DOL Issues First Guidance on Paid Sick Leave and Expanded Family and Medical Leave Under the Families First Coronavirus Response Act
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As detailed in our prior Advisory, the Families First Coronavirus Response Act (H.R. 6201) contains two paid leave components: (i) the Emergency Paid Sick Leave Act, which provides up to 10 days of paid sick and/or family leave related to COVID-19, and (ii) the Emergency Family and Medical Leave Expansion Act, which provides up to an additional 10 weeks of paid family leave to care for a child whose school or child care provider is closed or unavailable for reasons related to COVID-19.
On Tuesday March 24, 2020, the US Department of Labor (DOL) issued its first guidance addressing the new paid leave laws, including a Fact Sheet for Employees, a Fact Sheet for Employers, and a list of Questions and Answers. Today, the DOL issued a model notice that must be posted by April 1 in all workplaces of covered employers (i.e., private sector employers with fewer than 500 employees). The notice can be found here.
Although DOL will issue additional guidance on a timetable that is still uncertain, here are the important take-aways from the new guidance.
1. The new federal paid leave laws go into effect on April 1, 2020 and they are not retroactive.
- This means that employers that provided employees with paid leave prior to April 1—either pursuant to the employer's existing paid leave policies, pursuant to emergency paid leave laws enacted at the state or local level, or in anticipation of the federal paid leave requirements—may not count that earlier paid leave toward the federal requirements.
- Only paid leave provided on or after April 1 can be counted toward the federal paid leave requirements.
2.The DOL will observe a temporary 30-day period of non-enforcement after the laws go into effect.
- The non-enforcement will apply only if the employer has acted reasonably and in good faith to comply with the law. According to the guidance, this means: (i) violations are remedied, (ii) employees are made whole as soon as practicable, (iii) violations were not willful, and (iv) the employer provides the DOL with a written commitment to comply with the law in the future.
3. There is not yet guidance on the small-business exemption for employers with fewer than 50 employees and for whom providing the leave would jeopardize the viability of the business as a going concern.
- The DOL's regulations with the criteria for meeting the exemption are expected in "April 2020."
- We anticipate that the guidance will make clear that the size of an employer (for purposes of the 50 employee threshold) should be calculated at the time an employee requests the leave, since this is when the 500 employee threshold (discussed below) is calculated.
- The new Questions and Answers advise that small employers that wish to take advantage of the exemption will need to document why they meet the (forthcoming) criteria, but also state that they should not send any materials to the DOL when seeking the small business exemption. This suggests that each small business will be responsible for making the decision on exemption, but will be subject to penalties and enforcement if they get the decision wrong.
4. The laws do not apply to employers with 500 or more employees.
- The number of employees (for purposes of the 500-employee threshold) is calculated at the time leave is to be taken by an employee.
- To calculate the total number of employees, an employer should include: (i) all active employees; (ii) all employees on leave; (Iii) all temporary employees who are jointly employed with another employer (even if they are on the other employer's payroll); and (iv) day laborers supplied by a temporary agency. Independent contractors are not considered employees.
- Where a corporation has an ownership interest in another corporation, the two corporations are considered separate employers unless they are "joint employers" under the Fair Labor Standards Act, in which case their common employees are counted towards the employee threshold. The DOL's joint employer guidance can be found here.
- For separate entities, the DOL will use the Family and Medical Leave Act's "integrated employer test" to determine if employees from all entities should be counted toward the employee threshold. The DOL's integrated employer test takes into account several factors, including common management, interrelation between operations, centralized control of labor relations, and degree of common ownership or financial control.
5. Part-time employees are entitled to paid sick leave (up to 80 hours) based on their average hours worked.
- Part-time employees who have a regular work schedule are entitled to the number of work hours they are normally scheduled to work in a two-week period.Thus, a part-time employee regularly scheduled to work 20 hours per week would be entitled to 20 hours of paid sick leave each week, for a total of 40 hours of paid sick leave over a two-week period.
- If the normal work hours scheduled are unknown, or if the schedule varies, the employer can use a six-month average to calculate their average daily hours. The employee can then take that many hours per day for up to 2 weeks (as well as an additional 10 weeks after that under the family leave law).
6. Overtime hours must be included when calculating an employee's hours.
- For employees who regularly work overtime, their overtime hours must be included in calculating their "regular" schedule. However, there is no overtime "premium" included in or added to the rate of pay—the leave is always paid at an employee's regular rate, subject to statutory caps.
- For paid sick leave, keep in mind that employees are still limited to a maximum of 80 total hours over a 2-week period. Thus, an employee who regularly works 60 hours per week could take and be paid for up to 60 hours of paid sick leave in week 1, and 20 hours in week 2, subject to a daily maximum of either $511 (at their regular rate) or $200 (at 2/3 their regular rate) depending on the purpose of the leave.
- For family leave, this means that an employee who works 60 hours per week on average would be paid for 60 hours each week for up to 10 weeks, at 2/3 of their regular pay, subject to the daily maximum of $200.
7. The paid sick leave and extended family leave laws are intended to complement each other.
- Employees are eligible for paid leave only if they are unable to work or telework due to a covered reason.
- Employees who qualify for expanded family and medical leave (which is unpaid for the first 2 weeks) can take paid sick leave for the first 2 weeks, or may substitute any accrued leave under their employer's policy.
A. Employees may take up to 80 hours of paid sick leave - over two weeks - at their regular rate of pay (subject to a $511/day cap) where the employee is unable to work because the employee is quarantined (pursuant to federal, state or local government order or advice of a health care provider), or experiencing COVID-19 symptoms and seeking a medical diagnosis; or
B.(i) Employees may take up to 80 hours of paid sick leave - over two weeks - at 2/3 their regular rate of pay (subject to a $200/day cap), where the employee is unable to work because of a bona fide need to care for an individual subject to quarantine, or to care for a child whose school or child care provider is closed or unavailable for reasons related to COVID-19; and
(ii) Employees (who have worked at least 30 days) may take up to an additional 10 weeks of expanded family and medical leave at 2/3 their regular rate of pay (subject to a $200/day cap) where the employee is unable to work because of a bona fide need for leave to care for a child whose school or child care provider is closed or unavailable for reasons related to COVID-19.
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Update on Tax Credits: The Families First Coronavirus Response Act provides that an employer generally will receive tax credits equal to the amount of the qualifying sick and family leave paid and certain other expenses. On March 20, 2020, the Department of the Treasury, the Internal Revenue Service (IRS), and DOL jointly issued a news release (IR-2020-57) that provides preliminary guidance regarding the application of the new law. To take immediate advantage of the tax credits, the news release describes that an employer will be able to retain an amount of its payroll taxes (including employee wage withholding) equal to the amount of qualifying sick and family leave that the employer pays, rather than deposit such amounts with the IRS. If there are not sufficient payroll taxes to cover the cost of qualified sick and family leave payments, an employer will be able to file a request for an accelerated payment from the IRS, which the IRS expects to process in two weeks or less. Treasury and IRS provide helpful questions and answers at the following link: Basic FAQs.
© Arnold & Porter Kaye Scholer LLP 2020 All Rights Reserved. This Advisory is intended to be a general summary of the law and does not constitute legal advice. You should consult with counsel to determine applicable legal requirements in a specific fact situation.