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DOL issues rule implementing paid leave law

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Author: ADP Admin/Tuesday, May 5, 2020/Categories: Compliance Corner

The Department of Labor (DOL) has released a temporary rule implementing the leave provisions of the FFCRA. This temporary rule was released on April 1 and is effective immediately. It defines key terms and makes important clarifications regarding the leave requirements.

Background:

Effective April 1, 2020, the FFCRA requires employers with fewer than 500 employees to provide:

  • Emergency paid sick leave (EPSL): Up to 80 hours of emergency paid sick leave (EPSL) to employees when they are unable to work (or telework) because of a number of COVID-19 related reasons.
  • Public health emergency leave (PHEL)/Expanded FMLA: Up to 12 weeks of leave to care for their son or daughter under 18 years of age if their school or place of care has been closed, or their childcare provider is unavailable, due to a public health emergency. As first written, the FFCRA indicated the first 10 days of PHEL may be unpaid, but the remainder must be paid.

Employers that provide paid leave under the FFCRA are entitled to certain tax credits.

 

Exemptions:

 

The law also gave the DOL the authority to issue regulations exempting employers with fewer than 50 employees if it would jeopardize the viability of the business.

 

Under the law, an employer of a healthcare provider or an emergency responder may elect to exclude the employee from the application of the EPSL and/or the PHEL requirement.

 

Temporary Rule:

 

The following is a high-level summary of some of the definitions and clarifications included in the temporary rule.

 

Definitions:

 

  • Son or Daughter. A 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 18 years of age or older who is incapable of self-care because of a mental or physical disability.
  • Subject to a Quarantine or Isolation Order. Quarantine, isolation, containment, shelter-in-place, or stay-at-home orders issued by any federal, state, or local government authority that cause the employee to be unable to work even though their employer has work that the employee could perform but for the order. This also includes when a federal, state, or local government authority has advised categories of citizens (such as those of certain age ranges or with certain medical conditions) to shelter in place, stay at home, isolate, or quarantine, causing those categories of employees to be unable to work even though their employers have work for them.
  • Caring for an Individual in Quarantine/Isolation/Self-Quarantine. An employee's immediate family member, a person who regularly resides in the employee's home, or a similar person with whom the employee has a relationship that creates an expectation that the employee would care for the person if they were quarantined or self-quarantined. An employee may take EPSL under this provision if the employee is unable to perform work for their employer and if the individual depends on the employee to care for them and is either:
  • Caring for a Son or Daughter. Such leave is permitted only if no other suitable person is available to care for the son or daughter during the period of such leave.
  • Full-Time Employees. Those normally scheduled to work at least 40 hours each workweek. Under the law, a full-time employee is entitled to up to 80 hours of EPSL and a part-time employee is generally entitled to ESPL in the number of hours the employee is normally scheduled to work over two workweeks.
  • Healthcare Provider. For the purposes of exemption from the leave requirements, a health care provider is anyone employed at any doctor's office, hospital, health care center, clinic, postsecondary educational institution offering health care instruction, medical school, local health department or agency, nursing facility, retirement facility, nursing home, home health care provider, any facility that performs laboratory or medical testing, pharmacy, or any similar institution, employer, or entity. This includes any permanent or temporary institution, facility, location, or site where medical services are provided that are similar to such institutions.
  • Emergency Responders. Anyone necessary for the provision of transport, care, healthcare, comfort and nutrition of such patients, or others needed for the response to COVID-19. This includes but is not limited to military or national guard, law enforcement officers, correctional institution personnel, fire fighters, emergency medical services personnel, physicians, nurses, public health personnel, emergency medical technicians, paramedics, emergency management personnel, 911 operators, child welfare workers and service providers, public works personnel, and individuals with skills or training in operating specialized equipment or other skills needed to provide aid in a declared emergency, as well as individuals who work for such facilities employing these individuals and whose work is necessary to maintain the operation of the facility.

Clarifications:

 

Regular Rate of Pay

 

For the purposes of EPSL, the employer must generally pay employees their regular rate of pay (as defined by the Fair Labor Standards Act) or the applicable minimum wage, whichever is higher, up to a maximum of $511 per day (and a total of $5,110). However, leave to care for an individual on quarantine/isolation/self-quarantine or to care for a child whose school or daycare is closed or childcare provider is unavailable may be compensated at 2/3 of the employee's regular rate of pay (or the applicable minimum wage if higher), up to a maximum of $200 per day (and a total of $2,000).

 

For the purposes PHEL/Expanded FMLA, the paid portion of leave must be at a rate of no less than two-thirds the employee's regular rate of pay, as defined by the FLSA, up to a maximum of $200 per day.

 

The temporary rule requires employers to use a weighted average of the employee's regular rate of pay for the purposes of the leave, following this two-step method:

 

  • Use the rules contained in the FLSA (see a summary here) to compute the regular rate for each full workweek in which the employee has been employed over the lesser of:
  • Compute the average of the weekly regular rates, weighted by the number of hours worked for each workweek.

Note: For employees who are paid with commissions, tips, or piece rates, these amounts will be incorporated into the above calculation to the same extent they are included in the calculation of the regular rate under the FLSA.

 

Business Closures and Furloughs

 

The temporary rule further clarifies that if no work is available for the employee, the employee isn't entitled to leave. For instance, if the employer temporarily ceases operations because of a lack of work or the state has ordered the business to close because of COVID-19, employees wouldn't be entitled to leave under the FFCRA.

 

Note: Some state/local laws require employers to provide paid leave when the business closes because of a public health emergency.

 

Small Employer Exemption

 

The exemption for employers with fewer than 50 employees is limited to the requirements to provide EPSL and PHEL/Expanded FMLA to an employee who is caring for their child due to their school or place of care being closed, or their childcare provider is unavailable, for COVID-19 related reasons if it would jeopardize the viability of the business.

 

The temporary rule clarifies that to claim the exemption, an authorized officer of the business must determine that:

  • The leave requested 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 requesting such leave 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; or
  • There are not sufficient workers who are able, willing, and qualified, and who will be available at the time and place needed, to perform the labor or services provided by the employee requesting leave, and this labor or services are needed for the small business to operate at a minimal capacity.

To elect this exemption, the employer must document that a determination has been made pursuant to the above criteria. The employer should retain these records in its files for at least four years. The employer is still required to post the required FFCRA notice (see below).

 

Employee Documentation

 

Prior to taking leave under the FFCRA leave, an employee must provide documentation containing the following information:

  • Employee's name;
  • Date(s) for which leave is requested;
  • Qualifying reason for the leave; and
  • Oral or written statement that the employee is unable to work because of a qualified reason.

Additional documentation is required depending on the reason for the need for leave:

  • A quarantine or isolation order. The employee must also provide the name of the government entity that issued the order.
  • A healthcare provider advised self-isolation. The employee must also provide the name of the healthcare provider.
  • To care for a son or daughter. An employee must also provide:

The employer may also request an employee to provide additional material needed for the employer to support a request for tax credits pursuant to the FFCRA. The temporary rule indicates that an employer isn't required to provide leave if materials sufficient to support the applicable tax credit haven't been provided.

 

Employer Notice and Recordkeeping

 

The FFCRA requires employers to post a notice about the law's leave requirements. An employer may satisfy this requirement by emailing or direct mailing this notice to employees, or by posting this notice on an employee information internal or external website.

 

An employer is required to retain all documentation provided by employees for four years, regardless whether leave was granted or denied. If an employee provided oral statements to support their request for the leave, the employer is required to document and maintain this information.

 

In order to claim tax credits from the Internal Revenue Service (IRS), the temporary rule also advises an employer to maintain the following records for four years:

 

  • How the employer determined the amount of paid leave eligible for the credit, including records of work, telework, and leave;
  • How the employer determined the amount of qualified health plan expenses that the employer allocated to wages;
  • Copies of any completed IRS Forms 7200 that the employer submitted to the IRS;
  • Copies of the completed IRS Forms 941 that the employer submitted to the IRS or, for employers that use third-party payers to meet their employment tax obligations, records of information provided to the third-party payer regarding the employer's entitlement to the credit claimed on IRS Form 941; and
  • Other documents needed to support its request for tax credits pursuant to IRS applicable forms, instructions, and information for the procedures that must be followed to claim a tax credit.

Paid and Unpaid PHEL/Expanded FMLA

 

The temporary rule clarifies that the unpaid portion of PHEL/Expanded FMLA is two weeks, rather than the "10 days" used in the text of the FFCRA. The change to two weeks is meant to address situations in which employees don't work a five-day workweek. The employee may elect to substitute EPSL or other paid leave provided by the employer during this unpaid period, at two-thirds their regular rate of pay.

 

EPSL and Other Sources of Leave

 

The temporary rule further clarifies that EPSL leave is in addition to, and not a substitute for, other sources of leave that the employee had already accrued, was already entitled to, or had already used, before the FFCRA became effective on April 1, 2020. Therefore, neither eligibility for, nor use of, EPSL may count against an employee's balance or accrual of any other source or type of leave.

 

Compliance Recommendations:

 

Employers should consider reading the temporary rule in full and should take the necessary steps to ensure compliance with the leave, documentation, notice, recordkeeping, and other requirements of the FFRCRA and the rule. Employers should continue to monitor the guidance for additional changes and check back regularly for updated clarifications. Please contact your dedicated service professional with any questions.