as of April 27, 2020

Update on DOL Interpretations

The relationship between employer provided vacation, personal and sick pay or paid time off (collectively referred to as “PTO”) and emergency paid sick leave (“EPSL”) and Expanded Family and Medical Leave (“EFML”) has spawned many questions. After a correction to the Families First Coronavirus Response Act (“FFCRA”) regulations in which the Department of Labor (“DOL”) withdrew its initial interpretation, a new Question and Answer issued by the DOL, describes the relationship as follows:

• Relationship between EPSL and PTO. An employer may not require that an employee use his/her PTO before EPSL for any reason for which EPSL is allowed. After the use of EPSL, use of PTO is at the employee’s election and may not be required by the employer.
• Relationship between EFML and PTO. FFCRA provides employees with up to twelve weeks of EFML for the care of a child due to closure of school or unavailability of childcare due to COVID-19 with the first two weeks unpaid and the following ten weeks limited to 2/3 of pay up to $200/day and a maximum of $10,000.
  • First Two Weeks of EFML. Under the FFCRA, the initial two weeks of EFML leave for the care of a child due to the closure of school or unavailability of childcare are without pay. The employee may elect, but the employer may not require, that the employee use EPSL for the initial two weeks of EFML leave.
  • Next Up to Ten Weeks of EFML. The employer may require that any PTO available to an employee under the employer’s policies to allow an employee to care for a child under the circumstances involved be used concurrently with the leave required by FFCRA. Therefore, the employer must pay the employee’s full pay until the PTO has been exhausted. The employer may apply for a tax credit up to 2/3 of the employee’s regular rate of pay up to $200/day and a maximum of $10,000.

Additionally, provided the employer and the employee agree, and subject to federal or state law, paid leave provided by the employer may supplement the 2/3 pay under EFML so that the employer may receive his/her full compensation.

A revision of our previously issued Client Alert containing the above described change follows.

REVISED as of April 27, 2020

Under the Families First Coronavirus Response Act (“FFCRA”), a private sector employer with fewer than 500 employees or a governmental employer (including schools) are required to provide Emergency Paid Sick Leave (“EPSL”) and to provide leave based on a new qualified reason for Family and Medical Leave (“FMLA”) for the care of children when school or day care closes or is unavailable (“EFML”). FFCRA requirements are in place from April 1, 2020 to December 31, 2020. The U.S. Department of Labor (“DOL”) issued Temporary Regulations on April 6, 2020, which can be found in https://www.govinfo.gov/content/pkg/FR-2020-04-06/pdf/2020-07237.pdf. The Regulations clarify a number of issues regarding the interpretation and application of the FFCRA. On April 10, 2020, the DOL issued Corrections in 85 FR 20156-02, https://www.federalregister.gov/documents/2020/04/10/2020-07711/paid-leave-under-the-families-first-coronavirus-response-act-correction. In addition, the DOL continues to add to its Questions and Answers which can be found at https://www.dol.gov/agencies/whd/pandemic/ffcra-questions.

This is a follow-up to earlier Stoneman, Chandler & Miller LLP Client Alerts on the FFCRA with a focus on what must be paid and how private sector employers are able to recoup the costs of implementing FFCRA. This summary does not include all of the provisions of the FFCRA or the Regulations. Therefore, you should consult with legal counsel to ensure that you are applying the most up-to-date law.

Emergency Paid Sick Leave

If an employee is unable to work (or telework) for reasons related to COVID-19, the employee is eligible for up to 2 weeks (80 hours, or a part-time employee’s two-week equivalent) EPSL based on the employee’s regular rate of pay at:

• 100% pay - if the employee.

1. is subject to a Federal, State or local quarantine or isolation order related to COVID-19, which is defined as follows:
   “ a quarantine or isolation order includes 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 his or her employer has work that the employee could perform but for the order.  This also includes when a Federal, State, or local government authority had advised categories of citizens (e.g., of certain aga ranges or of 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.”  (29 CFR § 826.10(a)).  The EPSL is only available when “but for” the quarantine or isolation order, the employee would be able to perform work/telework.  (29 CFR § 826.20(a)(2)).  Therefore, the application of the above definition is not as broad as it may initially appear.  An employee is not eligible for EPSL where the employer does not have work for the employee as a result of the order or other circumstances.  For example, in the introductory explanation of the Regulations, the DOL distinguishes an eligible employee from an employee who is not eligible because the employee is not working/teleworking because there is no work even if his/her employer has had to close or has no work due to a quarantine or isolation order)”;
2. has been advised by a health care advisor to self-quarantine due to concerns related to COVID-19; or
3. has symptoms of COVID-19 and is seeking a medical diagnosis. This benefit is available up to a maximum of $511 per day and $5,110 total.

• 2/3 pay - if an employee is required to care for an individual who is subject to a COVID-19 Federal, State or local quarantine or isolation order or who has been advised by a health care advisor to self-quarantine due to concerns related to COVID-19. This benefit is available up to a maximum of $200 per day and $2,000 total. The employee may, with the employer’s approval, use his/her accrued, but unused sick, personal and/or vacation time if applicable, to make up the difference and receive full pay.

• 2/3 pay – if an employee is required to care for a son or daughter when a school or place of care has been closed (or childcare provider is unavailable) due to COVID-19 precautions or to care for an adult son or daughter who has a mental or physical disability, and is incapable of self-care because of that disability. This benefit is available up to a maximum of $200 per day and $2,000 total. An employee may, with the employer’s approval, use his/her accrued, but unused sick, personal and/or vacation time if applicable, to make up the difference and receive full pay.

Pay for EPSL must be provided to an employee before use of any other leave that an employee may be entitled to receive under other federal, state, or local law, collective bargaining agreement or an employer’s policy that existed prior to April 1, 2020. After EPSL, an employee may elect to use existing paid vacation, personal, sick or other paid time off (collectively referred to as paid time off or “PTO”) up to the employee’s normal earning.

 A private sector employer may obtain a reimbursement of the amount of FFCRA sick leave paid through a reduction of employment taxes as provided by the IRS and summarized below.  Public sector/governmental employers are not eligible for reimbursement.

Expanded Paid Family and Medical Leave

All employers with fewer than 500 employees, even those employers with too few employees to be covered by the Family and Medical Leave Act (“FMLA”), must provide to employees, who have been employed at least 30 calendar days, up to 12 weeks of EFML to care for a son or daughter under 18 if the child’s school or place of care has been closed (or childcare provider is unavailable) due to COVID-19, or to care for an adult son or daughter who has a mental or physical disability and is incapable of self-care because of that disability. This EFML leave may be taken intermittently or on a reduced schedule basis only if the employer and employee agree.

The first two weeks of EFML is unpaid. However, at the employee’s election, EPSL may be used during the initial two-week period of unpaid EFML or the employee may elect to use any accrued, but unused, PTO if applicable to pay for the initial unpaid period. Thereafter, the employee will be eligible for up to 10 weeks of additional leave at 2/3 the employee’s regular rate of pay up to $200 per day and an aggregate maximum of $10,000 total for 10 weeks. An employee may elect, or an employer may require under its policies, the use of available PTO which will run concurrently with EFML. In that event the leave is concurrent, the employer must pay the full amount to which the employee is entitled using the employer’s preexisting paid leave policy for the period that the leave is taken.

The maximum pay for both EPSL and EFML combined for care of a child together cannot exceed $12,000 total. All of an employee’s time on FMLA within the last 12 months must be added together. Therefore, if an employee has already used some FMLA for any other reason during the most recent 12 months, then that leave will reduce the leave available for leave under the EFML. In addition, if the employee’s business closes while the employee is on EFML, the employee’s right to pay and leave will end upon that closure.

Upon the conclusion of 12 weeks of FMLA leave, an employee must be returned to the same position as before or a position with equivalent status, pay, benefits and other employment terms as provided by the FMLA. However, an employee is not protected from employment actions, such as layoffs, that would have affected the employee regardless of whether the employee was on leave, such as closure of the employee’s worksite.

Documentation of Need for Leave

In order to comply with its obligations under FFCRA, an employer should obtain information from its employees, including name, dates for which leave is requested; qualifying reason for leave; and oral or written statement that employee is unable to work because of the qualified reason for leave.  If an employee provides oral statements in support of his/her request, the employer is required to document and to maintain that information in its records. 

In addition, the employee must provide the following:

• If the reason for leave is a Quarantine or Isolation Order, the name of the government entity that issued the order.
• If the reason for leave is based on the advice of a health care provider, the name of the health care provider who advised the employee to self-quarantine due to concerns related to COVID-19.
• If the reason for leave is care for an individual, then the employee must provide the employer with either the name of the government agency that issued the Quarantine or Isolation Order or the name of the health care provider that advised the individual cared for to self-quarantine due to concerns related to COVID-19.
• If the reason for leave is the care of a child, then the employee must provide the name(s) of the child(ren), age(s), name of the school(s), place(s) of care, or child care provider that has closed or is unavailable, and a representation that no other suitable person will be caring for the child during the period for which the employee takes EPSL or EFML.

Additionally, in order to obtain reimbursement, the Internal Revenue Service requires that:

• If an employee is seeking a leave to care for a child older than 14 years, the employee must provide a statement that special circumstances exist requiring the Employee to provide care for a child older than 14 during daylight hours. See IRS Questions 44 and 46.

If an employee does not provide the required information, the employer may deny the leave. 

Additional Documentation for Tax Credit

Private employers with fewer than 500 employees and tax exempt businesses are required to provide EPSL or EFML (collectively referred to as “qualified leave wages”).  Notably, although required to provide both leaves, governmental employers (including schools) are not eligible to receive any tax credits. 

Private sector employers are entitled to fully recover amounts paid in EPSL and EFML payments through a refundable employment tax credit, which includes the employer’s share of Medicare tax imposed on wages and the cost of maintaining health insurance coverage for the employee during the sick leave period (“qualified health plan expenses”).  Eligible employers may retain an amount of all federal employment taxes equal to the amount of the qualified leave wages paid, plus the allocable qualified health plan expenses and the amount of the employer’s share of Medicare tax imposed on those wages rather than depositing them with the IRS. 

The specific details regarding the amounts of the tax credit and the procedures for obtaining the credit are outlined in an IRS publication entitled Frequently Asked Questions Regarding COVID-19 Related Tax Credits at https://www.irs.gov/newsroom/covid-19-related-tax-credits-for-required-paid-leave-provided-by-small-and-midsize-businesses-faqs#basic. 

In addition to documentation from the employee, an employer should also maintain and document the following: 

• How the employer determined the amount of EPSL and EFML paid to employees, 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 completed IRS Forms 941 that the employer submitted to IRS or, for employers that use third party payers, records of information provided to the payers regarding the employer’s entitlement to a credit claimed on IRS Form 942, and
• Other documentation needed to support its request for tax credits pursuant to the IRS applicable forms, instructions and information for the procedures to follow to claim a tax credit.

All documentation must be maintained for four years regardless of whether the leave was granted or denied. 

Sample Forms

To assist with compliance, attached are two sample forms for your consideration and use.  Each employer should review and revise the form to comply with its needs.

COVID-19 Emergency Sick Leave

Expanded Family & Medical Leave to Care for Children
 

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NOTE: The purpose of this summary is to give an overview of an employer’s obligations under the FFCRA and related Regulations. It is not intended as legal advice with regard to any particular employer’s situation. There remain a number of questions regarding how the FFCRA will be interpreted and applied. Please refer any questions to your legal counsel.

Stoneman, Chandler & Miller LLP can help you address these recent developments. If you have any questions on the above, please do not hesitate to contact us.

Stoneman, Chandler & Miller LLP
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Boston, MA 02110
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617-340-8587 fax

This client alert, which may be considered advertising under the ethical rules of certain jurisdictions, should not be construed as legal advice or a legal opinion on any specific facts or circumstances by Stoneman, Chandler & Miller LLP and its attorneys. This client alert is intended for general information purposes only and you should consult a Stoneman, Chandler & Miller LLP attorney concerning any specific legal questions you may have.

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