Families First Coronavirus Response Act

Small Business Exemption Guidance Issued for the Families First Coronavirus Response Act

March 30, 2020

The Families First Coronavirus Response Act (“Act”) goes into effect on April 1, 2020. The Act expanded employer requirements as it relates to providing employees with Emergency Family and Medical Leave and Emergency Paid Sick Leave, as described in an article Shivani Sutaria Law Offices published on March 19 (see below). On March 24, 2020, the Department of Labor released its first set of Facts Sheets (one for employers and one for employees) and answers to Frequently Asked Questions regarding the Act. We published an article regarding this (see below).

A few days ago, the Department of Labor issued the Act's poster and last night, the it added questions and answers on its Frequently Asked Questions page regarding the small business exemption, which applies to businesses with fewer than 50 employees and when compliance would "jeopardize the viability of the business." According to the DOL, the exemption is limited to only when employees need paid sick leave and/or expanded family and medical leave due to the inability to work or telework because their child/s’ school or place of care being closed or their child care provider being unavailable due to the COVID-19 public health emergency.

Here are the applicable questions and answers:

58. When does the small business exemption apply to exclude a small business from the provisions of the Emergency Paid Sick Leave Act and Emergency Family and Medical Leave Expansion Act?

An employer, including a religious or nonprofit organization, with fewer than 50 employees (small business) is exempt from providing (a) paid sick leave due to school or place of care closures or child care provider unavailability for COVID-19 related reasons and (b) expanded family and medical leave due to school or place of care closures or child care provider unavailability for COVID-19 related reasons when doing so would jeopardize the viability of the small business as a going concern. A small business may claim this exemption if an authorized officer of the business has determined that:

The provision of paid sick leave or expanded family and medical leave would result in the small business’s expenses and financial obligations exceeding available business revenues and cause the small business to cease operating at a minimal capacity;
The absence of the employee or employees requesting paid sick leave or expanded family and medical leave would entail a substantial risk to the financial health or operational capabilities of the small business because of their specialized skills, knowledge of the business, or responsibilities; or
There are not sufficient workers who are able, willing, and qualified, and who will be available at the time and place needed, to perform the labor or services provided by the employee or employees requesting paid sick leave or expanded family and medical leave, and these labor or services are needed for the small business to operate at a minimal capacity.

59. If I am a small business with fewer than 50 employees, am I exempt from the requirements to provide paid sick leave or expanded family and medical leave?

A small business is exempt from certain paid sick leave and expanded family and medical leave requirements if providing an employee such leave would jeopardize the viability of the business as a going concern. This means a small business is exempt from mandated paid sick leave or expanded family and medical leave requirements only if the:

employer employs fewer than 50 employees;
leave is requested because the child’s school or place of care is closed, or child care provider is unavailable, due to COVID-19 related reasons; and
an authorized officer of the business has determined that at least one of the three conditions described in Question 58 is satisfied.

At this time, this is all the guidance provided by the DOL regarding the small business exemption. There are no specifics about whether there will be a process, beyond an authorized officer making a determination, that must be followed to claim the exemption. We will keep you updated.

Updated Information on Families First Coronavirus Response Act

March 24, 2020

On March 18, 2020, the Families First Coronavirus Response Act (“Act”) was signed into law. The Act expanded employer requirements as it relates to providing employees with Emergency Family and Medical Leave and Emergency Paid Sick Leave, as described in an article Shivani Sutaria Law Offices published on March 19. Last night on March 24, 2020, the Department of Labor released its first set of Facts Sheets (one for employers and one for employees) and answers to Frequently Asked Questions regarding the Act.

Here are some important takeaways:

Effective Date: The Act goes into effect on April 1, 2020 (not April 2, 2020 as previously expected). The Act will remain in effect until December 31, 2020.

Limited Information on the Small Business Exemption: The DOL states “To elect this small business exemption, you should document why your business with fewer than 50 employees meets the criteria set forth by the Department, which will be addressed in more detail in forthcoming regulations. You should not send any materials to the Department of Labor when seeking a small business exemption for paid sick leave and expanded family and medical leave.” Thus, it is still unknown at this time what the “criteria” will be and when they will be issued. We will keep you updated on this as soon as they are release.

Counting Employees for Threshold Purposes: To determine if employers meet the threshold number of 500 or less employees, employers must count all full-time and part-time employees within the United States, including employees on leave, temporary employees who are jointly employed by you and another employer, and day laborers supplied by a temporary agency (regardless of whether you are the temporary agency or the client firm if there is a continuing employment relationship). Independent contractors are not considered employees.

Previously-Provided Paid Sick Leave Does Not Count Towards the 10 Days Required Under the Act: The DOL states that the paid sick leave requirements under this Act commence on April 1, 2020. Therefore, any paid sick leave paid to employees prior to that date do not count towards the 10 days required under the Act.

Employees are Entitled to a Total of 10 days of Paid Sick Leave, Not More: The DOL states that employees are entitled to a total of 10 days of paid sick leave (80 hours for a full-time employee, or for a part-time employee, the number of hours equal to the average number of hours that the employee works over a typical two-week period) for one or a combination of qualifying reasons. Once the 10 days are exhausted, employers do not have to provide employees with additional paid sick leave in the event a new qualifying reason arises. The following are the six qualifying reasons for paid sick leave under the Act:

Subject to a federal, state, or local quarantine or isolation order related to COVID-19,
Has been advised by a healthcare provider to self-quarantine due to concerns related to COVID-19,
Is experiencing symptoms of COVID-19 and seeking a medical diagnosis,
Is caring for an individual who is subject to a quarantine or isolation order or has been advised by a healthcare provider to self-quarantine due to concerns related to COVID-19,
Is caring for their child if the school or place of care of the child has been closed, or the childcare provider of the child is unavailable, due to COVID-19,
Is experiencing any other substantially similar condition specified by the Secretary of Health and Human Services, in consultation with the Secretary of the Treasury and the Secretary of Labor

Paid Sick Leave and Family and Medical Leave Interaction: Employees who cannot work or telework due to their child/s’ school or place of care being closed or their child care provider being unavailable due to the COVID-19 public health emergency qualify for both the emergency paid sick leave and emergency family and medical leave under the Act. Employees can receive up to 12 weeks of paid leave; the first 2 weeks (10 days/80 hours) through the emergency paid sick leave entitlements and the additional 10 weeks through the emergency family and medical leave entitlements.

Other Qualifying Reasons Under FMLA are Not Paid: While the Act requires paid leave for employees who cannot work or telework due to their child/s’ school or place of care being closed or their child care provider being unavailable due to the COVID-19 public health emergency, the other qualifying reasons that previously existed under FMLA such as taking leave due to having a serious health condition, caring for a family member who has a serious health condition, and/or the birth and/or caring of a new child remains unpaid.

Fact Sheet on Families First Coronavirus Response Act

March 19, 2020

The Families First Coronavirus Response Act (“Act”) was signed into law on March 18, 2020 and will become effective on April 1, 2010. The Act has expanded employer requirements as it relates to providing employees with Emergency Family and Medical Leave and Emergency Paid Sick Leave. The Act applies to employers with 500 or less employees, with a caveat that the Secretary of Labor has the authority to exempt employers with fewer than 50 employees from requirements under both leaves “when the imposition of such requirements would jeopardize the viability of the business as a going concern.” Employers who are health care providers or emergency responders may elect to exclude their employees.

Emergency Family and Medical Leave Act

Expanded Eligibility:

Employees who have worked employers with 500 or less employees for at least 30 days prior to the leave are eligible.

Duration and Reason for FMLA Emergency Leave:

Employees may take up to 12 weeks of job-protected leave if they are unable to work or telework due to the need to care for their child (under 18 years of age) if the child’s school or place of care is closed or the childcare provider is unavailable because of the COVID-19 public health emergency.

Employer Compensation Requirements:

The first 10 days of FMLA emergency leave may be unpaid, and employees may choose to use any accrued/available paid sick leave or paid vacation hours.
An employee may request the employer pay him/her the 80 hours of emergency paid sick leave required under the Act (see below) during these 10 days.
After the first 10 days, employers must pay employees at two-thirds of an employee’s regular rate of pay for the number of hours the employee would otherwise be normally scheduled.
Employers can cap their daily compensation obligations per employee at $200 per day (with an aggregate cap of $10,000 per employee).
Part-time employees’ number of hours is based on the average number of hours they worked for the six months prior to taking FMLA emergency leave or their reasonable expectation at hiring of the average number of hours they would normally be scheduled to work.

Job Reinstatement:

Employers must reinstate employees to their same or similar position at the end of the FMLA emergency leave.
Employers with fewer than 25 employees may be exempt from this requirement if an employee’s position no longer exists following the FMLA emergency leave due to an economic downtown or other circumstances caused by this public health emergency.
The employer must make reasonable attempts to return the employee to an equivalent position for up to a year following the FMLA emergency leave.

Legal Liabilities:

The Act excludes employers with 50 or less employees from damages in an employee-initiated civil lawsuit regarding these FMLA requirements.

Emergency Paid Sick Leave

Reasons for Paid Sick Leave:

Employees who work for employers with 500 or less employees may take paid sick leave because they are:

Subject to a federal, state, or local quarantine or isolation order related to COVID-19,
Has been advised by a healthcare provider to self-quarantine due to concerns related to COVID-19,
Is experiencing symptoms of COVID-19 and seeking a medical diagnosis,
Is caring for an individual who is subject to a quarantine or isolation order or has been advised by a healthcare provider to self-quarantine due to concerns related to COVID-19,
Is caring for their child if the school or place of care of the child has been closed, or the childcare provider of the child is unavailable, due to COVID-19,
Is experiencing any other substantially similar condition specified by the Secretary of Health and Human Services, in consultation with the Secretary of the Treasury and the Secretary of Labor.

Expanded Amount of Paid Sick Leave:

Employers with fewer than 500 employees must provide full-time employees, regardless of an employee's duration of employment, with 80 hours of paid sick leave.
Part-time employees’ number of hours of paid sick leave is based on the average number of hours they worked for the six months prior to paid sick leave or their reasonable expectation at hiring of the average number of hours they would normally be scheduled to work.
This paid sick leave is in addition to any paid sick leave already provided by employers.

Employer Compensation Requirements:

Employers must pay employees at their regular rate of pay for reasons 1, 2, or 3 or two-thirds their regular rate of pay for reasons 4, 5, or 6.
Employers can cap their compensation obligations per employee at $511 per day (with an aggregate cap of $5,110 per employee) for reasons 1, 2, or 3 above and at $200 per day (with an aggregate cap of $2,000 per employee) for reasons 4, 5, or 6 above.

Employer Tax Credits

Payroll Tax Credit:

Employers will be entitled to a refundable tax credit equal to 100% of wages paid to employees for time off for reasons under the Emergency Family and/or Medical Leave Act and/or Emergency Paid Sick Leave.
The tax credit is against the employer portion of Social Security payroll taxes.