A summary of the recent clarifications of components of the FFRCA incluing topics such as effective date, exceptions, calculating paid sick leave, documentation and more. Current as of April 3, 2020.
Enacted on March 18, 2020, the FFCRA included provisions aimed at mitigating the effects of the COVID-19 crisis on businesses and individuals. Key components included the requirement that employers with fewer than 500 employees will be required to provide a certain amount of paid sick and paid family leave to employees affected by COVID-19 and will receive corresponding employment tax credits. In addition, the FFRCA temporarily expands the reasons for which employees working for enterprises with fewer than 500 employees may take leave under the Family and Medical Leave Act (FMLA).
The law itself, however, left open a number of questions of interpretation. Between March 24 and March 26, the Department of Labor (DOL) began to provide guidance on some of these open questions in the form of FAQs. These are briefly summarized below. To read the full text of the DOL's FAQs, click here: https://www.dol.gov/agencies/whd/pandemic/ffcra-questions
Importantly, the FAQs made clear that the leave provisions of the FFCRA were effective April 1, 2020 and terminate on December 31, 2020. They also clarify that FFCRA is not retroactive, i.e., leave taken before April 1 is not covered by FFCRA, and employers will not be eligible for tax credits for any paid leave provided prior to that date.
Exceptions for Employers with Fewer than 50 Employees
The law authorized the Secretary of the Department of Labor to issue regulations to exempt small businesses with fewer than 50 employees when it would jeopardize the viability of the business as a going concern. It was unclear, however, how these limitations would be effectuated. In its recent guidance, the DOL has stated:
To elect this small business exemption, employers 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.
Counting Employees for Fewer than 500 Threshold
Another clarification addressed how and when employees should be counted for purposes of determining whether the fewer-than-500 employee threshold is met. DOL states that the threshold must be determined on the date the leave is to begin. It is possible, therefore, if one employee's leave begins on Monday, when the employer has 503 employees, that employee would not be entitled to leave under FFCRA. If another employee's leave begins on Friday and the company's headcount has dipped to 499, the second employee would be entitled to leave under FFCRA.
As far as which employees to include, the DOL explained that the following should be included:
- Full-time and part-time employees within the United States, including any State of the United States, the District of Columbia, or any Territory or possession of the United States.
- Employees on leave;
- Temporary employees who are jointly employed by employers and another employer (regardless of whether the jointly-employed employees are maintained on only one or another employer's payroll); and
- Day laborers supplied by a temporary agency (regardless of whether employers are the temporary agency or the client firm if there is a continuing employment relationship).
Independent contractors should not be included for purposes of the 499-employee threshold.
For companies with multiple divisions or subsidiaries, the DOL stated that typically, a corporation (including its separate establishments or divisions) is considered a single employer and its employees must each be counted towards the fewer than 500-employee threshold. Where a corporation has an ownership interest in another corporation, the two corporations are 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 their common employees must be counted in determining whether paid sick leave must be provided under the Emergency Paid Sick Leave Act and expanded family and medical leave must be provided under the Emergency Family and Medical Leave Expansion Act.
For separate but related companies, the DOL has adopted the integrated employer test under the FMLA. Generally, this test requires an evaluation of factors to determine whether two entities should be considered an integrated employer for purposes of aggregating the total number of employees they have. These factors include: common management, interrelation between operations, centralized control of labor relations; and the degree of common ownership/financial control. If the totality of the circumstances weighs in favor of the entities being considered an integrated employer, then the combined entity should count all of their employees toward determining whether the entity has fewer than 500 employees.
Regular Rate of Pay for FFCRA Leave
Another open question in the FFCRA was how employers were supposed to calculate employees' regular rate of pay for purposes of paid sick and family leave. The DOL has explained that the regular rate of pay for FFCRA is the average of the employee's regular rate over a period of up to six months prior to the date on which the employee takes leave. If the employee has not worked for employers for six months, the regular rate used to calculate their paid leave is the average of their regular rate of pay for each week they have worked for employers. If the employee is paid with commissions, tips, or piece rates, these wages must be incorporated into the above calculation. You can also compute this amount for each employee by adding all compensation that is part of the regular rate over the above period and divide that sum by all hours actually worked in the same period.
Calculating Amount of Paid Sick Leave
The FFCRA entitles eligible employees to take emergency paid sick of up to 80 hours. Full-time employees are entitled to take up to 80 hours paid sick leave. Part-time employees are eligible for the number of hours equal to the average hours worked over a two-week period. The DOL clarified that part-time employees are entitled to leave for their average number of work hours in a two-week period. Therefore, employers should calculate hours of leave based on the number of hours the employee is normally scheduled to work. If the normal hours scheduled are unknown, or if the part-time employee's schedule varies, employers may use a six-month average to calculate the average daily hours. Such a part-time employee may take paid sick leave for this number of hours per day for up to a two-week period and may take expanded family and medical leave for the same number of hours per day up to ten weeks after that.
If this calculation cannot be made because the employee has not been employed for at least six months, use the number of hours that the employer and the employee agreed that the employee would work upon hiring. If there is no such agreement, employers may calculate the appropriate number of hours of leave based on the average hours per day the employee was scheduled to work over the entire term of his or her employment.
Employee Eligibility for Paid Family Leave
Under FFCRA, employees who have been employed for at least thirty (30) days are eligible to take leave under the Emergency FMLA Act, unlike the 12 months and 1,250-hour requirement for standard FMLA leave. The DOL has provided clarification that an employee is considered to have been employed for at least 30 calendar days if the employee was on the employer's payroll for the 30 calendar days immediately prior to the day their leave would begin. For example, if an employee wanted to take leave on April 1, 2020, they would need to have been on employer's payroll as of March 2, 2020. If an employee has been working as a temporary employee, and employers subsequently hire them on a full-time basis, employers should count the days previously worked as a temporary employee toward the 30-day eligibility period.
Documentation Required for Leave
The DOL clarified that employers must require employees to provide appropriate documentation to support the taking of FFCRA paid sick or paid family leave. For paid sick leave, employees must provide documentation showing:
- The employee's name,
- Qualifying reason for requesting leave,
- A statement that the employee is unable to work, including telework, for that reason, and
- The date(s) for which leave is requested.
- Documentation of the reason for the leave, such as the source of any quarantine or isolation order, or the name of the health care provider who has advised self-quarantine.
For employees seeking to take FFCRA paid family leave, employees will be required to provide similar documentation supporting the need for leave. The DOL suggests this might include a notice posted on a government, school or day care website informing individuals of the closure.
The DOL clarified that paid sick and paid family leave may be taken intermittently under certain circumstances. These leaves can be taken intermittently only for child care reasons, and then only if the employer consents to allow it.
Employees Affected by Business Closures, Shelter in Place Orders or Furloughs
The DOL explained that if an employee's worksite is closed, whether before or after April 1, and whether or not the employer's employees are on leave, once the business is closed, its employees are not eligible for any type of leave under FFCRA. The DOL notes that these employees may be eligible for state unemployment insurance. Similarly, employees who have been furloughed or whose schedules are reduced are not eligible for FFCRA leave of any kind.
Effect of FFCRA on Employer-Provided Leave Entitlements
Employees may not use employer-provided leave simultaneously with any leave under FFCRA, unless the employer agrees to allow the employee to supplement the amount they receive from paid sick leave or expanded family and medical leave under the FFCRA. The DOL clarified, however, that leave under the FFCRA is in addition to any employer-provided leave entitlements. Employees may choose to use existing paid vacation, personal, medical, or sick leave to supplement the amount they receive from paid sick leave or expanded family and medical leave, up to the employee's normal earnings.
Employers are not required to permit an employee to use existing paid leave to supplement the amount the employee receives from paid sick leave or expanded family and medical leave. Employers may not claim, and will not receive tax credit, for such supplemental amounts. Finally, employers may not require employees to supplement FFCRA pay with any paid leave amounts otherwise available to the employee under the employer's paid leave plans. Only employees may make that decision.
Required Notice Posting
Another update by the DOL applies to the required posting under FFCRA. The DOL confirmed that All employers covered by the paid sick leave or expanded family and medical leave provisions of the FFCRA are required to post the Department of Labor notice listing employee rights. The Department of Labor FFCRA poster is available at https://www.dol.gov/agencies/whd/pandemic. The Department of Labor has provided one poster for use by private employers covered by the FFCRA and another poster for use by federal employers.
For employees who are teleworking, employers can satisfy the posting requirement by emailing or direct mailing the notice to current employees or by posting the notice on an internal or external employee information website.
Important related content
- Do you know which type of employee leave applies? This infographic shows the criteria for three types of leave: Emergency Family and Medical Leave Expansion, Emergency Paid Sick Leave and Family and Medical Leave Act. View the infographic.
- COVID-19 Workplace Impact and Employer FAQs: The Families First Coronavirus Response Act
- Find FAQs, checklists, webcasts, and the resources to help you protect and manage your workforce here: ADP Employer Preparedness Toolkit — Coronavirus Disease (COVID-19)
- Launch this SPECIAL EDITION WEBCAST SERIES anytime: Protecting Your Workforce and Understanding Policies as Your Organization Responds to COVID-19
The information provided by ADP is for general informational purposes only and is not legal, accounting or tax advice. The information and services ADP provides should not be deemed a substitute for the advice of such professionals who can better address your specific concern and situation. Any information provided here is by nature subject to revision and may not be the most current information available on the subject matter discussed.
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