By Kirsten Mooney and Rob Gilmore
The Department of Labor (DOL) issued initial guidance Tuesday concerning the recently enacted Families First Coronavirus Response Act. The guidance answers many questions employers may now face in light of the Act’s various provisions. As the DOL continues to receive feedback from the pubic regarding the Act, additional guidance is expected within the week.
Most notably, the guidance sets the Act’s effective date to April 1, 2020. It will apply to all eligible leave taken from April 1, 2020 through December 31, 2020.
When and How Does an Employer Calculate Number of Employees?
An employer should calculate its coverage threshold at the time the employee takes his or her leave under the Act. The calculation should include the following:
- Both full-time and part-time employees within the United States, which includes any state, the District of Columbia, or any territory or possession of the United States;
- Employees on leave;
- Temporary employees who are jointly employed (regardless of whether they are maintained on the employer’s or another company’s payroll); and
- Day laborers supplied by temporary agencies.
Independent contractors, as defined under the Fair Labor Standards Act, should not be considered for purposes of the 500-employee threshold.
How Should Businesses Address Common Ownership?
The guidance specifically states that a corporation (including its separate establishments or divisions) is considered a single employer, and each of its employees must be counted toward the 500-employee threshold. Where a corporation has an ownership interest in another corporation, the two are still separate employers, unless they are joint employers (as defined under the Fair Labor Standards Act) with respect to certain employees. If two entities are joint employers, all of their common employees must be included in the employee calculation.
In addition, the guidance adopted the integrated employer test from the Family and Medical Leave Act of 1993 (FMLA) to determine if two entities are separate or integrated for purposes of coverage. The factors under the integrated employer test include common management, interrelation between operations, centralized control of labor relations, and degree of common ownership/control. If two or more entities constitute an integrated employer, then employees of all entities will be counted to determine coverage under the Act.
How Do Employers Apply for the Small Business Exemption?
The Act allows for an exemption for those small businesses with less than 50 employees, if providing leave under the Act would jeopardize the viability of the employer’s business. The guidance only advises employers to document why each would fall under the exemption, but provides no further information.
The DOL states this question will be more addressed in forthcoming guidance.
How Do Employers Calculate Hours for Part-Time Employees?
Under the Act, part-time employees are entitled to leave for their average number of hours worked in a two-week period. The employer should, therefore, calculate the part-time employee’s leave based on the number of hours the employee is normally scheduled to work. In the event that the normal scheduled hours are unknown, the employer should use a 6-month average to calculate the average daily hours of the employee.
If the employee has not been employed for at least six months, the DOL directs employers to use the agreed upon number of hours the employee is expected to work upon his or her hire.
How Do Employers Calculate Regular Rate of Pay?
The guidance provides that an employer must pay employees at their regular rate of pay (or 2/3 the regular rate, depending on the type of leave taken). Generally, the regular rate of pay is the average of the employee’s regular rate over a period of up to 6 months prior to the date on which the employee takes leave. Commissions, tips or piece rates are included in the employee’s regular rate of pay.
Alternatively, an employer can compute an employee’s regular rate by adding all compensation that is part of the regular rate over the above period and dividing that sum by all hours actually worked in the same period.
Should Employers Include Overtime Hours in Payment Calculations?
The guidance makes it clear that the employee should be paid for all normally scheduled work hours, even if that includes more than 40 hours in a week. However, the guidance also warns employers that the paid leave is subject to daily and aggregate caps. By way of example from the guidance, the Emergency Paid Sick Leave Act only requires that paid sick leave be paid for 80 hours over a two-week period.
The payment does not need to include a premium for overtime hours under the Act.
What is the Maximum Amount of Time an Employee May Take Under the Emergency Paid Sick Leave Act?
An employee may only take up to two weeks (or 10 days) of paid sick leave under the Emergency Paid Sick Leave Act, for any combination of qualifying reasons. The total number of hours for which the employee will receive sick leave is capped at 80 hours.
It is unclear at this time whether employees must use this leave consecutively.
How Do the Paid Leave Provisions Interact?
An employee may be eligible for paid leave under the Emergency Paid Sick Leave Act and additional paid leave under the Family and Medical Leave Act expansion – but the employee is only eligible for a total of 12 weeks. The Emergency Paid Sick Leave Act provides for an initial two weeks of paid leave, which covers the first 10 workdays of the otherwise unpaid expanded family and medical leave. The employee may also elect to use vacation or PTO time to cover the first 10 workdays of the expanded family and medical leave.
However, please note that an employee may only receive the additional 10 weeks of expanded family and medical leave under the Emergency Family and Medical Leave Expansion Act for leave to care for a child whose school or place of care is closed or unavailable due to the COVID-19 pandemic.
If an Employer Gives an Employee Paid Leave Prior to the Act’s Effective Date, Does it Still Have to Provide the 80 Hours Under the Emergency Paid Sick Leave Act?
Yes. The Emergency Paid Sick Leave Act imposes a new leave requirement on employers that is effective beginning April 1, 2020.
Are the Act’s Requirements Retroactive?
No. The Act’s requirements will not be applied retroactively.
DOL Model Notice Poster
In addition, DOL Re Model Poster for employer notification may be found here.
Under the Act, employers must notify employees of the paid leave. Per the Act’s language, the DOL has provided the model notice for employers to use in notifying their employees of the Act’s eligibility requirements, leave calculations, penalties, and more.
For questions, contact Rob Gilmore at rsg@kjk.com or 216.736.7240 or Kristin Bordis Mooney at kbm@kjk.com or 216.736.7239 or one of our Labor & Employment professionals.