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:

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:

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:

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]

Endnotes:
  1. Families First Coronavirus Response Act: https://www.dol.gov/agencies/whd/pandemic/ffcra-employer-paid-leave
  2. revisions and clarifications: https://s3.amazonaws.com/public-inspection.federalregister.gov/2020-20351.pdf
  3. Lindsay Nadeau: https://orr-reno.com/our-people/lindsay-nadeau/

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