DOL issues regulations interpreting expanded FMLA and paid sick leave laws

Yesterday the U.S. Department of Labor issued a temporary rule interpreting the expanded FMLA and paid sick leave provisions of the Families First Coronavirus Response Act. The DOL intends for the rule to be effective until December 31, when the FFCRA leave laws will expire.

Employers will welcome some of the DOL’s interpretations and will dislike others. 

The following is a fairly detailed summary of the rule’s provisions, but it is still only a summary:

Noteworthy definitions

“Public Health Emergency,” as defined in the temporary rule, is “an emergency with respect to COVID-19 declared by a Federal, State, or local authority.”

“School” is an elementary or secondary school through Grade 12. It encompasses non-profit and institutional day or residential schools.

“Son or daughter” includes biological, adopted, foster children, stepchildren, legal wards, and children of persons standing in loco parentis, under the age of 18. It also includes adults who have a disability and are incapable of self-care because of the disability.

“Subject to a Quarantine or Isolation Order.” As noted above, this specifically includes shelter-in-place or stay-at-home orders from governmental authorities, if the orders prevent the employee from being able to work even though the employer has work that is available.

Qualifying reason for leave

Leave under the Emergency Paid Sick Leave Act is available to eligible employees in the following circumstances:

1. The employee is under a federal, state, or local quarantine or isolation order because of COVID-19,

2. The employee is advised by a health care provider to self-quarantine because of COVID-19,

3. The employee has symptoms of COVID-19 and is seeking a medical diagnosis,

4. The employee is caring for an individual who meets one of the first two conditions, above,

5. The employee is caring for a son or daughter whose school or “place of care” is closed because of COVID-19 precautions, or whose care provider is unavailable for the same reason (I will refer to this as “Reason No. 5”), or

6. “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.”

Leave under the Emergency Family and Medical Leave Expansion Act is available to eligible employees for Reason No. 5 only. However, it is possible that coronavirus or a medical condition that makes one vulnerable to coronavirus might qualify as a “serious health condition” under the traditional Family and Medical Leave Act.

“Eligible employee”

There were no major surprises in this section. To qualify for leave under the Emergency Family and Medical Leave Expansion Act, the employee must have been working for the employer for at least 30 calendar days. An employee will meet this requirement if (1) he or she was hired 30 calendar days before the leave would begin, or (2) he or she was laid off or terminated on or after March 1, 2020, and rehired “or otherwise reemployed” before December 31, 2020, if he or she was on the payroll for at least 30 of the 60 days before the layoff or termination.

If the employee worked for the employer through a temporary agency before being hired by the employer, the time worked for the temporary agency will count toward the 30 days.

There is no minimum period of employment for those seeking leave under the Paid Sick Leave Act.

Employers can exclude “health care providers” and “emergency responders.” These definitions are extremely broad, as we have previously reported in connection with the FAQs.

“Covered employer”

A covered employer is one with fewer than 500 employees in the 50 states or the District of Columbia, or in U.S. territories or possessions. In determining coverage, employers should count all full-time and part-time employees, employees on leave, employees of temporary agencies who are jointly employed by the agency and the employer, day laborers supplied by a temporary agency (regardless of who is their “employer”). If two or more entities are joint employers within the meaning of the Fair Labor Standards Act or an “integrated employer” within the meaning of the FMLA, then the employees of all entities will be counted together. Independent contractors do not count; nor do employees on layoff or furlough who have not returned to work.

Employer coverage is measured as of the time that an employee requests leave. Thus, an employer whose workforce hovers near 500 employees could grant or deny requests for leave based on the number of employees it had at the time of the employee’s request. For example, Employee A might request leave in April, when the employer had 498 employees. The employer would be “covered” and would have to grant the request, assuming the employee was eligible and had a qualifying reason. Then, Employee B -- who requested leave in August, after the employer added to its workforce, putting it over 500 -- could be denied a request for leave. This is no oversight on the DOL’s part: the rule provides an example in which this is the result.

Employers with fewer than 50 employees can be exempt from the requirement to provide expanded FMLA leave, or paid leave due to a closing (Reason No. 5), if an authorized officer of the company determines that (1) the leave would cause the company’s expenses and financial obligations “to exceed available business revenues and cause the small business to cease operating at a minimal capacity”; (2) the absence of the employee requesting leave would put the company’s operational or financial health at risk because of the employee’s “specialized skills, knowledge of the business, or responsibilities”; or (3) there are not enough employees with the requisite skills who are available to perform the work that the employee performs and that the employee’s “labor or services are needed for the small business to operate at a minimal capacity.” The authorized official of the company must document the determination and should retain it, but should not send it to the DOL.

State and local “public agencies” are covered, regardless of the number of employees they have. Special rules apply to some federal agencies.

Calculating leave time available

Full-time employees receive up to 80 hours of paid sick leave. An employee is full-time if he or she normally works 40 hours a week or more. If the employee’s schedule is irregular, the employer can average the employee’s scheduled work hours and leave hours over a six-month period, or for the employee’s entire period of employment, whichever is less.

Part-time employees’ entitlement is pro-rated based on the number of hours that the employee is normally scheduled to work over two workweeks. A part-time employee normally works less than 40 hours a week.

If the employee’s part-time hours are irregular, the employer should calculate the number of hours the employee was scheduled to work on each calendar day before the employee’s leave would begin, including leave hours, take the average of that figure, and multiply the average by 14 to arrive at the amount of leave entitlement.

If the part-time employee has not worked for the employer for six months, the employer should determine the number of hours agreed upon by employer and employee at the time of hire, on average, each calendar day, multiplied by 14. If there was no agreement at the time of hire, then the employer would calculate the number of hours the employee actually worked since being hired, take the daily average, and multiply it by 14.

Amount of pay

Generally, the amount of pay under the Paid Sick Leave law is based on the higher of the employee’s regular rate, the federal minimum wage, or the applicable state or local minimum wage. The entitlement is 100 percent if the leave is for the employee’s own situation (Reasons No. 1, 2, or 3, above). This leave is capped at $511 a day or $5,110 in the aggregate.

If the leave is for care of an individual (Reason No. 4), or for a closing (Reason No. 5), then the entitlement is two-thirds. This leave is capped at $200 a day or $2,000 in the aggregate.

For leave taken under the expanded FMLA, which is available only for Reason No. 5, the first two weeks of leave are unpaid. However, the employee can use his or her paid sick leave at the two-thirds rate to cover this time. After the first two weeks, the employee is entitled to paid leave at the rate of two-thirds of the employee’s average regular rate multiplied by the scheduled number of hours for each day of leave taken. If the employee chooses or is required by the employer to use paid leave under the employer’s policies, the employer must pay the employee a full day’s pay subject to the cap of $200 a day or $10,000 in the aggregate.

Intermittent leave

If the leave is for Reason No. 5, or if the employee is working remotely, the employer and employee can (but are not required to) agree on an intermittent schedule and on which increments of time will be considered “work” and “leave.” Such an intermittent schedule will not run afoul of the “continuous workday rule” (very generally, under the FLSA, an employee is entitled to compensation from the first principal activity of the work day until the last), and it will not defeat the salary basis requirement for FLSA-exempt status.

However, if the employee must work onsite and is taking paid leave for any reason other than Reason No. 5, then the employee must take all of the leave until it is no longer needed. The rationale is to avoid having employees who are exposed to coronavirus coming into the workplace and exposing others. If the employee doesn’t use all of his or her leave allotment, the rest may be taken for a qualifying reason anytime before the end of 2020. The continuous workday rule will apply to onsite work.

“Reason No. 5”

Reason No. 5 is the only reason that qualifies under both the expanded FMLA and the Paid Sick Leave Act. If the employee is eligible under both provisions, the employee would receive paid sick leave at the two-thirds rate for the first two weeks (up to 80 hours), and then paid FMLA leave at the two-thirds rate for the remaining leave, up to the 12-week maximum. If the employee has no FMLA time available, he or she is still entitled to take two weeks of paid sick leave.

If the employee has FMLA time but no paid sick leave available, he or she can substitute other accrued paid leave that is offered by the employer. If the employee chooses not to substitute, then he or she would remain entitled to whatever accrued paid leave was in the “bank.”

Expanded FMLA leave counts against the employee’s 12-week-per-12-month period entitlement for all types of FMLA leave. However, paid sick leave does not.

For purposes of leave for Reason No. 5, “son or daughter” means a biological, adopted, or foster child, a stepchild, a legal ward, or a child in relation to whom the employee is in loco parentis, who is under the age of 18. However, as noted above, it also includes adults if they (1) have a disability, and (2) are incapable of self-care because of a disability.

Employer notice

Employers must post the DOL notice -- or a notice containing the same information -- “in conspicuous places.” The notice can be mailed or emailed to employees, and it can be posted on the employer’s website or intranet. A Spanish-language version is available, but employers are not required to post in any language other than English.

Employers are not required to provide “FMLA notices” (for example, leave designation notices) when an employee requests expanded FMLA leave or paid sick leave.

Employee notice

After the first day of leave, the employer may require employees to follow its reasonable notice procedures, except that in the case of foreseeable leave because of Reason No. 5, the employee can be required to provide as much notice as practicable. In either case, if the employee fails to provide proper notice, the employer “should” give the employee notice of the failure and an opportunity to provide appropriate documentation before denying the request for leave.

The rule specifies that employers may not require advance notice of leave. If the employee is unable to provide notice to the employer, “it will be reasonable for the notice to be given by the Employee’s spokesperson (e.g., spouse, adult family member, or other responsible party) . . ..”

Documentation

The rule specifies the documentation that employees must provide to employers when requesting leave and says that employers may not ask for more than what is specified.

The employee must provide his or her name, the date(s) for which the leave is requested, the reason for the leave, and either an oral or written statement that the employee is unable to work because of the qualifying reason. In addition, the employee must provide

• If the leave is for a government-issued quarantine or isolation order, the name of the issuing entity.

• If the leave is requested because of a recommended quarantine by a health care provider, the name of the health care provider making that recommendation.

• If the leave is for Reason No. 5, the name of the son or daughter; the name of the school, place of care, or child care provider; and “a representation that no other suitable person will be caring for the Son or Daughter during the period for which the Employee takes Paid Sick Leave or Expanded Family and Medical Leave.”

The employer may also request any information necessary for it to qualify for tax credits. If the employee does not provide this information, the request for leave may be denied.

Continuation of health care coverage

While the employee is on leave, the employer must continue the employee’s group health care coverage on the same basis as if the employee were still working. If the leave is unpaid, the employee must pay his or her share of the premium, but even if he or she does not, the employer must reinstate the coverage when the employee returns to work, with no preconditions. (These are essentially the same rules that apply to FMLA leave.)

Restoration/return to work

Generally, when leave is concluded, the employee has the right to return to his or her old job or to an equivalent one. If the employer conducts a layoff that would have included the employee on leave, the employer can deny restoration. There is also a “key employee” exception to the restoration requirement, like the one in the FMLA. Employers with fewer than 25 employees can deny restoration in the case of an employee who is on leave because of Reason No. 5 if

• The position no longer exists “due to economic conditions or other changes in operating conditions of the employer that affect employment and are caused by a Public Health Emergency during the period of leave”;

• The employer makes “reasonable efforts” to return the employee to an equivalent position; and

• The employer makes “reasonable efforts” to contact the employee for one year, in the event that an equivalent position becomes available. “The one-year period begins on the earlier of the date the leave related to a Public Health Emergency concludes or the date twelve weeks after the Eligible Employee’s leave began.”

Recordkeeping

Records must be retained for four years. This includes grants and denials of leave. It also includes all documentation provided by the employee in support of the request for leave. If the employee provided oral statements, the employer is responsible for documenting the reasons and retaining the documentation. In the case of a small business invoking the exemption, the determination by the authorized officer must be retained.

For purposes of the tax credits, the employer must retain the following documentation for four years:

• How the employer determined the amount of leave, including “records of work, Telework and Paid Sick Leave and Expanded Family and Medical Leave;”

• How the employer “determined the amount of qualified health plan expenses that the Employer allocated to wages;”

• Copies of IRS Form 7200s that were submitted to the Internal Revenue Service;

• Copies of IRS Form 941s that the employer submitted to the IRS (or, if the employer used a third party, “records of information provided to the third party payer regarding the Employer’s entitlement to the credit claimed” on the form); and

• Other documents supporting the employer’s claim for tax credits.

Prohibited acts

With respect to the Emergency Paid Sick Leave Act, it is unlawful for an employer to take action against an employee because the employee took paid sick leave or engaged in other legally protected activity. A failure to provide paid sick leave is treated as a violation of the minimum wage provisions of the FLSA.

With respect to the expanded FMLA, interference and retaliation are unlawful, as they are under the FMLA, and the remedies are the same. However, if the employer is too small to be covered by the traditional FMLA (has fewer than 50 employees), then the employee has no private right of action against the employer. Instead, the employee would have to file an administrative complaint with the DOL.

Preemption, other

An employee’s rights under these two leave laws are not diminished by another provision of federal, state, or local law; a collective bargaining agreement; or an employer policy that was in place before April 1, 2020.

Employers may not “deduct” from an employee’s entitlement any leave taken before the effective date of April 1, 2020, even if the leave was for a coronavirus-related reason. They may not require employees to use other paid or unpaid leave before using their paid sick leave. However, an employer can require an employee taking expanded FMLA leave to substitute other paid leaves, such as vacation or PTO. If so, the employer is required to pay 100 percent of the employee’s entitlement for the amount of time taken.

There is no required payout of unused paid sick leave or expanded FMLA after December 31, or when employment terminates.

Finally, if the employee takes leave with its employer, and then goes to work for a different employer before December 31, the employee does not get a new “bank” of leave with the new employer. If the employee exhausted the leave with Employer 1, then he or she is not entitled to take any leave under these laws with Employer 2. If the employee used some, but not all, of his or her leave with Employer 1, then he or she is entitled to only the “balance” with Employer 2.

Miscellaneous

The commentary to the temporary rule provides some additional nuggets that employers will find helpful:

• The employer does not have to pay for hours that a teleworking employee fails to report unless the employer knew or had reason to know that the employee was working.

• If an employee is teleworking, of course he or she is not normally entitled to paid leave. However, if there is a disruption to the work in the remote workplace (the DOL uses the example of a power failure) that prevents the employee from working, the employee is entitled to paid leave for that time.

• Leave because the employee has symptoms of coronavirus and is seeking a medical diagnosis (Reason No. 3) is limited to the time that the employee is unable to work because he or she is affirmatively seeking a medical diagnosis (for example, scheduling an appointment, or calling or visiting the doctor).

• An “individual” for purposes of leave to care for an individual who is under a quarantine or isolation order (Reason No. 4) must be a person with whom the employee has a personal relationship.

• An employee seeking leave for Reason No. 5 must certify that no one else -- including the other parent -- is available to care for the son or daughter.

• The DOL has chosen to use “two weeks” as the period for which pay is unavailable under the expanded FMLA instead of “10 days,” explaining that “10 days” works for full-time employees with regular schedules but may not work for part-time employees or others with irregular schedules.

• If an employer created special leave for COVID-19 reasons before April 1, the effective date of these leave laws, it will receive no credit for any leave granted, but it can revoke the special leave effective April 1.

For a printer-friendly copy, click here.