The U.S. Department of Labor (DOL) has now issued temporary regulations providing guidance on the Families First Coronavirus Response Act (FFCRA), which was signed into law on March 18, 2020, and took effect on April 1, 2020, in response to the growing COVID-19 pandemic. The temporary regulations, which were issued on April 1 and became effective immediately, address both types of leave established by the FFCRA: paid sick leave under the Emergency Paid Sick Leave Act (EPSLA) and family and medical leave under the Emergency Family and Medical Leave Expansion Act (EFMLEA), both of which we summarized in a previous client alert (available here).
The regulations follow the DOL’s issuance of more informal questions and answers (available here), which explain the requirements imposed by the new law, and the DOL’s release of a notice of employee rights (available here), which employers are required to post and distribute to employees. The new regulations were not subject to the usual notice and comment period due to the emergent nature of the law. Although the regulations elaborate on a number of provisions set forth in the FFCRA, we outline below some key takeaways for employers eager to understand their obligations under the legislation.
Although the DOL has said that until April 17, 2020, it will focus on compliance with, rather than enforcement of, the FFCRA where employers show “good faith” efforts to comply, employers should take steps now to familiarize themselves with the requirements of these paid leave laws.
EPSLA qualifying reasons
The EPSLA requires private employers with fewer than 500 employees to provide up to two weeks of paid sick leave to employees who are unable to work or telework for any one of six specified reasons related to the COVID-19 pandemic. We discuss two of those qualifying reasons below.
Subject to a quarantine or isolation order
One qualifying reason to take paid sick leave under EPSLA is when an employee is subject to a federal, state, or local quarantine or isolation order related to the COVID-19 pandemic. The regulations clarify that such an order need not be one directed specifically toward the employee seeking leave; rather, an order that advises some or all individuals to quarantine or stay at home would qualify for leave an employee who is subject to that order. However, the regulations also state that an employee may take leave for this reason only if, but for the quarantine or isolation order, he or she would otherwise be able to perform work for his or her employer. In other words, when an employer does not have work for the employee, even if that is a direct result of the same order, the employee’s absence from work is not covered by the EPSLA, and the employer will not be able to claim a tax credit under the EPSLA for any payments made during that time. Since many businesses have been or will be compelled to close or furlough employees during this crisis, this limitation will significantly curtail employee eligibility for sick leave under the FFCRA.
Caring for an individual
Another qualifying reason is when the employee is unable to work because he or she is caring for an individual who is subject to a quarantine or isolation order, or has been advised by a health care provider to self-quarantine. The regulations define this “individual” as an employee’s immediate family member, a person who regularly resides in the employee’s home (including a roommate, according to the DOL’s discussion preceding the regulations), or someone whose relationship with the employee “creates an expectation” that the employee would care for that person. An employee cannot take sick leave to care for an individual with whom the employee has no “personal relationship.” As with the quarantine or isolation order situation, the regulations limit eligibility for this qualifying reason to circumstances (1) where the employee, but for the need to care for this individual, would otherwise be able to perform work for the employer, and (2) where the employer has work for the employee.
The EFMLEA requires employers with fewer than 500 employees to provide up to 12 weeks of leave—two weeks of unpaid leave followed by 10 weeks of paid leave—to eligible employees who are unable to work or telework due to a need to care for their children under 18 years old whose school or place of care is closed or whose child care provider is unavailable because of the COVID-19 pandemic. The EFMLEA defines eligible employees as ones who have been employed for at least 30 calendar days; the subsequently enacted federal Coronavirus Aid, Relief, and Economic Security Act (CARES Act) amended that definition to include an employee who was terminated on or after March 1, 2020, had worked for the employer for at least 30 of the past 60 calendar days before the termination, and was then rehired by the employer. The FFCRA regulations add to that amendment that the employee must be rehired by the employer on or before December 31, 2020, to qualify as an eligible employee under this definition.
Given the CARES Act’s incentives for small businesses to retain employees during this crisis, as explained in previous alerts (available at these links—alert1, alert2, alert3, alert4—or on our Coronavirus Resource Center page), some businesses may decide to rehire employees who had already been terminated. Such rehired employees would benefit from this provision even before reaching 30 days of employment since the date of rehire.
Exclusion of health providers
The regulations permit employers to exclude health care providers and emergency responders from eligibility to take leave under both the EPSLA and the EFMLEA. An employer’s exercise of this option concerning a specific employee has no impact on that employee’s right to take earned or accrued leave under employer-established policies, according to the DOL’s discussion preceding the regulations. The new regulations define “health care providers” quite broadly in an attempt to encapsulate anyone “who is capable of providing health care services necessary to combat the COVID-19 public health emergency.” This includes anyone employed at a doctor’s office, hospital, clinic, medical school, local health department, nursing home, laboratory, pharmacy, or similar institution, or at an entity involved in making medical products or COVID-19-related medical equipment, tests, drugs, vaccines, diagnostic vehicles, or treatments. Moreover, anyone employed by an entity that contracts with such an institution to provide services or maintain operations “where that individual’s services support the operation of the facility” can be deemed a health care provider as well.
Despite the breadth of this regulation’s definition of health care providers, the DOL’s discussion of its regulation “encourages employers to be judicious” when choosing which employees are considered health care providers exempt from paid leave requirements to minimize the spread of the COVID-19 disease. When an employer denies a request for leave based on a determination that the employee is a health care provider, the employer must document that decision and retain such documentation for four years.
Both the EPSLA and the EFMLEA provide for exemptions from their paid leave requirements for employers with fewer than 50 employees when providing such paid leave “would jeopardize the viability of the business as a going concern.” Under the EPSLA, the exemption applies only when the request for leave is based on the need to care for a child whose school or place of care is closed or whose care provider is unavailable, but not for the five other qualifying reasons. To use this exemption, the regulations require an authorized officer of the small business to make one of the following three determinations and document it in a record to be maintained by the business:
- The requested paid leave would result in the business’s “expenses and financial obligations exceeding available business revenues” and cause the business “to cease operating at a minimal capacity”;
- The employee(s) requesting leave have “specialized skills, knowledge of the business, or responsibilities,” and their absence would “entail a substantial risk to the financial health or operational capabilities of the business”; or
- There are insufficient workers who can fill in for the employee(s) requesting leave, whose work is needed for the business to “operate at a minimal capacity.”
Documentation of need for leave
Because employers will be entitled to a tax credit for payments made for leave taken under the FFCRA—whether for paid sick leave or expanded family and medical leave—the regulations have addressed the documentation required by employees to support the reasons for such leaves. In all instances, the requesting employee must provide the employer with his/her name, the date(s) for which leave is requested, the qualifying reason for the leave, and an oral or written statement that he/she is unable to work because of the qualifying reason. The requesting employee must provide additional documentation depending on the basis for the qualifying reason:
- For paid sick leave due to the employee being subject to a quarantine or isolation order, provide the name of the government entity that issued the order;
- For paid sick leave due to the employee’s need to self-quarantine on advice of a health care provider, provide the name of the health care provider;
- For paid sick leave due to the employee’s need to care for an individual who is subject to a quarantine or isolation order or who was advised to self-quarantine, provide the name of the governmental entity that issued the order or the name of the health care provider; or
- For paid sick leave or expanded family and medical leave due to the employee’s need to care for a child whose school or place of care was closed or whose child care provider is unavailable, provide the name of the child being cared for; the name of the school, place of care, or child care provider; and “a representation that no other suitable person” will care for the child during the period of leave.
Employers are required to retain all documentation provided by employees pursuant to these requirements for a period of four years, whether the leave is granted or denied. To the extent an employee provides oral statements supporting the request for leave, the employer must document the statement and maintain it for four years as well.
Some, but not all, circumstances that qualify for paid sick leave under the EPSLA will also qualify for traditional FMLA leave, either because the employee has a “serious health condition” or because the employee is caring for a child, spouse, or parent with a serious health condition. In those cases, employers that were already subject to the FMLA should follow their normal FMLA documentation process—which is likely based at least in part on prior DOL-issued forms—as well as obtain the FFCRA documentation described above.
Documentation to claim tax credits
The FFCRA provides that employers can be reimbursed for the costs of providing paid leave through federal tax credits. The regulations advise employers that wish to claim tax credits from the IRS to maintain the following records for four years:
- Documentation to show how the employer determined the amount of leave paid to employees;
- 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 the employer submitted to the IRS;
- Copies of the completed IRS Forms 941 that the employer submitted to the IRS; and
- Other documents required by IRS forms and instructions.
Furthermore, the employer may ask requesting employees to provide additional documentation that may be necessary for the employer to claim tax credits, and may refuse to provide leave if such documentation is not provided.