DOL Issues Regulations For New Federal Paid Sick and Family Leave Law

This final rule provides additional guidance to employers with fewer than 500 employees who are subject to the paid sick and family leave obligations, and – in certain instances – modifies the prior understanding of what was required to comply with the law. This alert summarizes the major provisions set forth in the new implementing regulations, in addition to prior analysis of the statute and DOL’s answers to common questions which can be found here, here, and here. This alert does not address every provision set forth in the 124-page final rule document.  If you have specific questions not addressed here, we are able to assist.  The key issues addressed are as follows:

Counting Employees to Determine Employer Coverage

• • Generally, private employers with fewer than 500 employees are covered by these laws.
  • Employers count the following categories of employees: full- and part-time employees, employees on leave of any kind, jointly employed employees, and day laborers supplied by a temporary agency.
  • Employers do not count independent contractors or employees that have been furloughed.
  • Employers should only count US-based employees, including employees in US territories and possessions.
  • To determine whether a business is a joint employer of employees of another business, employers should undertake the joint employer analysis under the Fair Labor Standards Act.
  • Employers must also count all employees of unrelated entities if they satisfy the Family Medical Leave Act’s integrated employer test.
  • Both the joint employer and integrated employer tests are fact-specific with potential broad implications, so employers should be thoughtful and confer with counsel prior to making determinations.
  • Employers must count employees at the time the leave is taken to determine coverage. This means that employers may fall in and out of coverage obligations if their employee count fluctuates below or above 500 employees.  An employee who receives leave at a time the employer is covered is entitled to that leave even if, during the leave, the employer falls out of coverage because of increased headcount.

Potential Exemption for Employers with Less than 50 Employees

• • Employers with fewer than 50 employees may be exempt from coverage if complying “would jeopardize the viability of the business as a going concern.” There is no formula for determining this standard.
  • To use the exemption, an officer must determine that coverage:
    • • “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 would entail “a substantial risk to the financial health or operational capabilities of the business because of their specialized skills, knowledge of the business, or responsibilities.”
      • There are insufficient workers available who are able, willing, qualified, and available at the time and place needed to perform the labor and services provided by the employee and the employee’s labor or services “are needed for the small business to operate at a minimal capacity.”
  • An employer electing this exemption must document the determination sufficiently and retain those records.
  • An employer electing this exemption does not affirmatively submit the basis to DOL for approval or its information.
  • The notice poster must still be posted even if an employer believes it is subject to the exemption.
  • Employers should be thoughtful in whether they qualify for the exemption based on the fact-specific analysis.

Qualification for Paid Sick or Family Leave Entitlement

• • The implementing regulations provide clarifying guidance on what qualifies for leave, and generally provides more limitations for qualifying circumstances. Remember, the more expansive paid family leave is only available for employees who are caring for a child under circumstances described in the law.
  • Paid Leave Entitlement for Federal, State, or Local Quarantine: An employee is entitled to paid sick leave due to a quarantine or isolation order “only if, but for being subject to the order, he or she would be able to perform work” that is otherwise permitted by the employer, whether at the employer’s normal work place or through teleworking.  An employee is not entitled to paid sick leave if the employer does not have work for the employee.
  • Paid Leave Entitlement for Employees Advised by Health Care Provider to Self-Quarantine: An employee is entitled to paid sick leave if the health care provider advises the employee to self-quarantine based on the health care provider’s belief that:  (a) the employee has COVID-19; (b) the employee may have COVID-19; or (c) the employee is particularly vulnerable to COVID-19 and the employee’s decision to follow the health care worker’s advice to self-quarantine prevents the employee from working, either at the employee’s normal workplace or by telework.
  • Paid Leave Entitlement for Employees Seeking Diagnosis for COVID-19: Employees are entitled to Paid Sick Leave for the period of time that the employee is unable to work because he or she is taking affirmative steps to obtain a medical diagnosis of COVID-19 and is experiencing fever, dry cough, shortness of breath, or any other COVID-19 symptoms identified by the Center for Disease Control.
  • Paid Leave Entitlement for Employees Caring for an Individual: An employee that is caring for an immediate family member, a person “regularly resid[ing] in the employee’s home,” or a person with a relationship that creates an expectation that the employee would care for the individual is entitled to paid sick leave if the employee would have been able to perform his or her work but for this care.  An employee is not entitled to leave if the employer does not have work for the employee.
  • Paid Leave Entitlement for Employees Caring for a Child: An employee may take paid sick or family leave if he or she is unable to work because of the need to care for his or her child due to the closure of the child’s school or place of care for COVID-19 reasons.  Importantly, an employee can obtain this leave only if there is “no other suitable person available to care for the [child] during the period of such leave.”  An employee may not take this leave if the employer does not have work for the employee.

Intermittent Leave for Paid Sick or Family Leave

• • Worksite Intermittent Leave:
    • • Intermittent leave for an employee working at the worksite (i.e., not teleworking) is only available: (a) if the employer and employee agree to it; and (b) for an employee who otherwise qualifies to care for a child whose school or place of care has closed due to COVID-19 concerns.
      • Intermittent leave is not permitted at the worksite for any of the other qualifying circumstances for the logical reason that so permitting may increase the spread of COVID-19.
  • Telework Intermittent Leave is permitted if the employee and employer agree to it.
  • Best practice is to document any intermittent leave agreement.

Interplay with “Regular” FMLA Leave Entitlement

• • If an employee has already exhausted his or her entitlement to FMLA benefits prior to the enactment of the FFCRA, the employee may not take Expanded Family or Medical Leave.
  • If an employee uses only a portion of the 12 weeks of Expanded Family and Medical Leave available to him or her, he or she can then use the remainder of the 12 weeks for standard FMLA leave. For instance, if an employee takes 4 weeks of Expanded Family and Medical Leave for COVID-19 related issues and then within a 12-month period requires FMLA leave for a non-COVID related issue, the employee may take the remaining 8 weeks of FMLA leave.
  • An employee is capped at 12 weeks of Expanded Family and Medical Leave, regardless of whether that period of leave covers two traditional FMLA 12-month periods.

Employer and Employee Notice Requirements

• • Covered employers must post a notice explaining the FFCRA’s paid leave provisions. The DOL has already issued a model notice which can be found via the DOL’s website.
  • Covered employers who have employees working remotely should provide notice via email, regular mail, posting on company intranet, or other means that will provide employees with notice.
  • Generally, employers are permitted to require employees to follow “reasonable notice procedures” after the first day, or partial day, that the employee takes leave. For leave for necessary to care for a child with a school or place of care closure, employees should provide notice in advance of leave since the need for leave is foreseeable.
  • Reasonableness is judged by the facts and circumstances of each particular case. Generally, if an employee fails to provide documentation, an employer should give him or her notice of the failure to provide documentation and permit the employee to provide same before denying a request for leave.
  • Notice of taking leave may be given orally and that notice simply requires that sufficient information be provided for the employer to determine whether the leave requested is covered.
  • Employee notice may be given by someone other than the employee when the circumstances require.
  • The DOL makes clear that reasonableness will be expected from the employer with respect to notification and documentation, which is addressed below.

Leave Documentation Requirements

• • Employees are required to provide documentation to employers that contain the following information: (1) the employee’s name; (2) the date(s) leave is requested; (3) the qualifying reason for the leave; (4) an oral or written statement that the employee is unable to work because of the qualified reason.
  • For leave requests for quarantine or isolation orders, the employee must provide the employer with the name of the government entity ordering quarantine or isolation.
  • For employees that are self-quarantining, the employee must provide the name of the health care provider that advised the employee to self-quarantine.
  • For employees caring for someone under an order of quarantine or self-quarantine, the employee must name the government entity or the health care provider that advised self-quarantine.
  • An employee that is taking leave to care for a child with a COVID-19 related school closure or place of care closure must identify his or her child, the name of the school, place of care, or child care provider, and a representation that no other suitable person will be caring for the son or daughter during the period for which the employee takes leave.
  • Employers should be reasonable in their approach regarding documentation, with the regulations indicating that information – even if oral – to make a determination should be considered.

Maintenance of Health Insurance for Employee on Leave

• • Generally, an employer is required to maintain an employee’s current health insurance benefits during a leave period.
  • The employee is required to cover their portion of their premiums, and that payment must be paid through the method usually used during any paid leave, presumably a payroll deduction.
  • If the employee’s pay is insufficient to cover premiums, the employer may obtain payment from the employee.
  • An employee has the option to not retain health insurance with the employer during Paid Sick Leave or Expanded Family and Medical Leave. If the employee makes that election, he or she may rejoin the health plan with no waiting period after the leave has elapsed.
  • If an employer makes changes to its health insurance plan while an employee is on leave, those changes must generally affect employees on leave in the same way they affect an employee that is not on leave. For instance, if premiums are raised or lowered for all employees, the same would be required of an employee on leave.

Recordkeeping Requirements

• • Employers are required to retain all documentation for four years, whether leave was granted or denied.
  • If requests were made orally, an employer is required to document and maintain that information in its records for four years.
  • Employers that deny leave because of the small business exemptions must maintain records of the applicability of the exemption claimed for four years.

Tax Credit Documentation

• • To obtain a tax credit, an employer is required to maintain the following documentation for four years:
    1. 1. Documentation showing how the employer determined the amount of paid sick leave and expanded family paid to employees that are eligible for the credit (including records of work, telework, paid sick leave, and expanded family and medical leave).
       2. Documentation showing how the employer determined the amount of qualified health plan expenses that the employer allocated to wages.
       3. Copies of any completed IRS 7200 forms submitted to IRS.
       4. Copies of any completed IRS 941 form submitted to the IRS.
       5. Any other documents needed to support an employee’s request for tax credits.

The Coronavirus Task Force at Klehr Harrison stands ready to assist you in your business and legal needs. We will continue to provide additional information and guidance as the COVID-19 situation develops.

Co-authors Jonathan Krause, partner and Gregory Sellers, associate are members of the labor and employment practice group at Klehr Harrison.

Join Jonathan for a PBI webinar entitled “Paid Sick and Family Leave 2.0: Implementation Steps and Common Questions” on April 9 at 12:00 pm. Learn more here.