Implementing the Families First Coronavirus Response Act: Department of Labor Provides Updated Guidance

Implementing the Families First Coronavirus Response Act: Department of Labor Provides Updated Guidance

Following the enactment of the FFCRA on March 18, 2020, employers and employees alike had many questions regarding the Act’s implementation and are left to move forward with uncertainty. However, the Department of Labor (“DOL”) has provided new questions and answers to provide much needed clarity to all those struggling to ensure compliance with the new Emergency Family and Medical Leave Expansion Act (“E-FMLA”) and The Emergency Paid Sick Leave Act (“E-PSLA”).

Over the past week, the DOL has issued written guidance in the form of a published set of FAQ’s on its website found here, as well as facts sheets and a new required workplace poster. The DOL has already updated and expanded its written guidance several times, and readily admits that such guidance will continue to be issued on a rolling basis. Also, the DOL has indicated it intends to promulgate further regulations on an unspecified date in April 2020.

Interpretation and implementation of the FFCRA is changing quickly. But to date this is what we know based on the guidance provided by the DOL:

New Effective Date – A considerable curveball, the DOL announced that the FFCRA is going to become effective a day early on April 1, 2020.

Benefits Will Not Apply Retroactively – The DOL clarified that FFCRA benefits are not retroactive. As a result, any paid leave given to employees before the effective date of the FFCRA (April 1, 2020), which would have otherwise qualified for either E-FMLA and E-PSLA benefits, will not be counted to towards the FFCRA’s leave requirement. However, employees are entitled to their full entitled of FFCRA leave on April 1, 2020, and beyond.

Workplace Poster The DOL has issued the notice poster employers must use to educate employees on the new leave opportunities and requirements. Employers can satisfy their notice obligations under the FFCRA by: (1) posting the notice in a conspicuous location in the workplace; (2) directly emailing or mailing the requisite notice to each individual employee; and (3) posting the notice on an employee information internal or external website.

Employers should have the poster up by April 1. The DOL recognized employers are still grappling with the FFRCA going into effect and plans to give a 30-day grace period for enforcement. Employers are not required to issue notices to recently laid-off employees. However, notice should still be provided to furloughed employees, even though they are not entitled to paid leave under the law. Copies of the required notice and the DOL’s guidance concerning notice are available here and here.

Small Business Exemptions – The most needed point of clarity pertains to the possibility of small business exemptions from the E-FMLA and E-PSLA. Under the FFCRA, the Secretary of Labor reserved the authority to issue regulations exempting small businesses with fewer than 50 employees when the imposition of the Act’s requirements would jeopardize the viability of the business as a going concern. Unfortunately, the DOL has not issued any further elaboration on the implementation or requirements of these exemption provisions. The DOL simply advised small businesses should “document” why the E-FMLA and E-PSLA provisions of the FFCRA “jeopardize the viability” of your business. However, the DOL promised that forthcoming regulations will address this is in more detail.

Large Employers (500 or more employee) – The DOL clarified that the number of employees should be calculated “at the time your employee’s leave is to be taken.” This could greatly impact the 500-employee threshold outlined in the FFCRA. Based on this language, the DOL is requiring employers to determine whether it has 500 employees at the time any individual employee takes leave under the FFCRA. As a result, the 500-employee threshold to qualify as a large employer is a moving target. For businesses hovering around 500 employees, this could have substantial implications for businesses contemplating layoffs before and after the April 1 effective date. If the contemplated layoffs would bring the overall number of employees under 500, then FFRCA coverage would be triggered.

Moreover, the DOL also issued detailed guidance on how to calculate the number of employees when multiple entities exist under the same corporate family, and in situations where multiple entities may constitute “joint employers” or “integrated employers.”

Documentation and Certification Requirements – The DOL clarified that employers must require employees to provide appropriate documentation and written notice supporting the reason for their leave in order for the employer to claim a payroll tax credit for FFCRA leave payments. The appropriate notice should include:

  • the employee’s name;
  • the qualifying reason for requesting leave;
  • a statement that the employee is unable to work for that reason; and
  • the date(s) for which leave is requested

Documentation of the reason for leave is also necessary. This includes the source of any quarantine or isolation order, the name of the health care providers who advised the employee to self-quarantine, or notice of a school disclosure or lack of child care. Importantly, unlike traditional FMLA leave, no signed third-party certification is required for FFCRA paid leave.

Employers should retain all documentation and create written policies advising their employees of the documentation required to receive benefits. Employers who grant their employees paid leave under the FFCRA without keeping such documentation will not be eligible for a payroll tax credit.

Layoffs, Worksite Closures, and Furloughs – The DOL explained that if an employer closed its worksite before or after the April 1st effective date, but prior to the employee requesting leave under the FFCRA, the employee is not entitled to leave under the FFCRA. Additionally, if an employer closes its worksite during a time when an employee is on leave pursuant to the FFCRA, employee is no longer eligible for FFCRA benefits.

In the case of a furlough, an employee will not be entitled to leave under the FFCRA, even if the employer remains in operation. Further, if an employer reduces an employee’s hours, the employee may use leave under the FFCRA to supplement for the hours the employee is no longer working.

Existing Employer Leave Policies and FFCRA Paid Leave – The DOL clarifies that E-PSLA benefits are not to be denied or reduced based on existing accrued leave provided by the employer. As of April 1st, employers may permit—but may not require—employees to choose between their existing accrued leave and FFCRA’s E-PSLA or E-FMLA. However, employers may permit—but may not require—employees to supplement any partially paid leave under the FFCRA with existing accrued paid leave in order to receive their full compensation. Ultimately, an employer cannot require an employee to use existing accrued paid leave if the employee prefers not to.

In sum, the DOL has provided beneficial guidance for the interpretation and implementation of the FFCRA. However, we are still far from clarity on each detail. And for employers trying to ensure compliance with the FFCRA, the devil is in the details. We anticipate this is still going to be an evolving area of law in the upcoming months. The employment law team at ShuffieldLowman is available to advise employers in these uncertain times based on the current legal updates available. For more information on COVID-19 legal updates, visit our resources page HERE.

View our other FFCRA Blogs Here:
Families First Coronavirus Response Act: Emergency Family and Medical Leave Expansion Act

FFCRA Emergency Unemployment Insurance Stabilization Act

FFCRA: Emergency Paid Sick Leave Act

**Shuffield Lowman anticipates changes to develop as both federal and Florida government responds to this unprecedented health emergency. We will provide updates as we are able in this developing legal situation and other COVID-19 related employment legislation that may be enacted in the coming weeks and months.

***Disclaimer: The information contained herein provides an overview of developing and ongoing legislation and does not constitute legal advice for any particular situation.

Authors: Dillon McColgan & Clay Roesch

Updates to SBA Loans Under CARES Act

Updates to SBA Loans Under CARES Act

UPDATE 4/6/20 – The Small Business Administration (“SBA”) has released an Interim Final Rule regarding implementation of the CARES Act. The text of the Interim Final Rule can be found online at https://www.sba.gov/sites/default/files/2020-04/PPP–IFRN%20FINAL_0.pdf. The following is a list of the most impactful clarifications of the Paycheck Protection Program that are contained within the Interim Final Rule –

  • Payments to Independent Contractors and Sole Proprietors will not be considered within the calculation of “Payroll Costs” for purposes of the loan amount and the forgiveness amount.
  • A borrower must use at least 75% of the loan proceeds for payroll costs. It was previously understood that this limitation would be applied with regard to the amount of the loan forgiven, but now we know that it also applies to the approved use of the loan proceeds as well. In other words, the 75% rule applies to how the funds are used on the front-end, as well as how much is forgiven on the back-end.
  • The Interest Rate will be 1%
  • The Maturity Date will be 2 years, for any loan amount that is not forgiven

The Coronavirus Aid, Relief, and Economic Security Act (or CARES Act), a $2 Trillion package, was signed into law on Friday, March 27, 2020, and provides for a substantial expansion of Section 7(a) of the Small Business Act for the period between February 15, 2020 and June 30, 2020 (the “covered period”) called the Paycheck Protection Program. Businesses are now eligible to apply for business loans under Section 7(a) and should consider the updated rules to evaluate eligibility.

 

Who is eligible for loans under the CARES Act?

7(a) loans will no longer be limited to “small business concerns”; instead, during the covered period, such loans will be available to

  • any business concern, nonprofit organization, or veterans organization which employs not more than 500 employees OR, if applicable, complies with the size standard set forth by the Administration, which may be located online at https://www.sba.gov/document/support–table-size-standards;
  • Sole proprietors, independent contractors, and “eligible self-employed individuals” who are also entitled to the qualified sick leave tax credit under Section 7002 of the Families First Coronavirus Response Act; and
  • Businesses with more than one physical location, if they employ no more than 500 employees per physical location and are assigned a North American Industry Classification System (NAICS) code beginning with the number 72.
  • For the above categories, employees employed on a full-time, part-time, or other basis may be counted.

The requirement that applicants not have access to credit from other sources has been eliminated for the covered period.

 

Maximum Loan Amount

The maximum loan amount offered to an applicant will be calculated using the following formula, but will not exceed $10,000,000.00.

  • 5x –
    • The average monthly Payroll Costs (as defined below) for the 1-year period before the loan is made, or
    • If the applicant was not in business between February 15, 2019 and June 30, 2019, the average monthly Payroll Costs between January 1, 2020 and February 29, 2020, or
    • If the applicant is a seasonal employer, the average total monthly Payroll Costs between February 15, 2019 or March 1, 2019 (at the election of the Borrower) and June 30, 2019.
  • Plus the outstanding balance of any Economic Injury Disaster Loans made under Section 7(b)(2) of the Small Business Act after January 31, 2020, which may be refinanced under this loan.

Payroll Costs include:

1) salary, wages, commissions, tips, or other such compensation to employees, sole proprietors, or independent contractors up to $100,000 per year, as prorated for the covered period,

2) payment of vacation, parental, medical or sick leave,

3) allowance for dismissal or separation, group health care benefits, including insurance premiums;

4) retirement benefits; and

5) state or local taxes on compensation.

 

Payroll Costs do not include:

1) compensation to individuals in excess of an annual salary of $100,000, as prorated for the covered period;

2) certain taxes under Chapter 21, 22, or 24 of the Internal Revenue Code;

3) payments to employees who do not reside in the United States; and

4) qualified sick leave for which credit is allowed under Sections 7001 or 7003 of the Families First Coronavirus Response Act.

 

Forgiveness of Loans under CARES Act

The CARES Act requires lenders to forgive certain amounts (based on Payroll Costs and other expenses of Borrower) of the 7(a) loans obtained during the covered period.

  • Calculation of “Amount Forgiven” –
    • an amount equal to the sum of following costs incurred by the Borrower during the 8-week period following the origination of the 7(a) loan –
      • Payroll Costs (including additional wages paid to tipped workers);
      • Payments of Interest (but not Principal) on any mortgage obligation which is owed by the Borrower, is a mortgage on real or personal property, and existed prior to February 15, 2020;
      • Rent on any lease in force before February 15, 2020; and
      • Utility payments, including for electricity, gas, water, transportation, telephone or internet access, if those services began before February 15, 2020.
      • Note – recent guidance from the Department of Treasury states that “due to likely high subscription,” it is likely that non-Payroll Costs will be limited to 25% of the Amount Forgiven. This may be addressed by the regulations that will be issued by Small Business Administration in the coming weeks.
    • Reduction of amount forgiven – the “Amount Forgiven” will be reduced (but not increased) by
      • Reduction due to reduction in number of employees – multiplying the Amount Forgiven by a decimal obtained by dividing –
        • The average number of full-time equivalent employees per month employed during the 8-week period following the origination of the 7(a) loan; by
        • The average number of full-time equivalent employees per month employed between February 15, 2019 and June 30, 2019 OR between January 1, 2020 and February 29, 2020 (at the election of the Borrower, unless the applicant is a seasonal employer, in which case the former shall be used).
      • Reduction due to reduction in salary – The “Amount Forgiven” shall also be reduced by the amount of any reduction in total salary or wages of any employee during the 8-week period following the origination of the 7(a) loan by more than 25% from the most recent full quarter, if that employee did not receive wages or salary during any pay period in 2019 which would have amounted to more than $100,000 if annualized.
      • Exemption to reduction of Amount Forgiven where employees re-hired or salaries restored to prior amounts – the Amount Forgiven will not be reduced, as stated above, by reductions in the number of employees or salary of employees which occur between February 15, 2020 and April 26, 2020, IF those employees are re-hired and/or salaries are restored prior to June 30, 2020.

Amounts forgiven under this program will not be considered as gross income for purposes of taxation.

 

Other important facts regarding the loan program under the CARES Act

  • Application Procedures: You may apply through any existing SBA-approved Lender. A list of those lenders currently approved to provide SBA loans can be found online at https://www.sba.gov/partners/lenders/microloan-program/list-lenders. Other lenders may become approved and enrolled in the program over time, so you may consult with your lender if they do not appear on the list to determine if they will be offering loans under the Paycheck Protection Program. Applications can be made beginning on April 3, 2020 for small businesses and sole proprietorships, and April 10, 2020 for independent contractors and self -employed individuals. A copy of the application form for the Paycheck Protection Program can be found online at https://www.sba.gov/sites/default/files/2020-03/Borrower%20Paycheck%20Protection%20Program%20Application_0.pdf. We recommend that businesses review the application to ensure they can provide all the requested documentation and certify the necessary information.
  • Loan proceeds must be used for the following purposes – Payroll Costs, payments of interest (but not principal) on any mortgage obligation, rent (including rent under a lease agreement), utilities, and interest on any other debt obligations that were incurred before the covered period.
  • No Personal Guarantee or Collateral will be required during the covered period.
  • The interest rate for a loan is capped at 4%, but according to guidance recently issued by the Department of Treasury, which can be found online at https://home.treasury.gov/policy-issues/top-priorities/cares-act/assistance-for-small-businesses, the interest rate will be .50%.
  • Loans will be deferred for 6 months, according to Department of Treasury Guidance.

Each business is unique, so companies should review the various disaster relief loan programs available before choosing which one works best for your needs. If you are interested in discussing your business loan options with an attorney, our team is here to assist you with navigating the changing legal landscape due to COVID-19. For more information on ways our attorneys can help you during this time, visit our COVID-19 Response Team page HERE.

 

*Disclaimer: The information contained herein provides an overview of developing and ongoing legislation and does not constitute legal advice for any particular situation.

 

Implementing the Families First Coronavirus Response Act: Department of Labor Provides Updated Guidance

FFCRA: Emergency Paid Sick Leave Act

What is The Emergency Paid Sick Leave Act (“E-PSLA”)

The Families First Coronavirus Response Act signed into law by President Trump on March 18, 2020, contains a number of provisions, with four in particular that have an immediate impact on employers and employees. In this article, we explain some of the legal implications of the Emergency Paid Sick Leave Act.

The Emergency Paid Sick Leave Act (“E-PSLA”) provides paid sick leave for certain employees for specified scenarios related to COVID-19. Just like E-FMLA, the E-PSLA goes into effect on April 1, 2020, and expires on December 31, 2020.

WHO IS COVERED?

Although “covered employer” under the E-PSLA is not clearly defined, it applies to private employers with fewer than 500 employees and public entities with at least one employee. The new law appears to exclude larger employers with 500 or more employees. Likewise, it also appears to apply to individuals acting on behalf of employers (e.g., supervisors, managers, owners, etc.).


WHO QUALIFIES?

Employees are entitled to paid sick leave under the E-PSLA for the following six reasons:

  • The employee is subject to a federal, state, or local quarantine or isolation order related to COVID-19.
  • The employee has been advised by a health care provider to self-quarantine due to concerns related to COVID-19.
  • The employee is experiencing symptoms of COVID-19 and seeking a medical diagnosis.
  • The employee is caring for an individual who is subject to a quarantine/isolation order of who has been advised to self-quarantine due to COVID-19 concerns.
  • The employee is caring for a son or daughter of such employee if the school or place of care of the son or daughter (as defined by FMLA) has been closed, or the childcare provider of such son or daughter is unavailable, due to COVID-19 precautions.
  • The employee is experiencing any other substantially similar condition specified by the Secretary of Health and Human Services in consultation with the Secretary of the Treasury and Secretary of Labor.


HOW MUCH PAID SICK LEAVE MUST AN EMPLOYER PROVIDE?

Full-time employees are entitled to 80 hours of paid sick leave at their full rate of compensation for qualifying reasons (1), (2), and (3) provided above. For qualifying reasons (4), (5), and (6) listed above, a full-time employee is entitled to 80 hours of paid sick leave at two-thirds their rate of pay.

Part-time employees are entitled to payment equal to the average number of hours they worked over a two-week period. Note that the E-PSLA as is does not identify which two-week period the employer must use in this calculation. The Department of Labor is tasked with issuing guidelines on this matter within 15 days after enactment of the new law.

Paid sick leave is capped at $511 per day and $5,110 total per employee for use under qualifying reasons (1), (2), and (3); and capped at $200 per day and $2,000 total per employee for use under qualifying reasons (4), (5), and (6). The E-PSLA requires paid sick leave in addition to the employer’s existing paid leave policy, but any unused paid sick leave under E-PSLA does not carry over after December 31, 2020. Likewise, it does not have to be paid out upon separation of employment. The E-PSLA does not permit employers to substitute any prior paid leave they may have provided employees for COVID-19 related reasons. Moreover, employers must allow the employees to use E-PSLA paid sick leave before they use any remaining accrued paid leave that the employer provides.

 

OTHER IMPORTANT CONSIDERATIONS

Emergency paid sick leave under the E-PSLA shall be available immediately to employees regardless of how long the employee has been employed by the employer.

  • The Secretary of Labor will issue a model notice regarding employee rights under the E-PSLA within seven (7) days after enactment. Employers must post this notice in a conspicuous place where notices to employees are customarily posted.
  • Again, under the E-PSLA, The Secretary of Labor reserved the authority to issue regulations exempting small businesses with fewer than 50 employees when the imposition of the Act’s requirements would jeopardize the viability of the business as a going concern. To date, no further elaboration on this exemption has been made. It is possible that the Secretary of Labor will issue guidance regarding this exemption prior to April 2, 2020. But currently the application of this exemption is undetermined
  • Employers may not take adverse action against an employee who takes leave under the Act or files a complaint relating to the Act (the expected anti-retaliation provision).
  • Employers who violate the E-PSLA shall be considered to have failed to provide minimum wages under the Fair Labor Standards Act (“FLSA”) and are subject to the same penalties.

For the latest updates on the Emergency Unemployment Insurance Stabilization Act, contact our employment law team for information. To see other legal updates that are occurring from COVID-19, visit our resources page HERE. To see our other FFCRA blogs visit here:

View our other FFCRA Blogs Here:
Families First Coronavirus Response Act: Emergency Family and Medical Leave Expansion Act

FFCRA Emergency Unemployment Insurance Stabilization Act

Authors: Dillon McColgan & Clay Roesch

Implementing the Families First Coronavirus Response Act: Department of Labor Provides Updated Guidance

FFCRA: Emergency Unemployment Insurance Stabilization Act

The Families First Coronavirus Response Act signed into law by President Trump on March 18, 2020, contains a number of provisions, with four in particular that have an immediate impact on employers and employees. In this article, we explain some of the broad legal implications of the Emergency Unemployment Insurance Stabilization Act.

In short, this Act provides $1 billion in aid to state unemployment compensation programs so long as the states: (1) waive any waiting period; (2) waive the work search requirements for employees directly impacted by COVID-19 due to an illness in the workplace or isolation and self-quarantine as directed by a public health official; and (3) does not change employer accounts for COVID-19 related benefits.

The Act requires each state to improve access to benefits, including ensuring at least two methods of application or available including by phone, by internet, and in person. Likewise, the Act directs the Department of Labor to provide assistance to states to operate and expand work-sharing programs. Florida’s work-share program (Florida’s Short Time Compensation Program) provides wage compensation where employees experience reduced hours, rather than total loss of employment.

As the COVID-19 pandemic continues and the state’s unemployment program is stressed, we will continue to see how the provisions in this Act are actually implemented and to what extent.

For the latest updates on the Emergency Unemployment Insurance Stabilization Act, contact our employment law team for information. To see other legal updates that are occurring from COVID-19, visit our resources page HERE.

To see our other FFCRA blogs visit here:

View our other FFCRA Blogs Here:
Families First Coronavirus Response Act: Emergency Family and Medical Leave Expansion Act

FFCRA: Emergency Paid Sick Leave Act

 

Force Majeure and COVID-19

Force Majeure and COVID-19

WHAT IF YOUR ABILITY TO PERFORM CONTRACTUAL OBLIGATIONS IS MADE IMPOSSIBLE OR IMPRACTICAL DUE TO THE NOVEL CORONAVIRUS?

 

The phrase “force majeure” refers to unexpected external circumstances which prevent a party to a contract from meeting its obligations to perform. A party may be able to avoid liability for nonperformance by declaring force majeure. Examples of typical force majeure events include war, strikes, terrorist attacks, and natural disasters such as hurricanes, tornadoes or wildfires. The question of whether Covid-19 qualifies as a force majeure event is uppermost on the minds of parties for whom performance of their contractual obligations becomes impossible or impractical due to the impact of the virus.

 

DOES THE COVID-19 OUTBREAK QUALIFY AS A FORCE MAJEURE EVENT?

The short answer is maybe, and you would need to review the specific language in your contract to make that determination.

Many contracts contain force majeure clauses which outline the circumstances under which a party may be relieved from liability if its nonperformance is due to a force majeure event. The events covered by a force majeure clause depend on the specific language of the contract, but generally, an event must be both outside of the control of the parties and unforeseeable. Such clauses typically define what events qualify as force majeure, address or limit the remedies available to the contracting parties, and state the actions required of a party seeking to take advantage of those remedies. A force majeure clause may limit its application to circumstances which render performance impossible, or expand its application to circumstances which render performance impractical or ill-advised by authorities.

Oftentimes, a contract will include a non-exhaustive list of force majeure events, including natural disasters such as floods, tornadoes or hurricanes; war; acts of terrorism; and government actions which prevent performance. Few contracts include disease, epidemics or pandemics in the list of force majeure events, although an increasing number of contracts have done so in the wake of the 2002-2003 Severe Acute Respiratory Syndrome (“SARS”)” epidemic. In the absence of specific contractual language addressing epidemics or pandemics, parties may turn to catchall provisions, which frequently include “Acts of God” or circumstances beyond a party’s control in the definition of force majeure events.

The effects of Covid-19 have caused a far-wider effect than SARS, resulting in worldwide disruptions to businesses and society as a whole. The World Health Organization has officially declared Covid-19 a pandemic, and the U.S. Center for Disease Control has stated that the Covid-19 virus is “a new disease, caused by a novel (or new) coronavirus that has not previously been seen in humans.” https://www.cdc.gov/coronavirus/2019-ncov/faq.html. The President has declared a national state of emergency due to Covid-19, and has approved some states’ (including Florida’s) requests to declare their state a disaster area. Numerous state and local authorities have issued stay-at-home orders, and have limited or banned large gatherings due to Covid-19. These factors would give strong support to an argument that Covid-19 is an act of God or a factor which is beyond a party’s control and was unforeseeable. The Covid-19 outbreak will doubtless cause many parties to seek cancellation of contracts, and give rise to litigation on the issue. Businesses may also want to consider revising the language of their contracts to specifically include viral or bacterial pandemics or epidemics to the list of force majeure events.

 

WHAT IF A CONTRACT DOES NOT CONTAIN A FORCE MAJEURE CLAUSE?

If a contract does not contain a force majeure clause, general principles of contract law may offer relief to a party for whom performance is rendered impossible or impractical.  Florida, like most states, recognizes the defenses of impossibility, impracticability and frustration of purpose, which may be invoked to excuse a party’s performance under a contract under certain circumstances.  Such defenses, however, are sparingly applied.  For example, Florida courts have held that a steep decline in the market is not the sort of unforeseeable circumstance which falls within the doctrine of impossibility, as economic downturns are not truly unanticipated circumstances in a market-based economy such as that in the United States.  It remains to be seen under which circumstances Covid-19, and its effects on the economy and society, will support such defenses.

Our team is available to help interpret the provisions in your situation and review our client’s contracts to determine whether they may still be enforceable in these uncertain times. To learn about more legal updates due to COVID-19, visit our COVID-19 Resources Page HERE.

 

 

Implementing the Families First Coronavirus Response Act: Department of Labor Provides Updated Guidance

Families First Coronavirus Response Act: Emergency Family and Medical Leave Expansion Act

Without question, the most impactful change to employment law driven by the COVID-19 pandemic is the Families First Coronavirus Response Act (“FFCRA”). The FFCRA was signed into law by President Trump on March 18, 2020, after passing through the House and Senate with minor changes. The FFCRA becomes effective on April 1, 2020, and its requirements will sunset on December 31, 2020, unless extended or modified by subsequent litigation.

The FFCRA contains a number of provisions, but there are four that have an immediate impact on employers and their employees. Below we have outlined the important updates on the Emergency Family and Medical Leave Expansion Act.

 

Emergency Family and Medical Leave Expansion Act

The Emergency Family and Medical Leave Expansion Act (“E-FMLA”) expands the FMLA to add one new qualifying reason for leave related to COVID-19 and to provide partial paid leave for such leave. COVID-19 FMLA leave may be taken beginning on April 2, 2020.

 

WHO IS COVERED?

While FMLA usually only covers employers with 50 or more employees, the E-FMLA has expanded coverage to include all private employers with fewer than 500 employees and most public employers. Moreover, E-FMLA benefits are available to any full-time or part-time employee who has been employed by the employer for thirty (30) days. This departs from FMLA’s standard requirement that the employee must have worked for the employer for at least one year and 1250 hours.

 

WHO QUALIFIES?

The E-FMLA narrowly defines the scope of “qualifying need” an employee requires to qualify for the E-FMLA’s expanded benefits. The employee must be unable to work (or telework) due to a need for leave to care for the son or daughter under 18 years of age of such employee if their school or place of care has been closed, or the child care provider of such son or daughter is unavailable, due to the COVID-19 public health emergency declared by a federal, state, or local authority. In this event, the employee may take up to 12 weeks of coronavirus-FMLA leave.

 

PAID OR UNPAID LEAVE?

The next consideration is whether E-FMLA leave is paid or unpaid—the answer is both. The first ten (10) days of leave under the new E-FMLA are unpaid, but an employee may elect to use accrued paid leave during this 10-day period (including emergency paid sick leave which is discussed in detail below). After the first 10 days of E-FMLA leave, employers shall provide paid leave at no less than two-thirds of the employee’s regular rate of pay. The E-FMLA provides further formulas to determine how variable hour employees are to be paid. The paid leave is capped a $200 per day and $10,000 in the aggregate.

 

POSITION RESTORATION?

As with FMLA, E-FMLA provides job-protected leave, which means the employer must restore the employee to the same or similar position and pay upon the employee’s return to work. However, E-FMLA includes an exception for employers with fewer than 25 employees if the position no longer exists due to operational changes due to COVID-19 subject to certain conditions. Despite this exception, the employer still must make reasonable efforts to rehire the employee for up to one year if a similar position opens.

 

OTHER IMPORTANT CONSIDERATIONS

  • E-FMLA requires an employee to provide the employer with notice when practical if the employee foresees then need for COVID-19 leave.
  • Under the E-FMLA, the Secretary of Labor reserved the authority to issue regulations exempting small businesses with fewer than 50 employees when the imposition of the Act’s requirements would jeopardize the viability of the business as a going concern. To date, no further elaboration on this exemption has been made. It is possible that the Secretary of Labor will issue guidance regarding this exemption prior to April 2, 2020. But currently the application of this exemption is undetermined.
  • E-FMLA runs concurrent with traditional FMLA leave. E-FMLA leave is not an additional 12 weeks to the 12 weeks provided by traditional FMLA leave.
  • An employee may not bring a civil action against an employer because of the employer’s violation of the E-FMLA. However, the Secretary of Labor may enforce the law against employers through administrative and/or civil actions.

For the latest updates on E-FMLA, contact our employment law team for information. To see other legal updates that are occurring from COVID-19, visit our resources page HERE.

View our other FFRCA Blogs Here:
Families First Coronavirus Response Act: Emergency Family and Medical Leave Expansion Act

FFRCA Emergency Unemployment Insurance Stabilization Act

FFCRA: Emergency Paid Sick Leave Act

 

Authors: Dillon McColgan & Clay Roesch