In our continuing effort to keep our clients up to date on labor and employment developments related to COVID-19 and the Families First Coronavirus Response Act, we earlier published a bulletin linking clients to new guidance issued this week by the Department of Labor in this area. We encourage clients to review that guidance, but we also want to make some observations regarding some of the more significant aspects of the guidance, especially as they may answer earlier questions or ambiguities about the new law and COVID-19. There still remain a number of outstanding questions that are not completely addressed by this week’s DOL guidance. We will keep you apprised of anything further which the DOL may promulgate to help address those unanswered questions.
1) There Is A New Effective Date For FFCRA.
The DOL’s guidance clearly states that “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.” The Act originally stated that its provisions would take effect “no later than” 15 days from enactment, which was April 2, but that date has obviously been advanced a day.
2) The “500-Employee” Threshold Is Calculated at The Time Leave is Requested.
As noted by The Kullman Firm in a prior FAQ, it was previously unclear whether the DOL would apply the 500-employee cap (employers above that number are not covered by FFCRA) in a manner similar to other federal laws, wherein employee thresholds are typically calculated over a longer prior period of time. It appears clear from this week’s guidance, however, that this is not going to be the case for the FFCRA. Instead, the new guidance simply says, “you have fewer than 500 employees if, at the time your employee’s leave is to be taken (emphasis added), you employ fewer than 500 full-time and part-time employees.” The DOL went on to add, though, that in making that calculation, employers should include employees on leave, temporary employees who are jointly employed by the employer and another employer (regardless of whether the jointly-employed employees are maintained on only the user employer’s or another employer’s payroll), and day laborers supplied by a temporary agency, again “regardless of whether you are the temporary agency or the client firm if there is a continuing employment relationship.” True independent contractors are not counted toward the threshold.
3) Employers With Fewer Than Fifty Employees Must Wait for Further Guidance On How To Take Advantage Of The Small Business Exemption.
Clients with fewer than fifty employees have asked how to request an exemption where complying with the FFCRA “would jeopardize the viability of the business as a going concern.” The DOL seems to have largely deferred a decision on how such a request would be made, and simply stated “to elect this small business exemption, you should document why your business with fewer than 50 employees meets the criteria set forth by the Department, which will be addressed in more detail in forthcoming regulations. You should not send any materials to the Department of Labor when seeking a small business exemption…”
4) Look at Normal Schedule or Six-Month Average to Calculate a Part-Time Employee’s “Hours Worked” For Paid Leave Purposes.
According to the new guidance, “a part-time employee is entitled to leave for his or her average number of work hours in a two-week period. Therefore, you calculate hours of leave based on the number of hours the employee is normally scheduled to work. If the normal hours scheduled are unknown, or if the part-time employee’s schedule varies, you may use a six-month average to calculate the average daily hours. Such a part-time employee may take paid sick leave for this number of hours per day for up to a two-week period, and may take expanded FMLA (for children sent home from school or daycare) for the same number of hours per day up to ten weeks after that.”
5) The “Regular Rate of Pay” For Determining Paid Benefits Under FFCRA Is Generally a Six-Month Average.
DOL guidance states that for purposes of the FFCRA, the regular rate of pay used to calculate an employee’s paid leave is the average of his regular rate over a period of up to six months prior to the date on which he takes leave. If the employee has not worked for six months, then the regular rate will be based on the average of that regular rate of pay for each week he or she actually worked. Interestingly, the guidance states that if an employee is “paid with commissions, tips, or piece rates, these wages will be incorporated into the above calculation.” The most literal reading of that guidance would seem to indicate that not only the amount of “tip credit” used to bring an employee up to minimum wage, but also the amount of the actual tips themselves would be built into a calculation of the amount of hourly pay an employee would be due under the paid sick leave or paid FMLA provisions. This appears to place the burden on employers now to actually compensate employees who are off work for what customers—not just the employers—would have provided to them in the way of tips. If further clarification is provided on that point, we will keep you advised. Also, keep in mind that employers can claim a full tax credit for all paid leave benefits issued to qualifying employees under this provision.
6) Employers May Not Take “Credit” For Any Sick Pay Provided Before April 1.
Confirming our earlier prediction that employers would not be permitted to receive tax credit for paid sick leave provided prior to the Act’s effective date, the guidance further makes clear that any paid sick leave provided prior to April 1 does not count towards the eighty hours required under the Act. This week’s guidance contained this Q and A: “Can my employer deny me paid sick leave if [it] gave me paid leave for a reason identified in the Emergency Paid Sick Leave Act prior to the Act going into effect? No, the EPSLA imposes a new leave requirement on employers effective beginning April 1, 2020.” Presumably for consistency’s sake, the guidance went on to make it clear that any requirement to provide paid sick leave and expanded FMLA pay under FFCRA will not be retroactive to a date prior to April 1.
7) Employees Must Have Worked for the Employer for at Least the Thirty Days Prior to Requesting Leave Under the Expanded FMLA.
Employees are not eligible for paid leave under the emergency FMLA expansion provisions of the FFCRA unless they had been “employed for at least thirty calendar days by the employer…” Some employers have wondered whether that meant thirty cumulative calendar days or the most recent thirty-day period. The new guidance makes clear it is the latter: “You are considered to have been employed by your employer for at least thirty calendar days if your employer had you on his payroll for the thirty calendar days immediately prior to the date your leave would begin. For example, if you want to take leave on April 1, 2020, you would need to have been on your employer’s payroll as of March 2, 2020.” That same section of the guidance goes on to clarify that “if you have been working for a company as a temporary employee and the company subsequently hires you on a full-time basis, you may count any days you previously worked as a temporary employee towards this 30-day eligibility period.”
8) FLSA Flagged Concerns With Respect To Employee Expenses While Teleworking.
The DOL guidance does not expressly direct employers to pick up the cost of any business-related expenses incurred by employees while working from home, except to the extent that not reimbursing those expenses could result in a minimum wage violation. In particular, the guidance provides “Employers may not require employees who are covered by the FLSA to pay or reimburse the employer for such items that are business expenses of the employer if doing so reduces the employee’s earnings below the required minimum wage or overtime compensation.” Employers may, of course, elect to cover employee out-of-cost expenditures if they choose to do so. Further, certain states require employers to reimburse employees for all necessary expenses incurred in carrying out job duties and/or employer directives.
9) OSHA Implications For Telework (Work From Home).
This week’s bulletins state that “OSHA does not have any regulations regarding telework in home offices.” Fortunately, DOL cited – and thus seems to endorse – a directive issue by OSHA in 2000 “stating that the agency will not conduct inspections of employees’ home offices, will not hold employers liable for employees’ home offices, and does not expect employers to inspect the home offices of their employees. … If an employee makes a specific request [however] OSHA may informally let employers know of complaints about home office conditions, but will not follow up with the employer or employee.” The most significant comment made in this section of the guidance, however, has to do with work-related injuries and illnesses. To be specific, the guidance says, “employers who are required to keep records of work-related injuries and illness will continue to be responsible for keeping such records for injuries and illnesses incurring in a home office.” Left unaddressed – presumably because it would be a state, not federal law matter – is a question of whether an injury incurred in a home office or during telework would be compensable under workers’ compensation statutes. Again, that would be up to the law of the state where the home office is located. If you have any questions about that, please do not hesitate to ask the attorney with whom you work.
10) Federal Law Implications for Employees Requesting to Remain Away from Work for Fear of Contracting COVID-19
In the current environment, employers may be receiving requests from employees to stay away from work due to the fear of contracting COVID-19, which is not a specified basis for leave under the EPSLA or EFMLEA. However, some employees who make the request may also notify their employer that they suffer from an underlying health condition that makes them more susceptible to COVID-19 and the underlying condition may on its own qualify as a serious health condition under the Family and Medical Leave Act (“FMLA”) or a disability under the Americans with Disabilities Act (“ADA”). The FMLA provides eligible employees who qualify for leave due to their own serious health condition with unpaid leave and the ADA protects qualified individuals with disabilities and requires employers to provide reasonable accommodations for the disabilities.
When receiving requests to stay away from work from employees who represent that they suffer from an underlying health condition, an employer should seek to satisfy its obligations under both the FMLA and ADA. The employer should provide the employee with FMLA certification paperwork to be completed by her/his physician, as well as all other required FMLA documentation, such as the FMLA’s notice of rights and responsibilities. For the employee whose physician certifies that s/he stay away from work due to an underlying serious health condition, the employer should grant leave in accord with the FMLA and may count the leave against the employee’s FMLA entitlement.
Granting leave to such an employee may also be deemed a reasonable accommodation under the ADA. The Equal Employment Opportunity Commission guidance on reasonable accommodation under the ADA indicates that a leave of absence can be a reasonable accommodation. Such determinations are fact specific and the ADA requires employers to engage in an interactive process with the employee to determine whether remaining away from work would be a reasonable accommodation or some other accommodation would satisfy the employee’s request and the employer’s reasonable accommodation obligation. For instance, an employer could offer the employee the opportunity to work from home in order to satisfy the employee’s requests but also balance the employer’s business needs.
While on its face a request to remain away from work merely due to fear of contracting COVID-19 would not be protected under the FMLA or ADA, an employer cannot satisfy its obligations under the FMLA or ADA by simply denying such a request outright. Where the employee signals or the employer is otherwise aware that the employee suffers from an underlying health condition, the employer should proceed with its normal processes for determining qualification for FMLA leave and engaging with employees to determine the need for and appropriateness of a reasonable accommodation under the ADA. Further guidance from the DOL on this issue can be found at https://www.dol.gov/agencies/whd/fmla/pandemic.
In addition to FMLA and ADA considerations, employees refusing to work because of fear of contracting COVID-19 may implicate the National Labor Relations Act (“NLRA”), which protects employees who engage in protected concerted activity for mutual aid or protection with respect to terms and conditions of employment, as well as the Occupational Safety and Health Act (“OSHA”). Under the NLRA, protected concerted activity can include two or more employees acting together to improve terms and conditions of employment, as well as individual action expressly taken on behalf of co-workers. With some limitations, the NLRA prohibits employers from disciplining or discharging employees for engaging in such activity. Against this backdrop, employers should carefully consider how to respond to multiple employees refusing to work due to concerns of exposure to COVID-19 in the workplace.
Finally, under OSHA, employees may refuse to work if they reasonably believe they are in imminent danger. Imminent danger is defined to include “any conditions or practices in any place of employment which are such that a danger exists which can reasonably be expected to cause death or serious physical harm immediately or before the imminence of such danger can be eliminated through the enforcement procedures otherwise provided by this Act.” OSHA also indicates that imminent danger includes not only the “threat of death or serious physical harm,” but “a reasonable expectation that toxic substances or other health hazards are present, and exposure to them will shorten life or cause substantial reduction in physical or mental efficiency.” Therefore, similar to employer responses to potential implication of the FMLA, ADA and NLRA, before rejecting such concerns, employer’s should carefully assess the work environment, likelihood of exposure, and actions that could be taken to eliminate or reduce exposure concerns before responding to employees’ refusal to work due to fear of contracting COVID-19 in the workplace. To this end, OSHA has provided guidance on their website which can be found at https://www.osha.gov/SLTC/covid-19/.
11) The DOL Appears to Impose Different Tests for Calculating the 500-Employee Threshold for Purposes of the EPSLA and EFMLEA.
The DOL’s new guidance makes a surprising distinction between how the 500-employee threshold is met for purposes of the EPSLA as compared to the EFMLEA. According to the guidance, for purposes of the EFMLEA, common employees of (1) entities found to be “integrated employers” under the FMLA’s integrated employer test, or (2) joint employers under the FLSA’s joint employer test, are all counted towards the 500-employee threshold. For purposes of the EPSLA, however, only common employees of joint employers are counted. The distinction, if intentional by the DOL, is significant, as the tests for determining whether two entities are “joint employers” or “integrated employers” are very different.
Under the FLSA’s joint employer test, the DOL’s recently adopted final rule sets forth a four-factor test that looks to whether the potential joint employer (i) hires or fires the employees; (ii) supervises and controls the employee’s work schedule or conditions of employment to a substantial degree; (iii) determines the employer’s rate and method of payment; and (iv) maintains the employee’s employment records. The final rule also identifies factors that are not relevant and clarifies that other factors do not make a joint employer finding more or less likely. The final rule makes clear that no single factor is dispositive, and the appropriate weight to be given to each factor will vary depending upon the circumstances.
Under traditional FMLA integrated employer principles, separate entities are deemed integrated employers if they meet the integrated employer test. Factors considered in determining whether two or more entities are an integrated employer include (i) common management; (ii) interrelation between operations; (iii) centralized control of labor relations; and (iv) degree of common ownership/financial control.
The impact of this distinction, if incorporated into the final regulations, is significant: Companies that are exempt from the EFMLEA’s requirements may nonetheless be subject to the EPSLA by virtue of their inability to satisfy the stricter joint employer requirements. As analysis under the joint employer test and integrated employer test are fact specific and can vary from case to case, it is recommended to engage your employment counsel in assessing whether separate entities must aggregate employees for purposes of the 500-employee threshold.
12) DOL Announces 30-Day “Temporary Non-Enforcement Period” Applicable to the FFCRA.
In its March 24th guidance, followed up by additional guidance issued on the 25th, the DOL stated that “the Department will observe a temporary period of non-enforcement for the first 30 days after the Act takes effect, so long as the employer has acted reasonably and in good faith to comply with the Act. For purposes of this non-enforcement position, ‘good faith’ exists when violations are remedied and the employee is made whole as soon as practicable by the employer, the violations were not willful, and the Department receives a written commitment from the employer to comply with the Act in the future.“ The full text of the DOL’s Field Assistance Bulletin No. 2020-1 regarding this temporary non-enforcement policy may be found at https://www.dol.gov/agencies/whd/field-assistance-bulletins/2020-1.
Since legal developments pertaining to COVID-19 are constantly evolving, we recommend that our clients call the Kullman Firm attorney(s) with whom they work for the most current guidance on these matters.