Department of Labor Issues Guidance for Employers Under the Coronavirus Relief Law

On March 24, 2020, the U.S. Department of Labor's (DOL) Wage & Hour Division issued its first round of published guidance regarding the Families First Coronavirus Response Act (the Act), passed by Congress and signed by the President on March 18. This guidance clarifies several provisions of the Act, which were causing confusion among employers and employees.

The Effective Date of the Act

The Act was to go into effect no later than 15 days after its enactment, which caused some confusion regarding when its provisions would begin applying to employers. The DOL clarified that the Act goes into effect on April 1, 2020, and applies to leave taken between April 1, 2020, and December 31, 2020. The Act does not apply retroactively, as some had speculated.

Which Employees Are Eligible for Expanded Leave Under the FMLA?

The Act expands the Family Medical Leave Act (FMLA) to require small businesses to provide up to 12 weeks of FMLA leave for the limited circumstances of an employee who is unable to work (or telework) due to a need to care for a son or daughter under 18 years of age if the child's school or place of care has been closed, or the child's child care provider is unavailable due to a public health emergency due to COVID-19. To be eligible for this expanded paid leave under the FMLA, employees must have been employed by the employer for at least 30 calendar days. The DOL's guidance clarifies that employees are considered to have been employed by their employer for at least 30 calendar days if the “employer had [the employee] on its payroll for the 30 calendar days immediately prior to the day your leave would begin.” For example, if the employee “want[s] to take leave on April 1, 2020, [the employee] would need to have been on [the] employer’s payroll as of March 2, 2020.” In addition, certain re-hired employees, including temporary employees who are later hired on a full-time basis, may count their days previously worked for the employer towards this requirement.

Which Employers Does the Act Apply To?

The Act applies to employers with fewer than 500 employees. The DOL provided some guidance on this issue, which should help employers determine whether they are covered by the Act. Employers have fewer than 500 employees, if at the time the employee's leave is taken, the employer employs fewer than 500 full-time and part-time employees within the United States. As a result, employers who have 500 or more employees on April 1, 2020, but subsequently reduce their workforce so they have fewer than 500 employees, are subject to providing leave under the Act if, at the time the employee's leave is taken, the employer has fewer than 500 employees.

The DOL's guidance states that employees on leave, temporary employees jointly employed by the employer and another employer, and day laborers supplied by a temporary agency, should all be counted to determine the total employee headcount for purposes of coverage. Independent contractors, as defined under the Fair Labor Standards Act, should not be counted toward the total.

"Good Cause" Waivers

The Act also allows employers with fewer than 50 employees to request good cause waivers from the DOL if compliance with the Act's requirements would "jeopardize the viability of the business as a going concern." To elect this small business exemption, the DOL recommends that employers document why their business meets the criteria set forth by the DOL guidelines, which will be addressed in more detail in forthcoming regulations.

Calculating Pay Owed Under the Act

First, the guidance notes that paid leave should be calculated based upon the employee's regular rate of pay. The DOL's guidance explains that this also includes commissions, tips, or piece rates. For purposes of the Act, the guidance notes that the regular rate of pay used to calculate the employee's paid sick leave is the average of the regular rate over a period of up to six months prior to the date on which the employee takes leave. If the employee has not worked for his or her current employer for six months, the regular rate used to calculate the employee's paid leave is the average of his or her regular rate of pay for each week he or she worked for his or her current employer.

Are Employees Who Were on Company Paid Leave in March 2020 Due to COVID-19 Entitled to Additional Leave Under the Act?

Several employers began giving their employees paid leave prior to the April 1, 2020, effective date of the Act. Since the Act imposes a new leave requirement on employers that is effective beginning on April 1, 2020, employees who were on company paid leave in March 2020 due to COVID-19 are also entitled to the full leave provided in the Act. However, the leave provided for under the Act is not retroactive.

Notice Requirements for Employers

Each covered employer must post a notice of the Act's requirements in a conspicuous place on its premises. Since many employees are working remotely, an employer may satisfy this requirement by emailing or direct mailing this notice to employees, or posting this notice on an employee information internal or external website. While the DOL posted the notice on its website, it acknowledged that there could be updates to the notice. As a result, we recommend waiting to post or distribute the notice until the Act goes into effect on April 1, 2020.

Temporary Non-Enforcement Period

On March 24, 2020, the DOL issued a Field Assistance Bulletin explaining that the DOL will not bring any enforcement actions against any public or private employer for violations of the Act occurring within 30 days of enactment of the Act, i.e., March 18 through April 17, 2020, provided that the employer has made reasonable, good faith efforts to comply with the Act. The Field Assistance Bulletin further explains that for the purposes of this non-enforcement position, an employer who is found to have violated the Act acts "reasonably" and "in good faith" when three conditions are met: (1) the employer remedies any violations, including by making all affected employees whole as soon as practicable; (2) the violations of the Act were not "willful" (i.e., the employer "either knew or showed reckless disregard for the matter of whether its conduct was prohibited"); and (3) the DOL receives a written commitment from the employer to comply with the Act in the future.

Next Steps

The DOL's regulations regarding the Act will be published within the next week, and those regulations are expected to provide further clarification of many of the provisions of the Act. Moreover, some states have passed state laws mandating additional obligations regarding paid sick leave for employers. Employers will be required to comply with the most stringent laws applicable in their jurisdiction.

As employers of all sizes adjust to the extraordinary circumstances of the coronavirus outbreak, Allen Matkins attorneys are available to advise on implementing the federal Act, as well as adjusting policies to comply with new and existing laws.