FFCRA Poster, USDOL Guidance on FFRCA, Exempt EE Layoff or Furlough, Essential Business, and Cares Act.
Posted by Andrew Kaiser on March 26, 2020
As developments continue, we want to continue to keep our clients up to date on various rules and clarifications on FFCRA as well as a quick word about the changes proposed in the bill that was passed on March 25th by the US Senate.
On March 25th, USDOL released the required notice for all employers with less than 500 employees about Emergency Paid Leave (EPL) and Emergency Family & Medical Leave Act extension (EFMLA). The poster can be downloaded from the following link: https://www.dol.gov/sites/dolgov/files/WHD/posters/FFCRA_Poster_WH1422_Non-Federal.pdf
Along with the poster, guidance was issued about how to use this to give your employees notice about the law. Here’s our summary:
- Where do I post? You should put it with your other required workplace posters “in a conspicuous place” in each workplace.
- But what about people who are not at work, what do I do? An employer may satisfy the posting requirements by emailing or direct mailing this notice to employees, or posting this notice on an employee information internal or external website.
- Do I have to share this notice with recently laid-off individuals? No, FFCRA requirements apply only to current employees.
- I am a small business owner. Do I have to post this notice? Yes. All employers covered by the paid sick leave and expanded family and medical leave provisions of the FFCRA (i.e., certain public sector employers and private sector employers with fewer than 500 employees) are required to post this notice.
The law requires that this poster/notice be provided within ten days of the law’s passing so you should have it posted/distributed no later than Friday, March 27, 2020.
ADDITIONAL GUIDANCE ISSUED BY USDOL
When does this law go into effect?
The FFCRA’s paid leave provisions are effective on April 1, 2020, and apply to leave taken between April 1, 2020, and December 31, 2020. PLEASE NOTE that day is different than what we’ve previously stated, but may be subject to change.
How do we determine if we are below the 500 employee threshold?
You have fewer than 500 employees if, at the time your employee’s leave is to be taken, you employ fewer than 500 full-time and part-time employees within the United States. This includes employees on leave (including those who have been temporarily laid off or furloughed but not terminated) and temp employees who are jointly employed by you and another employer (regardless of whether the jointly-employed employees are maintained on only your or another employer’s payroll).
Workers who are independent contractors under the Fair Labor Standards Act (FLSA), rather than employees, are not considered employees for purposes of the 500-employee threshold, and this also includes owners who are employees of an “S” Corporation, LLC, Partnership or Sole Proprietorship.
How does common ownership or control impact this?
Similar to the way that FMLA includes multiple employers under the Integrated Employer Test, you will need to look at four factors to determine if separate entities are an integrated employer:
- common management
- interrelation between operations
- centralized control of labor relations
- degree of common ownership or financial control
How can I seek an exemption since I employ less than 50 employees?
There is NO process outlined for this yet, but two pieces of information came out from this most recent guidance:
- The exception is available only if providing child care-related paid sick leave (during the first two weeks) and expanded family and medical leave. So, leave during the first two weeks would have to be made available to employees who are subject to a quarantine order, seeking treatment or caring for a family member who has been diagnosed
- To receive the exception, you will need to prove that compliance will jeopardize the viability of your business as a going concern. We read that to mean you should document why your business with fewer than 50 employees meets the criteria set forth in more detail in forthcoming regulations.
In the meantime, they emphatically state to not send any materials to the Department of Labor when seeking a small business exemption for paid sick leave and expanded family and medical leave until their process is completed.
How will you determine what the employee’s regular rate of pay is for EPL/EFMLA?
Regular rate of pay used to calculate paid leave is the average of regular rate over a period of up to six months prior to the date on which leave is taken by the employee. If employee has worked less than six months, the regular rate used to calculate paid leave is the average of regular rate of pay for each week that employee has worked. If employee is paid with commissions, tips, or piece rates, these wages will be incorporated into the above calculation.
Can Employer deny paid sick leave if employee has paid leave prior to the Act going into effect?
No. The Emergency Paid Sick Leave Act imposes a new leave requirement on employers that is effective beginning on April 1, 2020.
Are the paid sick leave and expanded family and medical leave requirements retroactive?
NEW QUESTIONS AND ANSWERS
Here are some additional questions that have come in to help you better understand how this will impact your employees:
Can an employee who has been furloughed/laid off receive EPL or EFLMA Benefits?
No, they cannot be furloughed or laid off and then get FFCRA benefits.
Are there limitations on putting exempt employees (those not eligible to be paid overtime) on furlough?
This question has come up a lot in the last few days. As we said in the last update, Employers must be careful when furloughing exempt employees so that they continue to pay them on a salary basis and do not jeopardize their exempt status under the Fair Labor Standards Act (FLSA). A furlough that encompasses a full workweek is one way to accomplish this, since the FLSA states that exempt employees do not have to be paid for any week in which they perform no work.
USDOL address this question on one of their FLSA Fact Sheets:
Can an employer make prospective reduction in pay for a salaried exempt employee due to the economic downturn?
An employer is not prohibited from prospectively reducing the predetermined salary amount to be paid regularly to a Part 541 exempt employee during a business or economic slowdown, provided the change is bona fide and not used as a device to evade the salary basis requirements. Such a predetermined regular salary reduction, not related to the quantity or quality of work performed, will not result in loss of the exemption, as long as the employee still receives on a salary basis at least $684* per week. On the other hand, deductions from predetermined pay occasioned by day-to-day or week- to-week determinations of the operating requirements of the business constitute impermissible deductions from the predetermined salary and would result in loss of the exemption. The difference is that the first instance involves a prospective reduction in the predetermined pay to reflect the long term business needs, rather than a short-term, day-to-day or week-to-week deduction from the fixed salary for absences from scheduled work occasioned by the employer or its business operations.
Obviously it’s important to be very careful about this practice to avoid creating a situation where a currently exempt employee would become non-exempt. The Wage & Hour Division has been very opposed to changing the status of employee positions. As SHRM has pointed out numerous times: employers choosing to change an exempt employee to nonexempt must do so with the intention of the change being long term or permanent. A week by week change or frequent changes back and forth from exempt to nonexempt status may indicate the employer is trying to avoid overtime pay.
If we layoff all employees and do not continue making contributions to health benefit plan (including dental and vision), do we offer COBRA to everyone?
Under the rules, if the employer ends making contributions and puts everyone on COBRA, there is no group health plan any more. Your group is subject to COBRA as long as one person remains actively employed. Employees may elect to continue COBRA coverage under the normal notice and election procedure. If the plan has no active employees, the plan is terminated and COBRA is not an option. Call us and we can assist with these situations to plan accordingly.
Do we have a grace period to pay premiums during this COVID-19 crisis?
There is no consistent answer to that question unfortunately. Some states have required carriers to extend “grace periods” or the extra time that an insured such as an employer or an individual with their own coverage has to pay their premiums. Many have agreed to extend for 30 days, but not all. Check with your local EbenConcepts office or our OrchestrateHR team to see if business circumstances will require some extra time for paying your March and April premium bills.
One important note: if you have a self-funded plan, the need to continue paying claims during this time is critical! Failure to make timely payment to providers, creating real concerns and delays in paying claims and stop-loss insurance premiums, could put both discounts and plan operations in danger. We haven’t seen any flexibility issued by USDOL on enforcing fiduciary responsibilities so be very mindful of your requirements.
OTHER EMPLOYER ISSUES RELATED TO COVID-19
Among the myriad of issues that many employers are facing, this section hopes to address some other questions that have been coming up a lot over the last couple days:
What is an Essential Business? What is required to allow us to stay open during shelter-in-place/remain-at-home state or local orders?
This is becoming a common question, with many employers not sure of the answer. Here are some key steps in understanding:
1. Read the order and see if you fall within the guidelines for essential business. These orders are the primary governing documents for each order, and are not consistent between jurisdictions. Most things are obvious: hospitals, health care providers, grocery stores. But the fine line determinations must be carefully reviewed, and our advice has been to consult with your local government officials – elected ones seem to be a better source of information than staff right now – or your attorney. You may also find some guidance from the Cybersecurity and Infrastructure Security Agency (CISA) memo: https://www.cisa.gov/publication/guidance-essential-critical-infrastructure-workforce
2. Register with relevant governmental officials about your status if possible. Some states or local governments have adopted procedures for employers to identify as an essential employer due to the nature of your work. For example, North Carolina has set up a process for all businesses who believe they qualify to be exempt should email the NC Dept of Public Safety at firstname.lastname@example.org. That email should contain business name, point of contact including name, email, phone number, address, nature of business and why critical to continue operations and the link to your business website. In our research, there is no uniform approach so check with your local authorities.
3. What should I do to protect my employees? Under the Occupational Safety & Health Act (OSHA), employers are required to provide a safe working environment, which means often making sure people keep their distance, wash their hands thoroughly and in many orders, check the temperature of employees and customers upon entry.
One concern is that there are provisions under OSHA that employees can in good faith refuse to go work if they believe they are in imminent danger – meaning a threat of death or serious physical harm. We’ve seen no such order from OSHA, but it may be helpful to review what they have provided for employers: https://www.osha.gov/Publications/OSHA3990.pdf.
4. What do I need to provide my employees who are coming to work? You should definitely give your employees who are traveling to/from work a letter to carry with them in case they are stopped. That letter should have your logo, address and a contact name, number that can be contacted during working hours and email address. Here’s some text we’ve been providing to clients who have asked:
To Whom It May Concern:
This is to confirm that [Employee Name] is an employee of [Company Name]. [Company Name] is an “Essential Business or Operation” within the meaning of [Government Order issued by State or Local Government].
As such, [Company Name] is continuing to operate until further notice, and this employee is permitted under the terms of the Executive Order to travel to and from work. If you have questions, please contact the undersigned.
Should we adopt a company policy related to FFCRA and its leave provisions?
To prevent any confusion about whether or not an employer is compliant with this law, we are recommending that our clients adopt a policy to reflect their rules. Contact us at email@example.com for a model policy for you to look over and adopt to reflect your company’s implementation of this law.
What are the provisions of the CARES Act?
The Senate passed their legislation late Wednesday evening, and the House promises to take the bill up on Friday with the hope that it will be signed into law by the President by this weekend. The bill will provide economic stimulus through one-time payments to individuals who make less than $75,000/households who earn less than $150,000 as well as expanded unemployment benefits and assistance to small and large employers impacted by the sudden drop in our overall economy. There are a couple of key provisions that we want to highlight as they may assist you and your employees.
Small Employer Paycheck Protection Program. The bill creates a “paycheck protection program” for small employers, self-employed individuals, “gig economy” workers, and certain nonprofits (including 501(c)(3) organizations and 501(c)(19) veteran organizations, and tribal business concerns with under 500 employees) with $350 billion to help prevent workers from losing their jobs and small businesses from going under due to economic losses caused by the COVID-19 pandemic. Some key points:
- The size of the loans would equal 250% of an employer’s average monthly payroll. The maximum loan amount would be $10 million.
- Covered payroll costs include salary, wages, and payment of cash tips (up to an annual rate of pay of $100,000); employee group health care benefits, including insurance premiums; retirement contributions; and covered leave.
- The cost of participation in the program would be reduced for both borrowers and lenders by providing fee waivers, an automatic deferment of payments for one year, and no prepayment penalties.
- Loans would be available immediately through more than 800 existing SBA-certified lenders, including banks, credit unions, and other financial institutions.
The program would provide 8 weeks of cash-flow assistance through 100 percent federally guaranteed loans to small employers who maintain their payroll through June 30, 2020. If the employer maintains payroll, the portion of the loans used for covered payroll costs, interest on mortgage obligations, rent, and utilities would be forgiven, which would help workers to remain employed and affected small businesses and our economy to recover quickly from this crisis. This proposal would be retroactive to February 15, 2020, to help bring workers who may have already been laid off back onto payrolls. Small Business Administration is required to enact these programs with regulations no later than 15 days after the Act is signed into law.
Expanded Unemployment Benefits. The CARES Act also includes provisions to provide additional unemployment benefits for those folks displaced due to the economic situation, adding $250 billion to states for this purpose. Here are the bill’s key points:
- Would provide unemployment benefits to self-employed and independent contractors, like Uber drivers and gig workers, can receive unemployment during the public health emergency.
- Bill also includes support to state and local governments and nonprofits so they can pay unemployment to their employees.
- Would increase the maximum benefit by adding additional benefits of up to $600/week to keep employees whole through the end of July. (That does not mean that they will receive $600 per week if currently they are not earning that much) In addition, for those who need it, the bill provides an additional 13 weeks of benefits beyond what states typically allow.
*The expansion in unemployment benefits is temporary and expires at the end of 2020.
There will be more details to come on CARES Act, which thankfully has very little in terms of employer mandates and other requirements.
If you have any questions, please contact your agent or call us at 828-328-5671.