Last Wednesday, President Trump signed into law the Families First Coronavirus Response Act (FFCRA), in response to the ongoing spread of COVID-19. The FFCRA goes into effect by no later than April 2, 2020.

The scope and implications of FFCRA on FMLA and sick leave may be particularly daunting for small employers already stretched thin on revenue and resources. As we outlined in our blog post Employer Obligations Under Families First Coronavirus Response Act, the key provisions of FFCRA include the following:

• Temporary expansion of the Family Medical Leave Act (FMLA) to provide up to 12 weeks of FMLA-protected leave to employees unable to work due to needing to care for a minor child whose school or childcare facility is closed, or if the usual childcare provider is unavailable (the first 10 days of which are unpaid and the following 10 weeks of which are to be paid at the lower of two-thirds of the employee's regular rate of pay or $200 per day); and
• Provision of 10 days of paid sick leave for employees experiencing certain COVID-19-related qualifying events, available to any employee who:

1. Is subject to a federal, state, or local quarantine or isolation order;
2. Has been advised by a health care provider to self-quarantine;
3. Is experiencing symptoms of coronavirus and is seeking a medical diagnosis;
4. Is caring for a person subject to a federal, state, or local quarantine or isolation order or who has been advised by a healthcare provider to self-quarantine;
5. Is caring for a son or daughter whose school or daycare is closed; or
6. Is experiencing any other substantially similar condition specified by the Secretary of Health & Human Services, the Secretary of the Treasury, and/or the Secretary of Labor.

For qualifying events 1-3, the employee receives from the employer his or her regular rate of pay, up to $511 per day. For qualifying events 4-6, the employee receives from the employer the lesser of two-thirds his or her regular rate of pay or $200 per day. Employers are entitled to claim a tax credit for the full value of the amounts paid to employees under this emergency statute; however, employers may not claim the credit for amounts paid prior to the effective date of the FFCRA (which will be by no later than April 2, 2020).

FFCRA Small Business Exemptions

Recognizing the strain these requirements may cause small businesses, the FFCRA gives the Secretary of Labor the authority to issue regulations and guidelines which may exempt employers with fewer than 50 employees from certain FFCRA requirements. In addition, the Department of Labor has announced that it "will observe a temporary period of non-enforcement for the first 30 days after the Act takes effect, so long as the employer has acted reasonably and in good faith to comply with the Act."

Below are the possible FFCRA exemptions for small businesses that we are currently monitoring (note that there are other possible exemptions for healthcare employees and first responders which are outside the scope of this article):

• Paid Family Leave (FMLA): The Secretary of Labor is considering an exemption to the expansion of FMLA for businesses with fewer than 50 employees if providing such a benefit would "jeopardize the viability of the business as a going concern."
• Paid Sick Leave: The Secretary of Labor is considering an exemption to the 10 days paid sick leave requirement for businesses with fewer than 50 employees, but only if (i) the leave is for the purpose of caring for a child whose school or childcare center is closed due to COVID-19, and (ii) providing such a benefit would "jeopardize the viability of the business as a going concern."

Consequently, an employer with fewer than 50 employees is expected to extend the ten days of paid leave for the other five categories of qualifying events, even if it may jeopardize the business's viability.

We recommend that the FFCRA requirements as well as the above possible exemptions be factored into the business and viability projections of any business with fewer than 50 employees. Some states also have more generous benefits for employees (which supersede less generous federal benefits) and are also passing emergency legislation that may need to be taken into account when conducting a cost analysis. In the event that this analysis compels the conclusion that headcount must be reduced in order to maintain the business as a going concern, we recommend that those decisions be made in consultation with counsel.

We anticipate that the Department of Labor will issue guidance as to the manner in which employers are to calculate employee headcount and will provide updates as more information becomes available.

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