DOL Issues Temporary Rule on FFCRA Paid Leave Requirements
WHAT: The U.S. Department of Labor (DOL) issued a temporary rule on April 1, 2020 to implement the Families First Coronavirus Response Act (FFCRA) and clarify some of its provisions. In particular, the rule provides guidance on how businesses with fewer than 50 employees may qualify for an exemption from the FFCRA leave requirements, as well as clarifications on certain terms within the text of the Act.
WHEN: The rule is in effect from April 1, 2020 to December 31, 2020, when the statutory leave requirements expire under the FFCRA.
GUIDANCE: The temporary rule provides much needed clarity to the FFCRA and helps fill in a number of interpretive gaps that employers have been left to grapple with over the last few weeks. Notably, the rule provides guidance on key terms of the FFCRA, the exemption for employers with fewer than 50 employees, and what documentation employers should ask for from employees that have requested FFCRA leave.
Clarifications on Paid Sick Leave Eligibility: The temporary rule provides clarifications on when an employee is eligible for emergency sick leave under the FFCRA, clarifications that have become all the more important as more states issue stay-at-home orders or restrict their citizens’ movements. The FFCRA provides that an employee is entitled to the emergency paid sick leave if they are unable to work because of any one of six qualifying reasons. One of those reasons is if the employee is subject to a “Federal, State, or local COVID-19 quarantine or isolation order.” The DOL guidance clarifies that the phrase “quarantine or isolation orders” can include a broad range of governmental orders, include shelter-in-place, stay at home, or quarantine orders. An employee may take paid sick leave if they are subject to one of these orders, but DOL provides that the test is whether the employee would be able to work or telework “but for” being required to comply with one of the aforementioned orders. Further, the employee can only take sick leave when the employer has work for the employee to do. While there will still be scenarios where the facts are not wholly clear on whether or not an isolation is a but-for cause, the test still provides a guidepost for employers navigating this new legislation.
The guidance cites as an example an attorney who has tested positive for COVID-19, but whose symptoms are such that they are still able to perform services by teleworking. This attorney would not be eligible for emergency sick leave under the FFCRA.
Finally, the guidance narrows the interpretation of when an employee is eligible for emergency sick leave because they are caring for another individual. According to DOL, the employee is only eligible for paid sick leave if they have a genuine need to care for an individual and are actually prevented from working due to caring for that individual, who has been subject to a quarantine or has become ill due to COVID-19. Further, DOL states that the individual must be someone with whom the employee has a personal relationship, i.e. a family member, roommate, or similar person. This guidance thus excludes employees that do not want to come to work because they live with an immunocompromised or high-risk individual from eligibility, and those who are not acting in a caregiver capacity.
Rule for Determining 500 Employees: A significant question left open by the FFCRA is how an employer would determine whether or not they have 500 employees. The rule clarifies that requirement. The determination of whether an employer has 500 employees is dependent on the number of employees the employer has at the day the employee would take leave. DOL makes clear that this does mean some employees will be eligible for paid leave, while other employees at the same business may not be if the business grows in size between when the first employee takes leave and the second takes leave.
In counting employees, employers must take into account full-time and part-time employees, employees on leave, temporary employees, and day laborers. The employer should not count independent contractors, employees that have been furloughed, or any employees outside of the United States. Because the FFCRA does not have extraterritorial application, the number of employees in the United States will be the operative number for purposes of the Act.
For employers who are part of a family of companies, the Family and Medical Leave Act’s (FMLA) integrated employer test will determine whether those companies’ employees should be counted together for both the emergency paid leave and emergency family leave provisions of the Act. This test balances four factors to determine if more than one entity is a single employer: whether there is common management; interrelation between operations; centralized control of labor relations; and the degree of common ownership or financial control.
Companies that share employees will also be subject to the act if they satisfy the joint-employer test, as they will have to count those employees when determining whether they have 500 employees. The Federal Labor Standards Act (FLSA) joint-employer test applies to this determination, which is whether the employer can, and actually does, exercise direct or indirect control over a particular employee.
Intermittent Leave: The DOL guidance provides that employers do not have to permit intermittent use of paid sick or emergency FMLA leave but may agree to allow increments of intermittent leave in any amount. Intermittent leave cannot be used, however, when the employee is working at their usual worksite (as opposed to teleworking) and is taking the emergency sick leave because of a quarantine or isolation order, because they are experiencing symptoms and are seeking a diagnosis, or if they are caring for another individual. In those circumstances, the employee must continue to take paid sick leave until the allotment of leave is exhausted or the reason for the leave is no longer in effect. Thus, the employee is more or less restricted to take intermittent sick leave if they are caring for a dependent and unable to come into their regular worksite on a regular basis.
Small Employer Exemption: The FFCRA provides that the Secretary of Labor has the authority to issue regulations to exempt employers with under 50 employees from having to provide an employee emergency paid sick leave or family and medical leave to care for a dependent whose school or place of care is closed. The temporary rule greatly clarifies that exemption.
First, the exemption only applies the employees who are requesting emergency paid leave (either sick leave or medical and family leave) to care for a dependent. There is no such exemption for employees who are requesting emergency sick leave pursuant to one of the other qualifying reasons.
Second, employers with 50 or fewer employees may only take advantage of this exemption if providing such paid leave would jeopardize the viability of the business as a going concern. DOL has clarified this to mean that a small employer is exempt from the requirement to provide such leave when: (1) such leave would cause the small employer’s expenses and financial obligations to exceed available business revenue and cause the small employer to cease operating at a minimal capacity; (2) the absence of the employee or employees requesting such leave would pose a substantial risk to the financial health or operational capacity of the small employer because of their specialized skills, knowledge of the business, or responsibilities; or (3) the small employer cannot find enough other workers who are able, willing, and qualified, and who will be available at the time and place needed, to perform the labor or services the employee or employees requesting leave provide, and these labor or services are needed for the small employer to operate at a minimal capacity.
Employers may deny paid emergency leave only to employees whose absence would cause one of these three scenarios, which means that leave may sometimes be denied non-uniformly. In this situation, employers are strongly urged to consult with counsel before making leave decisions so as not to accidentally implicate non-discrimination laws.
To avail itself of this exemption, employers should carefully document the facts and circumstances of the denial and how it meets the criteria set forth above. These materials should not be sent to DOL, but rather retained in the employer’s files.
Documentation: Many employers have been concerned about the documentation required from employees that will substantiate the need for leave and substantiate later requests for tax credits. DOL states that an employee must provide written documentation supporting their leave request that includes a signed statement containing the following information: (1) the employee’s name; (2) the date(s) for which leave is requested; (3) the COVID-19 qualifying reason for leave; and (4) a statement representing that the employee is unable to work or telework because of the COVID-19 qualifying reason.
Depending on the type of leave requested, the employee may be required to provide additional documentation in support. For example, if an employee is requesting leave because they are subject to an isolation order, the employee must provide the name of the government entity that issued the quarantine or isolation order to which the employee is subject. Similarly, an employee requesting emergency sick leave or emergency family and medical leave to care for a dependent must provide the name of the child being cared for, the name of the school, place of care, or child care provider that closed or became unavailable due to COVID-19 reasons, and a statement representing that no other suitable person is available to care for the child.
The DOL temporary rule provides much needed guidance on the FFCRA, but it does not resolve all open questions. As the COVID-19 crisis continues, novel situations will continue to arise that require careful analysis of the Act, the temporary rule, and existing employer obligations, such as non-discrimination and wage and hour laws.