The U.S. Department of Labor (DOL) has issued a temporary rule providing additional information on the paid leave provisions of the Families First Coronavirus Response Act (FFCRA).
The FFCRA went into effect on April 1, 2020. It requires all employers with fewer than 500 employees to provide eligible employees with (1) emergency paid sick leave, and (2) expanded paid family and medical leave. We have written about the FFCRA and the DOL’s earlier guidance, so we’re highlighting only portions of the DOL’s rule that provide new insight into these paid leave laws.
Qualifying Reasons for Emergency Paid Sick Leave
There are six reasons that would require an employer to provide emergency paid sick leave:
- An employee is subject to a government quarantine or isolation order related to COVID-19.
- An employee has been advised by a health care provider to self-quarantine due to concerns related to COVID-19.
- An employee is experiencing symptoms of COVID-19 and is seeking a medical diagnosis from a health care provider.
- An employee is caring for an individual who is subject to a quarantine or isolation order (#1), or who has been advised to self-quarantine (#2).
- An employee is caring for his/her son or daughter whose school or place of care has been closed or is unavailable for reasons related to COVID-19.
- An employee has a “substantially similar condition,” which is not yet defined.
It is important to note that an employer does not have to provide emergency paid sick leave if the employer has closed its business or an employee who would otherwise be entitled to leave is laid off due to a lack of work.
Reason #1: Quarantine or Isolation Orders
A shelter-in-place or stay-at-home order related to COVID-19 is a quarantine or isolation order that triggers reason #1. But the order must prevent the employee from working, which includes teleworking. If an employee is subject to such an order but can work or telework, she is not entitled to paid leave for reason #1.
Reason #2: Self-Quarantine Due to Concerns Related to COVID-19
Reason #2 is triggered if a health care provider advises an employee to self-quarantine based on a belief that:
- The employee has COVID-19;
- The employee may have COVID-19; or
- The employee is particularly vulnerable to COVID-19.
The health care provider’s advice must also prevent the employee from being able to work, which includes teleworking.
The “particularly vulnerable to COVID-19” trigger is not the same thing as “fearful of contracting COVID-19.” Employees who are merely fearful of contracting COVID-19 at the workplace are not entitled to emergency paid sick leave, or expanded paid family and medical leave.
Reason #4: Caring for an Individual
The term “individual” in reason #4 is limited to an employee’s immediate family member, a person who regularly resides in the employee’s home, and someone with whom the employee has a relationship that creates an expectation the employee would care for that person. The term “individual” does not include persons with whom the employee has no personal relationship.
Also, as with reasons #1 and #2, providing care to the individual must prevent the employee from working, which includes telework, and the employer must have work for the employee. If not, reason #4 is not triggered.
Small Business Exemption
An employer with fewer than 50 employees is exempt from providing an employee with emergency paid sick leave for Qualifying Reason No. 5 and expanded family and medical leave if providing that leave would “jeopardize the viability of the business as a going concern.” There are three ways small businesses can establish this exemption to deny an employee’s request for leave—where an authorized officer has determined that:
- Providing the new paid leave would result in expenses and financial obligations exceeding revenues and cause the business to cease operating at a minimal capacity;
- The absence of employees requesting the new paid leave would entail a substantial risk to the financial health or operational capabilities of the 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 services provided by the employee requesting the new paid leave, and that labor or services are needed for the small business to operate at a minimal capacity.
Employers who can support this exemption should not submit documents to the DOL. Instead, they should document why its business qualifies and retain those documents in its own records for four years.
Required Documentation to Support an Employee’s Request for Leave
Employers may require employees who request the new paid leave to comply with their customary notice requirements for requesting leave, except in unusual circumstances. While the DOL regulations recognize that oral requests can be sufficient, employers are well advised to request that employees submit requests in writing, unless special circumstances (such as where the employee is hospitalized or otherwise seeking care for COVID-19 and so is unable to submit a written request) dictate otherwise.
In general, employees must provide the following basic information and documentation supporting a request for new paid leave:
- The employee’s name;
- The date(s) for which the leave is requested;
- The qualifying reason(s) for the leave; and
- A statement that the employee is unable to work because of the qualifying reason for the leave.
Employees need to submit additional information and documentation, depending on the qualifying reason for the leave. The categories below correspond to the Qualifying Reasons for Emergency Paid Sick Leave listed above.
- For Qualifying Reason #1, employees must provide the name of the government entity that issued the quarantine or isolation order.
- For Qualifying Reason #2, employees must provide the name of the health care provider who advised the employee to self-quarantine.
- For Qualifying Reason #3, employees must provide the name of the health care provider with whom the employee is seeking treatment.
- For Qualifying Reason #4, employees must provide the name of the government entity or of the health care provider.
- For Qualifying Reason #5, employees must provide:
- The name of the son or daughter being cared for;
- The name of the school or place of care that has closed or become unavailable;
- A representation that no other suitable person can care for the son or daughter for the duration of the requested leave; and
- If the child is older than 14 years old, a statement that special circumstances exist requiring the employee to provide care.
Employers must submit this documentation to the IRS to substantiate the claimed tax credits (discussed below), and they must retain this documentation in their files for four years.
Payroll Tax Credit
Employers are able to retain and use the Social Security, Medicare, and federal income taxes that they withhold from employees’ paychecks to offset the cost of the new paid leave and the costs to maintain health insurance coverage during such leave. If the payroll taxes are less than the costs of the new paid leave, employers will be able to request an advance of the refundable credits from the federal government.
Employers will report their total qualified leave wages and the related credits for each quarter on their federal employment tax returns, usually IRS Form 941 (Employer’s Quarterly Federal Tax Return). The IRS has developed Form 7200 (Advance Payment of Employer Credits Due to COVID-19) for employers to claim an advance credit if their payroll taxes are less than the costs of the new paid leave.