COVID-19 UPDATE: Paid Leave – Examining the Small Business Exemption Under the FFCRA

by Mike DeBlasi | October 7, 2020 12:10 am

The Families First Coronavirus Response Act[1] (“FFCRA”) was signed into law by President Trump in March 2020 and has impacted many New Hampshire employers ever since.

The FFCRA requires, in part, certain employers to provide employees with paid sick leave or expanded family and medical leave for specified reasons related to COVID-19. The U.S. Department of Labor’s (“US-DOL”) Wage and Hour Division administers and enforces the new law’s paid leave requirements.

Generally, the FFCRA provides that employees of covered employers are eligible for:

• Two weeks (up to 80 hours) of paid sick leave at the employee’s regular rate of pay where the employee is unable to work because the employee is quarantined (pursuant to Federal, State, or local government order or advice of a health care provider), and/or experiencing COVID-19 symptoms and seeking a medical diagnosis; or
• Two weeks (up to 80 hours) of paid sick leave at two-thirds the employee’s regular rate of pay because the employee is unable to work because of a bona fide need to care for an individual subject to quarantine (pursuant to Federal, State, or local government order or advice of a health care provider), or to care for a child (under 18 years of age) whose school or child care provider is closed or unavailable for reasons related to COVID-19, and/or the employee is experiencing a substantially similar condition as specified by the Secretary of Health and Human Services, in consultation with the Secretaries of the Treasury and Labor; and
• Up to an additional 10 weeks of paid expanded family and medical leave at two-thirds the employee’s regular rate of pay where an employee, who has been employed for at least 30 calendar days, is unable to work due to a bona fide need for leave to care for a child whose school or child care provider is closed or unavailable for reasons related to COVID-19.

However, small businesses, including nonprofit or religious organizations, with less than 50 employees may be exempt from some of these paid leave requirements.  The small business exemption is only triggered where an employee’s requested leave is needed to care for his or her child whose school or daycare is closed (or child care provider is unavailable) and were offering the leave would jeopardize the viability of the business as a going concern.

This means small businesses must still provide paid sick leave under the FFCRA to employees who need leave because: they themselves are subject to quarantine or an isolation order; they have been advised by a health care provider to self-quarantine; they are experiencing COVID-19 symptoms and are seeking a medical diagnosis; or they are caring for an individual who is subject to a quarantine order or has been advised to quarantine.

Determining whether offering the FFCRA’s paid expanded family and medical leave to an employee would “jeopardize the viability of the business as a going concern” has been somewhat of a gray area.  Per US-DOL regulations, in order to take advantage of the exemption, an officer of the employer must document that he or she has determined that providing leave to care for a child would jeopardize the viability of the business as a going concern because:

• the requested leave would result in the small business’s expenses and financial obligations to exceed available business revenues and cause the small business to cease operating at minimal capacity; or
• the absence of the employee or employees requesting leave would entail a substantial risk to the financial health or operational capabilities of the business because of their specialized skills, knowledge of the business or responsibilities; or
• there are not sufficient workers who are able, willing and qualified, and who will be available at the time and place needed, to perform the labor or services provided by the employee or employees requesting leave, and those labor or services are needed for the small business to operate at minimal capacity.

It appears US-DOL intended this to be done on a case-by-case basis for each employee requesting the expanded family and medical leave paid leave.

While there are not any formal filing requirements to qualify, an employer who elects the exemption should carefully document the reasons and any supporting information about why offering the leave would jeopardize its viability, and the records must be retained for at least 4 years.  But, no formal notice is actually sent to the US-DOL if an employer elects the small business exemption.

Employers should recall that the FFCRA is set to expire December 31, 2020 without further action from Congress.  Additionally, employers may be eligible for reimbursement of the paid leave costs through tax credits – a consideration that should be taken into account when determining whether offering the leave would jeopardize the business’s viability.  Another consideration to remember is that employers cannot receive Paycheck Protection Program (“PPP”) loan forgiveness for wages that are counted toward FFCRA tax credits.

On August 3, 2020, the U.S. District Court for the Southern District of New York ruled that certain leave provisions of the FFCRA were too restrictive.  In response, the US-DOL issued “revisions and clarifications[2]” to its regulations in September 2020.  However, the revisions did not substantively impact the small business exemption provision of the prior regulations.  A summary of the changes from the US-DOL provides:

• The Department reaffirms that paid sick leave and expanded family and medical leave may be taken only if the employee has work from which to take leave, and that employees must receive employer approval to take paid sick leave or expanded family and medical leave intermittently.
• The Department narrows the definition of “health care provider” to employees who are health care providers under 29 CFR. 825.125 and employees capable of providing health care services, meaning those who are employed to provide diagnostic services, preventive services, treatment services, or other services that are integrated with and necessary to the provision of patient care.
• In this rule, the Department also clarifies that the information the employee gives the employer to support the need for leave should be given as soon as practicable, and corrects an inconsistency regarding when an employee may be required to give notice of expanded family and medical leave to their employer.

It is important for small businesses weighing whether to elect the small business exemption from the FFCRA paid leave requirements to consider how denying paid leave may impact employee morale as well as its business operations and bottom line.  Employers would be well-advised to consider flexible work schedules and telework arrangements when possible to retain employees and keep them working through the remainder of the pandemic.

About the Author: Lindsay Nadeau[3]

Source URL: https://orr-reno.com/covid-19-update-paid-leave-examining-the-small-business-exemption-under-the-families-first-coronavirus-relief-act/

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