CLIENT ALERT – April 2, 2020
Yesterday, the Department of Labor released temporary regulations interpreting and explaining the new Families First Coronavirus Response Act (“FFCRA”) that went into effect April 1, 2020.
The full DOL summary and regulations can be found at the following link: https://www.dol.gov/sites/dolgov/files/WHD/Pandemic/FFCRA.pdf. In addition, the IRS released guidance regarding the FFCRA tax credits. That guidance can be found here: https://www.irs.gov/newsroom/covid-19-related-tax-credits-for-required-paid-leave-provided-by-small-and-midsize-businesses-faqs.
While we certainly encourage you to review those links in full if you have specific questions or want all the information provided, the information at those links is quite lengthy. In an effort to provide information regarding some of the most common questions we have been asked over the last few weeks, we are providing this alert.
In addition, since we are not tax lawyers, CPAs or financial advisors, we encourage you to get with such a person on your team to discuss the details regarding the tax credits and how to implement that process and properly utilize the tax credits.
The information provided in this alert is in a bullet point fashion and is explanatory information that should be read in conjunction with our previous alerts (although you should be aware that this newly released guidance may in some ways change some information in the previous alerts). If you have any questions, please do not hesitate to reach out to us.
- Although the term “child care provider” is defined in the law as someone who receives compensation for providing child care services on a regular basis, the DOL has confirmed that for FFCRA purposes, the “child care provider” does not have to be compensated or licensed if he or she is a family member or friend who regularly cares for the employee’s child. So, if an employee’s family member or friend who regularly cares for the employee’s child is no longer available due to COVID-19, the employee will be eligible for paid sick leave or paid family leave under the FFCRA if the employee is unable to work or telework due to this unavailability.
- The DOL has confirmed that the shelter-in-place and/or stay-at-home orders do constitute federal, state, or local orders of quarantine or isolation for purposes of Reason #1 in the Emergency Paid Sick Leave Act. That said, if the shelter-in-place and/or stay-at-home order results in the shutdown of the business, the DOL holds that no work is available and, thus, the employee is not eligible for paid sick leave under Reason #1. It is likely that for Reason #1 to apply, it would have to be in the limited situation where the employer is deemed an essential business and, thus, permitted to stay open but the employee in question is not providing essential products or services to the employer and, thus, is not permitted to work pursuant to the shelter-in-place and/or stay-at-home order.
- For purposes of the FFCRA, son or daughter includes not only children under 18 years of age but also children over 18 years old who are incapable of self-care due to a mental or physical disability.
- Many people have asked what it means for an employee to be able or unable to telework. The DOL now states that an employee is able to telework if: (a) his or her employer has work for the employee, (b) the employer permits the employee to work from the employee’s location, and (c), there are no extenuating circumstances that prevent the employee from performing the work. The DOL highlighted two specific extenuating circumstances examples – serious COVID-19 symptoms and a power outage at the employee’s home. So, it appears that the DOL is taking a very broad approach to whether or not an employee is “able to telework.”
- As you are aware, Reason #2 from the Emergency Paid Sick Leave Act is that a healthcare provider has advised the employee to self-quarantine. The DOL has expanded on this to indicate that the advice to self-quarantine must be based on a belief that (a) the employee has COVID-19, (b) the employee may have COVID-19, or (c) the employee is particularly vulnerable to COVID-19.
- As you also are aware, Reason #3 from the Emergency Paid Sick Leave Act is that the employee is experiencing symptoms of COVID-19 and is seeking a diagnosis. In the temporary regulations, the DOL provided two clarifications. First, the symptoms experienced must be fever, dry cough, shortness of breath, or any other COVID-19 symptoms identified by the U.S. Centers for Disease Control and Prevention. The DOL also stated that leave based on this reason is limited to the time the employee is unable to work because he or she is taking affirmative steps to seek a medical diagnosis, such as making, waiting for, or attending an appointment for a COVID-19 test.
- As you are aware, Reason #4 from the Emergency Paid Sick Leave Act applies to caring for an individual to whom Reason #1 or Reason #2 apply. The DOL has clarified what is meant by “individual.” The individual must be a family member of the employee, someone who regularly resides in the family member’s home, or a similar person with whom the employee has a relationship such that it creates an expectation the employee would care for the individual. “Individual” does not include people with whom the employee has no personal relationship.
- With respect to leave to care for a child whose school is closed or childcare is unavailable, the DOL has stated that such a reason only applies when no other suitable person is available to care for the child during the period of leave. The DOL provided examples of suitable individuals, such as co-parents, co-guardians, or the usual childcare provider.
- The DOL has confirmed that the 12 weeks of leave available under the Emergency Family Medical Leave Expansion Act (“EFMLEA”) is NOT an additional 12 weeks above and beyond the 12 provided by the FMLA. Rather, employees are eligible for a total of 12 weeks of FMLA leave in a calendar year, including EFMLEA leave related to care for a child whose school is closed or childcare is unavailable. Thus, if an employee has already utilized some FMLA leave in the calendar year, that amount of leave would reduce the 12 weeks available to the employee under the EFMLEA. Notably, however, the DOL has indicated that no more than 12 weeks may be used for the EFMLEA purposes (meaning if the employer’s calendar year ends during the April 1, 2020 – December 31, 2020 time period, an employee is not entitled to a new 12 weeks for EFMLEA purposes.
- The DOL confirmed that an employee can elect to use paid leave during the first two weeks of EFMLEA leave (which would otherwise be unpaid) and an employer CAN require an employee to utilize existing accrued PTO during that time if the employee does not elect to use paid leave.
- The DOL stated that if an employee was laid off after March 1, 2020 but rehired before December 31, 2020, that employee would be eligible for EFMLEA leave if he or she had been on the employer’s payroll for 30 or more of the 60 calendar days prior to the date of layoff.
- Regardless of whether an employer with fewer than 50 employees chooses to exempt one or more employees pursuant to the provisions of the FFCRA, the employer must post the required FFCRA notice.
- With respect to the small employer exemption, the DOL regulations make clear that it should be examined on an employee by employee basis and employers with fewer than 50 employees should be wary about making a wholesale determination of business jeopardy to avoid compliance with the portions of the law providing for leave to care for a child whose school is closed or childcare is unavailable.
- Intermittent leave is only available if the employer and employee agree. Even then, if the employee is working at the employer’s job site, intermittent leave is only available for leave to care for a child whose school has closed or childcare is unavailable. If the employer is working remotely, intermittent leave is available for any category. In addition, the increments for intermittent leave must also be agreed upon by employer and employee.
- If an employee has already exhausted his or her 2 weeks of paid sick leave under the new law, then the first two weeks of any EFMLEA leave must be unpaid unless the employee has accrued PTO available.
- While an employee could utilize 14 weeks of leave total under the FFCRA, the employee is only entitled to 12 weeks of leave for care of a child whose school is closed or childcare is unavailable. This means an employee could use 2 weeks of paid sick leave for Reasons 1-4 or 6 and then use 12 weeks of EFMLEA leave related to care of a child whose school is closed or childcare is unavailable. If the employee opts to use the paid sick leave for care of a child whose school is closed or childcare is unavailable, then the employee would only have 12 weeks of leave available in total.
- The DOL temporary regulations also outlined the documentation an employee must provide related to the various types of leave. This documentation is as follows:
- For all types of leave under the FFCRA – (1) Employee’s name, (2) date(s) for which the leave is requested, (3) qualifying reason for the leave, and (4) an oral or written statement that the employee is unable to work because of the qualified reason for the leave
- For leave related to a government order to quarantine or isolate – In addition to the general information above, the employee must provide the employer with the name of the government entity that issued the quarantine or isolation order
- For leave related to a healthcare provider’s advice to self-quarantine – In addition to the general information above, the employee must provide the employer with the name of the health care provider
- For leave to care for an individual subject to Reason #1 or Reason #2 – In addition to the general information above, the employee must provide the employer with the name of the government entity that issued the quarantine or isolation order to which the individual being cared for is subject OR the name of the health care provider who advised self-quarantine for the individual being cared for
- For leave to care for a child based on school closure or childcare unavailability – In addition to the general information above, the employee must provide the employer with (1) the name of the son or daughter being cared for, (2) the name of the school or child care provider that has closed or become unavailable, and (3) a representation that no other suitable person will be caring for the son or daughter during the period for which the employee takes the leave
- The DOL also outlined that an employer may request any additional supporting material from the employee that is needed to support a request for the FFCRA tax credits and the employer is NOT required to provide the leave if materials sufficient to support the applicable tax credit have not been provided. Per the IRS, this information is as follows:
- For leave to care for a child based on school closure or childcare unavailability – In addition to all the above, with respect to an employee’s inability to provide care for a child older than 14 during daylight hours, a statement that special circumstances exist requiring the employee to provide care.
- The DOL regulations also outlined the following recordkeeping requirements related to the FFCRA:
- All supporting documentation (regardless whether the leave was granted or denied) must be maintained for four years. If the employee provided oral statements to support a request, the employer should document those oral statements and maintain that information for four years.
- In order to claim the tax credits, an employer should maintain the following for four years:
- Documentation to show how the employer determined the amount of paid leave available, including records of work, telework, and paid leave;
- Documentation to show how the employer determined the amount of qualified health plan expenses that the employer allocated to wages;
- Copies of any completed IRS Forms 7200 that were submitted to the IRS;
- Copies of the completed IRS Forms 941 submitted to the IRS; and
- Other documents needed to support a request for tax credits
- Notably, the DOL stated that a private lawsuit may not be filed against any employer related to EFMLEA violations unless the employer would otherwise normally be subject to the FMLA (i.e., unless the employer was normally a covered FMLA employer, meaning having 50 or more employees).
As we said at the outset, we were highlighting some of the major points from the new regulations. It is likely that you have questions unanswered here, they are answered by the regulations (linked above). Furthermore, you can always reach out to us with questions if any of the information provided in this alert is unclear.
We will continue to keep you updated on any changes or further guidance, but we believe this will be the last of the guidance from the Department of Labor on this new law.