Families First Update - COVID-19 Alert
April 4, 2020
Since we published our initial alert regarding the Families First Coronavirus Response Act, both the Department of Labor and the IRS have updated their guidance interpreting the complicated new law. The Families First Act created the Emergency Paid Sick Leave Act (“EPSLA”) and Emergency Family and Medical Leave Expansion Act (“EFMLA”), which mandate that all employers with fewer than 500 employees provide paid sick leave and expanded family and medical leave to employees who require time off to care for themselves or others due to the COVID-19 pandemic. These new paid leave requirements started on April 1, 2020, and expire on December 31, 2020.
On April 1, 2020, the DOL published a temporary rule issuing regulations that refine and explain the protections and relief offered by EPSLA and EFMLA. Below is a summary of the high points of the new regulations and related updated agency guidance.
APPLICATION TO FURLOUGHED EMPLOYEES, CLOSED WORKSITES, AND REDUCED HOURS
The DOL’s guidance clarifies that employees who have been furloughed or had their worksites closed because their employer does not have work for them, are not entitled to paid sick leave or expanded family and medical leave (though they may be eligible for unemployment benefits). This is true whether the employer closes its worksite – even for a short period – due to lack of business or pursuant to a government directive. If the employer reopens and the impacted employees resume work, they would then be eligible for paid leave as warranted.
Thus, EPSLA and EFMLA should not impact an employer’s ability to make layoff decisions based on legitimate business and operational concerns, provided those decisions are not made in retaliation for employees exercising their right to leave.
SHELTER-IN-PLACE AND STAY AT HOME ORDERS QUALIFY AS A “QUARANTINE OR ISOLATION ORDER”
EPSLA provides that paid sick leave is available to employees unable to work due to “a federal, state, or local COVID-19 quarantine or isolation order.” The DOL regulations now confirm that quarantine and isolation orders include a “broad range of governmental orders, including orders that advise some or all citizens to shelter in place, stay at home, quarantine, or otherwise restrict their own mobility.”
However, the rule emphasizes two important caveats:
- First, an employee subject to a quarantine or isolation order may not take paid sick leave if their employer does not have work for them to do (e.g. the employer is forced to close due to a downturn in business caused by a shelter-in-place order).
- Second, an employee who is subject to a quarantine or isolation order is able to telework and thus may not take paid sick leave, if (a) the employer has work for the employee to perform; (b) the employer permits the employee to perform that work from the location where the employee is being quarantined or isolated; and (c) there are no extenuating circumstances that prevent the employee from performing that work, such as serious COVID-19 symptoms.
CLARIFICATION OF “TELEWORK” HOURS
As expected, the DOL views “telework” the same as work performed physically at a worksite. Accordingly, teleworking employees must always record and be compensated for all hours actually worked, including overtime. However, employers and employees are encouraged to implement “highly flexible telework arrangements” that allow employees to perform work at unconventional times, while also tending to family and other responsibilities.
The DOL has thus clarified that there is no presumption that employees are continuously teleworking during the workday during the COVID-19 pandemic, and employers are not required to count as hours worked all the time between the first and last principal activities performed by a teleworking employee. For example, an employee may perform telework from 7:00-9:00 a.m., 12:30-3:00 p.m., and 7:00-9:00 p.m. on weekdays, with only eight (8) actual hours worked instead of the standard 14 “continuous workday” hours.
REQUIRED EMPLOYEE DOCUMENTATION SUPPORTING THE NEED FOR LEAVE
Employers may require an employee to provide reasonable notice of the need for paid sick leave and expanded family and medical leave. Notice from the employee’s spokesperson (e.g., spouse, adult family member, or other responsible party) is reasonable, if the employee is unable to provide such notice personally. If an employee provides oral statements to support the request for leave, the employer is required to document and retain this information for four (4) years.
The regulations state that an employee must document their need for leave, providing a signed statement containing: (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 employee’s reason for the leave, additional documentation may be required.
The DOL has also confirmed that an employer need not provide leave to employees who will not provide sufficient materials to support the applicable tax credits.
To qualify for the reimbursable tax credits to cover the costs of leave, IRS guidance provides that employers must maintain, for four (4) years:
- Documentation to show how the employer determined how much EPSLA or EFMLA was paid to employees (including records of actual work performed, telework, and paid leave credits);
- Documentation to show how the employer determined the amount of qualified health plan expenses that were allocated to wages; and
- Copies of any completed IRS Forms 7200 (Advance Payment of Employer Credits Due to COVID-19) and the completed IRS Forms 941 (Employer’s Quarterly Federal Tax Return) that the employer submitted to the IRS (or, for employers that use third-party payers to meet their employment tax obligations, records of information provided to the third-party payer regarding the employer’s entitlement to the credit claimed on IRS Form 941).
EXEMPTION FOR SMALL EMPLOYERS
Employers with 49 or fewer employees can be exempt from EPSLA and EFMLA if providing the required leave would jeopardize the viability of the business as a going concern. The DOL regulations clarify that this small employer exemption applies when an authorized officer determines:
- 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;
- 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
- 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.
For the above reasons, the small employer may deny paid sick leave or expanded family and medical leave to an otherwise eligible employee. Employers using this exemption should retain these records for their own files (not send to the DOL).
The DOL has published the new required poster describing EPSLA and EFMLA (available here). Employers satisfy the laws’ notice requirements by posting and keeping it posted in a conspicuous place where employees or applicants at a worksite may view it. In addition to posting, employers should distribute the notice by e-mail, posting it online to an employee information website, or directly mailing to any employees who are not able to access information at the worksite, through e-mail, or online.
If you have any questions about the Families First Coronavirus Response Act or need strategic advice on how to manage your workforce during this trying time, feel free to contact Laura Balson (312-696-1351) or Ashley Orler (312-696-2032).