DOL Issues Guidance Ahead of The Families First Coronavirus Response Act Taking Effect
Yesterday afternoon (March 24, 2020), the Department of Labor issued Question & Answer guidance concerning the emergency paid sick leave and expanded FMLA leave provisions of the Families First Coronavirus Response Act. For an in-depth review of these provisions, please see our previous alert here. The DOL guidance includes some important information for employers as they prepare to implement these new leave mandates. Additionally, earlier today, the Department released a mandatory notice that covered employers must provide to employees, available here. Key points from the new guidance are summarized below.
Effective date: The Act states that it will take effect “no later than” 15 days after the date of enactment. The Act was signed into law on March 18th, leading most observers (us included) to conclude that the requirements would take effect on April 2, 2020. However, the DOL’s guidance states that the Act’s paid leave provisions will take effect on April 1st. Employers should be prepared to comply by that date.
Calculating the 500-employee threshold for the Act’s coverage: The leave requirements of the new law apply to non-government employers with fewer than 500 employees. (Governmental bodies are also covered, regardless of size.) The DOL’s guidance makes clear that full-time, part-time, and temporary employees working in the U.S. (including D.C., territories, and possessions) count toward the 500-employee cut-off. Employees who are currently on leave also count toward this threshold.
The guidance also answers the question of whether a subsidiary employer should count its parent organization’s employees toward the threshold with an “it depends”. If the parent organization is considered a joint employer under the FLSA or an integrated employer under the FMLA, then the subsidiary employer should count the parent organization’s employees toward the 500-employee threshold. Generally, this means that if the parent organization exercises any direct or indirect control over the subsidiary’s employees’ terms or conditions of employment, the two entities share common management, interrelations between operations, centralized control of labor relations, or a degree of common ownership or financial control, these employee totals should be combined for purposes of determining the 500-employee threshold. This is a fact-intensive analysis, so employers with questions about whether they are covered should consult their employment counsel as soon as possible.
The DOL also states that whether an employer has more than 500 employees is to be determined “at the time your employee’s leave is to be taken.” With many employers facing difficult decisions of whether to continue to employ certain employees, this may mean that employers with employee headcounts close to the 500-employee cutoff will need to reevaluate their coverage on a day-to-day basis.
Small business exemption: Last week, we reported that the Act authorizes the DOL to exempt employers with fewer than 50 employees from the paid leave provisions “when the imposition of such requirements would jeopardize the viability of the business as a going concern.” The DOL’s guidance confirms that forthcoming regulations will include this exemption, but provides no new information on how it will be applied. The guidance instructs small businesses that wish to use this exemption to “document why your business with fewer than 50 employees meets the criteria set forth by the Department, which will be addressed in more detail in forthcoming regulations.” According to the guidance, this information will not be sent to the Department of Labor, suggesting that there is no application process for the exemption, but that employers may be subject to compliance reviews after the fact.
Calculating an employee’s rate of pay: The DOL’s guidance makes clear that employers must pay employees for the hours they would have normally been scheduled to work, even if that exceeds 40 hours in a week. Therefore, overtime hours are to be counted when determining an employee’s normal work hours and regular rate of pay. However, since employees are not actually working these hours, they do not have to be paid at overtime (time-and-a-half) rates.
Additionally, employees taking emergency paid sick leave are only entitled to 80 hours of leave even if the employee would typically work more than 80 hours in a 2-week period. The DOL provides the following example:
An employee who is scheduled to work 50 hours a week may take 50 hours of paid sick leave in the first week and 30 hours of paid sick leave in the second week. In any event, the total number of hours paid under the Emergency Paid Sick Leave Act is capped at 80.
Employees using emergency FMLA leave to care for a child under the new law will be entitled to 2/3 pay for all hours that they would otherwise be scheduled to work in a workweek during which they use the emergency FMLA leave, subject to the $200 per day and $10,000 aggregate caps included in the law.
Leave taken prior to April 1: The guidance confirms that an employer cannot apply the leave benefits provided under the Act retroactively to leave taken by an employee before April 1.
Notice to Employees: This afternoon (March 25, 2020), the DOL published a model notice for all covered employers, except federal employers to provide their employees. A separate notice for use by federal employers was also published. The DOL also published an FAQ providing guidance on how to distribute the notice to employees working remotely. The notice must be posted physically in a conspicuous place in each workplace. Employers should also distribute the notice electronically or by mail to all employees working remotely. The notice does not need to be sent to recently laid-off employees or job applicants, but it does need to be provided to new hires. The notice does not need to be posted in a language other than English.
- Facts sheets for employers and employees: In addition to the Q&A, the DOL also published two fact sheets, one for employers and one for employees, outlining the basic requirements of the new law.
- Next steps: We anticipate that regulations concerning both the paid sick leave and expanded FMLA leave provisions will be issued before April 1, 2020. The Department of Labor has invited public comment on these regulations through its “Families First Coronavirus Response Act National Online Dialogue”. Because the DOL is soliciting public comments through March 29, 2020, we do not expect the DOL to issue its regulations until just before the new leave requirements take effect on April 1 – giving employers precious little time to comply.
We will continue to provide further information as it becomes available. In the meantime, if you have questions do not hesitate to reach out to Tracey Truesdale, Bill Pokorny, Erin Fowler, or any other Franczek attorney.