Employer’s Guide to the Families First Coronavirus Relief Act (“FFCRA”)
The Families First Coronavirus Response Act (“FFCRA”)¹ expands federal employment law by requiring paid leave for certain employees impacted by the Coronavirus crisis. At least for the time being, this represents a fundamental shift in federal employment law. Because the FFCRA’s provisions are enforceable through the harsh remedies of existing federal employment law, employers must pay careful attention to the new requirements to avoid substantial liability, including multiple claimant actions and attorney fees.
The employment provisions of the FFCRA modify both the Family Medical Leave Act (“FMLA”) and the Fair Labor Standards Act (“FLSA”). The FMLA normally provides unpaid leave for new parents, medical patients, and employees caring for a sick family member. The FLSA normally governs minimum wage and overtime pay. The FFCRA engrafts the (paid) Emergency Family and Medical Leave Expansion Act (“EFLA”)² onto the FMLA and subjects the new Emergency Paid Sick Leave Act (“EPSLA”) to the enforcement mechanisms of the FLSA. To recap, the FFCRA encompasses two provisions, the EFLA and the EPSLA, which are added to the FMLA and the FLSA, respectively.
The FFCRA operates through the existing enforcement frameworks of the FMLA and FLSA. These remedies include liquidated (double) damages for a violation, requiring an employer in violation to pay twice the amount owed. The employer must pay the attorney fees and costs of an employee who successfully sues to enforce its rights under the FFCRA³. An employee who is retaliated against for exercising rights under the FFCRA may file a “whistleblower” claim. Lastly, a manager who controls the employer’s practices and who violates the FFCRA may be held individually liable. These powerful remedies require employers to closely follow the requirements of the FFCRA.
The FFCRA must be reviewed with care because although it operates through the framework of existing law, it differs in its application and requirements from these underlying statutes.
The “Third” Coronavirus Bill, the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”), passed by Congress and signed by President Trump on March 27, 2020, clarifies the FFCRA as noted in the text.
Emergency Family Leave Act
The EFLA covers businesses with fewer than 500 employees.4 11(a)(1)(B).5 This is either due to lobbying by large employers or Congress’ sense (right or wrong) that larger employers already provide generous leave to their employees. The EFLA covers employees who cannot work or telework because they are caring for a child under 18 due to the closure of a school or childcare. 110(a)(2)(A).6 (Employees whose families are more directly impacted by Coronavirus are covered under EPSLA described below).
The first 10 days of EFLA are unpaid, as under regular FMLA. 110(b)(1)(A) The employee may use any available paid leave during this initial 10-day period, including any coverage under EPSLA. 110(b)(1)(B). These 10 days are followed by paid leave at two thirds the employee’s regular rate of pay. 110(b)(2)(B). The total payments to the employee under EFLA are capped at $200 per day and $10,000 in the aggregate. 110(b)(2)(B)(ii).7
The Secretary of Labor is authorized to issue regulations to protect a business with under 50 employees from providing paid leave when doing so would “jeopardize the viability of the business as a going concern.” 110(a)(3). However, the Secretary of Labor has not yet issued such regulations, and so all covered employers should assume that they will be subject to EFLA until further notice.8 However, the tax credit provision detailed below will mitigate most of the FFCRA’s impact on small businesses.
Emergency Paid Sick Leave Act
The EPSLA provides paid sick leave to an employee who is quarantined, seeks treatment for coronavirus, cares for somebody who is quarantined or seeks treatment, or cares for a child whose school is closed. EPSLA is limited to 80 hours or the number of hours that the employee works on average over a 2-week period. 5102(b)(2).9 The employer must provide paid sick leave under EPSLA even if the employee has other leave available.
EPSLA coverage is similar to EFLA, including “any person engaged in commerce or in any industry or activity affecting commerce that— (aa) in the case of a private entity or individual, employs fewer than 500 employees.” 5110(2)(B)(i)(I)(aa). EPSLA shall be paid at the regular rate of pay (or minimum wage if that is greater), or two thirds of that amount if the employee is caring for a family member. 5110(5)(b)
Like EFLA, the EPSLA provides that the Secretary of Labor may provide exemptions for “small businesses with fewer than 50 employees from the requirements of section 5102(a)(5) when the imposition of such requirements would jeopardize the viability of the business as a going concern.” Section 5111. As with EFLA, the Secretary of Labor has not yet provided exemptions.
The Secretary of Labor has issued a Model Notice that must be posted in conspicuous places on the premises of the employer. This Model Notice is required by EPSLA but refers to both EFLA and EPSLA.10 According to the guidance published by the Department of Labor, the notice requirement can be discharged by either emailing the notice or posting.11 Although EPSLA only refers to posting, the best practice is to print the poster, post it in a conspicuous area in the workplace (at the first opening), and then email the poster to all employees.
The employment provisions of the FFCRA sunset at the end of 2020.
The federal WARN Act, which governs plant closures and mass layoffs, is not amended by FFCRA or the CARES Act. WARN has exceptions for unforeseeable business circumstances or natural disasters. 29 U.S.C. § 2102(b). The Coronavirus epidemic would appear to most closely fit within the “unforeseeable business circumstances” exception. This exception reduces the notice required under the WARN Act, it does not fully absolve the employer from providing any notice. Further, as time passes, employers will have increased difficulty claiming that disruption from the Coronavirus was “unforeseeable.” Employers should consult with counsel about any anticipated plant closures or layoffs to ensure timely and adequate notice is provided.
Small businesses that employ fewer than 25 employees are not required to restore the employee to their position at the end of EFLA leave if the position is no longer available because the Coronavirus impacted the operations of the employer.
The FFCRA provides for a refundable tax credit to the employer for most payments to employees made under EPSLA and EFLA. Sections 7001 and 7003. Although the tax credit is refundable, it potentially creates a liquidity problem for businesses who must provide paid leave before they receive the credit. On March 24, 2020, the Department of Labor issued Enforcement Guidance that it will not enforce the FFCRA against employers before April 17, 2020, as long as they act reasonably and in good faith.12 Employers are specifically advised to pay leave within 7 days of receiving any tax credit (or reclaiming such credit from funds previously withheld from paychecks for forwarding to the IRS). However, this Enforcement Guidance does not apply to private rights of action by employees to enforce the FFCRA, so employers should strive to pay all leave as it comes due. The federal SBA and states such as Florida are also providing bridge loans to small business during the Coronavirus crisis which can be used for payroll and other purposes.
The CARES Act clarifies that employees may receive an advance of the refundable credit if they submit certain paperwork to the Secretary of the Treasury and that any failure to pay taxes owed due to anticipation of a credit under the FFCRA does not result in a penalty.
Additional requirements and exceptions apply to these provisions and employers, employees, and clients are urged to seek the advice of an experienced employment lawyer to provide advice on their particular circumstance.
1This act is commonly referred to as the “Second Coronavirus Bill.” The first Coronavirus bill mostly dealt with medical research and spending and does not substantially impact employment law.
2The author takes some liberty with this acronym, both to promote readability and pronunciation, and to reflect the fact that the Emergency Family and Medical Leave Expansion Act is really the “Emergency Family Leave Act,” given that it does not refer to “medical” leave per se and that its requirement for paid leave is not an “expansion” of any previous law, but an entirely new law.
3Employees may not directly claim against employers not previously subject to FMLA (because they have fewer than 50 employees). Section 3104. Instead, the Department of Labor may enforce EFLA against such FMLA-exempt employees. Employers with 50 to 500 employees, however, may be sued under EFLA.
4The FMLA normally applies to employers with 50 or more employees. Unlike the lower limit of the FMLA, this upper limit does not incentivize employers to limit (or fire) employees simply to get under the applicable threshold.
5Citations are to the bill, as the language of the bill does not track the United States Code and the FFCRA has not been codified.
6This provision is generous, given that a responsible teenager would be safe at home while parents work, and somewhat younger children could presumably amuse themselves while parents telework from home.
7Although not explicit in the FFCRA, these limitations apply per employee, not per firm, as clarified in the CARES Act.
8The Department of Labor expects to issue such regulations in April. Families First Coronavirus Response Act: Employer Paid Leave Requirements, n.4. https://www.dol.gov/agencies/whd/pandemic/ffcra-employer-paid-leave
9The CARES Act clarifies that payments are limited to a total of $5,110 ($511 per day) if the employee is precluded from working due to Coronavirus, and a total of $2,000 ($200 per day) if the employee is caring for another individual impacted by Coronavirus.
10A printable copy of the Secretary of Labor’s Model Notice is available at: https://www.dol.gov/sites/dolgov/files/WHD/posters/FFCRA_Poster_WH1422_Non-Federal.pdf
12Field Assistance Bulletin No. 2020-1, available at: https://www.dol.gov/agencies/whd/field-assistance-bulletins/2020-1