US Department of Labor Issues Temporary Regulations and Further Guidance on COVID-19 Paid Sick and Family Leave

As the US Department of Labor (“DOL”) prepares to begin enforcement of the newly enacted Families First Coronavirus Response Act (“FFCRA”), employers should be aware of new guidance from the DOL’s Wage and Hour Division (“WHD”). Specifically, WHD has issued further guidance—in the form of temporary regulations published in the Federal Register and additional questions & answers on the agency’s website—to supplement the public’s understanding of the FFCRA. The FFCRA, which President Trump signed into law on March 18, 2020, went into effect on April 1, 2020, the same date on which the DOL issued its temporary regulations. The DOL will begin broadly enforcing the law on April 18, 2020.¹ The FFCRA’s paid leave requirements expire on December 31, 2020, but potential liability for violations can extend up to three years thereafter.

As we discussed in our March 19, 2020 Legal Update, the FFCRA requires covered employers to provide paid leave to eligible employees who are “unable” to work for specified reasons related to COVID-19. The FFCRA contains two separate laws that address circumstances in which an employee is unable to work—the Emergency Paid Sick Leave Act (“EPSLA”), which creates a federal paid sick leave requirement for coronavirus-related needs, and the Emergency Family and Medical Leave Expansion Act (“EFMLEA”), which expands the Family and Medical Leave Act (“FMLA”) to include a paid leave component for employees caring for children whose schools or childcare facilities are closed because of the COVID-19 pandemic.

This Legal Update summarizes many topics set forth in the temporary regulations and the latest Q&A guidance. In general, the DOL clearly encourages employers and employees to “collaborate to achieve flexibility and meet mutual needs.”

Which Employers Are Covered by the FFCRA?

Generally, all private sector employers—both for-profit and non-profit entities—that employ fewer than 500 employees are covered employers who must provide paid sick leave and expanded family and medical leave. In determining whether the employer meets the 500-employee threshold, part-time and full-time employees must be counted. An employer should also include employees on leave and “joint employees” working on the employer’s site temporarily and/or through a temp agency. Both the EPSLA and the EFMLEA adopt the broad definition of “employee” set forth in the Fair Labor Standards Act (“FLSA”). Workers who are independent contractors under the FLSA, however, are not considered employees for purposes of the 500-employee threshold. Employers should also be mindful that the “integrated employer” and “joint employer” tests may impact whether two or more related entities may be treated as a single employer for purposes of the FFCRA.

Which Employers May Be Exempt from Certain Obligations of the FFCRA?

The DOL has authority under the FFCRA to exempt certain employers with fewer than 50 employees from having to provide paid sick leave and family leave but only as to the childcare component of each law, i.e., because the child’s school or place of care is closed, or the childcare provider is unavailable, due to COVID-19-related reasons. Further, the exemption is applicable to such small businesses only if providing an employee such leave would jeopardize the viability of the business as a going concern. To meet that burden, an authorized officer of the business must determine that at least one of the following three conditions is satisfied:

1. The provision of paid sick leave or expanded family and medical leave would cause the small employer’s expenses and financial obligations to cease operating at a minimal capacity;
2. The absence of the employee or employees requesting such leave would pose a substantial risk to the financial health or operational capacity of the small employer because of their specialized skills, knowledge of the business, or responsibilities; or
3. The small employer cannot find enough other workers who are able, willing, and qualified, and who will be available at the time and placed needed, to perform the labor or services the employee or employees requesting leave provide, and these labor or services are needed for the small employer to operate at a minimal capacity.

The WHD guidance does not address several categories of leave under the EPSLA. Thus, absent further guidance from WHD, all businesses with fewer than 50 employees must provide paid sick leave for an employee who is subject to a federal, state, or local quarantine or isolation order; has been advised by a healthcare provider to self-quarantine; is experiencing symptoms of COVID-19 and seeking a medical diagnosis; or is caring for someone who has been advised or ordered to quarantine.

The DOL also has the authority to exclude by rulemaking “certain health care providers and emergency responders” from the requirements of the EPSLA and EFMLEA.

What Types of Leave Are Protected?

The categories of protected leave differ between the EPSLA and the EFMLEA. An employee is eligible for paid leave under the EPSLA for any of 6 reasons related to COVID-19. The employee is:

1. Subject to a federal, state, or local quarantine or isolation order²;
2. Under self-quarantine on the advice of a healthcare provider;
3. Experiencing symptoms of COVID-19 and is seeking a medical diagnosis;
4. Caring for someone who has been advised or ordered to quarantine with whom the employee has a personal relationship³;
5. Caring for a son or daughter whose school or place of care has closed, or whose childcare provider is unavailable, because of COVID-19 precautions; or
6. Experiencing any other substantially similar condition specified by the Secretary of Health and Human Services in consultation with the Secretary and the Secretary of the Treasury.

Under the EPSLA, an employer may not deny an employee paid sick leave for a reason identified under the act even if the employer gave the employee paid sick leave for a reason identified in the act prior to the act going into effect because the act imposes a new leave requirement on employers that is effective on April 1, 2020.

The EFMLEA, in contrast, provide eligible employees with up to 12 workweeks of leave for a “qualifying need related to a public health emergency,” which means that an employee is unable to work (or telework) because the employee needs leave to care for a son or daughter whose school or place of care has closed, or whose childcare provider is unavailable, because of an emergency with respect to COVID-19 declared by a federal, state, or local authority. A school is “closed” for purposes of the FFCRA even if some or all instruction is being provided online or through another form of “distance learning.”

A “son or daughter” is intended to include the employee’s biological, adopted, or foster child; stepchild; legal ward; or a child for whom the employee is standing in loco parentis. WHD has also clarified that a “son or daughter” includes not only a child under the age of 18 but also an adult son or daughter who (1) has a mental or physical disability and (2) is incapable of self-care because of that disability. 

How Does Working from Home or Other Telework Impact Employees’ Ability to Take Leave?

The DOL’s temporary regulations and recent Q&A guidance define “telework” to mean work the employer permits or allows an employee to perform while the employee is at home or at a location other than the employee’s normal workplace. An employee is able to telework if (a) his or her employer has work for the employee; (b) the employer permits the employee to work from the employee’s location; and (c) there are no extenuating circumstances (such as serious COVID-19 symptoms) that prevent the employee from performing the work.

Telework is work for which normal wages must be paid and is not compensated under the EPSLA or the EFMLEA. Employees who are teleworking for COVID-19-related reasons must record and be compensated for all hours actually worked, including overtime, in accordance with the FLSA, and which the employer knew or should have known were worked by the employee. That said, the DOL regulations provide that an employer that permits an employee flexibility when teleworking will not be required to count as hours worked all of the time between the first and last principal activity of the day performed by an employee teleworking for COVID-19 related reasons.

If an employer offers the ability to telework the same number of hours per day but during different hours, the employee is able to work and leave is unnecessary unless (1) the reason for leave prevents the employee from working that schedule; (2) the employee has a qualifying paid sick leave absence; or (3) the employee cannot telework due to the need to care for a child. If an employee can telework while caring for the child, then leave is unavailable.

Which Employees Are Eligible for Coverage?

Employees are immediately eligible for leave under the EPSLA, regardless of the date on which they were hired. Full-time employees are eligible for up to 80 hours of paid sick leave over a 2-week period. An employer may not deny an employee sick leave even if the employee was given paid leave for a reason identified in the EPSLA prior to its effective date of April 1, 2020. The EPSLA expressly adopts the broad definition of “employee” from the FLSA and includes all full-time and part-time employees working in the United States (including its territories), as well as “joint employees” working on a site temporarily and/or through a temp agency. The DOL also has explained that in order for employees to rely on advice to self-quarantine, their healthcare provider must be a licensed doctor of medicine, nurse practitioner, or other healthcare provider permitted to issue a certification for purposes of the FMLA. If an employee is ill and decides to self-quarantine but does not seek a medical diagnosis or the advice of a healthcare provider, the employee generally is not entitled to paid sick leave under the EPSLA.

The EFMLEA eligibility requirements are broader than the FMLA, shortening the minimum period of employment to qualify for the EFMLEA to just 30 days with no minimum requirement as to hours worked (as compared to 12 months and 1,250 hours under the FMLA). An employee has been employed for at least 30 days under the EFMLEA if the employee has been on the employer’s payroll for the 30 calendar days immediately prior to the date on which the employee’s leave would begin. This includes employees who were laid off or otherwise terminated on or after March 1, 2020, had worked for the employer for at least 30 of the prior 60 calendar days, and were subsequently rehired or otherwise reemployed by the same employer. Under the EFMLEA, there is no distinction between full-time and part-time employees, but the number of hours an employee normally works each week will affect the amount of pay the employee is eligible to receive. Like the EPSLA, part-time employees are entitled to leave under the EFMLEA for the average number of hours they typically work in a 2-week period.

The FFCRA also provides for certain protections for employees in the public sector and public agencies.

How Much Leave Is Allowed?

Under the EFMLEA, an eligible employee is entitled to up to 12 workweeks of leave. An employer who was covered by the FMLA prior to April 1, 2020, and who is also now covered by the EFMLEA, must provide up to 12 workweeks of leave, for FMLA or EMFLEA reasons, during the current 12-month period determined by the employer. An employee’s eligibility for EFMLEA leave depends on how much FMLA leave the employee has already taken during the 12-month period determined by the employer. For example, if an employee has already taken 10 workweeks of FMLA leave during the 12-month period determined by the employer, the employee may be entitled to only 2 workweeks of EFMLEA leave. If an employee has already taken 12 workweeks of FMLA leave during the relevant 12-month period, the employee is not entitled to additional EFMLEA leave. Paid sick leave pursuant to the EPSLA, however, is not a form of FMLA or EFMLEA leave and does not count toward the 12 workweeks in the 12-month period cap. However, if an employee chooses to take paid sick leave concurrently with the first 2 weeks of EFMLEA leave, which is unpaid, then those 2 weeks count towards the 12 workweek limit in the 12-month period.

As noted above, the EPSLA caps the total amount of paid sick leave at 80 hours over 2 weeks for a full-time employee. Paid sick leave for part-time employees is calculated based on formulas proportional to the number of hours they typically work in a 2-week period. Paid sick leave under the EPSLA is available in addition to other types of sick leave provided under federal, state, or local law or the employer’s existing company policy. An employer may not require an employee to use other paid leave provided by the employer before the employee uses the paid sick leave under the EPSLA. Under the EPSLA, an employee is only eligible to be paid up to 80 hours over a 2-week period, irrespective of the number of hours an employee may typically work over a 2-week period (i.e., no overtime).

An employee who is unable to work because his or her child’s school or place of care is closed, or childcare provider is unavailable, is eligible to receive both EFMLEA and EPSLA leave but only for a total of 12 weeks paid leave. If the employee had not previously taken any leave under the FMLA, then the EPSLA would provide for an initial 2 weeks of paid leave, covering the first 2 weeks of expanded family and medical leave that are typically unpaid (unless existing vacation, personal, or other leave is used), and the EFMLEA would provide an additional 10 weeks of paid leave.

How Is Employee Pay Calculated?

For purposes of the FFCRA, the “regular rate of pay” to calculate an employee’s paid leave includes all remuneration paid to the employee (including commissions, tips, and piece rates) and is the average of the employee’s regular rate over a period of up to 6 months prior to the date that the employee takes leave. If the employee has not worked for the employer for 6 months, the regular rate of pay will be the average of the employee’s regular rate of pay for each week worked for the employer. Alternatively, an employer may calculate an employee’s regular rate of pay by adding all compensation that is part of the regular rate over the prior 6 months (or lesser period of time worked) and dividing that sum by all hours worked in the same period.

Under the EFMLEA, the first 10 days of leave are unpaid, but employees may elect to substitute any available paid leave (which includes the emergency paid leave granted under the FFCRA) during that period. After the first 2 weeks, the remainder of the leave is paid at a rate of at least 2/3 of the employee’s regular rate of pay with a maximum of $200 per day and $10,000 in the aggregate for a total of not more than $12,000 when combined with 2 weeks of paid leave taken under the EPSLA. When calculating pay, an employer should include overtime hours the employee would have been normally scheduled to work even if that is more than 40 hours in a week, although an employer need not include a premium for those overtime hours. For an employee who does not have a regular work schedule because the employee’s schedule varies week to week, the EFMLEA requires the employer to compute pay per day of leave based on the average number of hours the employee was scheduled per day over the 6-month period ending on the date on which the employee takes such leave, including hours for which the employee took leave of any type.

The rate of pay an employee receives under the EPSLA depends on the reason for the leave. If leave is necessary because the employee is under quarantine or is experiencing symptoms of COVID-19 and seeking treatment, then the employee receives his or her regular rate of pay up to $511 per day and $5,110 total. However, if leave is necessary for any of the other qualifying reasons (i.e., caring for others or caring for children due to school closure or for another substantially similar condition specified by the Secretary of Health and Human Services), then the employee is entitled to 2/3 or his or her regular rate of pay, with a cap of $200 per day and $2,000 total.

Employers may always pay employees more than they are entitled to receive for paid sick leave or expanded family and medical leave, but employers may not require employees to supplement or adjust the pay mandated under the FFCRA with paid leave to which the employee may be entitled under the employer’s paid leave policy.

May an Employee Take Intermittent or Incremental Leave?

Employers and employees may agree to intermittent and incremental use of paid sick leave or expanded family and medical leave, depending on whether the employee is teleworking or working at the employee’s usual worksite.⁴ If an employee is teleworking, the employer and employee may agree to intermittent leave, in any increment, for any reason covered by the FFCRA. However, if the employee is working at his usual worksite, intermittent EPSLA paid sick leave is only permitted for employees who are taking leave for school closures or childcare unavailability and only if the employer agrees. Employees taking paid sick leave for 1 of the other 5 qualifying reasons related to COVID-19 must take leave in full-day increments. (This limit is imposed because the intent of the FFCRA is to prevent employees who may be ill or caring for those who are ill from possibly spreading the virus to other individuals in the workplace).

What if an Employer Closes Its Worksite, Reduces Work Hours, or Furloughs Employees?

If an employer is forced to close a worksite, either for lack of business or because it is required to close pursuant to a federal, state, or local directive, employees do not receive, or continue to receive, FFCRA leave. It does not matter whether (1) the closure occurred before or after the FFCRA’s April 1 effective date; (2) an employee is on leave when closure occurs; (3) an employer furloughs an employee; (4) the worksite temporarily closes and the employer says it will reopen in the future; or (5) an employer reduces an employee’s hours because of lack of work.

What Documentation Is Required for Leave Under the FFCRA?

An employee must provide his or her employer with documentation in support of the reason for the leave, including the date(s) for which leave is requested, the qualifying reason for requesting leave,⁵ and an oral or written statement that the employee is unable to work or telework because of the qualified reason for leave.

The employer may make additional requests for documentation of employees needed for the employer to support a request for tax credits pursuant to the FFCRA, and the employer is not required to provide leave if materials sufficient to support the applicable tax credit have not been provided by the employee. The regulations further provide that an employer must retain all documentation for a period of 4 years, regardless of whether leave was granted or denied.

What Are Consequences for an Employer’s Non-Compliance with the FFCRA?

Under the EPSLA, an employer who fails to provide paid sick leave as required is considered to have failed to pay minimum wages in violation of the FLSA. Accordingly, employees may recover damages, including potential liquidated damages, as well as attorneys’ fees and costs. In the event an employer retaliates against an employee under the EPSLA (e.g., through discharge, other discipline), an employee may be entitled to monetary damages and other equitable relief, such as potential reinstatement. Retaliation is prohibited against an employee who takes paid sick leave under the EPSLA, files any complaint under the EPSLA, or institutes or testifies during any proceeding under the EPSLA.

With regard to the EFMLEA, the DOL regulations explain that employees who work for employers already subject to the FMLA are entitled to file private actions and recover the same remedies (such as lost wages, liquidated damages, and attorneys’ fees and costs) that Section 107 of the FMLA provides in the event the employer is liable. Employers who have fewer than 50 employees, on the other hand, do not face liability for private actions but are still subject to investigative and enforcement actions by WHD.

Are Employers Subject to a Notice Requirement ?

The FFCRA requires employers to post and keep posted a notice of the law’s requirements, which can be downloaded free of charge from the DOL website. To satisfy posting requirements, the employer may (1) post the notice in a conspicuous place at a worksite, where employees may view it; (2) distribute it by mail or email; or (3) post it on an employee information website.

Are There Any Tax Benefits for Employers?

The FFCRA includes terms that provide private employers with a refundable tax credit against payroll taxes for each calendar quarter in an amount equal to 100% of the qualified sick leave wages and qualifying family and medical leave wages, up to per diem and aggregate caps, and for allocable costs related to the maintenance of healthcare coverage under any group health plan while the employee is on the leave provided under the FFCRA. The regulations include links to IRS guidance on how employers may claim tax credits.

In order to claim tax credits from the Internal Revenue Service (“IRS”), the DOL set forth that the employer is advised to maintain the following records for 4 years:

1. Documentation to show how the employer determined the amount of paid sick leave and expanded family and medical leave paid to employees that are eligible for the credit, including records of work, telework, and paid sick leave and expanded family and medical leave;
2. Documentation to show how the employer determined the amount of qualified health plan expenses that the employer allocated to wages;
3. Copies of any completed IRS Forms 7200 that the employer submitted to the IRS;
4. 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
5. 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.

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To address the needs of our clients in this unfolding crisis, we have produced a guide to help employers manage HR legal and practical issues arising from COVID-19. 

Additional insights for employers navigating through COVID-19 developments is available in Employment and Migration articles on our COVID-19 Portal. 

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And for any legal questions related to this pandemic, please contact the authors of this article or Mayer Brown’s COVID-19 Core Response Team at FW-SIG-COVID-19-Core-Response-Team@mayerbrown.com.

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¹ The DOL has a limited stay of enforcement between April 1 and April 17, 2020, but it has reserved the right to retroactively enforce violations back to April 1, 2020, if the employer has not remedied the violations.

² Quarantine or isolation orders include a broad range of governmental orders, including orders that advise some or all citizens to shelter in place, stay at home, quarantine, or otherwise restrict their own mobility.

³ The employee must have a genuine need to care for the individual, e.g.,an immediate family member, roommate, or a similar person with whom the employee has a relationship that creates an expectation that the employee would care for the person if he or she were self-quarantined or ordered to quarantine. Employees may not take paid sick leave to care for someone with whom they have no relationship.

⁴ Absent agreement between the employer and employee, no leave under the FFCRA may be taken incrementally. A written agreement, while helpful, is not required, but the DOL’s regulations make clear that there must be a clear and mutual understanding between the parties that the employee may take intermittent leave.

⁵ The DOL regulations explain that additional documentation, depending on the qualifying reason for the employee’s request for leave, is required. For example, for paid sick leave under the EPSLA, additional documentation is needed to evidence the source of any quarantine or isolation order or the name of the healthcare provider who has advised the employee to self-quarantine.