Department of Labor | Fraser Blog

Five Stories that Matter in Michigan This Week – October 28, 2022

Governor Whitmer Signs Bipartisan Election Bills

Governor Whitmer recently signed a package of election law bills which impact how clerks process ballots, including those coming from members of the military overseas. Michigan Public Act 195 permits clerks to pre-process absentee ballots two days prior to Election Day, changes requirements for ballot drop boxes to increase security, and requires clerks to more frequently review and update qualified voter files to remove dead voters. Public Act 196 allows military members serving overseas to submit ballots electronically.

Why it Matters: Polling shows that voters are highly energized and polarized leading up to the midterm elections. These laws are meant to address certain voting-related issues, such as ballot box integrity, that have led to controversy in the past. If you have questions about these bills, or election law issues in general, please contact a member of our election law team.

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Department of Labor Issues New Proposed Rule on Independent Contractors

The U.S. Department of Labor recently issued a Notice of Proposed Rulemaking that, if adopted, would change the standard for analyzing a worker’s classification as either an employee or independent contractor.

Why it Matters: Employee misclassification can result in severe financial consequences. Businesses and employers should remain diligent in analyzing their workers’ classifications. Learn more on the subject.

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Michigan Court of Claims Rules in Prevailing Wage Policy Case

Judge Douglas Shapiro of the Michigan Court of Claims recently ruled in favor of the state’s Department of Technology, Management, and Budget (DTMB), when it implemented its prevailing wage policy. The Associated Builders and Contractors of Michigan (ABC) in July 2022 filed a preliminary injunction claiming that due to the 2018 repeal of Michigan’s prevailing wage law, that the state cannot require the wage rate, which the Court denied and agreed that DTMB did not violate separation of powers when implementing its prevailing wage policy.

Why it Matters: October 31 is the deadline for ABC to appeal the decision. If this decision stays, this signals changes to the way organizations do business with the state of Michigan. Learn more on DTMB’s prevailing wage.

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New CRA Director Vows to Crack Down on Black Market Sales

This week, Brian Hanna, the Cannabis Regulatory Agency’s acting director, spoke to media and highlighted the agency’s focus on cracking down on cannabis that is continuing to illegally enter Michigan’s market.

Why it Matters: Though official numbers have not been confirmed, it is known that illicit cannabis is continuing to enter Michigan’s medical and adult-use cannabis markets, causing widespread effects on prices and profits for legal and law-abiding businesses.

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State Court Administrative Office Proposes New Landlord-Tenant Rules

The State Court Administrative Office unveiled new proposed rules that if enacted, would alter the way eviction cases are handled for both landlords and tenants. Rules such as a requirement that tenants be served in person if a landlord wants an immediate default judgement, and the ability for tenants to get an automatic stay if they have applied for rental aid.

Why it Matters: If enacted, these rules would allow commercial and residential tenants more time to pay their landlords if they fall behind on payments, however landlords are against the new proposed rules as they believe it will make the process of finding new tenants more difficult.

Related Practice Groups and Professionals

Election Law | Garett Koger
Labor, Employment & Civil Rights | David Houston
Cannabis Law | Sean Gallagher
Real Estate | Jared Roberts

Department of Labor Issues New Proposed Rule on Independent Contractors

The US Department of Labor recently issued a Notice of Proposed Rulemaking that, if adopted, would change the standard for analyzing a worker’s classification as either an employee or independent contractor. The new rules are a reversion to prior tests, which consider certain “economic reality factors;” factors that were originally set out in a pair of cases before the Supreme Court of the United States in 1947 (See United States v. Silk, 331 U.S. 704, and Rutherford Food Corp. v. McComb, 331 U.S. 722).

The six non-exhaustive and unweighted factors flowing from those cases and included in this new rule are:

The worker’s opportunity for profit or loss depending on managerial skill;
The relative investment of the worker and the employer in the equipment, materials, or helpers required for their task;
The degree of permanence of the work relationship
Nature and degree of control – whether the employer has the right to control the manner in which the work is to be performed;
The extent to which the work performed is an integral part of the employer’s business;
Whether the service rendered requires a special skill or initiative.

These proposed rules are open for public comment until November 28, 2022.

Relatedly, the Internal Revenue Service recently “streamlined” its various “20 Factor” and other tests for independent contractor determination. See, IRS Publication, Topic No. 762. The Service now groups the prior multiple factors into three topics. The IRS Publication states the employer in making its determination, “must examine the relationship between the worker and the business. You should consider all evidence of the degree of control and independence in this relationship. The facts that provide this evidence fall into three categories – Behavioral Control, Financial Control, and Relationship of the Parties.” We add, however, that this “restatement” of IRS policy allows consideration of the prior “20 Factors,” or any others. While worker classification is likely to resolve similarly under DOL and IRS rules, the employer of course must consider both, lest it fall short in one regulatory arena or the other.

We all know that employee misclassification can result in severe financial consequences. Businesses and employers should remain diligent in analyzing their workers’ classifications and consult an experienced attorney with any questions. The attorneys at Fraser Trebilcock Davis & Dunlap, PC will continue to monitor these developments and stand ready to guide clients in their compliance with any new regulation.

Fraser Trebilcock Shareholder Dave Houston has over 40 years of experience representing employers in planning, counseling, and litigating virtually all employment claims and disputes including labor relations (NLRB and MERC), wage and overtime, and employment discrimination, and negotiation of union contracts. He has authored numerous publications regarding employment issues. You can reach him at 517.377.0855 or dhouston@fraserlawfirm.com.

Robert D. Burgee is an attorney at Fraser Trebilcock with over a decade of experience counseling clients with a focus on corporate structures and compliance, licensing, contracts, regulatory compliance, mergers and acquisitions, and a host of other matters related to the operation of small and medium-sized businesses and non-profits. You can reach him at 517.377.0848 or at bburgee@fraserlawfirm.com.

Client Alert: Broker & Consultant Fee Transparency to Group Health Plans

As the health care arena continues to evolve following the ACA and its progeny, one common theme in the regulations has been to increase transparency in the marketplace. Following on that theme, the Department of Labor recently issued its Field Assistance Bulletin No. 2021-03 aimed at the fees charged by group health insurance brokerages and consultants. The language of the Bulletin sets forth the Department’s short to medium term enforcement policy in regard to the amendments made to ERISA section 408(b)(2)(B), which was included as part of the Consolidated Appropriations Act of 2021 (CAA). Taken together, these documents set forth one method the Department will take to achieve the government’s goal of requiring group health plan sponsors, who are charged to act in a fiduciary capacity, to consider the costs of the services provided by certain vendors.

Who is affected?

ERISA section 408(b)(2)(B) applies to all group health plans, regardless of group size, and includes both insured and self-funded plans; all of which are “covered plans.” The sole exception applies to certain small employer health reimbursement arrangements.

The new language applies to “covered service providers” who provide plan related services to “covered plans.” Covered service providers include individuals and entities that enter into a contract or arrangement to provide one or more of the following services to a covered plan:

Brokerage services with respect to selection of:
- Insurance products (including vision and dental);
- Plan management services, vendors, and administrative supports; and
- Stop-loss, pharmacy benefit, wellness, and other plan services.
Consulting services related to the development or implementation of:
- Plan design, insurance or insurance product selection (including vision and dental);
- Plan management services, vendors, group purchasing organization agreements, and services; and
- Stop-loss, pharmacy benefit, wellness, and other plan services.

In addition to providing covered services, the broker, consultant, or other covered service provider must reasonably expect $1,000 or more in direct or indirect compensation in connection with its contract or arrangement with the covered plan.

Additionally, the Bulletin clarifies that only covered service providers who are a party to the contract or arrangement with the covered plan are required to make the disclosure. In this way, the amended statute does not require affiliates or subcontractors, solely by virtue of offering services to the covered plan as an affiliate or subcontractor of the covered service provider, to individually make the disclosures, as they will not have entered into the contract or arrangement with the covered plan.[1]

What information must be disclosed?

Covered service providers must disclose to covered plans specified information regarding the services to be provided and the compensation the covered service provide reasonably expects to receive in connection with its services. At a minimum, this information must include:

A description of the services to be provided by the covered service provider;
- Including, where applicable, information about those services for which the covered service provider will provide or reasonably expects to provide services directly to the covered plan as a fiduciary.
A description of the direct compensation that the covered service provider expects to receive in connection with the contract or arrangement with the covered plan. In most instances, such direct compensation will include some form of commission.
A description of all indirect compensation that the covered service provider, its affiliates, or subcontractors expect to receive.
- Where a covered service provider employs the use of affiliates, subcontractors, or both, the disclosure should also include a description of the arrangement between the covered service provider and the affiliate or subcontractor.
- Indirect compensation disclosures should also include (1) an identification of the services for which such indirect compensation will be received, (2) any formulae relied up in the calculation of such indirect compensation, (3) identification of the payer of such indirect compensation, and (4) a description of the arrangement and any formula amongst and between the payer of the indirect compensation and the covered service provider, affiliates, or subcontractors.
A description of any compensation the covered service provider expects to receive in connection with the termination of the contract, along with a calculation of how any prepayments will be calculated and refunded.

In addition to describing the types of compensation, the covered service provider notice should also include the manner in which such compensation will be received.

Finally, a covered service provider must set forth the services that the covered service provider is rendering to the covered plan as a fiduciary.

When are the disclosures required?

The CAA amendments became applicable on December 27, 2021. Covered service providers, therefore, are required to make their fee disclosures for any new contracts or arrangements as of that date. The Bulletin clarifies that the “effective” date of the contract or arrangement is the date the contract or arrangement was executed, which may not necessarily be the beginning of a new plan year. Therefore, covered plans should consult with and collect the requisite information from their covered service providers for any contracts or arrangements that are written, renewed, or extended in 2022.

Furthermore, in order to meet the objectives of the policy (i.e. allowing covered plans to perform cost-benefit analysis related to the fees charged and services provided by their brokers and consultants), covered service providers are required to make the disclosures set forth above “reasonably in advance” of the date on which the contract or arrangement is entered into, extended, or renewed. Furthermore, any change in such disclosures are required to be made as soon as practicable.

How does a covered plan ensure disclosure?

While the disclosures contemplated by the statutory provision are intended to come from the covered service provider, the fiduciary responsibility rest with the covered plan sponsor. The primary enforcement mechanism, therefore, is to deem nonconforming deals to be prohibited transactions under the statute. However, no such determination shall be made provided covered plans meet the following requirements:

“The responsible plan fiduciary did not know that the covered service provider failed or would fail to make required disclosures and reasonably believed that the covered service provider disclosed the information required to be disclosed.
The responsible plan fiduciary, upon discovering that the covered service provider failed to disclose the required information, requests in writing that the covered service provider furnish such information.
If the covered service provider fails to comply with a written request…within 90 days of the request, the responsible plan fiduciary notifies the Secretary of the covered service provider’s failure…”

Conclusion

As plan fiduciaries consider their options this year, whether its with a new carrier or a renewal, they should begin working with their brokers and consultants to gain a better understanding of the fees that are charged and prepare to answer inquiries about the reasonableness thereof.

[1] Affiliates and subcontractors should review the nature of their relationship to covered plans to ensure that their services do not extend beyond the scope of the services provided on behalf of a covered service provider, thus possibly triggering the need for the affiliate or subcontractor itself to disclose.

This alert serves as a general summary, and does not constitute legal guidance. Please contact us with any specific questions.

Robert D. Burgee is an attorney at Fraser Trebilcock with over a decade of experience counseling clients in business transactions, civil matters, regulatory compliance, and employee matters. Bob also has a background in employee benefits, having been a licensed agent since 2014. You can reach him at 517.377.0848 or at bburgee@fraserlawfirm.com.

Aaron L. Davis works in employee health and welfare benefits. He is also Chair of the firm’s labor law practice and serves as Firm Secretary. He has litigation experience in a diverse range of employment matters, including Title VII, the Age Discrimination and Employment Act, the Americans with Disabilities Act, the Family Medical Leave Act, and the Fair Labor Standards Act. You can reach him at 517.377.0822 or email him at adavis@fraserlawfirm.com.

Department of Labor Retains Independent Contractor Test

In January 2021, during the last days of the Trump administration, the U.S. Department of Labor (DOL) issued a “final rule,” to become effective in March of this year, changing the decades-longstanding independent contractor test under the Fair Labor Standards Act (“FLSA”). Under the proposed standard a “two core factor” test was to be applied, which would have narrowed the considerations for exclusion of workers from FLSA coverage as “independent contractors.”

However, on March 12, 2021, the DOL under President Biden announced proposed rulemaking, in effect blocking implementation of the Trump rule. On May 5, 2021, the Department announced a final rule withdrawing the proposed new rule, which the DOL characterized as overly employer-friendly, inconsistent with the purpose of the FLSA, and disruptive to the settled law. Of note, the principal deputy administrator for the DOL Wage and Hour Division stated: “When it comes to digital workers … we want to make sure that we continue to look at their needs, how they are interacting with their individual employers and whether or not they have the protections of the Fair Labor Standards Act.”.

Independent Contractor Test Under the FLSA

The net effect of these maneuverings is that the prior “economic reality” test remains in place without change. This means that the previous guidance from the DOL using a six-factor balancing test, based on Supreme Court precedent, will still be used to determine a worker’s classification. The six factors are:

The nature and degree of the employer’s control;
The permanency of the worker’s relationship with the employer;
Whether the worker, or the employer, provides the means and instrumentalities of the work, such as investment in facilities, equipment, or assistants;
The amount of skill, initiative, judgment, or foresight required for the worker’s services;
Whether the worker is at risk or benefit of profit or loss; and
The degree of integration of the worker’s services into the employer’s business.

IRS Test Remains Unchanged, Also

The IRS test, by comparison, was not changed during the Trump administration. The IRS you will recall uses the “20-factor” test. The test is comprised of three general categories; behavioral control, financial control and relationship of the parties.

The IRS factors are:

Degree of direction of work by employer.
Amount of training required to qualify.
Degree of integration worker’s duties into business.
Must work be done by worker or can worker contract performance to others?
Control of assistants.
Continuance/permanence of relationship.
Control over schedule.
Demand for full-time work.
On-site requirements.
Order and scheduling of work – dictated by worker or employer?
Reporting requirements.
Method of payment.
Compensation for business or travel expenses.
Use of tools, instrumentalities, and materials provided by employer.
Level of investment in employer operations.
Share in gain or loss.
Ability to work elsewhere.
Availability to work for general public.
Control over discharge.
Right to terminate

If you have questions about these changes, please contact Dave Houston or your Fraser Trebilcock attorney.

This alert serves as a general summary, and does not constitute legal guidance. All statements made in this article should be verified by counsel retained specifically for that purpose. Please contact us with any specific questions.

2021 Minimum Wage Rates — Important State and Federal Changes

Minimum wage laws are a mishmash of state and federal statutes and rules. Minimum wage rates and rules beginning in 2021 are an interesting reflection of this split of jurisdiction, and federal rulemaking under the outgoing administration. This blog highlights some of the more impactful changes.

State Of Michigan

The Michigan Minimum Wage Rate, currently $9.65 per hour, is consistently higher than the federal rate. This is permitted by federal law which allows each state to set a higher minimum wage than federal law requires, but not a lower rate. Michigan’s currently-applicable minimum wage law, the Improved Workforce Opportunity Wage Act of 2018 (“Michigan Minimum Wage Law”), provides for conditional annual increases in the state minimum wage. The scheduled rate for 2021 is $9.87 per hour, however, that rate increase does not go into effect when the state’s annual unemployment rate for the preceding calendar year is above 8.5 percent.

The Michigan Department of Labor (“MDOL”) recently announced that the scheduled 2021 minimum wage increase is unlikely to go into effect because the unemployment rate is likely to be over the 8.5% “threshold when [the Bureau of Labor Statistics] releases the final 2020 unemployment numbers for Michigan.”

Assuming the MDOL prediction is correct, then effective Jan. 1, 2021:

Michigan’s minimum wage will remain at $9.65 an hour.
The 85 percent rate for minors age 16 and 17 remains $8.20 an hour.
Tipped employees rate of pay remains $3.67 an hour.
The training wage of $4.25 an hour for newly hired employees ages 16 to 19 for their first 90 days of employment remains unchanged.
Overtime requirements remain the same under the Improved Workforce Opportunity Wage Act.

Under the Michigan Minimum Wage Law, Michigan’s minimum wage rate will increase to $9.87 in the first calendar year following a calendar year for which the annual unemployment rate is less than 8.5 percent. Under that statute, future increases in the minimum wage are conditionally scheduled for future years.

Federal Rules

Important changes under federal law include significant modification to “tipped employee” rules and increased minimum rates for certain workers.

Tipped Employee Rule Changes – Again

On December 22, 2020, the United States Department of Labor (“USDOL”) announced its “final rule” revising prior “tipped employee” regulations implemented under earlier language of the federal Fair Labor Standards Act (“FLSA”). Employers subject to these rules need to be very familiar with these changes as this is a fertile area of stringent federal enforcement. The new rules go into effect 60 days after this announcement, or on or about February 21, 2021.

The “general rule” is that tipped employees must be allowed to retain all their tips, unless the employer has adopted a qualified “tip pool.” Rules for such tip pools are complicated and changed significantly in March of 2018; the new rules replace those prior standards.

In brief, the February 2021 rules:

Continue to allow mandatory tip pooling arrangements.
Continue to allow the employer to pay a lower “tipped employee” rate and take a “tip credit” toward the minimum wage rate the employer would be required to pay if the tip credit is not applicable.
If the employer takes the tip credit it may not include in a mandatory tip pool, employees who do not routinely receive tips (such as back of the house staff).
An employer that does not take the tip credit but instead pays a set hourly rate at or above the applicable minimum wage for non-tipped employees may include employees who do not routinely receive tips in a mandatory tip pool.
Whether or not a tip credit is taken, managers and supervisors (as determined by the FLSA “duties” test) are prohibited from participating in a tip pool.
Tip pool funds must be paid out at least as often as the employer pays out base hourly wages. And,
An employer may take a tip credit for employee time spent performing tasks that do not generate tips (such as stocking, rolling silverware) if the non-tip generating duties relate to the tipped occupation and are performed contemporaneously with, or immediately before or after, the duties for which the employee does receive tips.

Federal Contract Workers

Workers performing work on or in connection with covered federal contracts must, effective January 1, 2021, be paid a minimum wage of $10.95 per hour, pursuant to Executive Order 13658.

The Competition for Workers

Due to the COVID slowdown in the economy upward wage pressure is not anticipated during 2021 according to commentators. However, as recently as this month, the following employers have adopted minimum wage rates significantly above those required by law. Some examples of prominent mid-Michigan and state-wide employers include:

Bank of America: $20
JP Morgan Chase: $16.50–$18 (based on location)
Charter/Spectrum: $16.50
Huntington National Bank: $16
Hobby Lobby $17 (for full-time employees)
Costco: $15
Target: $15
Best Buy: $15

Certain counties, municipalities and economic zones also have adopted minimum wage rates higher than the applicable state rate, although none in Michigan.

If you have any questions, please contact Dave Houston or your Fraser Trebilcock attorney.

We have created a response team to the rapidly changing COVID-19 situation and the law and guidance that follows, so we will continue to post any new developments. You can view our COVID-19 Response Page and additional resources by following the link here. In the meantime, if you have any questions, please contact your Fraser Trebilcock attorney.

Client Alert: COVID-19 Group Health Plan Service & Notification Requirements

On April 11, 2020, the Departments of Labor, Health and Human Services, and Treasury (Departments) jointly released frequently asked questions (FAQs) regarding health care coverage issues surrounding the implementation of the FFCRA and the CARES Act. See Joint FAQs.

Notably, the Departments maintain that the FAQs are a statement of policy and are effective immediately.

The Families First Coronavirus Response Act (FFCRA) was enacted on March 18, 2020 and requires health plans and insurers to provide certain items and services related to diagnostic testing for detection of SARS-CoV-2 or the diagnosis of COVID-19 without cost sharing or prior authorization from March 18, 2020 and during the applicable emergency period. The Coronavirus Aid, Relief, and Economic Security Act (CARES Act) was enacted on March 27, 2020 and broadened the range of diagnostic items and services that plans and issuers must cover. These FAQs represent the Departments’ approach to assist employers, issuers, providers and other stakeholders to come into compliance as well as to help families understand the new laws.

Applicable Plans

The FFCRA and CARES Act apply to group health plans and health insurance issuers offering group or individual health insurance coverage. The term “group health plan” includes both insured and self-insured group health plans, whether they are ERISA plans, non-federal governmental plans or church plans. The term “individual health insurance coverage” includes individual market coverage through or outside of an Exchange. It also includes student health insurance coverage.

However, short-term, limited-duration insurance is not subject… neither are excepted benefits or plans covering less than two employees (such as retiree-only plans).

Duration of Compliance

The FFCRA provisions are effective March 18, 2020 and continue during the public health emergency.

Required Items & Services

Q3-Q5 address the type of items and services that are required under the FFCRA and CARES Act, including:

in vitro diagnostic test (meeting certain requirements) for the detection of SARS-CoV-2 or the diagnosis of COVID-19, and the administration of such tests; this includes serological tests for COVID-19, which are used to detect antibodies against the SARS-CoV-2 virus; and
items and services furnished to an individual during health care provider office visits (including in-person and telehealth visits), urgent care center visits, and emergency room visits that result in an order for or administration of an in vitro diagnostic product, but only to the extent the items and services relate to the furnishing or administration of the product or to the evaluation of the individual for purposes of determining the need of the individual for such product.

The required benefits must be furnished during office visits. The Departments construe the term “visit” broadly and include non-traditional care settings, such as drive-through screenings. See Q8.

Additionally, a recent IRS Notice issued just days ago states that testing and treatment for COVID-19 includes “the panel of diagnostic testing for influenza A & B, norovirus and other coronaviruses, and respiratory syncytial virus (RSV) and any items or services required to be covered with zero cost sharing under … the CARES Act.” See IRS Notice 2020-29.

Notice 2020-29 also separately expands Notice 2020-15 to provide that reimbursement of expenses for testing and treatment of COVID-19 incurred on or after January 1, 2020 will not result in a high deductible health plan (HDHP) to fail to be an HDHP under Code section 223.

Cost-Sharing Requirements

Cost-sharing requirements (including deductibles, copayments and coinsurance), prior authorization requirements, and medical management requirements cannot be imposed for benefits that must be provided under section 6001(a) of the FFCRA, as amended by section 3201 of the CARES Act.

With regard to out-of-network providers, Q7 of the Joint FAQs provides that plans and issuers are required to provide coverage for such items and services even if providers have not agreed to accept a negotiated rate as payment in full. In such case, a cash price equal to the service as listed b the provider on a public internet website must be provided (or another amount may be negotiated for less than such cash price).

Summary of Benefits and Coverage (SBC) Requirements & Mid-Year Changes

While material modifications to the SBC normally require that the plan provide 60 days advance notice, the Departments state that they will not take enforcement action regarding greater coverage of COVID-19 diagnosis and/or treatment, as long as plans and issuers provide notice of the changes as soon as reasonably practicable. This non-enforcement policy applies only while the COVID-19 public health emergency and/or COVID-19 national emergency declaration is in affect. Coverage changes beyond this emergency period must fully comply.

State Standards

States may impose additional standards or requirements on health insurance issuers regarding COVID-19 diagnosis or treatment, as long as they do not prevent application of a federal requirement.

Excepted Benefits

The FAQs describe types of excepted benefits, including employee assistance programs (EAPs), and provide that COVID-19 diagnosis and testing offered under an EAP will not jeopardize that EAP’s excepted benefit status while the COVID-19 public health or national emergency declaration is in effect. Additionally on-site medical clinics offering COVID-19 diagnosis and testing will remain excepted benefits.

Telehealth & Remote Care Services

The Departments maintain that widespread use of telehealth and other remote care services are essential to fight the ongoing COVID-19 pandemic, and they strongly encourage all plans and issuers to promote and notify individuals about these services.

The CARES Act has already offered flexibility with regard to high deductible health plans (HDHPs) and health savings accounts (HSAs)… stating that use of telehealth and other remote care services prior to the deductible being met will not jeopardize HDHP status, even if their use is not for COVID-19 related reasons. Moreover, individuals using telehealth or other such services outside of the HDHP may also still contribute to HSAs. The CARES Act amended Internal Revenue Code section 223(c) in this respect and will remain in effect from March 27, 2020 and for plan years beginning on or before December 31, 2021.

However, subsequently released IRS Notice 2020-29, mentioned above, provides that telehealth and other remote care services provided on or after January 1, 2020 (and applying for plan years beginning on or before December 31, 2021) will not affect HDHP status, expanding on the CARES Act which previously applied this rule effective as of March 27, 2020.

Similar to guidance previously stated in these FAQs, plans and issuers who add benefits (or reduce or eliminate cost sharing) for telehealth and other remote care services will temporarily be deemed not to violate notice of material modifications requirements or mid-year change restrictions. The Departments will apply the same non-enforcement policy as described above but only during the emergency declaration and only as long as notice is provided as soon as reasonably practicable.

Participant Communication and Lawsuits

Please keep in mind this is a Department non-enforcement policy and does not protect employers and plans from participant lawsuits.

As you are well aware, the law and guidance are rapidly evolving in this area. Please check with your Fraser Trebilcock attorney for the most recent updates.

This alert serves as a general summary, and does not constitute legal guidance. Please contact us with any specific questions.

Elizabeth H. Latchana specializes in employee health and welfare benefits. Recognized for her outstanding legal work, in both 2019 and 2015, Beth was selected as “Lawyer of the Year” in Lansing for Employee Benefits (ERISA) Law by Best Lawyers, and in 2017 as one of the Top 30 “Women in the Law” by Michigan Lawyers Weekly. Contact her for more information on this reminder or other matters at 517.377.0826 or elatchana@fraserlawfirm.com.

Brian T. Gallagher is an attorney at Fraser Trebilcock specializing in ERISA, Employee Benefits, and Deferred and Executive Compensation. He can be reached at (517) 377-0886 or bgallagher@fraserlawfirm.com.

Client Alert: New Model COBRA Notices Issued by DOL

Along with other recent changes, including the delay of COBRA deadlines and premium payments (see our Client Alert: Major Extension of Employee Benefit Plan Deadlines Due to COVID-19 Outbreak), the U.S. Department of Labor’s Employee Benefits Security Administration (EBSA) released new model notices that employers may use to comply with the notice obligations under the Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA). A News Release as well as frequently asked questions (FAQs) were also posted.

These revised general and election model notices provide additional information regarding the interaction between COBRA and Medicare. While no legal changes are referenced, a new paragraph explains to employees that there may be advantages to enrolling in Medicare before, or instead of, electing COBRA.

Along with a few other small revisions, the model notices insert a new section addressing whether an individual can enroll in Medicare instead of COBRA, the timeframe for doing so, and the potential penalties for waiting to enroll in Medicare Part B. The new section also describes the priority of payment if both COBRA and Medicare are elected.

Employers should ensure their COBRA notices are updated to include these revisions.

Notably, these new notices do not address the extension of time to elect COBRA or to pay for COBRA during the coronavirus Outbreak Period. (See our Client Alert: Major Extension of Employee Benefit Plan Deadlines Due to COVID-19 Outbreak). Employers are not required to provide COBRA election notices during the Outbreak Period, and individuals are not required to elect or pay for COBRA during the Outbreak Period. Separately, in its recent FAQs (accompanying the Joint Notice that extends COBRA deadlines, among others), the EBSA reminds individuals that if employer coverage is lost, Marketplace coverage is another alternative, and it may be more affordable than COBRA. The FAQs review the Marketplace’s special enrollment periods (which have not been extended).

Issues regarding communication of all these changes will emerge quickly.

Important Note: While the Department of Labor considers use of these model notices by employers to be good faith compliance, it is important to remember that participant and qualified beneficiary litigation may still ensue. These model notices do not address numerous other important circumstances, such as limited application of COBRA continuation for most underspent health FSAs. Additionally, it is recommended that the general notices contain information on how an individual must provide notice of a qualifying event (such as whether oral notice or electronic notice will be accepted) and what information must accompany the notice of qualifying event.

With all the continual changes, it is important to be in contact with your employee benefits advisors and counsel. Please check with your Fraser Trebilcock attorney for the most recent updates.

This alert serves as a general summary, and does not constitute legal guidance. Please contact us with any specific questions.

Client Alert: Major Extension of Employee Benefit Plan Deadlines Due to COVID-19 Outbreak

The coronavirus outbreak has affected virtually every aspect of normal life and business relations, including operation and administration of employee benefit plans. To assist plan participants and beneficiaries, employers and other plan sponsors, plan fiduciaries, and other service providers of employee benefit plans impacted by the COVID-19 pandemic, the U.S. government took action as authorized by ERISA Section 518.

On April 28, 2020, the U.S. Department of Labor’s Employee Benefits Security Administration (EBSA) issued EBSA Disaster Relief Notice 2020-01 (Disaster Relief Notice). The Disaster Relief Notice provides deadline relief and other guidance and extends the time for plan officials to furnish benefit statements, annual funding notices, and other notices and disclosures required by Title I of the Employee Retirement Income Security Act of 1974 (ERISA).

Additionally, on April 28, 2020, the Department of Treasury, the Internal Revenue Service, and EBSA issued a joint notice which extends certain time frames affecting participants and beneficiaries under ERISA and the Internal Revenue Code (Joint Notice). The Joint Notice extends certain time frames affecting a participant’s right to group health plan coverage during the COVID-19 outbreak, special enrollment periods, and COBRA continuation of such coverage after employment ends. Time periods for filing claims for benefits, appealing denied claims, and external review periods are also extended.

While the Department of Health and Human Services (HHS) was not involved in this round of guidance, it has been in consultation with EBSA and the Treasury and has advised that it will extend similar relief timeframes applicable to non-Federal governmental group health plans.

The News Release and Frequently Asked Questions regarding the Disaster Notice and Joint Notice can be found here:

FAQs

News Release

Joint Notice

The Joint Notice is applicable to all group health plans, disability plans, other employee welfare benefit plans, and employee pension benefit plans subject to ERISA or the Code. Specifically, these plans must disregard the period from March 1, 2020 until sixty (60) days after the National Emergency ends (or other specified date) when determining certain deadlines for plan participants, beneficiaries, qualified beneficiaries, and claimants. This period is called the Outbreak Period. In particular, plans must disregard the Outbreak Period for the following due dates:

HIPAA Special Enrollment
COBRA Election Period
COBRA Premium Payment Due Date
Date for Individuals to Notify the Plan of Qualifying Events or Disability Determinations
Claim Procedure Date for Individuals to File A Benefit Claim
- Keep in mind health FSA runout periods and forfeitures are also delayed during this period
Claim Procedure Date for Claimants to File An Appeal
Date for Claimants to File A Request for External Review
Date for Claimants to Perfect A Request for External Review

Note: The Joint Notice only extends the claims procedure deadlines for claimants; it does not explicitly extend the date by which a plan administrator has to respond to claims and appeals. However, the plan administrator’s deadlines for issuing such adverse benefit determination on claims and appeals would appear to fall within the general notice and disclosure relief provided by the Disaster Relief Notice.

Additionally, for purposes of group health plan obligations, the Outbreak Period is disregarded for the following:

Date to Provide a COBRA Election Notice

The Joint Notice includes a number of examples to explain how these rules take effect. Each of these examples assumes that the National Emergency ends on April 30, 2020, meaning that the Outbreak Period extends from March 1, 2020 through June 29, 2020, the latter date being 60 days after the National Emergency ends.

With regard to COBRA, one of the listed examples maintains an employee loses group health plan coverage due to a reduction in hours. The COBRA election notice is provided on April 1, 2020. Although typically an individual has 60 days to elect COBRA, here the Outbreak Period is disregarded. Therefore, the 60 day period begins to run on June 29, 2020, so the individual has until August 28, 2020 to elect COBRA.

In another example, an employee was eligible for but declined enrollment in her employer’s group health plan. On March 31, 2020 she gave birth and wants to enroll herself and her child, which is a 30-day HIPAA special enrollment right. The Outbreak Period (again through June 29, 2020 for purposes of these examples) is disregarded, so the 30 day enrollment ends instead on July 29, 2020.

Employers will want to pay close attention to these deadlines as they can have significant administrative and economic impacts. For example, group health plans may have to bear the financial responsibility for continuing premium contributions for months prior to a beneficiary making a COBRA payment. See Example 3:

Example 3 (COBRA premium payments).

(i) Facts. On March 1, 2020, Individual C was receiving COBRA continuation coverage under a group health plan. More than 45 days had passed since Individual C had elected COBRA. Monthly premium payments are due by the first of the month. The plan does not permit qualified beneficiaries longer than the statutory 30-day grace period for making premium payments. Individual C made a timely February payment, but did not make the March payment or any subsequent payments during the Outbreak Period. As of July 1, Individual C has made no premium payments for March, April, May, or June. Does Individual C lose COBRA coverage, and if so for which month(s)?

(ii) Conclusion. In this Example 3, the Outbreak Period is disregarded for purposes of determining whether monthly COBRA premium installment payments are timely. Premium payments made by 30 days after June 29, 2020, which is July 29, 2020, for March, April, May, and June 2020, are timely, and Individual C is entitled to COBRA continuation coverage for these months if she timely makes payment. Under the terms of the COBRA statute, premium payments are timely if made within 30 days from the date they are first due. In calculating the 30-day period, however, the Outbreak Period is disregarded, and payments for March, April, May, and June are all deemed to be timely if they are made within 30 days after the end of the Outbreak Period. Accordingly, premium payments for four months (i.e., March, April, May, and June) are all due by July 29, 2020. Individual C is eligible to receive coverage under the terms of the plan during this interim period even though some or all of Individual C’s premium payments may not be received until July 29, 2020. Since the due dates for Individual C’s premiums would be postponed and Individual C’s payment for premiums would be retroactive during the initial COBRA election period, Individual C’s insurer or plan may not deny coverage, and may make retroactive payments for benefits and services received by the participant during this time.

Importantly, the Joint Notice acknowledges that different geographical regions may have different Outbreak Period end dates. In such case, additional guidance will be issued.

Disaster Relief Notice

In the Disaster Relief Notice, the Department of Labor announced an extension of deadlines for furnishing certain required notices and disclosures to plan participants, beneficiaries and others in order for plan sponsors to meet their ERISA obligations during the coronavirus outbreak.

Participant Disclosures

Subject to the duration limitation in ERISA section 518, an employee benefit plan and the responsible plan fiduciary will not be in violation of ERISA for a failure to timely furnish a notice, disclosure, or document that must be furnished between March 1, 2020, and 60 days after the announced end of the COVID-19 National Emergency, if the plan and responsible fiduciary act in good faith and furnish the notice, disclosure, or document as soon as administratively practicable under the circumstances. Good faith acts include use of electronic alternative means of communicating with plan participants and beneficiaries who the plan fiduciary reasonably believes have effective access to electronic means of communication, including email, text messages, and continuous access websites.

Such notices include Summary Plan Descriptions, Summaries of Material Modifications, benefit determinations, annual funding notices, periodic benefit statements, summary annual reports, participant fee disclosures, QDIA notices, and blackout notices, as long as good faith efforts are made to furnish these documents as soon as administratively practicable. Of note, this Disaster Relief Notice uses the same Outbreak Period as in the Joint Notice.

Employee Pension Benefit Plans

The Disaster Relief Notice also addresses certain items specific to employee pension benefit plans, including:

An ERISA retirement plan’s failure to follow the usual procedural requirements for plan loans and distributions will not be treated as a failure by the DOL, provided that:

The failure is solely attributable to the COVID-19 outbreak;
The plan administrator makes a good-faith diligent effort to comply with ERISA’s procedural requirements;
The plan administrator makes a reasonable attempt to correct any procedural deficiencies as soon as practicable.

The DOL confirmed that it will not treat participant loans as violating ERISA if those loans comply with the increased loan limits and/or suspension of loan repayments provided by the CARES Act, and that it will treat a plan as having been operated in accordance with its terms with respect to certain plan loan and distribution provisions available under the CARES Act if the plan satisfies the conditions for the extended amendment deadline under the CARES Act. This guidance is unsurprising, but appreciated.

The Disaster Relief Notice also indicates that the DOL will not take enforcement action if a plan fiduciary fails to meet the usual deadlines for forwarding participant contributions and loan repayments to a plan during the Outbreak Period, if the failure is solely attributable to the COVID-19 outbreak, provided the employer and/or service provider acts reasonably, prudently, and in the interest of employees to comply as soon as administratively practicable under the circumstances.

Finally, the Disaster Relief Notice specifically confirms that blackout notices are covered by the general good faith relief from notice and disclosure deadlines under ERISA section 518 described earlier, and further provides that a plan fiduciary is not required to make a written determination that the failure to meet the normal 30-day advance notice requirement was due to events beyond the reasonable control of the plan administrator, as a pandemic inherently satisfies that standard.

Form 5500 and Form M-1 Filing Relief

The IRS had previously extended the Form 5500 deadline in certain limited cases related to the COVID-19 pandemic. See IRS Notice 2020-23. Specifically, for filings otherwise due on or after April 1, 2020 and before July 15, 2020 are now due on July 15, 2020. This does NOT apply to calendar year plans as their filings are due July 31, 2020 and are outside the relief period. Presumably, this is because calendar year plans can already obtain an automatic extension of their 2019 Form 5500 deadline until October 15, 2020. However, the guidance indicates that the DOL will continue to monitor the situation and may issue further relief depending on how things unfold.

The Disaster Relief Notice now extends this same relief to Form M-1 filings. Form M-1 is applicable to multiple employer welfare arrangements (MEWAs) and certain other entities required to report for their ERISA group health plans. While Form M-1 is normally due March 1, if an entity had timely requested a 60-day extension, that extended period falls within the relief period and now would be due by July 15, 2020.

General Compliance Guidance

Last, the Disaster Relief Notice provides several points of general ERISA fiduciary compliance guidance during this coronavirus pandemic, notably that:

Plans must act reasonably, prudently, and in the interest of the covered workers and their families who rely on their health, retirement, and other employee benefit plans for their physical and economic wellbeing.
Plan fiduciaries should make reasonable accommodations to prevent the loss of benefits or undue delay in benefits payments.
When the pandemic prevents plans and service providers from fully and timely complying with claims processing and other ERISA requirements, the Department of Labor will emphasize compliance assistance and include grace periods and other relief where appropriate.

Importantly, however, the fiduciary relief provided by the Disaster Relief Notice is generally limited to adoption of nonenforcement positions by the DOL. It does not necessarily restrict a participant’s ability to enforce his or her substantive rights under ERISA.

As you are well aware, the law and guidance are rapidly evolving in this area. Please check with your Fraser Trebilcock attorney for the most recent updates.

This alert serves as a general summary, and does not constitute legal guidance. Please contact us with any specific questions.

FFCRA: DOL Latest Guidance Alters Action Plans of Many Employers

After the passage of the Families First Coronavirus Response Act (FFCRA) and the initial round of Department of Labor (DOL) guidance issued last week, employers began developing action plans on how to deal with their workforce amid a continually changing landscape, including numerous State orders requiring schools and businesses to close and for individuals to “stay at home.”

The Emergency FMLA Expansion Act and the Emergency Paid Sick Leave Act (Acts) are being carefully considered, and employers are preparing to offer these benefits to employees in numerous situations. For more detailed information on these Acts, which are set forth under the FFCRA, please see our previous Client Alert.

However, late last week, the DOL updated its initial list of 14 FAQs with an additional 23 new questions and answers. The updated DOL guidance can be found here: https://www.dol.gov/agencies/whd/pandemic/ffcra-questions. Moreover, the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) was signed into law on Friday which modifies certain provisions of the FFCRA. These matters are set forth below.

EPSLA: Worksites Closing Due to Shelter In Place Orders Will Not Qualify for Paid Sick Leave

Under the Emergency Paid Sick Leave Act (EPSLA), one of the reasons an employer must provide employees with paid sick time is if they are unable to work (or telework) due to a need for leave because:

The employee is subject to a Federal, State, or local quarantine or isolation order related to COVID-19;

With respect to recent “shelter in place” or “stay at home” orders issued by certain States, employers were preparing to offer leave when sending their employees home. However, late last week in its updated list of FAQs, the DOL clarified that if an employer closes its worksite and/or sends employees home for lack of work, even if due to State directives, paid sick leave will not be warranted.

Questions and Answers #23 and 24 state that if an employer closes its worksite, either before or after April 1, 2020 when the Acts become effective, leave under the Acts is not warranted during the period of closure. Significantly, it goes on to state:

This is true whether your employer closes your worksite for lack of business or because it is required to close pursuant to a Federal, State, or local directive.

Instead, employees are encouraged to contact their State workforce agency or unemployment insurance office to answer questions about eligibility.

Question and Answer #25 also states that paid sick leave or expanded family and medical leave already being provided will stop as of the date the employer closes its worksite.

Moreover, the DOL guidance addresses circumstances of employers who remain open but furlough employees due to lack of work. That also does not qualify under the Acts. See Question and Answer #26:

If my employer is open, but furloughs me on or after April 1, 2020 (the effective date of the FFCRA), can I receive paid sick leave or expanded family and medical leave?

No. If your employer furloughs you because it does not have enough work or business for you, you are not entitled to then take paid sick leave or expanded family and medical leave. However, you may be eligible for unemployment insurance benefits. You should contact your State workforce agency or State unemployment insurance office for specific questions about your eligibility. For additional information, please refer to https://www.careeronestop.org/LocalHelp/service-locator.aspx.

Question and Answer #27 addresses what happens if a worksite closes and then later reopens. Leave may only be available when the worksite is open.

Question and Answer #28 discusses availability of leave for reduced hours. Again, not having enough work for an employee to do does not qualify; however, an employee who is unable to work his/her full schedule due to a COVID-19 qualifying reasons is entitled to leave under the Acts.

Employees Must be Unable to Conduct Work that Employers Have for Them To Do

The DOL guidance states that the employer must have work for employees to do, and the employee must be unable to work or telework for one of the COVID-19 specified reasons to be entitled to leave under the Acts. See Question and Answer #18:

What does it mean to be unable to work, including telework for COVID-19 related reasons?

You are unable to work if your employer has work for you and one of the COVID-19 qualifying reasons set forth in the FFCRA prevents you from being able to perform that work, either under normal circumstances at your normal worksite or by means of telework.

If you and your employer agree that you will work your normal number of hours, but outside of your normally scheduled hours (for instance early in the morning or late at night), then you are able to work and leave is not necessary unless a COVID-19 qualifying reason prevents you from working that schedule.

Documentation Requirements for Leave Taken Under the Acts

While the Acts did not list any documentation or substantiation requirements for entitled leaves, the DOL provides guidance in Question and Answer #15:

What records do I need to keep when my employee takes paid sick leave or expanded family and medical leave?

If one of your employees takes paid sick leave under the Emergency Paid Sick Leave Act, you must require your employee to provide you with appropriate documentation in support of the reason for the leave, including: the employee’s name, qualifying reason for requesting leave, statement that the employee is unable to work, including telework, for that reason, and the date(s) for which leave is requested. Documentation of the reason for the leave will also be necessary, such as the source of any quarantine or isolation order, or the name of the health care provider who has advised you to self-quarantine. For example, this documentation may include a copy of the Federal, State or local quarantine or isolation order related to COVID-19 applicable to the employee or written documentation by a health care provider advising the employee to self-quarantine due to concerns related to COVID-19. If you intend to claim a tax credit under the FFCRA for your payment of the sick leave wages, you should retain this documentation in your records. You should consult Internal Revenue Service (IRS) applicable forms, instructions, and information for the procedures that must be followed to claim a tax credit, including any needed substantiation to be retained to support the credit.

If one of your employees takes expanded family and medical leave to care for his or her child whose school or place of care is closed, or child care provider is unavailable, due to COVID-19, under the Emergency Family and Medical Leave Expansion Act, you must require your employee to provide you with appropriate documentation in support of such leave, just as you would for conventional FMLA leave requests. For example, this could include a notice that has been posted on a government, school, or day care website, or published in a newspaper, or an email from an employee or official of the school, place of care, or child care provider. This requirement also applies when the first two weeks of unpaid leave run concurrently with paid sick leave taken for the same reason. If you intend to claim a tax credit under the FFCRA for the expanded family and medical leave, you should retain this documentation in your records. You should consult IRS applicable forms, instructions, and information for the procedures that must be followed to claim a tax credit, including any needed substantiation to be retained to support the credit.

Question and Answer #16 sets forth the records that an employee must provide an employer.

Other DOL FAQ Highlights

The updated FAQs address numerous other circumstances, including:

Intermittent leaves under the Acts while teleworking
Intermittent leaves under the Acts while working at employer’s worksite
Continuation of group health plan coverage
Interaction of employer paid time off policies with leave rights under the Acts
Unavailability of tax credits for amounts employers pay in excess of the Acts’ requirements
Whether leaves under the Acts can be taken in conjunction with unemployment insurance
How employers who are part of a multiemployer collective bargaining agreement can satisfy their obligations under the Acts

Again, for the full DOL questions and answers, please see: https://www.dol.gov/agencies/whd/pandemic/ffcra-questions.

How the CARES Act Affects Leave Entitlements under the FFCRA

The FFCRA was also modified slightly by the CARES Act, which was enacted on Friday, March 27, 2020. Changes include:

Under the FMLA Expansion Act, employees who have been employed for at least 30 calendar days by the employer are eligible for the leave if they have a qualifying need related to a public health emergency. The CARES Act adds a provision for rehired employees, including in the definition of “eligible employee” the following:
- an employee who was laid off by that employer not earlier than March 1, 2020, had worked for the employer for not less than 30 of the last 60 calendar days prior to the employee’s layoff, and was rehired by the employer.
With respect to tax credits under the FMLA Expansion Act and the Emergency Paid Sick Leave Act, the CARES Act amends the FFCRA to provide for advancing credits, up to the amount of the tax credit allowed, calculated through the end of the most recent payroll period in the quarter. Forms and instructions regarding this advanced credit will be forthcoming.

FFCRA Poster Reminder

The DOL also updated its questions and answers regarding the FFCRA poster requirements. Specifically, it added guidance clarifying that the notice must be “posted” by April 1, 2020. See https://www.dol.gov/agencies/whd/pandemic/ffcra-poster-questions.

Again, the poster can be found here: https://www.dol.gov/sites/dolgov/files/WHD/posters/FFCRA_Poster_WH1422_Non-Federal.pdf.

As you are well aware, the law and guidance are rapidly evolving in this area. Please check with your Fraser Trebilcock attorney for the most recent updates.

This alert serves as a general summary, and does not constitute legal guidance. Please contact us with any specific questions.

FFCRA: Required Employer Actions By April 1, 2020

Under newly issued guidance, the Department of Labor (DOL) has set the effective date of the FMLA Expansion Act and Emergency Paid Sick Leave Act (Acts) as April 1, 2020. This is one day earlier than anticipated. Employers must comply with these new laws from April 1 to December 31, 2020. For more information on these Acts, which are set forth under the Families First Coronavirus Response Act (FFCRA), please see our previous Client Alert.

Updated FFCRA Guidance

DOL News Release

Along with the updated guidance, the DOL issued a News Release outlining the compliance information being issued. See https://www.dol.gov/newsroom/releases/whd/whd20200324

As expected, the News Release verified that more guidance would be forthcoming:

The guidance announced today is just the first round of information and compliance assistance to come from WHD.

DOL Question and Answer

Additionally, the Wage and Hour Division of the DOL issued updates in a Question and Answer format. See https://www.dol.gov/agencies/whd/pandemic/ffcra-questions. Highlights include the following information:

That the Acts are effective April 1, 2020 and are not retroactive.
How employers with fewer than 500 employees are impacted.
- Two or more employers will be combined under the Fair Labor Standards Act (FLSA) joint employer test or the Family and Medical Leave Act (FMLA) integrated employer test.
That the Acts do not apply to private employers with 500 or more employees.
That small business exemptions will be addressed in forthcoming regulations.
How to count hours worked by a part-time employee, how to count overtime hours, and how to calculate the rate of pay.

DOL Fact Sheet for Employers

The following fact sheet for employers was also provided: https://www.dol.gov/agencies/whd/pandemic/ffcra-employer-paid-leave

Nonenforcement Policy

The DOL issued Field Assistance Bulletin No. 2020-1 setting forth its nonenforcement policy for good-faith compliance with the Acts. Importantly, the nonenforcement policy will stem from March 18 through April 17, 2020. However, the DOL intends on fully enforcing the Acts and any violations thereunder after this stay is lifted. The Bulletin states, in pertinent part:

Enforcement Guidance
The Department will not bring enforcement actions against any public or private employer for violations of the Act occurring within 30 days of the enactment of the FFCRA, i.e. March 18 through April 17, 2020, provided that the employer has made reasonable, good faith efforts to comply with the Act. For purposes of this non-enforcement position, an employer who is found to have violated the FFCRA acts “reasonably” and “in good faith” when all of the following facts are present:

The employer remedies any violations, including by making all affected employees whole as soon as practicable. As explained in a Joint Statement by the Department, the Treasury Department and the Internal Revenue Service (IRS) issued on March 20, 2020, this program is designed to ensure that all covered employers have access to sufficient resources to pay required sick leave and family leave wages.

The violations of the Act were not “willful” based on the criteria set forth in McLaughlin v. Richland Shoe, 486 U.S. 128, 133 (1988) (the employer “either knew or showed reckless disregard for the matter of whether its conduct was prohibited…”).

The Department receives a written commitment from the employer to comply with the Act in the future.

If the public or private employer either (i) violates the Act willfully, (ii) fails to provide a written commitment to future compliance with the Act, or (iii) fails to remedy the violation upon notification by Department, the employee seeking payment, or a representative of that employee, including by making all affected employees whole as soon as practicable, the Department reserves its right to exercise its enforcement authority.

After April 17, 2020, this limited stay of enforcement will be lifted, and the Department will fully enforce violations of the Act, as appropriate and consistent with the law.
***
For purposes of this non-enforcement policy, employers who are eligible for tax credits but who have insufficient cash flow should make payment of sick leave or family leave wages as soon as possible, but not later than seven 7 calendar days after the employer has withdrawn an amount equal to the required paid sick leave and expanded family and medical leave wages from the employer’s Federal payroll tax deposits or, to the extent such deposits are not sufficient, has received a refund of the credit amount from the IRS to cover the required wages.

FFCRA Poster

Furthermore, the DOL has just released the required notice for employers to post. The poster can be found here: https://www.dol.gov/sites/dolgov/files/WHD/posters/FFCRA_Poster_WH1422_Non-Federal.pdf

Accompanying FAQs answer some important questions. See https://www.dol.gov/agencies/whd/pandemic/ffcra-poster-questions. Highlights include:

The Acts require that the FFCRA notice must be posted in a conspicuous place on the employers premises where employees can see it. However, for employees who are teleworking, employers can meet these requirements by mailing or emailing the notice. The employer could also post the notice on an employee information internal or external website.
There is no requirement to post the notice in multiple languages (although the DOL is working on translations).
Laid off employees are not entitled to the notice. It only must be provided to current employees, which includes newly hired employees. Again, the Acts are effective from April 1 through December 31, 2020, so the notice requirements apply to any new employees hired within this time period.
Small employers under 50 employees must also post the notice, even if they intend on claiming an exemption.
This notice is issued on March 25, 2020. Employers are advised to check the following website for updates: https://www.dol.gov/agencies/whd

Interaction with State Law

Finally, employers should also keep in mind the interaction of the Emergency Paid Sick Leave Law with their own paid time off policies and state law requirements.

For example, employers with employees in Michigan must take into consideration Michigan’s Paid Medical Leave Act. One of the qualifying reasons for leave under this law is the “closure of the eligible employee’s primary workplace by order of a public official due to a public health emergency…” Unless the business is deemed essential under Michigan’s Executive Order 2020-21 and therefore allowed to stay open, the Michigan Paid Medical Leave Act will likely apply.

This alert serves as a general summary, and does not constitute legal guidance. Please contact us with any specific questions.