to exclude certain employees (i.e., healthcare providers and emergency responders) from the FFCRA leave requirements. The FFCRA Temporary Rule defines healthcare providers broadly to include anyone employed at a doctor’s office, hospital, health care center or similar institution. It defines emergency responders to mean employees necessary for the provision of transport, care, health care, comfort, and nutrition of patients, or whose services are necessary to limit the spread of COVID-19.
Pursuant to the FFCRA Temporary Rule, covered employers must provide up to eighty (80) hours of paid sick leave to employees that need leave from work due to COVID-19-related reasons. If the employee is a part-time employee, the employer must offer a two-week equivalent. Qualifying COVID-19-related reasons include when the employee:
- Is subject to a government quarantine order due to COVID-19 symptoms;
- Has been advised by a health care provider to self-quarantine due to COVID-19 symptoms;
- Is experiencing COVID-19 symptoms and is seeking medical attention;
- Is caring for an individual subject to an order described in (1) or (2);
- Is caring for his/her child whose school or place of care is closed or whose childcare provider is unavailable for COVID-19-related reasons; or
- Is experiencing any other substantially similar condition as specified by the Department of Health and Human Services.
Note that covered employers must also provide up to ten (10) weeks of paid, and two (2) weeks of unpaid, emergency family and medical leave to employees that have been employed for at least 30 days if they seek leave for qualifying reason #5 above.
The amount of sick leave and pay available to each employee is based upon the employee’s reason for leave. Employees should be paid either their regular rate of pay or the applicable state or federal minimum wage, whichever is higher, as follows:
- Up to 80 hours of paid sick leave at 100% of the applicable pay rate for qualifying reasons #1-3 above (up to $511 daily and $5,110 total)
- Up to 80 hours of paid sick leave at 2/3 of the applicable pay rate for qualifying reasons #4 and #6 above (up to $200 daily and $2,000 total)
- Up to 12 weeks of paid sick leave at 2/3 of the applicable pay rate for qualifying reason #5 (up to $200 daily and $12,000 total)
SMALL BUSINESS EXEMPTION
There is an exemption applicable to small businesses with less than 50 employees. The exemption applies if a business has less than 50 employees and the employer has determined that granting the sick leave will result in one of the following:
- The leave requested would cause the business’s expenses and financial obligations to exceed available business revenues and cause the business to cease operating at a minimal capacity;
- The absence of the employee(s) requesting leave would entail a substantial risk to the financial health or operational capabilities of the business due to their specialized skills, knowledge or their responsibilities to the business; or
- There are not sufficient workers that are able, willing, qualified and available at the time and place needed to perform the labor/services provided by the employee, and the labor/services are necessary for the business to operate at a minimal capacity.
The small business should document such a determination. While the business is not required to submit documentation of a determination to the DOL, such documentation should be retained in its records.
NOTICE TO EMPLOYEES
Each covered employer must have posted a notice regarding FFCRA leave to its employees by April 1, 2020. The notice requirement may be met by: (1) posting the notice in a conspicuous place on the employer’s premises; (2) emailing or direct mailing the notice to employees; or (3) posting the notice on an employee information website. Employers are not required to post the notice in multiple languages, but the DOL will be translating it into multiple languages should the employer wish to do so. The FFCRA notice may be downloaded from the DOL’s website at https://www.dol.gov/agencies/whd/posters.
To be eligible for tax credits under the FFCRA, the employer must retain records and documentation related to each employee’s leave to substantiate the claim. To this end, the FFCRA requires each employee requesting leave to provide documentation to his/her employer specifying the following:
- Employee’s name;
- Date(s) for which the leave is requested;
- The qualifying reason for requesting leave; and
- A statement (oral or written) that the employee is unable to work due to the qualifying reason for leave.
If the employee requests leave due to a quarantine order, the employee should include the governmental entity or name of the healthcare provider that issued the order. If the employee requests leave to care for his/her child, the employee should include: (1) the name of the child to be cared for; (2) the name of the school, place of care, or child care provider that is closed or unavailable due to COVID-19-related reasons; and (3) a statement that no other individual will be providing care to the child during the period of leave. The employer may also request any additional information necessary to support a request for tax credits under the FFCRA.
OBTAINING THE FFCRA TAX CREDIT
If an employer grants leave under the FFCRA to its employees and is eligible for tax credits, it should report its total qualified leave wages and related tax credits on IRS Form 941 (Employer’s Quarterly Federal Tax Return). Employers may also file IRS Form 7200 (Advance Payment of Employer Credits Due to COVID-19) to request advance payment of tax credits for qualified sick and family leave wages. Note that if the employer receives advance payment of such tax credits, it must reconcile the advance payments on its 2020 employment tax returns. All applicable records and documentation necessary to substantiate the employer’s eligibility for the FFCRA tax credits must be maintained by the employer for at least 4 years after the tax becomes due or paid, whichever occurs later. Such records and documentation must be readily available for IRS review.
For more information regarding the FFCRA Temporary Rule or other questions, please contact your regular HLP attorney, or Partners@thehlp.com, or call (212) 734-0128 or (248) 996-8510.