March 25, 2020
Late yesterday, the DOL released a new Q & A publication aimed at providing employers with some initial guidance on implementing emergency paid sick leave (EPSL) and paid family leave (FMLA+) provisions of the Families First Coronavirus Response Act (FFCRA). A link to the guidance is here. While the publication falls short of providing answers to numerous open issues, the DOL did clarify the effective date of the new law, addressed which employees should be counted toward the 500 employee threshold to determine employer coverage and outlined how to calculate full and part-time employee regular rates of pay under the EPSL and FMLA+.
The following are some key takeaways:
Effective date: The guidance makes clear that the FFRCA’s paid leave provisions go into effect April 1, 2020, not April 2, 2020, as previously assumed. The law still expires December 31, 2020.
Covered Employers: The law still applies to private-sector employers with fewer than 500 employees. Notably, however, the employee threshold must be determined each time an employee goes on leave related to the EPSL or FMLA+. Practically speaking, this means that certain employers may fluctuate between being covered by the law (or not) at any given time, even perhaps, daily.
Counting Employees: The following groups of employees are counted to determine whether an employer falls within the “under 500 employees” coverage threshold:
- Full and part-time employees (not independent contractors)
- Only employees within the U.S.; the law does not apply to employees outside the United States and its territories.
- Employees on leave
- Temporary employees who are jointly employed by the employer and another employer (regardless of whether those employees are maintained only on one employer’s payroll)
- Day laborers supplied by a temporary agency (regardless of whether the employer is the temporary agency or the client firm if there is a continuing employment relationship).
Corporations and the Integrated Employer Test: The guidance provides that typically a corporation (and its separate establishments or divisions) will be considered a single employer and its employees must be added together to determine whether it exceeds the 500-employee threshold. If a corporation has an ownership interest in another corporation, the two corporations are still typically separate employers unless they are joint employers under the FLSA with respect to certain employees. If two entities are found to be joint employers, all of their common employees must be counted in determining whether EPSL and FMLA+ leave must be provided.
The DOL’s recent guidance also adopts the ‘integrated employer’ test outlined in the FMLA to determine whether two or more entities should be considered separate entities, or combined, for FMLA+ purposes. Those factors under the FMLA include common management, interrelation between operations, centralized control of labor relations, and degree of common ownership/control. See 29 CFR 825.104(c)(2). If two entities constitute an integrated employer under the FMLA, then employees of all entities making up the integrated employer will be counted in determining employer coverage for purposes of FMLA+ requirements.
Small Business Exemption: The DOL reiterates there will be an opportunity for businesses with fewer than 50 people to demonstrate that compliance with the EPSL and FMLA+ provisions would jeopardize the viability of their business. Regulations on this exact issue remain forthcoming.
Counting Leave Owed to Part-time Employees: Part-time employees are entitled to an average number of work hours in a two-week period. To calculate that average, the DOL issued the following parameters:
- Average the number of hours worked in a two-week period.
- If normal hours are not known, or if the hours vary, calculate the average daily hours over a 6-month period.
- If the employee has not been employed for 6 months, use the number of hours agreed upon at the outset of employment.
- If there is no agreed upon number of hours, calculate the average daily hours over the employee’s entire term of employment.
Calculating the “Regular Rate” and Overtime: The guidance makes clear that the FMLA+ requires employers pay an employee for hours the employee would have been normally scheduled to work. However, the DOL confirmed that EPSL benefits are capped at 80 hours total over a two-week period. The guidance notes, as an example, that an employee who is scheduled to work 50 hours a week may take 50 hours of paid sick leave in the first week and only 30 hours of paid sick leave in the second week because of the 80-hour cap. Notably, the DOL also confirmed that the payment made to the employee “does not need to include” a premium for overtime hours under either the EPSL or FMLA+.
Leave Granted Prior to April 1, 2020: Any leave granted prior to April 1, 2020 will not count towards the new requirements and will not be eligible for the tax credits under the new law.
Maximum Paid Leave: The DOL confirms that while an employee may be entitled to leave under the EPSL and the FMLA+, 12 weeks is the maximum amount of leave that may be taken.
Again, the DOL’s March 24, 2020 guidance provided some clarification on a number of issues, but many questions remain. Additional guidance and regulations are still anticipated this week.