New Department of Labor Families First
Coronavirus Response Act Interim Guidance
Exemptions for Small Business,
Health Care Workers, and First Responders
By Julie Pace, David Selden, and Heidi Nunn-Gilman
The U.S. Department of Labor (DOL) just released new guidance on The Families First Coronavirus Response Act (FFCRA)’s partial exemption for small businesses with under 50 employees. Also, there are certain employers who may exclude specific employees from coverage, and DOL has identified which employers are considered health care providers and emergency responders.
The FFCRA includes the Emergency Paid Sick Leave Act and the Emergency Family and Medical Leave Expansion Act. The FFCRA combats COVID-19 by identifying three items that apply to companies, non-profit organizations with 1 to 499 employees and government entities. The three items include: (1) expanding the Family and Medical Leave Act (FMLA) temporarily to cover leave needed for the care of children who are out of school or child care because of COVID-19; (2) creating an additional two weeks, to a maximum of 80 hours, of paid leave for COVID-19 related purposes, including for an employee’s own health needs or an employees’ need to care for family members; and (3) providing for payroll tax credits related to an employer’s expenses of providing for both types of paid leaves for qualifying employees. See earlier Gammage & Burnham update for details regarding the amount of leave, amount of pay and covered reasons for leave.
1.What Businesses Are Considered to be a Small Business under the FFCRA?
A business with fewer than 50 employees is considered to be a “small business” and is exempt from providing (1) the additional two weeks, to a maximum of 80 hours, of paid leave for COVID-19 related purposes to school or place of care closures or child care provider unavailability for COVID-19 related reasons; and (2) expanded Family and Medical Leave due to school or place of care closures or child care provider unavailability for COVID-19 related reasons, when doing so would jeopardize the viability of the small business as a going concern. This also includes religious or nonprofit organizations.
2. Are There Specific Requirements under FFCRA for a Small Business to Be Partially Exempt from the Emergency Paid Sick Leave Act and Emergency Family and Medical Leave Expansion?
Yes. A small business may claim the small business exemption if an authorized officer of the business has determined that:
A. 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;
B. 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
C. 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 their labor or services are needed for the small business to operate at a minimal capacity.
The exemption for small businesses applies ONLY to leave for employees who cannot work because they are needed to care for their child whose school or place of care is closed or regular care provider is not available. The small employer is still required to provide emergency paid leave of an additional two weeks, to a maximum of 80 hours, of paid leave for COVID-19 related purposes for the other purposes covered in the FFCRA, such as the employee’s own health condition.
3. Who Is Considered to be a Health Care Provider Who Can Be Exempt?
According to DOL’s Questions and Answers, a “health care provider” who can be excluded from coverage of the FFCRA is “anyone employed at any doctor’s office, hospital, health care center, clinic, 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, pharmacy, or any similar institution, employer, or entity. This includes any permanent or temporary institution, facility, location, or site where medical services are provided that are similar to such institutions.”
“Health care provider” includes any individual employed by an entity that contracts with any of the institutions described above, employers, or entities or institutions to provide services or to maintain the operation of the facility. This further includes, “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.”
4. Can a Governor Make an Additional Determination of Who Is a Health Care Provider?
Yes. DOL recognizes that a health care provider can include any individual that the highest official of a state or territory determines is a health care provider necessary for the state or territory regarding the response to COVID-19.
5. Is It up to an Employer to Determine if Its Employees Are Health Care Providers?
Yes, but to minimize the spread of COVID-19, DOL encourages employers to be judicious when using the definition to exempt health care providers.
6. Who Is Considered to Be an Emergency Responder?
DOL defines an “emergency responder,” for purposes of employees who may be excluded from paid sick leave or expanded Family and Medical Leave by their employer under FFCRA, to include “an employee who is necessary for the provision of transport, care, health care, comfort, and nutrition of such patients, or whose services are otherwise needed to limit the spread of COVID-19.”
DOL continues to define “emergency responder” to include, but not be limited to, “military or national guard, law enforcement officers, correctional institution personnel, fire fighters, emergency medical services personnel, physicians, nurses, public health personnel, emergency medical technicians, paramedics, emergency management personnel, 911 operators, public works personnel, and persons with skills or training in operating specialized equipment or other skills needed to provide aid in a declared emergency as well as individuals who work for such facilities employing these individuals and whose work is necessary to maintain the operation of the facility.”
Additionally, as with health care providers, DOL provides similar authority to Governors to designate emergency providers needed for the response to COVID-19.
7. Conclusion, Tips and Documenting Leaves.
DOL and IRS may issue more guidance or regulations to further clarify the various new laws. Companies need to stay up to date with the evolving changes. Companies that intend to claim any of the exemptions should keep records to demonstrate why they are entitled to an exemption to avoid stiff penalties.
Further, companies should consider how to document leaves in payroll systems and employment records, such as using CVchildcare, CVSelf, and CVFamily or similar designations to distinguish between the various types of leaves. This will be helpful information to use for reporting requirements and audits that likely will occur at some point in the future to substantiate tax credits or defend against potential claims by employees or compliance audits by DOL.
Before utilizing the small business exception, businesses should be able to demonstrate that their survival as a going concern would be at risk if the paid leave were to be provided and the employees would be absent in order to cover for child care or educational services for their children. Potential documentation to substantiate the qualification for the exemption could include contractual obligations to provide products or services for customers such as job orders that show work that is required to be fulfilled despite the slowdown, lack of liquidity to cover expenses of leave that are not immediately recoverable through payroll tax credits, closure notices applicable to business, or other threats to the business.