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U.S. Labor Department Releases Fact Sheet on Families First Coronavirus Response Act

    Client Alerts
  • March 26, 2020

On Tuesday, the U.S. Department of Labor released a fact sheet that answers some but not all questions employers have with regard to requirements under the new Families First Coronavirus Response Act. The fact sheet states that the law will take effect April 1, not April 2 as previously calculated based on its enactment date. The fact sheet covers questions over both the emergency sick leave and paid family leave portions of the new law. Some of the highlights include:

  • Employers are entitled to dollar-for-dollar tax credit for all qualifying ways paid under FFCRA. Tax credits also extend to “amounts paid or incurred to maintain health insurance coverage.”
     
  • “[E]very dollar of expanded family and medical leave (plus the cost of the employer’s health insurance premiums during leave) will be 100% covered by a dollar-for-dollar refundable tax credit available to the employer.”
     
  • The Labor Department will observe a temporary period of non-enforcement for the first 30 days after the law takes effect, so long as the employer has acted reasonably and in good faith to comply with it. “’[G]ood faith exists when violations are remedied and the employee is made whole as soon as practicable by the employer, the violations were not willful, and the Department receives a written commitment from the employer to comply with the Act in the future.”
     
  • The effective date is April 1, 2020. It applies to leave taken between April 1, 2020, and December 31, 2020.
     
  • Calculating the 500-employee threshold:
     
    • Count “at the time your employee’s leave is to be taken.”
       
    • Count only employees within the U.S.
       
    • Include 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 for purposes of the threshold.
       
    • Typically, a corporation (including separate establishments or divisions) is considered to be a single employer and its employees must each be counted towards the threshold.
       
    • Where a corporation has an ownership interest in another corporation, the two are separate employers unless the companies are joint employers with respect to certain employees.
       
    • In general, two or more entities are separate employers unless they meet the integrated employer test under FMLA.
       
  • Exemption for business with fewer than 50 employees:
     
    • Employers should document why paying the benefit would jeopardize the business as a going concern and how it meets forthcoming criteria set by the DOL.
       
    • Do not send any materials to the DOL when seeking a small business exemption.
       
  • Calculating hours for part-time employees:
    • Calculate based on normal schedule.
       
    • If normal hours unknown, use six-month average to calculate the average daily hours.
       
    • If not an employee for at least six months, use hours agreed upon at the time of hiring.
       
    • If no agreement on hours, use average hours per day over entire term of employment.
       
  • Calculating paid leave benefit:
    • Include expected overtime hours to calculate FMLA expansion leave.
       
    • Emergency paid sick leave is capped at 80 hours, so do not take overtime into account.
       
    • Pay does not need to include a premium for overtime hours under either the Emergency Paid Sick Leave Act or the Emergency Family and Medical Leave Expansion Act.
       
  • Calculating regular rate of pay:
    • Incorporates DOL Fact Sheet #56 from December 2019.
       
    • Formula: Total compensation in the workweek / total hours worked in the workweek = regular rate for workweek.
       
    • Regular rate of pay used to calculate paid leave is “the average of your regular rate over a period of up to six months prior to the date on which you take leave.”
       
    • If have not worked for employer for six months, use the average of your regular rate of pay for each week you have worked for your current employer.
       
    • Commissions, tips, or piece rates will be incorporated into the calculation.
       
  • Existing policies:
     
    • Employer cannot deny emergency paid sick leave if leave has already been paid for a reason identified in the FFCRA prior to the effective date.
       
  • Requirements are not retroactive, meaning that employees who are not employed (and possibly those not active) as of April 1 will not be eligible for benefits.

On Wednesday, DOL released the new FFCRA poster, which should be placed with other legal notices by employers subject to the new law.

You can find Parker Poe's additional alerts related to COVID-19 here