Updated March 25, 2020
In an ongoing effort to keep our clients up to date on legal developments related to COVID-19, including but not limited to the Families First Coronavirus Response Act, we are sharing answers to some frequently asked questions we have been receiving from clients in this arena. If you would like to discuss the new legislation, or have other questions, please do not hesitate to contact The Kullman Firm attorney(s) with whom you work.
1) How does the “2/3 the regular rate” of payment requirement interplay with the minimum wage?
Based on the language in both the Emergency Family and Medical Leave Expansion Act (“EFMLEA”) and the Emergency Paid Sick Leave Act (“EPSLA”), as well as additional guidance issued by the Department of Labor (“DOL”) on March 24, 2020, the two-thirds payment amounts set forth in both laws do not require satisfaction of the minimum wage under the Fair Labor Standards Act (“FLSA”), although under both the EPSLA and EFMLEA, the minimum wage can be a factor in determining the amount of pay.
More particularly, under the EFMLEA, paid leave is “at an amount not less than two-thirds of an employee’s regular rate of pay.” The regular rate of pay is determined under the FLSA in the same manner as an employer would determine the regular rate for purposes of determining the overtime rate under the FLSA. This means the same types of payments that must be included in the regular rate under the FLSA should be included in determining the two-thirds rate under the EFMLEA. The March 24, 2020, guidance from the DOL indicates that the regular rate on which the two-thirds amount is based must be at or above the federal minimum wage, or the applicable state or local minimum wage. However, neither the latest guidance nor the specific language of the EFMLEA suggests that the two-thirds payment itself must also satisfy the minimum wage requirement. Additionally, pay under the EFMLEA is not pay for actual work; it is pay in lieu of work.
Under the EPSLA, paid leave is at an amount “not less than the greater of” 1) the employee’s regular rate of pay, also determined under the FLSA; 2) the minimum wage rate set by the FLSA; or 3) the minimum wage rate in effect for the employee in the state or locality in which the employee is employed. However, for paid sick time taken under the EPSLA because a) the employee is caring for an individual who is subject to an order of 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, b) the employee is caring for a son or daughter because the school or place of care of the son or daughter has been closed, or the child care provider of the son or daughter is unavailable due to COVID-19 precautions, or c) the employee is experiencing any other substantially similar condition specified by the Secretary of Health and Human Services in consultation with the Secretary of the Treasury and the Secretary of Labor, then the employee is only entitled to pay equaling two-thirds of the rate set forth in 1), 2) and 3) above (i.e., two-thirds of the greater of the three). Even though payments under the EPSLA can be determined in part on the minimum wage of the FLSA, similar to the EFMLEA, the language of the EPSLA does not require that the two-thirds payment satisfy the minimum wage.
2) How do I handle a furlough or temporary layoff of salaried exempt employees?
In order to retain the exemption, exempt employees must receive their full salary for all weeks in which they perform any work. As a result, partial week furloughs are unlikely to reduce labor costs with respect to exempt employees. If you are sending exempt employees home temporarily, be sure to do it in full week increments. Best practice is to get a signed acknowledgement from exempt employees confirming their agreement not to perform any work for the duration of the work stoppage. Employers might also consider collecting employee access cards, computers, and cell phones from exempt employees to the extent feasible. Upon return to work, employers should ask exempt employees to reaffirm that they did not perform any work during the furlough or layoff.
With respect to layoffs, furloughs or terminations, the process with exempt employees is no different than with non-exempt workers. Employers must pay out all wages owed, which may—depending on applicable state laws—include accrued, unused vacation time. Where a high number of employees are terminated at or near the same time as others—i.e., within up to 90 days of each other, employers should look closely at whether federal or state WARN act notice requirements are triggered. The DOL’s March 24, 2020, guidance also reminds employers that layoff decisions cannot be made on the basis of race, sex, age (40 and over), color, religion, national origin, disability or other protected characteristics.
3) When will I ever see the tax credit I’m supposed to be getting?
According to an IRS news release on March 20, 2020, and the DOL’s March 24, 2020 guidance, reimbursement in the form of tax credits available to employers under the Families First Coronavirus Response Act (FFCRA) will be quick and easy to obtain. An immediate dollar-for-dollar tax offset against payroll taxes will be provided for qualifying wages paid under the FFCRA. Qualifying wages are those paid to an employee who takes leave under the EPSLA and/or EFMLEA for a qualifying reason, up to the appropriate per diem and aggregate payment caps. Applicable tax credits also extend to amounts paid or incurred to maintain health insurance coverage. When a refund is owed, the IRS will send the refund as quickly as possible. To take immediate advantage of the paid leave credits, businesses can retain and access funds that they would otherwise pay to the IRS in payroll taxes. If those amounts are not sufficient to cover the cost of paid leave, employers can seek an expedited advance from the IRS by submitting a streamlined claim form that will be released during the week of March 23, 2020.
4) Are commonly-owned subsidiaries or parent-subsidiary companies counted together or separately in reaching the 500-employee threshold determination?
According to the DOL’s March 24, 2020 guidance, for the EPSLA, if two or more employers are joint employers under the FLSA’s joint employer test, then their common employees must be counted in determining the 500-employee threshold. For the EFMLEA, the same FLSA joint employer analysis would apply, but additionally, if two or more employers are integrated employers under the FMLA’s integrated employer test, then employees of all integrated employers employees must be counted in determining employer coverage under the EFMLEA. The DOL’s guidance suggests that the FMLA’s integrated employer test may not apply to determining the 500-employee threshold under the EPSLA. This may be clarified as further guidance is published.
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.
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.
5) How are the 500 employees counted and are contract or temporary agency employees entitled to the benefits of the FFCRA (from the “user” employer)?
The DOL’s March 24, 2020, guidance indicates that the determination of whether the 500-employee threshold is satisfied is made at the time an employee’s leave is to be taken and clarifies that all full-time employees and part-time employees within the United States, including any State of the United States, the District of Columbia, and any Territory or possession of the United States should be included. Also to be included in the count are 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 other employer’s payroll); and day laborers supplied by a temporary agency (regardless of whether the employer is the temporary agency or the client firm if there is a continuing employment relationship). The count excludes from the count workers who are independent contractors under the FLSA.
The DOL’s March 24, 2020 guidance further states that all employees of covered employers are eligible for paid sick leave under the EPSLA for the specified reasons related to COVID-19 and that employees employed for at least 30 days are eligible for leave under the EFMLEA for a qualifying reason. The guidance also states that employees will be deemed to have been employed for 30 calendar days by the employer for purposes of the EFMLEA if they were on the employer’s payroll for the 30 calendar days immediately prior to the day their leave would begin. For example, if an employee wanted to take leave on April 1, 2020, s/he would need to have been on the employer’s payroll as of March 2, 2020. As for temporary employees, the guidance states that if an employer subsequently hires the temporary employee on a full-time basis, the employer must count the days worked as a temporary employee toward the 30-day eligibility period.
From a legal perspective, the answer to the question of whether temporary agency employees are going to be entitled to benefits could well be determined by the answer to another question: whether those user employers would be considered “joint employers” of those individuals, along with the staffing agency. If the staffing agency does not afford their employees the benefits of the new Act, then the user employers could well be jointly liable for such payments. From a practical standpoint, the user employers may attempt to have the staffing agencies agree to assume that liability, although it is anyone’s guess as to whether they would willingly assume that responsibility (in the absence of any pre-existing contractual obligation to do so). Again, this is a complex area under the new law which does not yet seem to have any firm answers. We will keep you posted if we become aware of further clarifications.
6) What is the effective date of the FFCRA?
According to the DOL’s March 24, 2020 guidance, the effective date will be April 1, 2020. Both the EPSLA and the EFMLEA state that they will “take effect not later than 15 days after the date of enactment,” which was March 18, 2020. This language left the door open for both laws to go into effect sooner than April 2, 2020; and the DOL has now indicated that they will go into effect one day sooner on April 1, 2020.
7) Will employees who are out of work because their employers simply have no work for them, or have been shut down by state or local government order, be entitled to either set of paid leave benefits?
The answer to this question remains somewhat ambiguous, especially in states or locations where a general “stay at home” order has been issued. While future regulations or additional government guidance may clarify this issue, it is certainly arguable that employees whose employers laid them off NOT because of a government-ordered closure or isolation order, but because of a downturn in business would not be entitled to either set of paid benefits where there is simply no work for them to perform. The FMLA expansion portion of the new law will provide benefits to employees with a “qualifying need related to a public health emergency.” That term is in turn defined to mean “the employee is unable to work (or telework) due to a need for leave to care for the son or daughter… of such employee if the school or place of care has been closed, or the child care provider of such son or daughter is unavailable due to a public health emergency.” If the employer’s place of business has been “voluntarily” closed, or the employee has been laid off or furloughed due to a decrease in business, then it would seem to be the unavailability of any work, not a school or childcare problem, that is the true cause for the employee being out of work.
Similar logic would seem to apply to the emergency paid sick leave element of the FFCRA. Under those provisions, an employee may be entitled to such paid sick leave for six very specific reasons (one of which is the same as that for expanded FMLA.) None of those reasons include a situation where the employee is unable to work (or telework) merely because his or her employer’s place of business has been voluntarily closed or he or she has been laid off due to lack of work.
There is obviously a different question for employers in states like Louisiana and now many other states and/or local political subdivisions like individual counties, and even cities, which are now subject to a generalized stay at home or shelter in place order with some businesses exempted and others not being exempted. That problem comes in the form of the first covered reason for an employee’s entitlement to the “emergency paid sick leave” benefit: “The employee is subject to a Federal, State or local quarantine or isolation order related to COVID-19.” The question is whether a stay at home and/or shelter in place order qualifies as either a quarantine or isolation order. Based on past CDC guidance on quarantines and isolation orders, we are of the belief that a general stay at home or shelter in place order is not the equivalent of either a quarantine or isolation order, but we note that this situation is fluid and, further guidance and direction from federal, state, and/or local authorities could change the thinking on this issue. But, as can currently be found in CDC materials, a quarantine is defined as separating and restricting the movement of people who were exposed to a contagious disease to see if they become sick. Isolation is defined as separating sick people with a contagious disease from people who are not sick. The current versions of various stay at home and shelter in place orders do not fit neatly in either definition. Of course, it is possible that at the time regulations are issued by the DOL, the agency may itself define the terms quarantine and isolation, and it could differ from what CDC has said in the past. Until further guidance is rendered by the government, and considering Congress’s stated intention in enacting the FFCRA of providing an historic level of help to employees being thrown out of work by the pandemic, employers need to monitor this situation closely.
One final thought for companies in states like Louisiana: employers MIGHT be able to advance the same arguments outlined above for employers in states without such stay-at-home orders with respect to the extended FMLA part of the new law, since the reasons listed for entitlement to that benefit do not include “federal, state or local quarantine or isolation orders,” but just the childcare reason. Again, however, taking such an aggressive approach might be viewed as excessive hair-splitting. At the very least, since that extended FMLA leave will not be paid until after the first 10 days of leave, and the Act is not going into effect until April 2, employers would probably be better advised to wait to see if further guidelines are issued.
8) How do I manage and address COVID-19 symptomatic issues involving (a) employees who have not tested positive, but seem to show potential symptoms of the coronavirus, (b) employees who say they may have come in contact with someone away from work with a virus, (c) coworkers who worked in close proximity with employees mentioned in (a) or (b), and (d) employees who worked alongside other employees who did test positive.
These are difficult and complicated questions, but they are arising on a daily basis as more and more individuals are beginning to exhibit symptoms, are obtaining positive test results, or suspect that co-workers or others outside the workforce with whom they have had contact may have been exposed to COVID-19. Fortunately, guidance has been emerging from various state and federal agencies and those of us in the legal sector, including The Kullman Firm.
- What questions am I permitted to ask employees about their health?
During a pandemic, Americans with Disabilities Act-covered (ADA) employers may ask such employees if they are experiencing symptoms of the pandemic virus. For COVID-19, these include symptoms such as fever, chills, cough, shortness of breath, or sore throat. Employers must maintain all information about employee illness as a confidential medical record in compliance with the ADA.
You can ask employees if they have cold or flu-like symptoms—for example, if they have fever or chills and a cough or sore throat. You should generally avoid asking employees if they have been diagnosed as having COVID-19. While observation of physical symptoms is likely to justify a medical inquiry under the present circumstances – meaning the employer is permitted to ask if an employee has COVID-19 without violating the ADA – employees may not yet be diagnosed with the virus. As such, physical observation may be a more reliable indicator of illness at this stage.
- Can I send employees home or make them work from home?
Yes. The CDC states that employees who become ill with symptoms of COVID-19 should leave the workplace. The ADA does not interfere with employers following this advice. You can send employees home if they admit they are sick or exhibit symptoms of illness. You can also require employees to go home or work from home if they have been in close contact with someone confirmed to have COVID-19. Employees who are sent home or quarantined should not return to work for 14 days plus 24 – 72 hours since they last had symptoms of the virus. You can even require employees with no known symptoms or exposure to telework if their job duties allow telework. Do not identify any employees who have tested positive for COVID-19. For more information, see https://www.cdc.gov/coronavirus/2019-ncov/php/risk-assessment.html
- When may an ADA-covered employer take the body temperature of employees during the COVID-19 pandemic?
Generally, measuring an employee’s body temperature is a medical examination. Because the CDC and state/local health authorities have acknowledged community spread of COVID-19 and issued attendant precautions, employers may measure employees’ body temperature. However, employers should be aware that some people with COVID-19 do not have a fever.
- Can an employee refuse to come to work because he or she is scared of contracting COVID-19?
Under the Occupational Safety and Health Act (OSHA), employees may refuse to work if they reasonably believe they are in imminent danger. As the virus progresses, this may become an issue. Notably here, if an employee discloses that he or she suffers from an underlying condition that would make exposure to COVID-19 potentially more serious than for the average, otherwise-healthy person, employers should consider whether a separate accommodation under the ADA is needed.
- Are OSHA standards impacted here?
Although there is no OSHA regulation that specifically addresses COVID-19 yet, OSHA has issued March 2020 guidance entitled Guidance on Preparing Workplaces for COVID-19 (OSHA 3990-03 2020). Under the guidance, OSHA recommends the following (1) develop an infectious diseases preparedness and response plan; (2) prepare to implement basic infection prevention measures; (3) develop policies and procedures for prompt identification and isolation of sick people, if applicable; (4) develop, implement, and communicate about workplace flexibilities and protections; (5) implement workplace controls; and (6) follow existing OSHA standards (e.g., PPE standards and the General Duty Clause). COVID-19 is a recordable illness under OSHA. A link to OSHA’s Guidance on Preparing Workplaces for COVID-19 can be found here: https://www.osha.gov/Publications/OSHA3990.pdf
- When employees return to work, does the ADA allow employers to require doctors’ notes certifying their fitness for duty?
Yes. Such inquiries are permitted under the ADA either because they would not be disability-related or, if the pandemic influenza were truly severe, they would be justified under the ADA standards for disability-related inquiries of employees. As a practical matter, however, doctors and other health care professionals may be too busy during and immediately after a pandemic outbreak to provide fitness-for-duty documentation. Therefore, new approaches may be necessary, such as reliance on local clinics to provide a form, a stamp, or an e-mail to certify that an individual does not have the pandemic virus.
The Kullman Firm is here to assist you as questions arise. Please reach out to the attorney(s) with whom you regularly work should you have any questions. Our attorneys will be available at any time during this health crisis.