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:
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:
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:
Additionally, in order to obtain reimbursement, the Internal Revenue Service requires that:
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:
All documentation must be maintained for four years regardless of whether the leave was granted or denied.
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.
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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.
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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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