FFCRA Leave Provisions Effective April 1 and CARES Act Provide Relief for Small Businesses and Unemployed Workers
FFCRA Leave Provisions
Companies with less than 500 workers must implement their paid sick leave and expanded FMLA leave programs under the Families First Coronavirus Response Act (FFCRA) by April 1, 2020. As discussed in our earlier alerts of March 18, March 25 and March 27, the FFCRA provides paid leave for workers for qualifying COVID-19-related reasons.
Quarles & Brady has prepared template documents for employers to utilize in administering these new leave programs (NOTE: Providing this employee notice does not replace the requirement to post the DOL notice.)
The Department of Labor (DOL) has been issuing guidance in the form of FAQs on a rolling basis. The full text of DOL’s FAQs is available here. DOL’s most recent guidance was released on Saturday, March 28, 2020. Notable highlights from that guidance include:
- Reinstatement - Generally, employees should be returned to the same (or a nearly equivalent) job when returning to work after taking protected leave. DOL reiterates the principle that employees are not protected from employment actions that would have resulted in a job loss regardless of the leave, such as business closures, layoffs and other legitimate business reasons.
- Length of FMLA Leave - Employees are only entitled to 12 weeks of FMLA leave, regardless of whether it is taken as traditional or expanded leave. For example, an employee who took two weeks of FMLA leave in January 2020 to undergo and recover from a surgical procedure now only has ten weeks of FMLA leave of any type (traditional and/or expanded leave under the FFCRA) for the remainder of the applicable FMLA year. The regular FMLA employer obligations, such as notice of rights and designation notice, still apply for employees taking expanded leave under the FFCRA to care for their child.
- Documentation – The DOL revised its FAQs regarding documentation from employees to support the need for leave. DOL instructs employers to consult Internal Revenue Service (IRS) applicable forms, instructions, and information for the procedures that must be followed to claim a tax credit, including any needed substantiation to be retained to support the credit. Employers are not required to provide leave if materials sufficient to support the applicable tax credit have not been provided.
- Health Care Workers May Be Excluded - Employers may elect to exclude from paid sick leave and expanded FMLA anyone employed at any doctor’s office, hospital,
healthcare center, clinic, post-secondary educational institution offering healthcare instruction, medical school, local health department or agency, nursing facility, retirement facility, nursing home, home healthcare provider, any facility that performs laboratory or medical testing, pharmacy, or any similar institution. The DOL encourages employers to be judicious when deciding whether to exclude healthcare providers.
- Emergency Responders May Be Excluded - Employers may elect to exclude from paid sick leave and expanded FMLA provisions those who work as emergency responders such as physicians, nurses, public health personnel, emergency medical technicians, paramedics, emergency management personnel, 911 operators, public works personnel, military or national guard, law enforcement officers, correctional institution personnel, firefighters, emergency medical services personnel and similar positions. The DOL encourages employers to be judicious when deciding whether to exclude emergency responders.
- Limited Small Business Exemption - Employers with fewer than 50 employees may be exempt from providing paid sick leave and paid family leave under the FFCRA regarding school closure/child care needs due to COVID-19. This exemption cannot be applied to the other reasons for paid sick leave, and the exemption is only applicable when the company has determined that at least one of the three following scenarios regarding the financial and/or operational needs of the company has been met:
- The provision of paid sick leave or expanded FMLA 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 FMLA 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 FMLA leave, and these labor or services are needed for the small business to operate at a minimal capacity.
On March 27, 2020, the federal government enacted the Coronavirus Aid, Relief, and Economic Security (CARES) Act with provisions to support the economy during the COVID-19 pandemic. It provides for various forms of support for business owners, employers, and employees adversely affected by COVID-19. These provisions include direct financial assistance to individuals, loans and economic assistance to businesses, and aid to the healthcare industry.
The Act contains specific provisions that employers across the country should be familiar with. Below is a summary of significant employment provisions in the CARES Act.
The CARES Act creates a temporary Pandemic Unemployment Assistance Program that expands who can qualify for unemployment benefits. Through December 31, 2020, individuals who are unable to work as a direct result of the coronavirus can apply for unemployment benefits.
The CARES Act expands the definition of a “covered employee” as anyone who self certifies that they are able and available to work but are unemployed due to a variety of COVID-19 qualifying factors, many of which would be beyond what would qualify for unemployment under most state laws.
The CARES Act authorizes the Secretary of Labor to establish additional eligibility criteria through the extension of benefits to self-employed individuals and independent contractors. Individuals are not entitled to avail themselves of these benefits if they have the ability to telework with pay or are receiving paid sick leave or other paid leave benefits.
The CARES Act extends unemployment compensation benefits otherwise available in most states from 26 weeks to 39 weeks for the period beginning on January 27, 2020 and ending on December 31, 2020.
The amount of benefits available under the CARES Act includes the amount of benefits available under state law plus an additional $600.00 per week for up to four months for recipients of traditional unemployment insurance and those eligible under the Pandemic Unemployment Assistance Program.
Payroll Tax Credit
The CARES Act provides for a refundable payroll tax credit for each calendar quarter in an amount equal to 50% of qualified wages paid to each employee by an eligible employer during the COVID-19 crisis. An eligible employer is one whose: (1) operations are fully or partially suspended due to a government shutdown order due to COVID-19; or (2) gross receipts for the calendar quarter are less than 50% of their gross receipts from the same calendar quarter of the previous year.
The credit is based on "qualified wages" paid to the employee. For eligible employers with more than 100 full-time employees, "qualified wages" are wages paid to employees when they are not providing services due to COVID-19. For eligible employers with 100 or less full-time employees, "qualified wages" include all employee wages whether or not the employer is open for business or subject to a shutdown order. The CARES Act defines "qualified wages" to include health care benefits.
The credit is available for the first $10,000 of qualified wages paid to each eligible employee. The credit is available for wages paid or incurred for the period from March 13, 2020 through December 31, 2020.
Quarles & Brady will continue to analyze FFCRA leave provisions and monitor upcoming guidance and interpretations of the FFCRA and CARES Act.
If you have any questions related to the provisions of the Families First Coronavirus Response Act or the CARES Act, please contact your local Quarles & Brady attorney, or: