On April 6, 2020, the U.S. Department of Labor (the “DOL”) published temporary regulations (the “FFCRA Regulations”) to implement the Families First Coronavirus Response Act (the “FFCRA”). The Regulations are available here. The FFCRA, which was signed into law on March 18, 2020, applies to employers with fewer than 500 employees and generally provides employees with up to 80 hours of emergency paid sick leave, subject to payment level caps, for reasons relating to COVID-19 (“Emergency Sick Leave”) and up to 12 weeks of family medical leave, 10 of which are paid subject to a payment level cap, to care for a child who is home due to school or day care closures or because the child's caregiver is unavailable as a result of COVID-19 (“Emergency Family Medical Leave”).
Goodwin’s March 19, 2020 Client Alert summarizing the key provisions of the FFCRA is available here.
Since our last Client Alert on the FFCRA, the DOL issued the Families First Coronavirus Response Act: Questions and Answers, which is available here, and the FFCRA Regulations. The Internal Revenue Service (the “IRS”) also published the COVID-19 Related Tax Credits for Required Paid Leave Provided by Small and Midsize Businesses FAQs, which is available here. While not a comprehensive review of those detailed publications, this Client Alert highlights some key takeaways and action items for employers.
1. EMPLOYERS MUST PROVIDE FFCRA NOTICE TO THEIR EMPLOYEES
Employers must post and keep posted a notice of the FFCRA’s paid leave provisions in a conspicuous place where employees or job applicants at a worksite may view it. The DOL’s form of the notice is available here. Given that many employees are no longer coming to the worksite – either because their employers have permitted them to work remotely or because there is not currently work to perform – employers may satisfy their notice obligations by emailing or direct mailing this notice to their employees, or posting it on an employee informational internal or external website.
While a prudent practice, the FFCRA Regulations do not require employers to respond to employees requesting Emergency Family Leave with notices of eligibility, rights and responsibilities, or written designations that leave use counts against Family and Medical Leave Act (“FMLA”) leave allowances as would otherwise be required by the FMLA.
2. EMPLOYEES MUST PROVIDE EMPLOYERS WITH NOTICE AND DOCUMENTATION
Employees must provide their employers with notice of their use of FFCRA leave as soon as practicable after the first workday or portion of the workday missed. While oral notice containing sufficient information for employers to determine whether the requested leave qualifies as either Emergency Sick Leave or Emergency Family Leave will suffice, it is reasonable for employers to require employees to comply with employers’ usual and customary notice and procedural requirements for requesting leave.
In addition to notice of use of FFCRA leave, employees must also provide their employers with documentation supporting their use of either Emergency Sick Leave or Emergency Family Leave. This documentation must contain (1) the employee’s name, (2) the date(s) for which leave is requested, (3) the qualifying reason for the leave, and (4) an oral or written statement that the employee is unable to work because of the qualifying reason for the leave.
Additional information is required depending on the qualifying reason for the leave, including, where applicable: (1) the name of the government entity issuing the quarantine or isolation order applicable to the employee or individual cared for by the employee; (2) the name of the health care provider advising the employee or individual cared for by the employee to self-quarantine; and (3) the name of the child being cared for, the name of the child’s school, place of care, or child care provider that has closed or become unavailable and a representation that no other suitable person will be caring for the child during the period for which the employee is taking the leave. Where employees provide oral statements to support their requests for FFCRA leave, employers are required to document the information provided. Employers must retain this documentation for four years, regardless of whether the leave is granted or denied.
3. EMPLOYERS MUST PAY STATUTORY AMOUNTS AND SOMETIMES MAY REQUIRE EMPLOYEES TO USE ACCRUED PAID TIME OFF TO SUPPLEMENT THOSE AMOUNTS
For Emergency Sick Leave, employers must pay employees their regular rate of pay if the absence is due to a quarantine or to seek a diagnosis or care (capped at $511 per day and $5,110 in the aggregate) and employees will be entitled to receive 2/3 of the their regular rate of pay if the absence is to care for another individual or a child or other permissible reasons (capped at $200 per day and $2,000 in the aggregate). For Emergency Family Leave, after the first two weeks (usually ten workdays) of leave, employers must pay employees 2/3 of the employee’s regular rate of pay up to $200 per day and $10,000 in the aggregate.
To the extent that a portion Emergency Family Leave is unpaid, employers may require employees to use any other paid leave accrued under the employer’s policies to cover the unpaid portion of the leave. To this end, employees may elect and employers may require employees to use accrued leave such as vacation or personal leave or paid time off that is otherwise available to employees for Emergency Family Leave purposes, thereby supplementing the $200 per day cap such that employees receive a full day’s pay for such days that they supplement their Emergency Family Leave. In this scenario, such other accrued leave would run concurrently with the Emergency Family Leave.
On the other hand, employers may not require employees to supplement Emergency Sick Leave in a way that diminishes, reduces or eliminates other leaves to which employees are already entitled or that employees have already accrued, including employer-provided leave policies. Similarly, employers may not require employees to use other leave to which they are entitled before using Emergency Sick Leave. Employers and employees, however, can agree that the employee may supplement Emergency Sick Leave with other accrued leave.
4. EMPLOYERS MUST KEEP CLEAR AND ACCURATE RECORDS OF FFCRA LEAVES AND PAY TO BE ELIGIBLE FOR REFUNDABLE TAX CREDITS
The above-described documentation of the reason and length of an FFCRA leave is essential for employers seeking refundable tax credits from the IRS. The tax credits are equal to 100% of the FFCRA paid leave required during each calendar quarter in accordance with the daily and aggregate caps as well as any qualified health plan expenses allocable to those wages, plus the amount of the employers’ share of Medicare taxes imposed on those wages. Because employers may retain the payroll taxes they otherwise would have paid each calendar quarter, in anticipation of claiming these tax credits, employers should begin tracking the amount of Emergency Sick Leave and Emergency Family Leave they are paying as soon as possible. Where employers provide leave when it is not required under the FFCRA or supplement Emergency Sick Leave or Emergency Family Leave with other accrued leave (as discussed above), such paid time off is not eligible for the refundable tax credits.
Notably, for leave to care for a child, the IRS currently appears to be requiring employers to also collect information pertaining to the age of an employee’s child and, if the child is older than fourteen, a statement that special circumstances exist requiring the employee to provide care for the child during daylight hours. This documentation requirement is not set forth in either the FFCRA Regulations or the FFCRA itself but is a prudent additional step for employers seeking refundable tax credits.
5. EMPLOYERS ARE NOT REQUIRED TO PAY UNUSED LEAVE AT TERMINATION AND NEW EMPLOYEES MAY BE ELIGIBLE FOR A REDUCED AMOUNT OF EMERGENCY SICK LEAVE
Employers are not obligated to pay any unused Emergency Sick Leave or Emergency Family Leave upon employees’ termination of employment or upon the expiration of the FFCRA on December 31, 2020. Additionally, employees are not entitled to additional Emergency Sick Leave if they change jobs between now and December 31, 2020, such that a full-time employee who has taken some but fewer than 80 hours of Emergency Sick Leave and then changes employers is entitled only to the remaining portion of such Emergency Sick Leave from the new employer. To this end, employers hiring new employees between now and December 31, 2020, may wish to determine how much Emergency Sick Leave each such new hire has already used by the time of hire.
6. INTERMITTENT LEAVE MAY BE AGREED TO BUT IT IS NOT REQUIRED
Subject to certain conditions discussed below, Emergency Sick Leave or Emergency Family Leave under the FFCRA may be taken intermittently if the employer and the employee agree to such an arrangement. The agreement must detail the specific increments in which the intermittent FFCRA leave will be taken. If an agreement is reached, employees may always use Emergency Sick Leave and Emergency Family Leave intermittently when teleworking. When employees wish to use such leave intermittently while reporting to their employer’s worksite, however, they may only do so when the need for leave is due to an employee’s inability to work due to the need for leave to care for a child if the child’s school or place of care has been closed or the child’s care provider is unavailable due to the public health emergency (“Child Care Reasons”). Put another way, employees may not use Emergency Sick Leave intermittently while reporting to their employer’s worksite when the need for leave is due to (1) a quarantine or isolation order, (2) their need to self-quarantine, (3) experiencing COVID-19 related symptoms, or (4) caring for an individual who is quarantining, since these reasons for leave present a higher likelihood of risk to others at the employer’s worksite. Once employees have begun taking Emergency Sick Leave for one of these non-Child Care Reasons, employees must use their permitted leave consecutively until the qualifying reason for the Emergency Sick Leave no longer exists.
7. EMPLOYEES WHO CAN TELEWORK ARE NOT ENTITLED TO FFCRA LEAVES
Employees may not take Emergency Sick Leave or Emergency Family Leave if they are able to telework, including in circumstances when employees need to self-quarantine. Even if employees are unable to perform teleworking tasks or work because of Child Care Reasons, because teleworking often may be performed both during normal hours or at other times agreed upon by employers and employees, employees who need to provide care for their child during typical working hours could agree with their employer to perform their teleworking tasks or work at times when they do not have to care for their child. In this situation, these employees would not be eligible to take Emergency Sick Leave or Emergency Family Leave, although they would have to first agree to such a teleworking arrangement with their employers.
Additionally, though not required, employers may consider agreeing to permit employees to take intermittent FFCRA leave for Child Care Reasons and to permit those same employees to also telework, whether during or outside of normal hours. This could allow employees to telework and take intermittent FFCRA leave on the same day to the extent such an arrangement is advantageous to employers.
8. EMPLOYEES ARE NOT ENTITLED TO FFCRA LEAVES WHEN ON FURLOUGH OR WHEN A BUSINESS CLOSES
Employees may only take Emergency Sick Leave or Emergency Family Leave when they are “unable to work” because of certain qualifying reasons. Where employers do not have work for employees to perform – as in the case of a furlough – employees are not eligible to take Emergency Sick Leave or Emergency Family Leave. Similarly, Emergency Sick Leave and Emergency Family Leave are not available when a quarantine or isolation order causes a business to close and results in a lack of work for its employees.