Navigating the New Families First Coronavirus Response Act

Article Highlights:

• An overview of how these laws may impact your organization.
• Overview of Families First Coronavirus Response Act
• Unique Issues Facing Nonprofit Employers
• Advantages of Nonprofit Status

An overview of how these laws may impact your organization.

“Chance favors the prepared mind.” ― Richard Preston, The Hot Zone

Two months ago, it was hard to imagine that the world would be overtaken by the kind of situation we are facing today with Covid-19. But here we are. In addition to facing the unprecedented health and economic fallout from the virus, nonprofit employers are particularly challenged by complying with a patchwork of new Covid-19 related laws.[1]  In this article, we provide an overview of how these laws impact your organization.

Overview of Families First Coronavirus Response Act

On April 1, 2020, the Families First Coronavirus Response Act (“FFCRA”) went into effect. It is the first federal paid leave law that covers private employers in U.S. history. Through December 31, 2020, any employer with fewer than 500 employees is required to provide emergency paid sick leave (EPSL) and expanded family and medical leave (EFMLA) for specific Covid-19 related reasons.

Do I Get a Break if I Have Fewer Than 50 Employees?

Yes, a nonprofit employer with fewer than 50 employees may qualify for an exemption from having to provide EPSL and EFMLA due to school or daycare closure or unavailability for Covid-19 related reasons. To qualify, the employer must show that complying with FFCRA would “jeopardize the viability of the small business as a going concern.” To claim this exemption[2], the employer must show that:

(1) “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;

(2) “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

(3) “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.”[3]

Who May Qualify for EPSL and EFMLA

All full-time and part-time employees, including temporary employees who are jointly employed by the employer and another employer, and employees who are on leave qualify. Independent contractors are not counted.

Emergency Paid Sick Leave (EPSL)

What Does an Employee Receive?

In addition to any paid sick leave an employer must provide under state and local laws[4], employees also get the following:

• Two weeks of EPSL at employee’s regular rate of pay[5] (for a maximum of $511 per day and $5,110 in total) if the employee cannot work (and cannot telecommute) because the employee is:
  • quarantined under a federal, state, or local government order or a doctor’s order; and/or
  • experiencing Covid-19 symptoms and seeking a medical diagnosis.
• Two weeks of EPSL at two-thirds employee’s regular rate of pay (for a maximum of $200 per day and $2,000 in total) if the employee cannot work (and cannot telecommute) because they must care for:
  • an individual who is quarantined under a federal, state, or local government order or a doctor’s order; and/or
  • a child whose school or child care provider is closed or unavailable for Covid-19 related reasons; and/or
  • the employee is experiencing a “substantially similar condition as specified by the Secretary of Health and Human Services.”

If an employer provided paid sick or childcare leave for a reason identified in FFCRA prior to April 1, 2020, that leave does not qualify as FFCRA leave and an employer will not be eligible for tax credits for providing that leave.

Requiring Use of Other Paid Sick Time, PTO, or Vacation

An employer cannot force an employee to use any other paid sick time before having to use EPSL. On the other hand, they may require an employee to use their PTO and vacation after an employee exhausts their EPSL. Further, an employer cannot require an employee to use up any other paid sick time while the employee is also using EPSL. In other words, an employer cannot force an employee to cover their leave hours with EPSL and any other paid sick time at the same time.

Expanded Family and Medical Leave (EFMLA)

What Does an Employee Receive?

If an employee has been working for the employer for at least 30 days, the employee also receives an additional 10 weeks of paid EFMLA at two-thirds employee’s regular rate of pay (for a maximum of $200 per day and $10,000 in total) if the employee cannot work because they must care for a child whose school or child care provider is closed or unavailable for Covid-19-related reasons.

Requiring Use of Other Paid Leave

An employer may require an employee to use any existing employer-provided paid leave at the same time that the employee takes EFMLA.

Employee’s Concern of Getting Covid-19

An employee who works for an employer deemed an “essential business” cannot refuse to come to work due to a personal concern or fear of contracting Covid-19. Unless the employee has a qualifying reason under the FFCRA, they may instead use any accrued/unused PTO or vacation, and may be eligible for unemployment insurance benefits if the employee has a qualifying reason.

Employer Tax Credit:

Employers who must comply with EPSL and EFMLA qualify to receive a dollar-for-dollar tax credit reimbursement for all “qualifying” wages the employer pays under the FFCRA. Qualifying wages are wages paid to an employee who takes a leave under the FFCRA for a qualifying reason, and the credit reimbursement is limited to the per diem and aggregate payment caps. An employer may also receive tax credits for any amounts paid to maintain health insurance coverage for their employees.

Notice of FFCRA Rights

Given the likelihood that many employees are now working remotely, the Department of Labor has offered employers some flexibility in notifying employees about their FFCRA rights. If an employer continues to have employees come onto work premises, employers must post a copy of the notice of FFCRA requirements “in a conspicuous place.” Otherwise, a copy of the notice may be emailed or directly mailed to employees, or the notice may be posted on the employer’s website or onto an internal website accessed by employees. Regardless, the notice must be communicated or posted to employees by April 1, 2020.

Prohibition Against Discrimination and Retaliation

An employer cannot terminate, discipline, or discriminate against an employee who qualifies and takes paid sick leave under the FFCRA, or files an administrative complaint or a lawsuit that relates to the exercise of their rights under the FFCRA.

Penalties for Violation

The penalties for an employer’s non-compliance with FFCRA can be substantial. For example, failure to comply with EPSL will be considered as a failure to pay minimum wage[6] and will expose an employer to damages under the Fair Labor Standards Act. Similarly, a violation of the EFMLA will be subject to the same penalties and enforcement procedures that exist under the Family and Medical Leave Act (FMLA).

However, the Department of Labor is offering employers a small break—so long as an employer has acted “reasonably and in good faith” to comply with FFCRA, the Department of Labor will temporarily refrain from enforcing legal compliance for 30 days after April 1, 2020. “Good faith” is considered to exist when (1) an employer remedies a violation of the FFCRA and makes its employee whole as soon as it practically can; (2) the employer’s violation was not willful; and (3) the Department of Labor receives a written commitment from the employer that it will comply with the FFCRA in the future.

Unique Issues Facing Nonprofit Employers

Nonprofit organizations are undoubtedly projecting the financial impact Covid-19 on their operations. Continued funding from local, state, and federal grants and from fundraisers is a major factor in that analysis. Another major factor is the cost of retaining a nonprofit’s workforce, which in turn involves the cost of complying with FFCRA if that workforce is retained instead of laid off or furloughed.

The goal of the FFCRA is to ease the health and financial burdens suddenly faced by this country’s workforce. However, there are costs to the employer in complying with FFCRA. For example, due to the nature of social, health, and humanitarian services offered by many nonprofits, much of their workforce cannot telecommute and, if they are deemed “essential,” then employees must work at the employer’s premises. In turn, these employees may stand a higher risk of being exposed to contracting Covid-19 due to their increased interactions with the public. As such, a nonprofit employer may be faced with having a sizable portion of their workforce be out for up to 12 weeks under the FFCRA.

Moreover, nonprofits, particularly small organizations, do not typically maintain sophisticated (and cost-prohibitive) record-keeping procedures and systems. Complying with the FFCRA would likely entail the additional cost and effort of tracking and maintaining records of those employees who take EPSL and EFMLA (e.g., the amount of time taken, how much time remaining, supporting documentation to support the taking of leave, etc.).

In addition, despite being eligible for a dollar-for-dollar tax credit for complying with FFCRA, an employer may not see those credits immediately, which will necessitate the employer to “float” their payroll costs for a later reimbursement and risk potentially not being reimbursed through the payroll credits.

Finally, under the newly passed CARES Act[7], the definition of an “eligible employee” has been broadened in the EFMLA portion of the FFCRA to give credit for prior service to employees who were laid off March 1, 2020 or after and who otherwise worked at least 30 of the last 60 calendar days prior to the layoff and then became rehired in 2020. For example, a laid off employee on March 2 who is rehired on June 10 (and otherwise worked at least 30 calendar days between January 2nd and March 2nd) immediately qualifies for both EPSL and EFMLA —i.e. two weeks of paid sick leave followed by ten weeks of paid EFMLA leave.  If the same laid off worker only worked 22 calendar days between January 2nd and March 2nd and is rehired on June 10, the worker is eligible only for two weeks of EPSL upon rehire, and must work 30 calendar days (or until July 30) to be eligible for EFMLA.

Advantages of Nonprofit Status

At the same time, the nonprofit status of an organization offers a few advantages that may not otherwise be available. For instance, nonprofit organizations frequently depend on volunteer services offered by individuals. If such individuals volunteer their services in an emergency relief capacity for an organization (e.g., volunteering at a food bank to collect food for low income families who have recently lost their jobs due to Covid-19), and those volunteers do not expect to receive (nor do they actually receive) any compensation by the organization, then those individuals are not covered by the FFCRA.

In addition, as we note in footnote 1, many nonprofit employers operate as health clinics, FQHCs, and caregivers. The FFCRA carves out an exemption for such employers from having to provide EFMLA for “health care providers” and “emergency responders.” Although we are awaiting additional guidance from the Department of Labor on this exemption, the FFCRA incorporates the same definition for “health care provider” as it is defined under the FMLA.

The Department of Labor most recently issued further guidance on April 20, 2020 on the above rules and guidelines and they continue to do so on a near weekly basis. It is highly recommended employers frequently check the Department of Labor’s website for updated guidance, and to consult with their legal counsel on how to comply with the applicable rules and regulations.

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Footnotes:

[1] Given the health crisis created by Covid-19, nonprofit organizations that operate as health clinics, FQHCs, and as caregivers are especially distressed. Most governmental shelter-in-place orders deem these type of organizations as essential or critical and hence, they must remain open, which creates safety risks to the organizations’ employees.

[2] The Department of Labor has not yet issued any guidelines or regulations to advise small businesses on how to request an exemption. For now, the Department of Labor is recommending that small businesses document why they meet the exemption criteria set forth by the Department.

[3] https://www.dol.gov/agencies/whd/pandemic/ffcra-questions#58

[4] So long as an employer complies with local, state, or other federal laws, an employer may alter its already existing paid leave policy to lessen the hardship of complying with EPSL’s requirements.

[5] The average regular rate must be computed over all full workweeks during the six-month period ending on the first day that EPSL or EFMLA is taken.

[6] Here, the minimum wage refers to the hourly wage at which the employer must compensate the employee for taking paid sick leave, which is the greater of the employee’s regular rate or the applicable local, state, or federal minimum wage. One situation when this would arise would be when an employee gets paid overtime because overtime must be calculated into an employee’s regular rate.

[7] The CARES Act is a federal emergency relief bill that provides emergency grants and forgivable loans to businesses; and direct cash and expanded unemployment benefits to individuals.

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