Tag: Emergency Paid Sick Leave Act

FFCRA Paid Leave Extension Until September 30, 2021 with Tax Credits

If you are a private employer with under 500 employees, were you aware you can voluntarily extend FFCRA paid leave from April 1 through September 30, 2021 and still receive a tax credit?

This is now allowed under the American Rescue Plan Act (“ARPA”), which was enacted on March 11, 2021.

However, be cautious. ARPA changes the rules for Emergency Paid Sick Leave (“EPSL”) and Emergency FMLA Extension (“EFMLA”). If these rules are not followed, no tax credit will be available.

Highlights of these changes are below.

Under the EPSL, in addition to the previous 6 reasons for leave, you must allow leave for 3 more reasons, namely:

  • When the employee is seeking or awaiting results of a COVID-19 test or diagnosis;
  • When the employee is obtaining a COVID-19 vaccine;
  • When the employee is recovering from an injury, disability, illness, or condition related to the COVID-19 vaccine.

EPSL also includes a fresh 10-day bank of leave effective April 1, 2021.

Under the EFMLA, which previously was limited to leave needed to care for children due to COVID-19 related school and place of care closures or unavailable care providers, will now include “all” of the EPSL reasons for leave, including the 3 additional reasons.

EFMLA also gets rid of the first 10 days of unpaid leave, starts paid leave immediately, and increases the maximum paid leave over 12 weeks from $10,000 to $12,000.

Additionally, both EPSL and EFMLA provide new non-discrimination rules, stating that tax credits are not available if employers discriminate in favor of highly compensated individuals, full-time employees, or employees based on tenure.

Questions arising include whether employers can pick and choose which parts of this voluntary FFCRA extension to apply.

  • Can we extend paid sick leave without the fresh 10-day bank?
  • Can we extend either EPSL or EFMLA without the new reasons?
  • Can we extend EPSL but not the EFMLA (or vice versa)?

Given the wording of ARPA, picking and choosing whether to apply the new reasons for leave or the fresh 10-day bank does not appear to be an option. Strict compliance is required.

However, whether an employer can extend that EPSL but not the EFMLA (or vice versa) is not as clear. While it appears to be allowable, we are anxiously awaiting updated government guidance and clarification.

In the meantime, if you intend on providing FFCRA paid leave starting April 1st, be prepared to apply it with an “all or nothing” approach.

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.

Fraser Trebilcock is committed to providing you valuable information. Please watch for upcoming alerts on these and other topics.

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.

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.

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:

  1. 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.
  2. 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…”).
  3. 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.

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.

Elizabeth H. Latchana, Attorney Fraser TrebilcockElizabeth 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.