DOL Issues Final Rule and Additional Guidance on FFCRA Leave and Pay Requirements

The Final Rule supplements and clarifies the multiple FFCRA Q&A publications the DOL has issued over the past several weeks. On April 3, after the Final Rule was released, the DOL updated its prior Q&A guidance incorporating content from the Final Rule. The updated April 3 guidance is available here. This is the most current and comprehensive set of FFCRA Q&As published to date by the DOL. (Our previous summaries of the DOL’s March 25 and March 28 FFCRA Q&As are available here and here, though readers should note that the Q&As contained in those links have now been updated via the April 3 updated Q&As.)

The following are some key provisions of FFCRA that the April 1 Final Rule and updated Q&As issued on April 3 address:

Are employees eligible for FFCRA paid leave when they are off work due to a stay at home order issued by a governmental entity?

The Final Rule addresses whether an employer is required to pay FFCRA sick and family leave benefits to an employee who is not working due to a governmental stay at home order. One such order is Illinois Executive Order 2020-10 issued by Governor Pritzker ordering non-essential workers to stay at home until April 7 (extended to April 30, per Executive Order 2020-18). Many other states have implemented similar orders.

The Final Rule helps clarify an apparent ambiguity between the language of FFCRA and prior DOL Q&A’s. Specifically, FFCRA provides that an eligible employee is entitled to paid sick leave if “[t]he Employee is subject to a Federal, State, or local quarantine or isolation order related to COVID-19.” Likewise, the family leave provision of FFCRA provides that a qualifying need for family leave exists where an “employee is unable to work . . . due to a need for leave to care for [a child] . . . if the school or place of care has been closed, or the child care provider of such [child] is unavailable, due to a public health emergency,” which the Act defines as “an emergency with respect to COVID-19 declared by a Federal, State, or local authority.” Thus on its face, the eligibility requirements for FFCRA paid sick and family leave appear to be met where an employee is required to be off work due to a stay at home order that prohibits them from going to work and requires closure of an employee’s child’s school or child care facility.

However, in Q&As issued on March 28 (that we summarized here), the DOL announced that employers are not required to provide FFCRA sick and family leave benefits, and would not be entitled to a tax credit if they did, if employees are off work due to a furlough or closure of their worksite, regardless of “whether [the] employer closes [the] worksite for lack of business or because it was required to close pursuant to a Federal, State or local directive.” See Q&As Nos. 24-28.

The Final Rule clarifies this ambiguity by stating that, while a quarantine or isolation order referred to in FFCRA does include a quarantine, isolation, containment, shelter-in-place, or stay-at-home order issued by any Federal, State, or local government authority, employees impacted by such orders “may not take Paid Sick Leave where the Employer does not have work for the Employee as a result of the order or other circumstances.” Though not addressed in the Final Rule, the DOL’s Q&As clarify that this includes furloughs, hours reduction, or closure of a worksite, even where this is “pursuant to a Federal, State or local directive.”

Thus, the DOL has made clear that where an employer either does not have work or has been required to close its workplace due to the COVID-19 pandemic, it is not required to pay its employees FFCRA paid sick and family leave benefits.

It appears an employer would be required to provide FFCRA sick or family leave benefits to workers subject to a governmental quarantine or isolation order only where such an order impacts the employee but not the employer – for example, where an employer that is subject to a stay at home order has some employees who qualify as “essential” but others who do not, or where an employer operates in a jurisdiction that does not have a stay at home order in place but has employees in a jurisdiction that does have a stay at home order in place. However, in both examples, the employer still would not be required to provide FFCRA sick leave or family leave benefits if: (1) it has no work available; or (2) it has telework available for employees who must stay at home but are able to telework.

When are employees entitled to paid sick leave under FFCRA in order to self-quarantine?

The DOL Final Rule and its April 3 updated Q&As has clarified that an employee may take FFRCA paid sick leave to self-quarantine “if a health care provider directs or advises [them] to stay home or otherwise quarantine . . . because the health care provider believes that [they] may have COVID-19 or are particularly vulnerable to COVID-19” and such quarantine prevents the employee from working (i.e., because telework is not available for their position, or the employee is too ill to work remotely).

Note that this may allow an employee whose job cannot be performed remotely to seek FFCRA leave based on age or underlying health conditions that place the employee at higher risk for COVID-19, upon a statement to that effect from a health care provider.

A “health care provider” in this context has the same meaning as under the FMLA and includes “a licensed doctor of medicine, nurse practitioner, or other health care provider permitted to issue a certification for purposes of the FMLA.”

When are employees eligible for paid sick leave under FFCRA to care for someone who is subject to a quarantine or isolation order?

The DOL guidance provides that employees may take FFRCA paid sick leave to care for an individual who, as a result of being subject to a quarantine or isolation order, is unable to care for him or herself and depends on the employee for care where providing such care prevents the employee from working (i.e., including from teleworking, where offered). The DOL guidance emphasizes that this individual must be someone “who genuinely needs” the employee’s care. The Final Rule states that such individuals include the following:

• An immediate family member;
• Someone who regularly resides in the employee’s home (i.e., a roommate) “who genuinely needs” the employee’s help); 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 self-quarantined or was quarantined” (i.e., a non-immediate family member who does not reside with the employee but who the employee regularly provides care for and “who genuinely needs” the employee’s help).

Can both parents take paid sick or family leave simultaneously to care for their child whose school or place of care is closed due to COVID-19?

Generally, no. The DOL Final Rule explains that employees may only take paid sick or family leave under FFCRA to care for their child “when [they] need to, and actually are, caring for [their] child if [they] are unable to work or telework as a result of providing care.” Accordingly, the DOL states that “[g]enerally, [an employee] do[es] not need to take such leave if a co-parent, co-guardian, or [the employee’s] usual child care provider is available to provide the care [their] child needs.”

“Generally” does not mean always, however. Exceptions might exist, for example, if both parents are teleworking and sharing child care responsibilities, or based on specific family dynamics (number of young children in the family, or a child or children with special needs). These situations should be assessed on a case-by-case basis.

Does providing employees with telework absolve an employer’s responsibility to pay FFCRA paid sick or family leave?

It depends. The Final Rule explains that the term “telework” means “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.” It further provides that an employee is able to telework if the following conditions exist:

1. The employer has work for the employee;
2. The employer permits the employee to work from the employee’s location; and
3. There are no extenuating circumstances (such as serious COVID-19 symptoms) that prevent the employee from performing that work.

If all three of these conditions are satisfied, an employer may provide telework opportunities to employees who need to work from home, which then absolves any obligation to provide FFCRA sick or family leave benefits while the employee is teleworking.

Of course, as with all teleworking arrangements, employees who are teleworking for COVID-19 reasons must be compensated for all hours worked “and which the Employer knew or should have known were worked.” However, the DOL emphasizes the need for flexibility for teleworking employees who may have other obligations and distractions in their home. Thus, the FLSA requires that teleworking employees typically should count all time between the first and last principal activity performed by an employee as hours worked. For employees who are teleworking for COVID-19 related reasons, however, the DOL encourages employers and employees to reach agreement concerning teleworking hours so as to allow employees to balance their job responsibilities with other responsibilities while teleworking, such as child care responsibilities.

It is important for employees to provide, and employers to maintain, accurate records of hours worked in such situations. Employers with teleworking employees should develop a telework plan that addresses not only timekeeping but also issues like reimbursement of business expenses and security of sensitive business information. Employers who need assistance preparing telework policies can contact Schiff Hardin’s Labor and Employment law professionals for assistance.

Will employers who voluntarily provided paid leave to employees before FFCRA effective date be able to deduct the amounts voluntarily given from their obligation to provide paid sick or family leave under FFCRA?

No. The Final Rule states that while “[t]he Department acknowledges that some employers voluntarily offered and provided [paid] leave to help their employees in this time of emergency, . . . FFCRA still requires those employers to provide the entirety of the paid sick leave and expanded family and medical leave to which its employees are eligible, regardless of whether an employee took the additional paid leave the employer voluntarily offered.”

Moreover, as we previously reported here, the DOL has clarified that employers cannot claim or receive a tax credit for any amounts paid to employees outside of FFCRA’s requirements or in excess of FFCRA’s statutory caps for paid sick leave or family leave. (As a reminder, these caps are, for sick leave, $511 per day/$5,110 total for an employee’s own condition or $200 per day/$2,000 total for an employee caring for another, and family leave, $200 per day/$12,000 total.)

How do employers count employees to determine if they have 500 or more employees exempting them from the paid sick and family leave requirements of FFCRA?

The Final Rule also provides additional information about how employers determine if they have 500 or more employees and are thus exempt from the paid sick leave and family leave requirements of FFCRA. To determine the number of employees, the Final Rule states that an employer “must count all full-time and part-time Employees employed within the United States at the time the Employee would take leave.”

The Final Rule defines “within the United States” as “any State within the United States, the District of Columbia, or any Territory or possession of the United States.” The applicable timeframe to count employees is “at the time the Employee would take leave,” meaning an employer may move in and out of coverage under FFCRA’s paid leave provisions as it increases or decreases the size of its workforce between the effective date (April 1, 2020) and the sunset date (December 31, 2020) of the Act.

Employers should count all employees currently employed, regardless of how long employed, including employees on leave, temporary employees who are jointly employed by the employer and an employment agency under the FLSA (regardless of on which employer’s payroll the employee appears), and daily laborers supplied by a temporary placement agency.

Employers should not count workers who are independent contractors under the FLSA, or workers who have been laid off or furloughed (even if the furlough is due to COVID-19) and have not been subsequently reemployed.

The Final Rule further clarifies that typically, a corporation (including its separate establishments or divisions) is considered a single employer and all of its employees should be counted together. However, “[w]here one corporation has an ownership interest in another corporation, the two corporations are separate Employers unless they are joint employers under the FLSA” as governed by the “economic reality” test (multipart test consisting of various factors).

Relatedly, two or more entities will be considered separate employers “unless they meet the integrated employer test under the FMLA,” a highly fact-specific determination based on the extent of common/interrelated operations, common management, directors, and boards, centralization of control, and other factors.

When does a small employer qualify for the small business exception to providing its employees FFCRA paid sick and family leave?

The DOL has clarified that employers with fewer than 50 employees are exempt from FFCRA’s paid sick leave requirements and family leave requirements when any of the following conditions exist:

• Such leave would cause the small employer’s expenses and financial obligations to exceed available business revenue and cause the small employer to cease operating at a minimal capacity;
• 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
• The small employer cannot find enough other workers who are able, willing, and qualified, and who will be available at the time and place 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.

If any of these conditions exist, an employer may deny FFRCA leave “only to those otherwise eligible employees whose absence would cause the small employer’s expenses and financial obligations to exceed available business revenue, pose a substantial risk, or prevent the small employer from operating at minimum capacity, respectively.”

Where a small employer decides to deny FFCRA leave under this exception, it must document the facts and circumstances that meet the criteria which justifies such denial. Employers must retain such documentation, but should not send it to the DOL unless and until they are requested to do so.

Can employees take intermittent paid leave sick or family leave under FFCRA?

Yes, but only by agreement of the employer and employee and only for specified reasons where the risk of spreading COVID-19 at the workplace is minimal. According to the Final Rule:

One basic condition applies to all employees who seek to take their paid sick leave or expanded family and medical leave intermittently – they and their employer must agree. Absent agreement, no leave under the FFCRA may be taken intermittently.

While the agreement need not be in writing, “in the absence of a written agreement, there must be a clear and mutual understanding between the parties that the employee may take intermittent paid sick leave or intermittent expanded family and medical leave, or both.”

Teleworking Employees: Where an employee is teleworking, if both employer and employee agree, the employee “may take paid sick leave or expanded family and medical leave intermittently, in any agreed increment of time….” Both FFCRA and the DOL regulations “encourage employers and employees to implement highly flexible telework arrangements that allow employees to perform work, potentially at unconventional times, while tending to family and other responsibilities, such as teaching children whose schools are closed for COVID-19 related reasons.”

Employees Present at the Worksite: More stringent restrictions apply for employees who continue to work at the employer’s worksite. For these employees, the Final Rule states that intermittent FFCRA leave is allowed only “to care for the employee’s son or daughter whose school is closed, or whose child care provider is unavailable, because of COVID-19.” Employees working at the employer’s worksite are prohibited from taking paid sick leave intermittently, “notwithstanding any agreement between the employer and employee to the contrary,” if the employee:

• Is subject to a Federal, State, or local quarantine or isolation order related to COVID-19;
• Has been advised by a health care provider to self-quarantine due to concerns related to COVID-19;
• Is experiencing symptoms of COVID-19 and is taking leave to obtain a medical diagnosis;
• Is caring for an individual who either is subject to a quarantine or isolation order related to COVID-19 or has been advised by a health care provider to self-quarantine due to concerns related to COVID-19; or
• Is experiencing any other substantially similar condition specified by the Secretary of Health and Human Services.

The DOL has deemed the risk of an employee spreading COVID-19 to other employees to be too high in any of these situations such that intermittent leave is not appropriate and shall not be granted, regardless of whether the employer and employee agree.

How do the paid sick and family leave benefits under FFCRA interact?

Both the paid sick leave provisions and family leave provisions of FFCRA provide for leave when needed to care for the employee’s son or daughter due to COVID-19 related school or care provider closures/unavailability. The Final Rule confirms that when an employee qualifies for such leave under both sections of FFCRA, an employee may first use two weeks of paid leave under the sick leave provisions, to run concurrently with the first two weeks of unpaid leave under the family leave provisions, to be followed by up to 10 additional weeks of paid family leave under the family leave provisions for any remaining leave taken for this purpose.

How does the family leave provision of FFCRA interact with the FMLA?

The Final Rule explains that FMLA leave and family leave under FFCRA are coextensive and run concurrently. Thus, where an employee has already used some FMLA leave in the employer’s current 12-month leave year, the 12 week family leave allotment under FFCRA is offset by the amount of FMLA previously used that year. If an employee has already exhausted all 12 weeks of FMLA, the employee is not entitled to additional family leave under FFCRA, but may still take paid sick leave under sick leave provisions of FFCRA for a COVID-19 qualifying reason.

Is an employee required to provide documentation of the need for FFCRA paid leave?

Yes. “An employee must provide his or her employer documentation in support of paid sick leave or expanded family and medical leave,” including “a signed statement containing the following information: (1) the employee’s name; (2) the date(s) for which leave is requested; (3) the COVID-19 qualifying reason for leave; and (4) a statement representing that the employee is unable to work or telework because of the COVID-19 qualifying reason.”

The Final Rule provides the following additional documentation/recordkeeping requirements:

• An employee requesting paid sick leave due to a federal, state, or local quarantine or isolation order related to COVID-19 must provide the name of the government entity that issued the quarantine or isolation order to which the employee is subject.
• An employee requesting paid sick leave because he or she has been advised by a health care provider to self-quarantine due to concerns related to COVID-19 must provide the name of the health care provider who advised him or her to self-quarantine for COVID-19 related reasons.
• An employee requesting paid sick leave to care for an individual due to a federal, state, or local quarantine or isolation order related to COVID-19 or who has been advised by a health care provider to self-quarantine due to concerns related to COVID-19 must provide either (1) the government entity that issued the quarantine or isolation order to which the individual is subject or (2) the name of the health care provider who advised the individual to self-quarantine, depending on the precise reason for the request.
• An employee requesting to take paid sick leave or expanded family and medical leave to care for his or her child whose school or care provider has been closed or is unavailable due to COVID-19 must provide the following information: (1) The name of the child being care for; (2) the name of the school, place of care, or child care provider that closed or became unavailable due to COVID-19 reasons; and (3) a statement representing that no other suitable person is available to care for the child during the period of requested leave.

Note that employers are required to obtain and retain all documentation supporting a request for FFCRA paid leave, regardless of whether leave was granted or denied, for four years. If an employee provides oral statements to support his or her request for paid sick or family leave, the employer is required to document and retain such information for four years.

These documentation and recordkeeping requirements are distinct and in addition to records needed to support an employer’s request for a tax credit and are intended to monitor compliance with FFCRA paid leave requirements. Employers “may also request an Employee to provide such additional material as needed for the Employer to support a request for tax credits pursuant to the FFCRA.”

What documentation do employers need to retain to obtain a tax credit under FFCRA?

The Final Rule provides that in order to claim tax credits from the IRS for sick leave or family leave benefits paid to employees under FFCRA, employers should obtain and retain the following records for four years:

• Documentation to show how the employer determined the amount of paid sick and family leave paid to its employees that are eligible for the credit, including records of work, telework and sick and family leave benefits paid
• Documentation to show 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 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
• 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.

The DOL provides various IRS resources for employers including how to obtain the forms needed to claim a tax credit, including:

• https://www.irs.gov/forms-pubs/about-form-7200
• https://www.irs.gov/pub/irs-drop/n-20-21.pdf
• https://www.irs.gov/newsroom/covid-19-related-tax-credits-for-required-paid-leave-provided-by-small-and-midsize-businesses-faqs

In addition to its other documentation and recordkeeping requirements, employers may also require an employee to provide such additional materials as needed for the employer to support a request for tax credits pursuant to FFCRA and may refuse to provide an employee paid FFCRA leave if such materials sufficient to support the applicable tax credit have not been provided.