Alert / Employee Benefits
Summarizing DOL and IRS guidance regarding the Families First Coronavirus Act

April 7, 2020

A recent abundance of guidance was issued in relation to the Families First Coronavirus Response Act (FFCRA) both by the Department of Labor (DOL) and Internal Revenue Service (IRS). IRS guidance is summarized in our separate Alert. This document focuses on the new or modified DOL FAQs and recently issued temporary regulations. In that guidance, the DOL clarified several key administrative issues, identified elements required for employees to meet FFCRA eligibility, and outlined a number of specific employer obligations.

Lockton comment: We recommend employers review the DOL FAQs regarding FFCRA as they contain significant and helpful information far beyond the highlights provided here. However, we caution employers to be sure they are reviewing the most recent copy of the FAQs. We have found that when the DOL updates these FAQs, existing responses may also be updated without specific notice of any change.

FFCRA consists of two parts, the Employee Paid Sick Leave Act (EPSLA) that provides 80 hours of paid sick leave for coronavirus-related events and is available to all employees and Expanded Family and Medical Leave (FMLA+) that provides up to 12 weeks of FMLA and up to 10 weeks of pay for leave taken to care for a child whose school or child care provider is closed or unavailable due to the COVID-19 pandemic. FMLA+ is available to any employee who has worked for the employer for at least 30 days, rather than the standard 12-month/1250-hours requirement for other leave entitlement under FMLA. For a summary of the specific provisions under each of these sections, refer to Lockton’s coronavirus legislation: Implementation details.

Administrative issues clarified

Employers are facing many difficult issues while attempting to properly administer new requirements under FFCRA. New regulations provide provides some clarity as follows:

1.  Counting employees: FFCRA, as passed, had inconsistencies between the two sections of the law, EPSLA and FMLA+. Inconsistencies have been addressed in the regulations so that EPSLA and FMLA+ are treated in the same manner. For example, the regulations make it clear that if an employer is aggregated under the integrated employer test for FMLA+ such that FMLA+ does not apply, that same count is used for purposes of determining that EPSLA will not apply. Significantly, the newest DOL FAQs clarify that for purposes of counting employees to determine whether the employer is covered under FFCRA, that count does not include involuntarily furloughed employees (but does include those on voluntary leaves of absence). Refer to Lockton’s FAQ for more information about how to count employees under the integrated employer test.

Lockton comment: For purposes of applying FFCRA, the number of employees is determined as of the first day of the employee’s leave. Employers that lay off or furlough many employees may find employee count to be significantly diminished after a layoff or furlough. This may impact whether the employer is subject to FFCRA. 

2.  Counting hours: Under Fair Labor Standards Act (FLSA) rules, an employer must count all hours between the first and last principal activity performed by an employee — meaning that intermittent work during a single day could result in more hours payable than intended. To allow flexibility during the COVID-19 pandemic, employers are not required to count hours for time in between agreed upon hours worked. Hours need not be consecutive during telework.

Lockton comment: For example, to address the need to care for children due to school closings, an employer may agree to allow an employee to work eight hours using the following schedule: 7-10 a.m., 12-3 p.m. and 7-9 p.m. on weekdays. The employer would be required to pay the employee for the eight hours worked, not the 14 hours between the first to last hour worked.

A variable-hour, part-time employee whose weekly work schedule varies is entitled to paid sick leave equal to 14 times the average number of hours that the employee was scheduled to work per calendar day over the six month period ending on the date on which the employee takes paid sick leave, including hours for which the employee took any leave. This computation is not possible for variable hour part-time employees who have been employed for fewer than six months. In that case, the employee is entitled to 14 times the expected number of hours the employee and employer agreed the employee would work on average each calendar day at the time of hire.

3.  Intermittent leave: One basic condition applies when an employee wishes to take leave under FFCRA intermittently. That is, both the employee and employer must agree and must identify the increments of time leave will be taken intermittently. Absent agreement, no leave under the FFCRA may be taken intermittently. This rule intentionally affords teleworking employees and employers broad flexibility under the FFCRA to agree on arrangements that balance the needs of each teleworking employee with the needs of the employer’s business. Moreover, the DOL believes that because teleworking employees present no risk of spreading the COVID-19 virus to work colleagues, intermittent leave for any qualifying reason furthers the statute’s objective to contain the virus.

4.  Order of pay issues: An employer must pay sick leave under EPSLA first. EPSLA must be provided in addition to other leave benefits under (1) any other federal, state or local law; (2) a collective bargaining agreement; or (3) an employer policy that existed prior to April 1, 2020. Employers may not require employees to use other paid leave or take unpaid time before EPSLA leave but may permit an employee to supplement EPSLA pay with other time, such as paid time off (PTO), at the employee’s election. Employers are not required to allow employees to supplement pay.

Lockton comment: An employer may elect to pay a supplement (without offsetting other paid leave) to EPSLA or FMLA+ pay to increase pay up to 100% of wages if the cap is less than the employee’s regular wages. However, employers need to be cautious as any supplement is not eligible for the IRS tax credit. If the employer supplements FFCRA pay, or the employee supplements FFCRA pay with PTO or other time off, the employer will need to run two calculations — one identifying supplemented pay, and one identifying the pay established under FFCRA for which the employer is entitled to a tax credit.

5.  Verbal notice from employee: An employee may give an employer verbal notice of the need for leave under FFCRA. The employer may require the employee to follow up with a written request.

Lockton comment: Lockton has created model forms an employer may use for an employee to request leave under EPSLA or FMLA+. The model forms contain the information required for an employer payment to qualify for a tax credit. An employer should require that any form contain complete information. If the employee never submits the form or the information provided does not support that the leave qualifies for pay or leave under FFCRA, then the leave does not need to be granted under FFCRA. However, we recommend employers establish a nondiscriminatory policy outlining what will occur if an employee has received pay or leave that is later determined to be ineligible under FFCRA.

6.  Documentation required from employee: An employee need not provide documentation showing a specific event has occurred, unless otherwise required under FMLA for an event that also qualifies under that law. For leave under FFCRA, employers must obtain information from employees that identifies the specific need for leave, such as the name of the agency that issued the quarantine or isolation order, the medical provider advising self-quarantine, the names and ages of children needing care, the name of the school or child care provider closed, a representation from the employee that they are unable to work (including telework), and in the case of a school or child care provider closing or becoming unavailable, a representation from the employee that no other responsible person will be with the children during the period of requested leave. Lockton’s Alert on this topic contains more detailed information about documentation needed for the employer to be reimbursed through tax credits.

 

Eligibility concerns clarified

Employers face challenges when determining exactly who is eligible for pay and leave under FFCRA, and in particular, whether the event identified by the employee represents an eligible event. Regulations provide additional guidance on the following eligibility issues:

7.  Telework: If an employee can telework, they are not entitled to benefits. The regulations define telework broadly to effectuate the statute’s underlying purposes and outline the circumstances when an employee is considered able to telework. Telework is no less work than if it were performed at an employer’s worksite, so employees who are teleworking for coronavirus-related reasons must always record — and be compensated for — all hours actually worked, including any applicable overtime. An employee may be unable to telework because they need to care for a child or may be prevented from doing so because of an event like a power outage. In such cases, the employee is considered unable to work.

8.  Time off for caring for a child: For purposes of both EPSL and FMLA+, care due to a school closure or loss of child care provider related to the pandemic is available for children under age 18, as well as those 18 or older who are incapable of self-care because of a mental or physical disability.

Lockton comment: For example, an employee has a 23-year-old daughter with severe autism who cannot care for herself and who usually attends a program for autistic adults during the day. If that program closes because of coronavirus-related reasons, the employee may be eligible for EPSLA and FMLA+ to care for that child due to the closure.

A child care provider is defined as a person or entity who is compensated for services and is licensed to provide child care services on a regular basis, such as a center-based child care provider, a group home child care provider or a family child care provider; or a family member or friend, such as a neighbor, who regularly cares for the child (regardless of pay or licensing).

An employee is not entitled to leave if another suitable individual — such as a co-parent, co-guardian, or the usual child care provider — is available to provide care for the employee’s child.

The IRS will not provide a tax credit for care for a child under 14 during daylight hours unless the employee identifies a valid and specific reason for the need for care.

9.  Leave due to quarantine or isolation order: There has been ongoing confusion regarding the definition of quarantine and isolation. The DOL has clarified that the definition of a quarantine includes shelter-in-place or stay-at-home orders issued by any federal, state or local government authority. If the employee could work but for the order, and the order prohibits the employee from being able to perform that work, the employee is entitled to sick pay. In most cases, if telework is available, the telework option prevents the employee from being entitled to sick pay.

Lockton comment: In some rare cases, an employer may be obligated to pay sick pay to a perfectly healthy employee who is prevented from traveling to work and for whom telework is not an option.

An example of how this may occur: The employee is a machine operator for a tanning bed manufacturer. The employee resides in County A where the county government has issued a shelter-in-place order, and tanning bed manufacturing is not considered an essential business that would allow the employee to leave home to drive to their place of work. The tanning bed manufacturing plant is located in County B that does not have a similar shelter-in-place or stay-at-home order, and there is no restriction on the continued operation of the business. The employee cannot perform the work via telework, and the company is neither shutting down its plant nor is it reducing the manufacture of tanning beds due to the pandemic. In this case, the employer would be required to pay the employee two weeks (80 hours) of sick pay under EPSLA because the employee would be subject to quarantine, the employer has work available, but the employee cannot perform the work remotely and is therefore, unable to work.

In addition, guidance has clarified that a person may be prevented from teleworking under certain circumstances. In such cases, the employee would be entitled to sick pay. For example, if an employee cannot telework while caring for a young child, that employee would be entitled to sick pay. If the employee is prevented from teleworking, for example because of a power outage, that employee would be entitled to sick pay for the period they were unable to telework.

10.  Leave because of advice by a healthcare provider to self-quarantine: An employee is entitled to sick pay if they have been advised by a physician to self-quarantine because (a) they have the COVID-19 virus, (b) there is a possibility they have the COVID-19 virus, or (c) they are particularly vulnerable to having severe symptoms if they contracted the COVID-19 virus. If the employee would otherwise have been able to work, or if the employee cannot telework because it is not an option or they are too ill to do so, the employee is entitled to sick pay.

Lockton comment: This clarification means that if your employee has consulted with a physician, they may be entitled to sick pay even if they aren’t sick or haven’t been exposed to individuals who have tested positive for the COVID-19 virus. For example, a person with diabetes or lung disease may be advised to self-quarantine because they are more vulnerable to a severe reaction should they be infected with the COVID-19 virus. If this employee could have worked but cannot do so because telework is not an option, the employer must provide two weeks of sick pay.

11.  Leave to seek a medical diagnosis due to symptoms of the coronavirus: An employee is entitled to sick pay if they are seeking a medical diagnosis because they have a fever, dry cough, shortness of breath or any other specific symptom of the coronavirus identified by the Centers for Disease Control and Prevention (CDC). Paid sick leave is limited to time the employee is unable to work because they are making, waiting for or attending an appointment for a COVID-19 virus test.

Lockton comment: This means an employee who is ill but is not exhibiting typical coronavirus symptoms (for example, symptoms of a typical stomach flu or a headache without a fever) will not be entitled to sick pay under EPSLA (but may take sick time they otherwise have available).

Leave due to an employee’s decision to self-quarantine without seeking medical advice, even with symptoms of the COVID-19 virus, is not eligible for pay under EPSLA. The employee may be eligible for pay under another sick leave policy.

12.  “Individuals” an employee may care for: An employee may take paid time under EPSLA to care for an individual for  the qualifying reasons discussed above in numbers nine and 10. To do so, there must be a genuine need to care for the individual. In addition, the individual being cared for must be an immediate family member, roommate or a similar person who generally resides in the employee’s home or with whom the employee has a relationship where the individual depends on the employee and expects that employee to care for them.

13.  Excluding employees of healthcare providers and emergency responders: Although the law states employees who are healthcare providers or first responders may be excluded, the DOL has indicated that this exclusion may be extended to anyone who works at the location where healthcare providers or emergency responders provide services (the definition of who qualifies can be found in the DOL FAQs). The DOL cautions that this determination should be made on a case by case basis as good judgment should be used to help prevent the spread of the coronavirus.

14.  Thirty days of employment for FMLA+: If an employee has been on the employer’s payroll for 30 calendar days immediately prior to the day FMLA+ leave would begin, they have satisfied the initial eligibility criteria for expanded FMLA. In addition, if an employee is rehired (on or before Dec. 31, 2020) after being terminated (including layoff) on or after March 1, 2020, that employee will have satisfied the 30-day eligibility requirement if they had been on the employer’s payroll for 30 or more of the 60 calendar days prior to the date of termination.

Lockton comment: When an employee works for the employer through a temporary staffing agency, employers often credit that employee with time worked toward any benefits eligibility waiting periods. Similarly, for FMLA+, the employer is required to credit time while the employee worked through a staffing agency for that employer if hired as a direct employee.  The employer must count the days the employee worked for the employer through the staffing agency for purposes of counting the 30-day eligibility period for FMLA+.

Employer obligations

15.  Notice posting: Covered employers must post the DOL’s model poster in a conspicuous place. Alternatively, the notice requirement may be satisfied by email or direct mail, or by posting the notice on an internal or external employee information website.

16.  Recordkeeping: An employer must retain documentation for four years, regardless of whether FFCRA leave was granted or denied. If the employer accepts a verbal statement requesting leave under FFCRA, the employer must document and retain information in its records supporting eligibility for leave. A denial of FFCRA leave must be documented and include the authorized officer’s determination of ineligibility. To support the reimbursement of FFCRA pay through a tax credit, employers must maintain the following:

  • Documentation showing how the employer determined the amount of pay and leave provided to employees, including records of work, telework and paid leave under FFCRA
  • Documentation showing how the employer determined any related qualified health plan expenses allocated to wages during FFCRA leave
  • Copies of IRS Forms 7200 submitted to the IRS
  • Copies of IRS Forms 941 submitted to the IRS or records of information provided to a third-party filing on behalf of the employer that supports entitlement to the credit claimed
  • Other documents needed to support tax credits pursuant to IRS guidance

17.  Prohibited acts: An employer is prohibited from discharging, disciplining or discriminating against any employee because they took paid leave or filed a complaint and instituted a proceeding against the employer under EPSLA. An employer is subject to FLSA enforcement rules for any such violation. An employer is subject to similar rules under FMLA regarding FMLA+, including enforcement provided under FMLA. However, an employee is also granted a private right of action against the employer to enforce FMLA+ provided the employer is otherwise subject to FMLA. Essentially, this means the employee can directly sue the employer, without taking any other administrative steps, for failure to provide required pay and leave to care for a child whose school or child care provider has closed or is unavailable due to the COVID-19 pandemic.

18.  Effect of other laws, employer practices and collective bargaining agreements: FFCRA does not eliminate or diminish any right the employee has to other leave programs, whether provided by a federal, state or local government law or ordinance, through a collective bargaining agreement or provided by the employer under policies in place prior to April 1, 2020. An employer cannot reduce pay or leave under FFCRA because the employer had provided pay or leave prior to April 1, 2020. The employer may limit FMLA+ leave to 12 weeks, reduced by other FMLA time taken during that same period. The employer may, consistent with its FMLA policies, require an employee to use PTO or other paid time during FMLA+.

Employers will need to invest time and resources in assuring that they are following FFCRA requirements in accordance with the law and additional guidance. Human resources, benefits personnel, accounting, payroll and other affected departments will need to coordinate efforts to assure that FFCRA pay and leave is administered properly and that pay is eligible for reimbursement through IRS tax credits. Contact your Lockton team if you have any questions.

 

Not legal advice: Nothing in this Alert should be construed as legal advice. Lockton may not be considered your legal counsel, and communications with Lockton's Compliance Services are not privileged under the attorney-client privilege.

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