On Wednesday, the Department of Labor published regulations to implement the Families First Coronavirus Response Act (FFCRA). The 124-page document offers the Department’s latest, most thorough, and most formal guidance regarding the FFCRA. Requirements of the FFCRA became effective April 1st and continue through December 31, 2020.
“Quarantine” and “Isolation” Orders Include Stay-at-Home Orders; Still May Not Qualify Employees for Paid Leave
Under the FFCRA, covered employers must provide paid leave to an employee who is unable to work because the employee is subject to a Federal, State, or local quarantine or isolation order related to COVID-19. Today the Department expanded the pre-existing definition of those terms to include containment, shelter-in-place, and stay-at-home orders issued by any Federal, State, or local government authority.
However, the comments accompanying the regulations go on to state, “An employee subject to one of these orders may not take paid sick leave where the employer does not have work for the employee.” This provision is true even if the reason for the employer’s lack of work is the stay-at-home order.
One example included in comments involved the closure of a coffee shop due to a government stay-at-home order. If the coffee shop laid off a cashier due to the downturn in business caused by the stay-at-home order, the cashier would not qualify for paid leave under the FFCRA. In the Department’s view, the cashier is “unable to work” because the customers were subject to the stay-at-home order, not the cashier. Similarly, if the entire coffee shop closed due to a stay-at-home order, the cashier is unable to work because the coffee shop is subject to the order, not the cashier. In either event, the employer did not have work for the employee. As a result, the employee is not entitled to paid leave under the FFCRA.
Although not included in the regulations, compare the example above to a hypothetical stay-at-home order that prevented individuals over 65 years old from leaving their residence for any reason. If a 67-year-old employee could not travel to his place of employment due to the order (and also could not telework) the employee would be eligible for paid leave under the FFCRA.
Reasons for Qualified Leave Narrowed
Two of the qualified reasons for paid leave under the FFCRA received clarifications in the regulations.
The FFCRA provides that eligible employees may take leave if they are unable to work due to the need to care for an “individual” who is subject to a quarantine or isolation order or has been advised to self-quarantine. With the new regulations, the Department requires that the individual receiving care must be the employee’s immediate family member, a regular resident in the employee’s home, or someone with whom the employee had a relationship that creates an expectation the employee would provide care for the individual. Employees may not take paid leave to care for an individual with whom they have no personal relationship.
A significant clarification was also made to employees requesting leave to care for a son or daughter whose school or childcare provider closed or is unavailable due to COVID-19. Perhaps anticipating the likely dispute between employers and employees, the regulations clarify that leave for this reason is available only if no other suitable person is available to care for the son or daughter during the period of leave. If a suitable person – such as a co-parent, co-guardian, or the usual childcare provider – is available, the employee is ineligible for paid leave under the FFCRA. Notably, the determination of whether someone is “suitable” is left to the employee.
Pay Rate Calculations and Amount of Leave Clarified
It came as no surprise that a massive piece of legislation introduced, debated, and passed in the span of a week contained inconsistencies. One such inconsistency surrounded leave requirements for part-time employees with variable schedules.
Citing the stated intent of Congress to provide employees with two-weeks of paid leave, the Department clarified that part-time employees with variable schedules are entitled to fourteen times the number of hours the employee was scheduled per calendar day averaged over a six month period that ends on the date the employee would take leave. Originally, the statute could be interpreted as providing only a single day’s pay for such employees.
Documentation and Recordkeeping Requirements
The FFCRA requires that an employee provide his or her employer with as much notice of the need for leave as is practicable under the circumstances. In addition, employees must provide certain documentation to employers before taking leave. Such documentation must include 1) the employee’s name; 2) date(s) for which leave is requested; 3) qualifying reason for the leave; and 4) an oral or written statement that the employee is unable to work because of the qualified reason for leave. Notably, the regulations require the employee to provide “documentation” that the employee is unable to work but permit the employee to provide an oral statement. Moreover, the Department’s executive summary states that employees must provide a “signed statement” that includes the information above, but the requirement of a signature is not found in the regulations. Until this ambiguity is resolved, employers should, as always, err on the side of more documentation.
Based upon the reason for leave, the employee may be required to provide additional information. For example, an employee that self-quarantines based on the recommendation of his or her medical provider must provide the name of the health care provider to the employer. The employee is not required to produce a doctor’s note or provide any type of medical certification form.
Employers must retain all documentation described above for four years, regardless of whether the leave was granted or denied. If an employee provided oral statements to support the employee’s request for leave, the employer must document and maintain such information in its records for four years. If an employer is eligible for exemption from application of the FFCRA’s requirements – because, for example, it employs health care providers and emergency responders – employers must document the determination of the exemption for the same four-year period.
The regulations also provided guidance to employers that intend to claim tax credits for qualified payments under the FFCRA. The Department recommends that employers preserve the following documentation for four years in order to support their claim for tax credits:
Documentation to show how the employer determined the amount of paid leave provided to employees;
Documentation to show how the employer determined the amount of qualified health plan expenses that the employer allocated to wages;
Any completed IRS Forms 7200 submitted to the IRS;
Any completed IRS Forms 941 submitted to the IRS, or records of information provided to a third-party payer regarding the employer’s eligibility for the tax credit; and
Any other documents requested by the IRS under its applicable guidelines.
The IRS recently released its own guidance for employers that includes much more information on the tax implications created by the FFCRA. Employers are encouraged to consult with their tax advisors for more information.
Employees may supplement unpaid leave under the FFCRA with accrued paid leave provided by an employer. For instance, an employee on qualified leave to care for an individual diagnosed with COVID-19 would receive 2/3 of the employee’s regular rate of pay for such leave. The employee may use other accrued paid leave to make up for the 1/3 loss of wages. Employers may require an employee to use other accrued paid leave if the employee takes leave under the expanded FMLA.
The term “son or daughter” includes biological, adopted, or foster child, a stepchild, a legal ward, or a child of a person standing in loco parentis, who is under 18 years of age or is 18 years of age or older who is incapable of self-care because of a mental or physical disability. This definition is consistent with existing FMLA regulations.
An employee is considered full-time for purposes of the FFCRA if the employee is normally scheduled to work at least 40 hours each workweek. Any employee who is not full-time is designated as part-time under the FFCRA.
Employers must maintain group health coverage for employees taking leave under the FFCRA but may require employees to provide their share of any applicable premium payments.
As employers across the country face unprecedented challenges posed by COVID-19, the attorneys at K|W|W will keep you up to date on the laws and regulations affecting your workforce. To learn more about these changes and how they may impact your business, please join us at our next live webinar on Monday, April 6th at 10:00 a.m. And in the meantime, if you have any questions or concerns, please reach out to us. As always, your workforce is our priority.
The K|W|W Team