DOL Publishes Additional Guidance on the FFCRA and the CARES Act is Signed into Law Providing Additional Relief to Small Businesses
Over the weekend, the U.S. Department of Labor (DOL) published a third round of guidance on the Families First Coronavirus Response Act (FFCRA) in the form of additional questions and answers about the paid sick leave and Emergency Family and Medical Leave Expansion (EFMLA) provisions, available here.
The latest round of DOL guidance, among other updates, addresses two issues that have previously been unclear and will have broad implications for both small employers and those employers in the health care industry.
Employers should also take note that the Coronavirus Aid, Relief, and Economic Security (CARES) Act was signed into law on Friday, March 27, 2020. Among the programs in the Act is “Paycheck Protection Program,” which is a $349 billion boost to the existing Small Business Administration (SBA) loan guaranty program.
Some of the major highlights of the recent DOL Guidance and the CARES Act’s Paycheck Protection Program are summarized below.
Small Business Exemption
As we noted in one of our previous alerts, public agencies and private employers with less than 500 employees will need to comply with the paid leave provisions of FFCRA starting April 1, 2020. However, the law has two sets of exemptions that may apply: “health care providers and emergency responders” and small businesses with less than 50 employees.
The DOL guidance explains that the "small business" exception applies to employers with fewer than 50 employees, leave (paid sick leave or EFMLA) is requested because a child's school or daycare is closed, and an "authorized officer of the business" has determined that at least one of these three conditions is present:
The provision of paid sick leave or expanded family and medical leave would result in the small business’s expenses and financial obligations exceeding available business revenues and cause the small business to cease operating at a minimal capacity;
The absence of the employee or employees requesting paid sick leave or expanded family and medical leave would entail a substantial risk to the financial health or operational capabilities of the small 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 paid sick leave or expanded family and medical leave, and these labor or services are needed for the small business to operate at a minimal capacity.
Small businesses should note that it can never claim an exemption from the paid sick leave provisions related to any other coronavirus related qualifying absences (i.e., personal or family care) (except for health care providers as discussed below). DOL “encourages employers and employees to collaborate to reach the best solution for maintaining the business and ensuring employee safety.”
Health Care Providers
The DOL offers a much broader definition of “health care provider” than most believed it would use in defining the scope of employees potentially exempt from the paid leave provisions of the FFCRA. According to the DOL, a health care provider is “anyone employed” at any:
- doctor’s office
- health care center
- post-secondary educational institution offering health care instruction
- medical school
- local health department or agency
- nursing facility
- retirement facility
- nursing home
- home health care provider
- any facility that performs laboratory or medical testing,
or any similar institution, employer, or entity, which the DOL says should include any site where medical services are provided that are similar to such institutions.
The DOL guidance also includes any individual employed by an entity that contracts with any of the above institutions, employers, or entities to provide services or to maintain the operation of the facility, including anyone employed by any entity that provides medical services, produces medical products, or is otherwise involved in the making of COVID-19 related medical equipment, tests, drugs, vaccines, diagnostic vehicles, or treatments.
Otherwise stated, any business that touches the health care industry can exempt any of its employees from coverage. But, to minimize the spread of the virus, the DOL “encourages employers to be judicious when using this definition to exempt health care providers from the provisions of the FFCRA.”
Emergency responders are also given a broad definition to be exempted from the paid leave provisions of the FFCRA.
Other Notable FFCRA Guidance
The DOL guidance answers a host of other questions that employers may have about complying with the FFCRA, including the following:
- Employees must document their need for paid leave and EFMLA
- Paid leave and EFMLA are not available to previously furloughed employees
- Employees on FFCRA leave are entitled to maintain health care coverage
- Tax credits are not available for paid leave in excess of required amount
Small employers (24 or fewer employees) get some relief when it comes to job restoration
The DOL’s guidance certainly provides information, but such guidance should also be read in conjunction with a variety of other laws and obligations that employers have. As we have noted in prior alerts, the FFCRA takes effect on April 1, 2020. It is anticipated that DOL will be issuing regulations. In the meantime, the DOL issued Field Assistance Bulletin No. 2020-1 on March 26, 2020, confirming the DOL’s policy of non-enforcement for violations of the FFCRA “occurring within 30 days of the enactment of the FFCRA, i.e., March 18 through April 17, 2020, provided that [an] employer has made reasonable, good faith efforts to comply with the Act.”
Paycheck Protection Program
Small businesses that employ fewer than 500 workers—including sole proprietors, self-employed individuals, and independent contractors—qualify to receive a loan under the Paycheck Protection Program (PPP) created by the CARES Act, which may be used to cover operating expenses, including payroll costs, during the economic crisis resulting from the COVID-19 pandemic.
The PPP provides 100% federal guaranteed loans to eligible small businesses to help keep their employees on the payroll. The PPP provides loans of up to 250% of the employer’s average monthly payroll costs, with a cap of $10 million. If all loan conditions are met, the loans will be forgiven in many circumstances. The availability of this program may be one way for your small business to thrive in the face of the current economic downturn. Average monthly costs are determined by looking back one year from the date of the loan. An employer may use such a loan to cover salaries, group health benefits, rent, utilities, and other specified expenses. But the employer may not use the loan to pay for other coronavirus-related benefits, such as paid leave under the FFCRA. Reimbursement for those leave payments is made through the tax credit process enacted as part of that legislation.
The U.S. Chamber of Commerce has published a helpful step-by-step guidance document available here. Additional detail will be provided as the Small Business Administration drafts implementing regulations.
Hurwitz & Fine continues to monitor and analyze these updates and advise employers on matters related to the coronavirus outbreak. Please contact any member of the firm’s Employment Practices team for guidance on this evolving issue at 716-849-8900 or visit our website at www.hurwitzfine.com
Joseph S. Brown – [email protected]
Ann E. Evanko – [email protected]
Katherine L. Wood – [email protected]