Tag: EPSLA

Employers Stay Informed: FFCRA Temporary Rule Issued – New FFCRA Guidance & Requirements Continue to Impact Compliance

While COVID-19 continues to attack our nation, businesses face the ongoing struggle with managing workforces and finding a game plan that is morally and fiscally responsible. New programs and laws are constantly being issued and updated which makes compliance matters all the more difficult.
 
With respect to the Families First Coronavirus Response Act (FFCRA), affecting nearly all private employers with fewer than 500 employees, as well as public employers, the Departments are continually updating existing guidance sources and issuing new ones. 
 
DOL Questions & Answers
 
Over the past week, the Department of Labor’s Q&As on the FFCRA’s provisions for Emergency Paid Sick Leave Act (EPSLA) and Emergency FMLA Expansion Act (EFMLEA) have been updated and/or modified at least 3 times. Answers which have changed include 7, 15, 16, and 31-33. For the most recent version, see: https://www.dol.gov/agencies/whd/pandemic/ffcra-questions
 
IRS FAQs Relating to Employer Tax Credits
 
The IRS has now issued guidance on how to calculate the tax credits, how to claim them, how to calculate the allocable health insurance costs, the method used to request advance payment, and what documentation and substantiation requirements must be followed. These tax credits will offset the employers’ required cost to provide FFCRA paid leave, as well as the allocable share of health care costs and the employer’s portion of Medicare. See: https://www.irs.gov/newsroom/covid-19-related-tax-credits-for-required-paid-leave-provided-by-small-and-midsize-businesses-faqs
  • Questions 1-19: general information.
  • Questions 20-24: determining the amount of the tax credits for Paid Sick Leave.
  • Questions 25-30: determining the amount of the tax credits for FMLA Expansion leave.
  • Questions 31-36: how to determine the amount of allocable qualified health plan costs.
  • Questions 37-43: how to claim the credits.
  • Questions 44-46: employer substantiation requirements.
  • Questions 47-48: describe time periods (including leave taken before December 31, but paid later).
  • Questions 49-51: special issues of taxation and deductibility.
  • Questions 52-56: other special issues for employers including interaction with other tax credits, use of third-party payers, etc).
  • Questions 57-59: special issues for employees.
  • Questions 60-66: self-employed issues.
IRS Advance Tax Credit Form & Instructions
 
Additionally, IRS tax forms and instructions were released to apply for advance credits in cases where retention of allowed withholdings is not enough to cover the cost of paid leave:
Temporary Regulations
 
Finally, temporary regulations were released which modify numerous previous FFCRA provisions and shed light on others.  See https://www.dol.gov/agencies/whd/ffcra 

On April 1, 2020, the U.S. Department of Labor announced new action regarding how American workers and employers will benefit from the protections and relief offered by the Emergency Paid Sick Leave Act and Emergency Family and Medical Leave Expansion Act, both part of the Families First Coronavirus Response Act (FFCRA).

FFCRA helps the United States combat the workplace effects of COVID-19 by reimbursing American private employers that have fewer than 500 employees with tax credits for the cost of providing employees with paid leave taken for specified reasons related to COVID-19. The law enables employers to keep their workers on their payrolls, while at the same time ensuring that workers are not forced to choose between their paychecks and the public health measures needed to combat the virus. The Department’s Wage and Hour Division administers the paid leave portions of the FFCRA.

These temporary regulations are effective from April 1, 2020 through December 31, 2020 and cover, in detail:
  • Paid Leave Entitlements
  • Employee Eligibility
  • Employer Coverage
  • Intermittent Leave
  • Leave to Care for a Child Due to School or Place of Care Closure or Child Care Unavailability — Interaction between the EPSLA and the EFMLEA
  • Leave to Care for a Child Due to School or Place of Care Closure or Child Care Unavailability — Interaction between the EFMLEA and the FMLA
  • Employer Notice
  • Employee Notice of Need for Leave
  • Documentation of Need for Leave
  • Health Care Coverage
  • Multiemployer Plans
  • Return to Work
  • Recordkeeping
  • Prohibited Acts and Enforcement
  • Effect of Other Laws, Employer Practices, and Collective Bargaining Agreements
The regulations further explain and outline circumstances, as well as documentation requirements, for the six (6) qualifying reasons to provide paid sick leave under the EPSLA. Additionally, the regulations set forth options for intermittent leave; how to calculate the average regular rate; updates to many definitions, including son or daughter, school, and place of care; limits on the term “individual” for whom one may provide care; detailed record keeping requirements; as well as numerous other important information. 
 
Employers with fewer than 50 employees should also keep in mind that they may qualify for the small business exemption from the Emergency FMLA Expansion Act and/or the school closure/day care unavailability portion of the Emergency Paid Sick Leave Act. The details of how to qualify are set forth in the regulations. Additionally, employers with under 25 employees may not have to comply with the FMLA job restoration provisions if certain conditions are met. 

Here are some takeaways from the regulations:
  • EPSLA: Full-time employees are those normally scheduled to work 40 hours per workweek.  Anyone working under that is deemed part-time.  This will affect the number of hours (80 or less) of paid sick leave required under the EPSLA and the amount of the tax credit an employer is allowed.  If an employer provides an employee who works 30 hours a week with 80 hours of paid sick leave, the employer will not receive a tax credit for all 80 hours.
  • EPSLA Qualifying Reasons for Paid Sick Leave: Guidance and rationale is provided for the COVID-19 related qualifying reasons to take EPSLA, including discussion of shelter-in-place and stay-at-home orders, employees who are advised to self-quarantine, caring for an individual subject to the above, affirmative steps employees with COVID-19 symptoms such as dry cough or fever must take to seek a diagnosis, and others.
  • EPSLA Qualifying Reason: An “individual” for whom an employee cares for due to the COVID-19 reasons as set forth in the FFCRA is restricted to a person with which the employee has a relationship as further described under the regulations.
  • Child Care Provider: Child care provider is modified, in part, to include family members, friends or neighbors who regularly care for the child even if they are not compensated or licensed.
  • Son or Daughter: Son or daughter is expanded to include children 18 or older who are incapable of self-care due to a mental or physical disability.
  • Calculation of Leave and Pay:  Formulas and timelines are provided for how to calculate the amount of leave required, the amount of pay, and the average number of hours an employee was scheduled per day, especially for those with varying hours.
  • Unable to Work: Further details on how an employee must be unable to work or telework in order to claim FFCRA leave is explained.
  • Intermittent Leaves: Expanded information on intermittent leaves and when that may be allowed, which depends on whether the employee is working on-site or teleworking, as well as the reason for leave.
  • Exceptions from Employee: The definitions of “health care provider” and “emergency responder” are expanded for purposes of those employees for whom employers can exclude under the EPSLA and EFMLAEA and therefore will not be eligible for FFCRA leave.
  • Notice: Notice requirements are provided, including the prohibition of employers asking for more information beyond what is allowed in the temporary regulations.
  • Documentation: Detailed documentation requirements are provided depending on the leave requested. This is incredibly important as proper documentation is also required to receive the tax credits. 
  • Recordkeeping: Recordkeeping obligations are set forth, including that the employer is required to retain all documentation for four years, regardless of whether leave was granted or denied, and regardless if employee’s notice was oral or written.  Records must include how the paid leave was calculated, how health insurance was allocated, as well as numerous other information. 
  • Health Care Coverage: The requirement for employers to maintain health care coverage is described, including the employee’s right to reinstatement of coverage upon returning from leave.
  • Intersection of Leave Requirements: Guidance is provided regarding intersection of EPSLA and EFMLEA, EFMLEA and FMLA, as well as paid leave under FFCRA and other available paid time off.
  • Return to Work: EFMLEA return to work obligations are set forth.
  • Small Business Exemption (Under 50 Employees): The small employer exemption for employers with fewer than 50 employees is set forth, including requirements to qualify.  The exemption is only for purposes of EFMLEA and EPSLA leaves relating to schools and place of care closures or where a child care provider is unavailable for COVID-19 reasons.
  • Small Business Exemption (Under 25 Employees): Details of when the FMLA job restoration requirements may not apply to an employer with fewer than 25 employees are described.
  • Multiemployer Plans: Further information is provided regarding multiemployer plans.
  • Effect on Other Laws / Contracts: Provisions regarding the FFCRA’s effect on other laws, employer practices and collective bargaining agreements are set forth, including the sequencing of paid leave.
  • Prohibited Acts: FFCRA’s prohibitions as well as enforcement measures under both the EPSLA and EFMLEA are detailed.
Guidance regarding the FFCRA is continually updated and is evolving rapidly; however, this is a general outline of information currently available.  It may be prudent for employers to review their handbooks, policies, and plans as well as check administrative procedures and protocol to ensure compliance.
 
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.

Employers & COVID-19: New Legal Requirements under the Families First Coronavirus Response Act

These are unprecedented times and ensuring health and safety of the world’s population is certainly on everyone’s mind. For those running and operating businesses, a whole separate challenge exists. 

Due to the various orders and advisories to self-quarantine, school closings, and far-reaching spread of the COVID-19 pandemic, employers are faced with a rapidly changing workforce. They are grappling with how to continue business while dealing with the safety of their workers. It is a moral and financial dilemma. As employers of all sizes must consider how to manage this ever changing situation, new laws, requirements, and relief are being released just as quickly.

Given the economic downturn spurred by the recent turn of events, additional legal requirements are undoubtedly daunting for employers who face uncertainty or are weighing difficult decisions regarding their workforce. To help provide some clarity on these new obligations, this Client Alert discusses the emerging laws affecting employers and their health plans, including expanded benefits under FMLA, as well as additional required paid sick days.

 

Families First Coronavirus Response Act (“FFCRA”)

This past Wednesday, March 18, 2020, the Families First Coronavirus Response Act (“FFCRA”) was signed into law. The FFCRA applies numerous requirements and obligations to employers. In addition to expanding unemployment benefits, lessening financial obstacles for COVID-19 testing, and setting forth funding to assist with domestic nutrition programs, the FFCRA’s affects employers by amending the Family and Medical Leave Act (FMLA) to provide a new type of leave relating to the COVID-19 pandemic and separately requiring that employers provide paid sick days to employees for COVID-19 related matters.

The FFCRA becomes effective on April 1, 2020. Therefore, employers must understand its provisions and act quickly.

Emergency Family and Medical Leave Expansion Act

The FFCRA modifies FMLA under the Emergency Family and Medical Leave Expansion Act (“FMLA Expansion Act”). While the FMLA, in general terms, applies to employers with 50 or more employees and protects employees who have worked at least 12 months with that employer, the FFCRA now changes that with respect to COVID-19 related issues and adds a new section titled “Public Health Emergency Leave.”

In summary, FMLA leave now also applies to employees who have been employed at least 30 days by employers who employ fewer than 500 employees (and public agencies) if those employees are unable to work (or telework) because they need to care for their under age 18 children due to the closure of schools or unavailability of day care due to a government declared COVID-19 public health emergency. The first 10 days of the 12-week job-protected leave is unpaid; however, subsequent days must be paid leave in an amount of not less than two-thirds of regular pay, capped at $200 per day with a maximum cap of $10,000 per employee.

Effective Dates:

The FMLA Expansion Act is applicable from April 1, 2020 to December 31, 2020.

Qualifying Leave:

Specifically, the FMLA Expansion Act applies to qualifying needs related to a public health emergency, as set forth below:

  • “Qualifying need related to a public health emergency” is when an employee is “unable to work (or telework) due to a need for leave to care for the son or daughter under 18 years of age of such employee if the school or place of care has been closed, or the child care provider … is unavailable, due to a public health emergency.”  The terms “child care provider” and “school” are also defined.
  • “Public health emergency” is an emergency with respect to COVID-19 declared by a Federal, State, or local authority.
 
Affected Employers:
The leave requirements apply to employers with fewer than 500 employees, as well as public agencies. 

Exemptions may apply for employers with less than 50 employees if complying would jeopardize the viability of the business as a going concern and if regulations are so issued. See: https://www.irs.gov/newsroom/treasury-irs-and-labor-announce-plan-to-implement-coronavirus-related-paid-leave-for-workers-and-tax-credits-for-small-and-midsize-businesses-to-swiftly-recover-the-cost-of-providing-coronavirus. We expect such regulations to be issued in April of 2020.

Special rules apply in cases of employment under multi-employer bargaining agreements.

Eligible Employees:

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. Certain health care providers and emergency responders may be excluded from this additional protection, if regulations are so issued. Additionally, an employer of an employee who is a health care provider or an emergency responder may elect to exclude such employee.

Employees must provide the employer with notice of leave as practicable.

Special rules apply in cases of employment under multi-employer bargaining agreements.

Unpaid and Paid Leave Components:

The 12-week FMLA leave has both unpaid and paid components.

Unpaid leave applies for the first 10 days; however an employee may substitute accrued vacation, personal, medical or sick leave time.

Paid leave must be provided by the employer for days in excess of 10 days, calculated based on at least two-third’s of an employee’s regular rate of pay and the number of hours the employee would otherwise be scheduled to work.

The amount shall not exceed $200 per day and $10,000 in the aggregate. However, for an employee whose schedule varies from week to week and an employer is unable to determine with certainty the number of hours the employee would have worked, the employer must instead average the number of hours the employee was scheduled per day over the 6-month period ending on the date the employee took such leave (or if the employee did not work, the employer must use a reasonable expectation the employee’s average hours at the time of hiring).

Small Employer Partial Exception:

FMLA’s restoration to work provisions will not apply to employers with fewer than 25 employees if:

  • The employee takes leave pursuant to a public health emergency;
  • The position held by the employee no longer exists due to economic conditions or operation changes that affect employment and are caused by a public health emergency during the leave;
  • The employer makes reasonable efforts to restore the employee to an equivalent position (with equivalent benefits, pay, and other terms and conditions of employment); and
  • If the above efforts of the employer to restore the employee fail, the employer makes reasonable efforts to contact the employee if an equivalent position becomes available for a period of 1 year beginning on the day the qualifying need related to the public health emergency concludes (or the date that is 12 weeks after the date the employee’s public health emergency leave starts).
Significantly, small employers who are not accustomed to FMLA must now comply with the FMLA Expansion Act for COVID-19 related leaves.  However, in a joint news release issued late in the day of Friday, March 20, 2020, the U.S. Treasury Department, Internal Revenue Service, and the U.S. Department of Labor stated that small businesses with fewer than 50 employees will be eligible for an exemption in cases where the viability of the business in threatened. See: https://www.irs.gov/newsroom/treasury-irs-and-labor-announce-plan-to-implement-coronavirus-related-paid-leave-for-workers-and-tax-credits-for-small-and-midsize-businesses-to-swiftly-recover-the-cost-of-providing-coronavirus.
Additionally, unless otherwise specified, all covered employers must apply FMLA’s typical protections for these public health emergency leaves, including job-protection and restoration, and the continuation of group health plan coverage with employer contributions during such leaves. 

Emergency Paid Sick Leave Act

The FFCRA also requires employers to provide up to 80 hours of paid sick time for COVID-19 related issues under the Emergency Paid Sick Leave Act (“EPSLA”).

Effective Dates:

The EPSLA is effective from April 1, 2020 to December 31, 2020.

Affected Employers:

The EPSLA applies to virtually all private employers with fewer than 500 employees and to virtually all public agencies employing 1 or more employees. Exemptions may apply for employers with less than 50 employees if complying would jeopardize the viability of the business as a going concern and if regulations are so issued.  Additionally, future regulations may allow an employer of an employee who is a health care provider or an emergency responder to opt out.

Eligible Employees:

The EPSLA requires no hour or service requirement to receive paid leave, which may be immediately used. However, employers of employees who are health care providers or emergency responders may elect to exclude these employees from the above.

Special rules apply for multi-employer bargaining agreements.

Reason for Paid Sick Leave:

Under EPSLA, employers shall provide employees with paid sick time if they are unable to work (or telework) due to a need for leave because:

  1. The employee is subject to a Federal, State, or local quarantine or isolation order related to COVID-19;
  2. The employee has been advised by a health care provider to self-quarantine due to concerns relating to COVID-19;
  3. The employee has COVID-19 symptoms and is seeking a medical diagnosis;
  4. The employee is caring for an individual subject to quarantine or isolation or advised to self-quarantine as described in paragraphs (1) or (2) above;
  5. The employee is caring for his/her child if the school or place of care has been closed or the child care provider is unavailable due to COVID-19 precautions; and
  6. The employee is experiencing any other substantially similar condition specified by the Secretary of Health and Human Services.
 
Amount of Paid Sick Time:
Paid sick time is calculated based on the employee’s required compensation and the number of hours the employee would otherwise be scheduled to work capped at:
  • $511 per day and $5,110 in the aggregate for reasons (1)-(3) under Reason for Paid Sick Leave above; and
    • For Reasons (1)-(3), compensation shall not be less than the greater of the employee’s regular rate of pay under the Fair Labor Standards Act (“FLSA”), minimum wage rate under the FLSA, or the minimum wage rate in the applicable State or locality (whichever is greater) in which the employee is employed.
  • $200 per day and $2,000 in the aggregate for reasons (4)-(6) under Reason for Paid Sick Leave above
    • For Reasons (4)-(6), compensation shall be two-thirds of that described for Reasons (1)-(3).
However, for any part-time employee whose schedule varies from week to week and an employer is unable to determine with certainty the number of hours the employee would have worked, the employer must instead average the number of hours the employee was scheduled per day over the 6-month period ending on the date the employee took such leave (or if the employee did not work, the employer must use a reasonable expectation the employee’s average hours at the time of hiring). The Department of Labor is expected to issue additional information and guidelines regarding calculation of this paid sick time.
 
Duration of Paid Sick Leave:
For full-time employees, 80 hours of paid sick time must be provided.  For part-time employees, paid sick time will be the number of hours that the employee works, on overage, over a two-week period. There will not be a carryover from one year to the next.  Paid sick time is terminated with the employee’s next scheduled work shift immediately following the point when leave is no longer needed as defined under EPSLA. 

Notice Requirement:

Employers must post, in conspicuous places where employer notices are customarily posted, an approved notice describing the requirements of the EPSLA. The Secretary of Labor will make a model notice availability no later than March 25, 2020.  It must be posted by April 1, 2020.

Prohibited Acts:

Employers cannot discharge, discipline, or otherwise discriminate against employees who take leave under the EPSLA or have filed a complaint, instituted (or caused to be instituted) any proceeding or has testified or is about to testify in any proceeding related to the EPSLA.

Additionally, the EPSLA states that employers cannot require that an employee be involved in a search or find a replacement to coverage his/her hours during the leave.

Employers also cannot require that an employee use other employer provided paid leave prior to using leave under the EPSLA.

Enforcement:

Employers who fail to comply will be subject to stiff penalties under the Fair Labor Standards Act.

Tax Credits for Paid Sick and Paid Family and Medical Leave

While the FFCRA requires employers to comply with additional paid FMLA and sick leave relating to the COVD-19 pandemic, it also provides some relief for employers in the form of tax credits.

Employers will be allowed a quarterly tax credit equal to 100 percent of the qualified sick leave wages paid under the EPSLA and equal to 100 percent of the qualified family leave wages paid under the FMLA Expansion Act, subject to limitations and requirements. For example, the sick leave wages taken into account shall not exceed $200 per day (or $511 per day for leaves associated government order quarantine or isolation due to COVID-19, self-quarantine as advised by a health care provider due to COVID-19 concerns, or if an employee has COVID-19 symptoms and is seeking a diagnosis) up to a limited number of days. The family leave wages taken into account shall not exceed $200 per day or up to $10,000 in the aggregate and is limited to certain employment taxes.

The credits also include a portion of the health plan cost allocable to the paid leave.

Tax credits are also available for eligible self-employed individuals.

However, these tax credits are subject to additional restrictions and requirements. As the law continues to evolve and new guidance is to be issued this week, an in-depth discussion is beyond the scope of this Client Alert.

Concluding Thoughts:

While aspects of the FFCRA are not completely clear, we certainly hope to see more guidance from the Department of Labor prior to the law’s April 1st effective date.

Current actions for employers include analyzing the interplay between the FFCRA’s new leave and paid sick time requirements, their own policies, as well as other federal, state, and local laws. Questions to ask include whether the employer’s leave of absence provisions should be amended and whether paid time off polices need to be rewritten.

Benefits are also a key component in this analysis. Depending on potential layoffs or leaves of absence, even if unaffected by the FFCRA, will benefits be continued? What do the applicable employee benefit plans, insurance policies, and/or other governing documents provide? How will monthly payments by the employee continue?  Is there a risk of insurers denying continued benefits? Does COBRA apply? What are the Affordable Care Act or Pay or Play consequences if coverage is terminated, or if coverage is continued but the employer contribution ceases for non-FMLA leaves?  Do benefit documents require amendments to comply?

A plethora of questions are mounting and the rapid nature of legal changes is not helping. However, as always, careful consideration of options and benefits is paramount.

Of some relief, good faith efforts toward compliance will be considered.  In a subsequent IRS News Release issued on Friday, March 20, 2020, the Department of Labor stated that it will be issuing a temporary non-enforcement policy in order for employers to come into compliance with the Act. “Under this policy, Labor will not bring an enforcement action against any employer for violations of the Act so long as the employer has acted reasonably and in good faith to comply with the Act. Labor will instead focus on compliance assistance during the 30-day period.” See https://www.irs.gov/newsroom/treasury-irs-and-labor-announce-plan-to-implement-coronavirus-related-paid-leave-for-workers-and-tax-credits-for-small-and-midsize-businesses-to-swiftly-recover-the-cost-of-providing-coronavirus.

Again, 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, 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.