Analysis of The Families First Coronavirus Response Act, and Its Application to Guam
On March 18, 2020, President Trump signed into law the second piece of legislation in response to the 2019 Coronavirus (“COVID-19”), the Families First Coronavirus Response Act (“FFCRA”). The full text can be found here.
As discussed in detail below, the FFCRA contains two separate laws that impose paid family and sick leave obligations on employers with fewer than 500 employees. The FFCRA presumptively applies to small employers with fewer than 50 employees, i.e., employers who are not presently covered by the provisions of the federal Family and Medical Leave Act (“FMLA”), subject to possible exemptions discussed below. The FFCRA also includes special provisions with respect to employees who are employed by healthcare providers and emergency responders.
Summary of Key Provisions
Division C – Emergency Family and Medical Leave Expansion Act
What It Does. The Emergency Family and Medical Leave Expansion Act (“EFMLEA”) expands the coverage of the FMLA and requires employers with fewer than 500 employees to provide eligible employees with the right to take up to 12 weeks of job-protected leave for a “qualifying need related to a public health emergency,” which means COVID-19. Under this provision, “eligible employees” may take leave if the employee is unable to work (or telework) because they must care for a son or daughter (under 18 years old) whose school or place of care has been closed or child care provider is unavailable, due to a COVID-19 emergency as declared by a Federal, State, or local authority.
Application to Guam. Because the new law is an expansion of the existing FMLA, and the FMLA is applicable to Guam, the EFMLEA is applicable to Guam employers and employees.
Eligible Employees. Any employee who has been employed for at least 30 calendar days by the employer granting the leave is eligible.
Note: EFMLEA broadens the scope of employees eligible for leave. Under the FMLA, employees are not eligible for leave unless they have worked for their employer for at least 12 months and have worked 1,250 or more hours in the 12-month period preceding their leave. The EFMLEA shortens the minimum period of employment from 12 months to 30 days, and it includes no required number of hours worked during that period.
Covered Employers. Employers with fewer than 500 employees.
Exemptions.
Small businesses with fewer than 50 employees may seek an exemption from the expanded FMLA requirements from the Secretary of Labor if the company can show that compliance with the law “would jeopardize the viability of the business as a going concern.”
Employers of employees who are health care providers or emergency responders may elect to exclude such employees from eligibility for paid leave. (The Act does not define the terms “healthcare provider” and “emergency responder.”)
Note: EFMLEA differs from the FMLA in important respects. Any private employer engaged in commerce that employs fewer than 500 employees is subject to the EFMLEA requirements. This is broader than the regular FMLA leave requirement of 50 or more employees for each working day during each of 20 or more calendar workweeks in the current or preceding calendar year (and within a 75-mile radius of the employee’s worksite). In other words, while employers with fewer than 50 employees are not subject to the regular FMLA, they are subject to the EFMLEA (but these employers may apply for an exemption to be established by the Secretary of Labor, as described below). Further, employers with 500 or more employees are still subject to the regular FMLA, but are excluded from the EFMLEA.
Definition of “qualifying need related to a public health emergency.” With respect to leave, this means an employee has need for leave for one of the following reasons:
To care for a family member who has been exposed or has symptoms, or to care for a child under 18 if the school or
place of care has been closed or childcare provider is unavailable due to the public health emergency.
Leave. Qualifying employees may take up to 12 weeks of leave. The initial 10 days of leave are unpaid, but the employee may use accrued personal or sick leave during these first 10 days. After 10 days, employees are paid at two-thirds of their regular rate. Payments made to employees for this type of leave are capped at $200 per day and $10,000 in the aggregate.
Hourly employees. For hourly employees whose schedules vary, the employee’s paid leave rate should equal the average number of hours that the employee was scheduled per day over the six-month period prior to the leave. If the employee did not work in the preceding six-month period, the paid leave rate should equal the “reasonable expectation” of the employee at the time of hiring with respect to the average number of hours per day that the employee would be scheduled to work.
Restoration to Position: For employers with fewer than 25 employees, an employee returning from expanded FMLA leave is entitled to reinstatement when the leave commenced unless:
The position does not exist due to changes in the employer’s economic or operating condition that affect employment and were caused by the COVID-19 emergency;
The employer makes reasonable efforts to restore the employee to an equivalent position; and
If those efforts fail, the employer makes an additional reasonable effort for at least a year to contact the employee if an equivalent position becomes available.
Tax Credits. Each quarter, employers subject to the requirement are entitled to a fully refundable tax credit equal to 100 percent of the qualified paid Family and Medical Leave Act (FMLA) wages paid by the employer, subject to certain caps.
Effective Date. The section will go into effect on April 2, 2020 and will expire on December 31, 2020.
Division E – Emergency Paid Sick Leave Act
What It Does. The Emergency Paid Sick Leave Act (“EPSLA”) covered employers with fewer than 500 employees to provide full-time employees with 10 days (80 hours) of paid sick leave when the employee cannot work or telework for reasons related to COVID-19. Part-time employees are entitled to the number of hours of paid sick time equal to the number of hours they work, on average, over a two-week period.
The specific reasons allowed for the mandatory paid sick leave include time necessary:
The employee is subject to a Federal, State, or local quarantine or isolation order related to COVID-19;
The employee has been advised by healthcare providers to self-quarantine due to COVID-19;
The employee is experiencing symptoms of COVID-19 and seeking a medical diagnosis;
The employee is caring for an individual subject to a quarantine order or self-quarantine;
The employee is caring for children if schools are closed or their caregivers are unavailable due to COVID-19 precautions; or
The employee is experiencing substantially similar conditions as those specified by the US. Health and Human Services.
Application to Guam. Unlike Division C, Division E of the FFCRA does not amend the FMLA - it is a stand-alone act. It borrows the definition of “employee” and “State” from the Fair Labor Standards Act (where “state” includes territories), but it does not amend that Act, either. Given that Division E will apply to persons employed by the Government of Guam (“employee:” includes persons employed by a “State”), we assume it will apply to private employers, too.
Eligible Employee. All employees, regardless of length of employment are eligible for the leave.
Covered Employers. Private employers with fewer than 500 employees, certain government employers, and all other non-private entity employers with more than one employee are required to provide their employees with paid sick leave.
The Secretary of Labor shall issue regulations to:
Exclude small businesses with fewer than 50 employees from the law’s paid leave requirements if it “would jeopardize the viability of the business as a going concern.”
Allow employers who are health care providers or emergency responders to opt out of the paid leave requirement.
Paid Sick Time. The amount of paid sick time to which an employee is entitled depends on whether they work on a full-time or part-time basis.
Full-time employees receive 80 hours of paid sick leave.
Part-time employees receive a prorated amount of paid sick leave based on the number of hours that the employee works, on average, over a two-week period. If the part-time employee’s schedule vary, the hours are calculated by determining the average number of hours that employee was scheduled to work over the prior 6-month period, including any leave. If the employee has not worked over that period, then the paid leave rate should equal the “reasonable expectation” of the employee at the time of hiring with respect to the average number of hours per day that the employee would be scheduled to work. The employer can seek reimbursement for the wages paid to employees taking emergency paid sick leave through tax credits applicable to the employer’s portion of Social Security taxes.
Rate of Pay: The rate of pay that an employee may receive for sick leave under the EPSLA depends on the reason why the leave is needed.
If sick time is needed because of any of the first three reasons set forth above, i.e., the employee is subject to a Federal, State, or local quarantine or isolation order, the employee has been advised by healthcare providers to self-quarantine due to COVID-19, or the employee is experiencing symptoms of COVID-19 and seeking a medical diagnosis, then the employer must compensate the employee for any paid sick time they take at the higher of: (i) their regular rate of pay, (ii) the federal minimum wage, or (iii) the local minimum wage. Payments must not exceed $511 per day or $5,110 in the aggregate.
If sick time is needed for any other reasons set forth in the EPLSA, i.e. care for a sick family member or school closure, then the employee is compensated at two-thirds of the rate they would otherwise receive, capped at $200 per day and $2,000 in the aggregate.
The Secretary of Labor must issue guidelines to assist employers in calculating leave benefits by April 2, 2020.
Employers with Existing Leave Policies. The paid sick leave allotment provided for in this legislation is in addition to whatever sick leave is already offered by employers (including subject to state or local requirements).
An employer may not require an employee to use other paid leave provided by the employer before using the paid sick time provided under the FFCRA.
Nothing prohibits employers from changing their leave programs after the law goes into effect.
Employer Posting Requirement: Employers must post a notice that advises employees of their rights under the EPSLA . The Secretary of Labor is required to create a notice by March 25.
Prohibitions and Enforcement: Employers may not discharge, discipline, or discriminate against any employee who (a) takes paid sick leave or (b) has filed a complaint or proceeding or testified in any such proceeding related to the benefits and protections provided by the EPSLA. Employers cannot require, as a condition of providing paid sick leave, that an employee search for and find coverage for the hours during which the employee is using paid sick time. Employers who violate the paid sick leave requirements or retaliation prohibitions of the Act shall be subject to civil penalties under the Fair Labor Standards Act.
Tax Credits. Each quarter, employers subject to the requirement are entitled to a fully refundable tax credit equal to 100 percent of the qualified paid sick leave wages paid by the employer.
Effective Date. The provisions will go into effect on April 2, 2020, and will expire on December 31, 2020.
Other Considerations.
How to Count Employees. Because the FFCRA temporarily expands coverage and eligibility under the federal FMLA, definitions under that law continue to apply. Specifically, the fewer than 500 employees would be counted across the company, not by location. Further, whether the employees of affiliated companies, like parent-subsidiary companies or sister companies, would be aggregated towards the 500 employee count would depend on whether the affiliated companies are so closely intertwined so as to constitute a “single employer” under the FMLA Regulations. The FMLA Regulation on how to count coverage provides as follows:
§ 825.104 Covered employer.
(a) An employer covered by FMLA is any person engaged in commerce or in any industry or activity affecting commerce, who employs 50 or more employees for each working day during each of 20 or more calendar workweeks in the current or preceding calendar year. Employers covered by FMLA also include any person acting, directly or indirectly, in the interest of a covered employer to any of the employees of the employer, any successor in interest of a covered employer, and any public agency. Public agencies are covered employers without regard to the number of employees employed. Public as well as private elementary and secondary schools are also covered employers without regard to the number of employees employed. See § 825.600.
(b) The terms commerce and industry affecting commerce are defined in accordance with section 501(1) and (3) of the Labor Management Relations Act of 1947 (LMRA) (29 U.S.C. 142(1) and (3)), as set forth in the definitions at § 825.102 of this part. For purposes of the FMLA, employers who meet the 50-employee coverage test are deemed to be engaged in commerce or in an industry or activity affecting commerce.
(c) Normally the legal entity which employs the employee is the employer under FMLA. Applying this principle, a corporation is a single employer rather than its separate establishments or divisions.
(1) Where one corporation has an ownership interest in another corporation, it is a separate employer unless it meets the joint employment test discussed in § 825.106, or the integrated employer test contained in paragraph (c)(2) of this section.
(2) Separate entities will be deemed to be parts of a single employer for purposes of FMLA if they meet the integrated employer test. Where this test is met, the employees of all entities making up the integrated employer will be counted in determining employer coverage and employee eligibility. A determination of whether or not separate entities are an integrated employer is not determined by the application of any single criterion, but rather the entire relationship is to be reviewed in its totality. 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.
(d) An employer includes any person who acts directly or indirectly in the interest of an employer to any of the employer's employees. The definition of employer in section 3(d) of the Fair Labor Standards Act (FLSA), 29 U.S.C. 203(d), similarly includes any person acting directly or indirectly in the interest of an employer in relation to an employee. As under the FLSA, individuals such as corporate officers “acting in the interest of an employer” are individually liable for any violations of the requirements of FMLA.
If an employer is an “integrated employer” under (c)(2), and can aggregate employees across its related companies to exceed a 500-employee headcount, then the employer is not covered by the law.
The U.S. Department of Labor (DOL) released a statement which includes an overview of key COVID-19 related DOL and Occupational Safety and Health Administration (OSHA) documents which includes:
OSHA’s Guidance on Preparing Workplaces for COVID-19: https://www.osha.gov/Publications/OSHA3990.pdf
OSHA’s COVID-19 website: https://www.osha.gov/SLTC/covid-19/
Wage and Hour Division (WHD) guidance on Families First Coronavirus Response Act: Employee Family and Medical Leave Rights: https://www.dol.gov/agencies/whd/pandemic/ffcra-employee-paid-leave
WHD guidance on FFCRA: Employer Paid Leave Requirements: https://www.dol.gov/agencies/whd/pandemic/ffcra-employer-paid-leave
WHD FAQs on COVID-19 and the Fair Labor Standards Act: https://www.dol.gov/agencies/whd/flsa/pandemic
WHD FAQs on COVID-19 and the Family and Medical Leave Act: https://www.dol.gov/agencies/whd/fmla/pandemic