The Latest From Chicago: Anti-Retaliation, Fair Workweek, and Food Delivery Disclosures

While warm weather has finally hit Chicago, Mayor Lightfoot, the City Council and Chicago Department of Business Affairs and Consumer Protection (BACP) have not taken a spring break. The below summarizes the latest ordinances, and regulations from the Windy City:

Anti-Retaliation Ordinance

The Chicago City Council passed the COVID-19 Anti-Retaliation Ordinance last week, which prohibits employers from retaliating against employees for obeying a public health order requiring an employee to stay home due to coronavirus.

The Ordinance prohibits employers from demoting or terminating a Covered Employee for obeying an order issued by the Mayor, the Governor of Illinois, the Chicago Department of Public Health, or, in the case of (2), (3), and (4) below, a treating healthcare provider, requiring the Covered Employee to:

  • Stay at home to minimize the transmission of COVID-19;
  • Remain at home while experiencing COVID-19 symptoms or sick with COVID-19;
  • Obey a quarantine order issued to the Covered Employee;
  • Obey an isolation order issued to the Covered Employee; and
  • Obey an order issued by the Commissioner of Health regarding the duties
  • of hospitals and other congregate facilities

Employees subject to demotion or termination may recover reinstatement, damages equal to three times the full amount of wages that would have been owed had the retaliatory action not taken place, actual damages, and attorneys’ fees. Violations may also lead to fines of up to $1,000 per offense per day.

The ordinance is effective immediately.

Fair Workweek Ordinance

Chicago’s Fair Workweek Ordinance is set to take effect on July 1, 2020. Ahead of the effective date, the BACP has issued rules for implementing the ordinance, and a supplemental rule for implementation during the pandemic.

The Ordinance requires covered employers to post work schedules at least 10 days in advance, and provide additional pay if work schedules are changed without advanced notice. However, the Ordinance creates an exception where the work schedule change is “because of” a pandemic. BACP’s supplemental rule clarifies that the COVID-19 outbreak qualifies as a “pandemic” for the purposes of this exception, and will remain a “pandemic” until the Mayor’s Executive Order declaring a state of emergency is repealed.    

However, a work schedule change will be considered “because” of the pandemic only when the pandemic causes the employer to materially change its operating hours, operating plan, or the goods or services provided by the employer, resulting in the work schedule change. Further, the exception applies only to the work schedule during which the change occurs, and the work schedule immediately following.

Additionally, while the substantive requirements of the Ordinance will still go into effect on July 1, 2020 and may still be enforced by the City, individual employees will not be allowed to file lawsuits for violations of the ordinance occurring before January 1, 2021.

New Rules for Third Party Food Delivery Companies

Mayor Lightfoot and the BACP announced new rules earlier this month for third-party food delivery companies to increase transparency and fair competition. Effective Friday, May 22nd, all third-party delivery companies must disclose the following to customers, in a “clear and conspicuous manner”:

  • the menu price of the food;
  • any sales or other tax applied to the transaction;
  • any delivery charge or service fee, imposed on or collected from the customer by the third-party food delivery service or by the covered establishment, in addition to the menu price of the food;
  • any tip that will be paid to the person delivering the food, and not to the third-party food delivery service, to be added into the transaction when it occurs, and
  • any commission associated with the transaction.

The disclosure requirements apply to all websites, mobile applications or other internet services that offer or arrange the sale of food or beverages by a restaurant, bar or other food-serving establishments. The measure is intended to promote transparency and fair competition, as many restaurants are increasing relying on third-party delivery services to stay afloat during the pandemic.

While the rules were promulgated in response to the pandemic, these new rules will be in place permanently.

Guidance for Restaurants Applying COVID Surcharges

The City of Chicago issued a guidance for restaurants charging COVID-related surcharges to customers, reminding restaurants that the City’s restaurant tax is .50%, and any surcharge customers are required to pay is considered taxable and should be included in the basis upon which the restaurant tax is calculated. Additionally, a COVID surcharge is not a tax and should not be designated as such on any price list or invoice.

New Required Poster and Other Key Takeaways for Employers from Illinois’ New Stay-At-Home Order

On April 30, Governor Pritzker issued an executive order extending Illinois’ Stay-at-Home mandate to May 30. The order, effective May 1, also contains a number of new requirements for employers. The key takeaways are below:

1. All Employers with Employees On-Site Must Post New Safety Poster

Any business with employees physically reporting to the work site must post guidance regarding workplace safety during the COVID-19 emergency. The required posting is available here.

Additional workplace safety posters are available from OSHA and the CDC.

2. Employers Should Facilitate Remote Work “When Possible”

All businesses must evaluate whether employees are able to work from home and are encouraged to facilitate remote work from home when possible.

3. Employers Must Provide Face Coverings to Employees Where Social Distancing Unavailable

Employer must provide employees with appropriate face coverings and require that employees wear face coverings where maintaining a six-foot social distance is not possible. When work circumstances require, employers must provide employees with other protective equipment in addition to face coverings.

4. New Social Distancing Guidelines for Manufacturers

Essential manufacturers that continue to operate are required to follow social distancing requirements and take “appropriate precautions.” These precautions may include:

      • providing face coverings to all employees who are not able to maintain a minimum six-foot social distance at all times;
      • staggering shifts;
      • reducing line speeds;
      • operating only essential lines, while shutting down non-essential lines;
      • ensuring that all spaces where employees may gather, including locker rooms and lunchrooms, allow for social distancing; and
      • downsizing operations to the extent necessary to allow for social distancing and to provide a safe workplace in response to the COVID-19 emergency.

5. New Social Distancing Guidelines for Retail Stores

Essential retail stores that continue to operate must comply with the following requirements to the greatest extent possible:

      • provide face coverings to all employees who are not able to maintain a minimum six-foot social distance at all times;
      • cap occupancy at 50 percent of store capacity, or, alternatively, at the occupancy limits based on store square footage set by the Department of Commerce and Economic Opportunity;
      • set up store aisles to be one-way where practicable to maximize spacing between customers and identify the one-way aisles with conspicuous signage and/or floor markings;
      • communicate with customers through in-store signage, and public service announcements and advertisements, about the social distancing requirements set forth in this Order (Social Distancing Requirements); and
      • discontinue use of reusable bags.

Non-essential retail stores may reopen for the limited purposes of fulfilling telephone and online orders through pick-up outside the store and delivery. Employees working in the store must follow social distancing requirements and must wear a face covering when they may come within six feet of another employee or a customer.

What Are the Key Takeaways from the IRS’s New Guidance and the DOL’s Proposed Rules?

The federal government continues to provide additional guidance and rulemaking on the Families First Coronavirus Response Act’s Emergency Paid Sick Leave (EPSL) and Expanded FMLA (E-FMLA) requirements, which went into effect on April 1.

  • The IRS’s new guidance is available here.
  • Additionally, the Department of Labor (DOL) has issued proposed rules on the enforcement of the FFCRA, available here.

Below are the highlights. To read our initial write-up of the FFCRA, and our summaries of the IRS’s and DOL’s previous guidance, click here.

Key Takeaways:

  • Requests for leave need to be in writing and contain specific information depending on the need for the leave.
  • Leave to care for an “individual” only covers immediate family members, people in the household and other similar people.
  • Where leave is to care for a child aged 15-18, and provided that work is during daylight hours, employee must provide special justification of their need for leave.
  • Shelter-in-Place and Stay-at-Home orders do constitute government quarantine/isolation orders, but employees can only claim leave for one of these reasons if they are subject to the order (i.e. not essential) and there is work for them to do (i.e. workplace is open) – leaving very few situations where an employee could claim EPSL based on such an order.

IRS Guidance

Is there more information on how to claim the tax credits for providing EPSL and E-FMLA?

Yes! Employers will report the amount of EPSL and E-FMLA (“qualified leave wages”) on their quarterly federal employment tax returns (typically a Form 941).

Employers may receive the tax credit in advance by reducing the amount of federal employment taxes they deposit for that quarter by the amount of the qualified leave wages paid in that quarter.

The IRS provides the following example:

An employer paid $5,000 in qualified leave wages and is otherwise required to deposit $8,000 in federal employment taxes, including taxes withheld from all of its employees, for wage payments made during the same quarter as the $5,000 in qualified leave wages. The employer may keep up to $5,000 of the $8,000 of taxes it was going to deposit, and it will not owe a penalty for keeping the $5,000. The employer is then only required to deposit the remaining $3,000 on its required deposit date. The employer will later account for the $5,000 it retained when it files its Form 941, Employer’s Quarterly Federal Tax Return, for the quarter.

What about tax credits for “qualified health plan expenses”?

Tax credits for qualified leave wages may be increased by the amount employers pay to provide and maintain a group health plan (“qualified health plan expenses”) allocable to each type of qualified leave wages. Qualified health plan expenses are properly allocated to EPSL or E-FMLA if the allocation is made on a pro rata basis among covered employees (for example, the average premium for all employees covered by a policy) and pro rata on the basis of periods of coverage (relative to the time periods of leave to which such wages relate).

What form do I use to request advance payment of tax credits?

Form 7200. The form, and instructions for completing it, are available here.

What information do I need to request from an employee to substantiate the tax credits?

Employers need to request the following information in writing in order to substantiate the need for leave:

  1. The employee’s name;
  2. The date or dates for which leave is requested;
  3. A statement of the COVID-19 related reason the employee is requesting leave and written support for such reason; and
  4. A statement that the employee is unable to work, including by means of telework, for such reason.

Additional information is also required for the following:

  • If the need for leave is based on a quarantine order, the statement from the employee should include the name of the governmental entity ordering quarantine.
  • If the need for leave is based on the advice of a health care provider to self-quarantine, the statement from the employee should include the name of the health care professional advising self-quarantine.
  • If the need for leave is to care for a person subject to a quarantine order or advised to self-quarantine, the employee will need to provide the person’s name and relation to the employee (in addition to the name of the governmental entity ordering quarantine or the name of the health care professional advising self-quarantine.)
  • If the need for leave is based on a school closing or child care provider unavailability, the statement from the employee should include the name and age of the child (or children) to be cared for, the name of the school that has closed or place of care that is unavailable, and a representation that no other person will be providing care for the child during the period for which the employee is receiving family medical leave and, with respect to the employee’s inability to work or telework because of a need to provide care for a child older than fourteen during daylight hours, a statement that special circumstances exist requiring the employee to provide care.

What records do I need to retain to request the tax credit?

In addition to retaining the information provided by the employee, employers should retain the following documentation:

  • Documentation to show how the employer determined the amount of qualified sick and family leave wages paid to employees that are eligible for the credit, including records of work, telework and qualified sick leave and qualified family leave.
  • Documentation to show how the employer determined the amount of qualified health plan expenses that the employer allocated to wages.
  • Copies of any completed Forms 7200, Advance of Employer Credits Due To COVID-19, that the employer submitted to the IRS.
  • Copies of the completed Forms 941, Employer’s Quarterly Federal Tax Return, that the employer submitted to the IRS.

How long will I need to retain these records?

For four years after the date the tax becomes due or is paid, whichever comes later.

How long are the tax credits available?

The credits are available for EPSL and E-FMLA leave taken between April 1, 2020, through December 31, 2020, even if paid after December 31, 2020.

DOL’S Temporary Rule

Note that the temporary rule is effective as of April 1, but the DOL has noted that the version currently available may vary slightly from the published rule.

Employees may receive EPSL if they are subject to a quarantine or isolation order or are caring for an individual who is subject to quarantine or isolation order. What is a “quarantine or isolation order”?

A quarantine or isolation order includes quarantine, isolation, containment, shelter-in-place, or stay-at-home orders issued by any Federal, State, or local government authority that cause the employee to be unable to work. It also includes instances where the Federal, State, or local government authority has advised categories of citizens (e.g., of certain age ranges or of certain medical conditions) to shelter in place, stay at home, isolate, or quarantine.

An employee is eligible for EPSL if the employer has work available, but the employee cannot perform available work because of such an order.

Employees may receive EPSL if they are advised by a health care provider to self-quarantine. What type of advice does this cover?

An employee qualifies for EPSL if a health care provider advised them to self-quarantine based on a belief that (a) the employee has COVID-19, (b) the employee may have COVID-19, or (c) the employee is particularly vulnerable to COVID-19; and following the advice to self-quarantine prevents the employee from being able to work at the workplace or by telework.

Employees may receive EPSL to care for an individual subject to a quarantine or isolation order or advised by a health care provider to self-quarantine. Does this mean any individual the employee cares for?

No, but the definition of “individual” is broad. “Individual” means an employee’s immediate family member, a person who regularly resides in the employee’s home, or “a similar person with whom the employee has a relationship that creates an expectation that the employee would care for the person if he or she were quarantined or self-quarantined.” It does not include persons with whom the employee has no personal relationship.

How may employers provide notice to employees of the FFCRA?

The FFCRA requires employers to post a notice on its premises, in conspicuous places. Employers may also satisfy this requirement by emailing or direct mailing this notice to employees, or posting this notice on an employee information internal or external website.

What documentation may I request from employees?

The DOL does not require employees to provide all of the information that the IRS requires employers to retain in order to support the tax credit (see above) to be eligible for EPSL or E-FMLA, but it permits employers to deny leave if the employee does not provide all information required to request a tax credit.

Note that for leave taken under the FMLA for an employee’s own serious health condition related to COVID-19, or to care for the employee’s spouse, son, daughter, or parent with a serious health condition related to COVID-19, the normal FMLA certification requirements still apply.

What type of notice may an employer require of the employee’s need to take EPSL or E-FMLA?

Notice may not be required in advance, and may only be required after the first workday (or portion thereof) for which the employee takes EPSL or E-FMLA. After the first workday, the employer may require the employee to follow “reasonable notice procedures.” Generally, the following notice requirements will be reasonable:

  • Requiring notice as soon as practicable under the facts and circumstances of the particular case.
  • Requiring notice to be given by the employee, or the employee’s spokesperson if the employee is unable to do so personally.
  • Requiring oral notice and sufficient information for an employer to determine whether the requested leave is covered by the EPSL or E-FMLA.
  • Requiring employee to comply with the employer’s usual and customary notice requirements for requesting leave, absent unusual circumstances.

Employers may not require employees to provide more information beyond what is needed to support the tax credit when providing notice.

How do I elect the small business exemption?

Employers with fewer than 50 employees may be exempt from having to provide E-FMLA and EPSL Category #5 (leave to care for a child due to the school or childcare provider being closed/unavailable due to COVID-19).

To elect this small business exemption, the employer must document that a determination has been made pursuant to the criteria for the exemption. The employer does not need to submit this documentation, but must simply retain the records in its files.

Does the employee maintain health benefits during EPSL or E-FMLA leave?

Yes. Employers must maintain the employee’s coverage under any group health plan (on the same conditions as coverage would have been provided if the employee had been continuously employed during the entire leave period.

What documentation do I need to retain?

In addition to the documentation required to be maintained to request the tax credits (see above), employers must retain all documentation provided by employees requesting leave, regardless of whether leave was granted or denied. These documents need to be retained for four years.

 

Assessing Workforce Options: Amid Financial Pressures, What’s The Right Plan Of Action For My Business?

Many businesses have faced significant economic challenges due to the coronavirus pandemic. If your business is considering making personnel decisions to improve financial stability, you have a number of options and considerations.

Generally, employers have four options for reducing their workforce costs:

  1. Reducing employees’ hours
  2. Reducing employee compensation
  3. Furloughs/temporary layoffs
  4. Termination/permanent layoffs

You do not have to select one alternative – these options can be used in combination to address the unique needs of your business. For example, a portion of the workforce could be furloughed and a different portion could be laid off. Or, some employees may have their pay reduced and may later be laid off if conditions do not improve.

The attached chart summarizes key considerations when determining the right plan for your business. Keep in mind that if your business has applied for or received a loan from the Small Business Administration’s Paycheck Protection Program (put in place as part of the CARES Act) a reduction in the number of employees, in work hours, or in payroll during the eight weeks after receiving the loan may impact the loan forgiveness. Employers, in some cases, have the opportunity to rehire employees or make up for wage reductions by June 30, 2020 and still receive loan forgiveness. Consult our specific guidance on the CARES Act or speak to your accountant or bank concerning the loan terms.

 

Click here to download a full PDF of the guide.

 

For more resources and LP’s response to COVID-19, visit this webpage.

Additional Guidance from DOL on FFCRA – including rules for small employer exemption and definitions of “health care provider” and “emergency responder”

Over the weekend, the Department of Labor (DOL) issued its latest round of guidance on the FFCRA’s Emergency Paid Sick Leave (EPSL) and Expanded FMLA (E-FMLA) requirements. The additional guidance is found in Questions #38-59 of DOL’s running Q&A document. Below are the highlights. You can find our initial write-up of the FFCRA, and our summaries of the DOL’s first and second guidances, here.

The FFCRA referred to a small business exemption for employers with fewer than 50 employees. Do we have any more information?

Finally we do! The DOL has confirmed that employers with fewer than 50 employees may be exempt from having to provide E-FMLA and EPSL Category #5 (leave to care for a child due to the school or childcare provider being closed/unavailable due to COVID-19). Note that this exemption only applies to E-FMLA and EPSL due to school/childcare closure – not to other types of EPSL.

In order to claim exemption from providing E-FMLA or EPSL Category #5, an authorized officer of a business with fewer than 50 employees must have determined that one of the following is true:

    1. Providing EPSL or E-FMLA would result in expenses and financial obligations exceeding available business revenues and cause the business to cease operating at a minimal capacity;
    2. The absence of the employee(s) requesting EPSL or E-FMLA would entail a substantial risk to the financial health or operational capabilities of the business because of their specialized skills, knowledge of the business, or responsibilities; or
    3. There are not sufficient workers who are able, willing, and qualified, and who will be available at the time and place needed, to perform the labor or services provided by the employee(s) requesting EPSL or E-FMLA, and these labor or services are needed for the small business to operate at a minimal capacity.

We strongly recommend that the company maintain both the records and information on which the officer’s determination is based and a written record of the officer’s determination.

 

Can an employee take EPSL or E-FMLA to care for any child whose school or childcare is closed?

The FFCRA only provides leave to care for a “son or daughter” whose school or child care is closed or unavailable – not any child. The DOL has now clarified that “son or daughter” includes any “biological, adopted, or foster child, your stepchild, a legal ward, or a child for whom you are standing in loco parentis—someone with day-to-day responsibilities to care for or financially support a child.” So the key is that the child is that employee’s responsibility – EPSL is not available where the employee wants to care for someone else’s child.

 

If an employee used FMLA earlier in the year, does that impact EPSL and E-FMLA?

The DOL has clarified that E-FMLA counts toward the total 12 weeks contemplated under the FMLA. So, if an employee has taken FMLA within the last 12-months, their total regular FMLA and E-FMLA can’t exceed 12 weeks. Similarly, an employee who takes E-FMLA, will have that time counted against their annual FMLA entitlement.

 

What is a full-time employee for purposes of EPSL? What is a part-time employee?

For purposes of EPSL, a full-time employee is one who is normally scheduled to work 40 hours or more per week. A part-time employee is one normally scheduled to work fewer than 40 hours. This matters for EPSL, because it determines how many hours of EPSL the employee is eligible to receive.

 

Who is a “health care provider” for purposes of determining which employees can be denied EPSL/E-FMLA?

The FFCRA provides that employers can refuse EPSL and E-FMLA for “health care providers.” The DOL has now clarified that a health care provider is very broad. It includes anyone employed at any doctor’s office, hospital, health care center, clinic, post-secondary educational institution offering health care instruction, medical school, local health department or agency, nursing facility, retirement facility, nursing home, home health care provider, any facility that performs laboratory or medical testing, pharmacy, or any similar institution, employer, or entity.

“Health care provider” also includes anyone employed by an entity that contracts with any of these health care institutions to provide service or to maintain the operation of the facility. The DOL states that this includes anyone employed by an entity that “provides medical services, produces medical products, or is otherwise involved in the making of COVID-19 related medical equipment, tests, drugs, vaccines, diagnostic vehicles, or treatments” and anyone that the highest official of a state or territory (generally, a governor) determines is a health care provider necessary for that state or territory’s response to COVID-19.

However, the DOL encourages employers to be judicious with their reliance on the “health care provider” exemption in order to minimize the spread of COVID-19.

 

Who is an “emergency responder” for purposes of determining which employees can be denied EPSL/E-FMLA?

The DOL has also defined “emergency responders” very broadly, stating that it is an employee who is necessary for the provision of transport, care, health care, comfort and nutrition, or whose services are otherwise needed to limit the spread of COVID-19. The DOL states that this includes, but is not limited to, “military or national guard, law enforcement officers, correctional institution personnel, fire fighters, emergency medical services personnel, physicians, nurses, public health personnel, emergency medical technicians, paramedics, emergency management personnel, 911 operators, public works personnel, and persons with skills or training in operating specialized equipment or other skills needed to provide aid in a declared emergency as well as individuals who work for such facilities employing these individuals and whose work is necessary to maintain the operation of the facility.” In addition, anyone that the highest official of a state or territory (generally, a governor) determines is an emergency responder necessary for that state or territory’s response to COVID-19 is deemed to be an emergency responder.

However, the DOL encourages employers to be judicious with their reliance on the “emergency responder” exemption in order to minimize the spread of COVID-19.

 

Is my company required to return an employee to the same position after his or her leave?

The DOL says yes – in most circumstances. Employers can’t take an adverse employment action (firing, disciplining, etc.) against an employee for taking EPSL or E-FMLA. However, employees aren’t protected from employment action that would have impacted them regardless of their being on leave – such as layoffs or furloughs.

Employers with fewer than 25 employees also have some specific provisions that apply to an employee returning from E-FMLA. If your company is in that position, refer to Question #43 in the Q&A or contact your employment lawyer to discuss.

DOL Provides Additional Guidance on Families First Leave Provisions, Including Treatment of Employees on Furlough and Handling of Intermittent Leave

More Guidance from DOL on Paid Sick Leave and Emergency FMLA

Late Thursday the Department of Labor (DOL) issued more guidance for employers on the Families First Coronavirus Relief Act (FFCRA) emergency paid sick leave (EPSL) and expanded Family and Medical Leave Act (E-FMLA) requirements. The additional guidance is in the form of 22 new Q&As (#15-37 in the Guidance, which you can find here).

The guidance finally answered several important questions that had left employers confused by their obligations, including how to handle furloughed employees and whether intermittent leave is available to care for a child who is home from school or childcare because of a COVID-19-related closure.

Here are the key questions and answers from this new guidance:

What are the records the employee must provide and the employer must keep?

To be eligible for the tax credit, employers must require, and employees must provide, appropriate documentation in support of the reason for the leave. The documentation should include the employee’s name, the qualifying reason for the leave, a statement that the employee is unable to work (or telework) for that reason, and the dates for which they require the leave. While it appears that the employee’s own declaration will satisfy part of the requirement, the employee must provide documentation supporting the reason for the leave. Examples of such documentation are a copy of the Federal, State, or local quarantine or isolation order related to COVID-19, written documentation by a health care provider advising self-quarantine, or the notice demonstrating the closure of a school or place of care.

The DOL Guidance makes clear that this documentation must be retained by the employer to support the tax credit.

May EPSL and E-FMLA be taken intermittently?

Employees who are working at their usual worksite may use EPSL and E-FMLA intermittently only if the reason they are taking the leave is to care for a child whose school or childcare is closed or unavailable (Category #5) and the employer agrees. The DOL encourages employers and employees to collaborate to achieve flexibility in this area.

Employees who are teleworking may take EPSL and E-FMLA intermittently with the employer’s agreement, in whatever increments the employee and employer agree to. The DOL encourages employers and employees to collaborate to find ways to allow for a combination of telework and intermittent leave.

What happens if I close a worksite? Are employees eligible for EPSL/E-FMLA?

In general, employees are not eligible for EPSL or E-FMLA during the period when a worksite is closed. This is true even if the worksite closes on or after April 1, 2020 and even if an employee already has begun EPSL or E-FMLA leave. In this situation, the employee would receive EPSL or E-FMLA only for the period from April 1 to the date of the closure.

Are furloughed employees eligible for EPSL/E-FMLA?

No. If the employer implements a furlough because it does not have enough work or business, then the impacted employees are not eligible for EPSL/E-FMLA. Note that this remains the case even if the employer indicates that they plan to reopen.

Employees who are furloughed should apply for unemployment benefits.

If an employer reduces an employee’s hours, can employees use EPSL or E-FMLA to make up the difference?

No.

May I require employees to use other available paid leave (vacation time, PTO, etc.) to supplement the EPSL/E-FMLA pay? May I allow them to?

Employers may not require employees to use paid leave to “top off” their EPSL/E-FMLA pay, but may allow it if the employee wishes to do so.

What if I want to pay an employee their full pay during EPSL or E-FMLA even though they only receive 2/3 pay under the FFCRA?

Employers can choose to pay more, but they will not receive a tax credit for the excess payments.

When is an employee able to telework for purposes of the FFCRA?

An employee is able to telework (and thus ineligible for EPSL and E-FMLA) if the employer permits or allows them to perform work at home or a location other than their regular workplace and pays them their normal wages for such work.

When is an employee unable to work or telework?

An employee is unable to work or telework, and thus potentially eligible for EPSL, if the employer has work for them and one of the EPSL qualifying reasons keeps them from being able to perform that work (either at their worksite or via telework).

Do state and local “stay at home” and “shelter in place” orders constitute “quarantine or isolation” orders so as to satisfy Category #1 for EPSL?

The guidance doesn’t specifically address whether the current broad government orders to “stay at home” or “shelter in place” constitute a “quarantine or isolation order” as is required to fall under Category #1 for purposes of EPSL. However, language in one of the questions regarding workplace closures further supports what we already thought – namely that these orders do not meet the requirements for Category #1.

 

 

New Guidance on Families First Coronavirus Response Act – INCLUDING DESIGNATION OF APRIL 1st EFFECTIVE DATE

Since President Trump signed the Families First Coronavirus Response Act (FFCRA) on March 18th (see our summary of the FFCRA’s key employment provisions here), we’ve received two pieces of additional guidance – one relating to how the FFCRA’s emergency paid sick leave (EPSL) and emergency FMLA provisions (E-FMLA) will be interpreted and one relating to how businesses can take advantage of the dollar-for-dollar tax credit for payments of EPSL and E-FMLA.

Here are the key questions and answers coming out of each of those updates. In addition, at the end, we’ve highlighted a number of open issues and questions that remain unclear:

DOL Guidance on EPSL & E-FMLA

When does my business have to comply?

The Act is effective on April 1, 2020. This means that all covered employers (those with fewer than 500 employees) have to start providing these new types of leave on April 1st. There is a narrow exception that applies to employees who are health care providers or emergency responders, but otherwise, all businesses with fewer than 500 employees are required to comply by 4/1.

Are there any special provisions for my small business?

If your business has less than 50 employees and providing childcare-related EPSL and E-FMLA would jeopardize the viability of your business, your business may be eligible for the small business exemption. The DOL is preparing regulations to address the criteria for this exemption.  In the meantime, the DOL has advised that you maintain records showing the business impact of these requirements.

How do I determine whether my business has fewer than 500 employees?

The number of employees is counted at the time the employee’s leave is to be taken, including full-time and part-time employees, temporary employees, day laborers, and joint employees (regardless of whether the joint employees are maintain on your payroll) employed in the United States, including any employees on leave. Independent contractors are not considered employees for this purpose.

We understand that this creates a difficult framework for employers that are close to the 500-employee mark, but you will need to reassess if your company has at least 500 employees on a daily basis.

Are related businesses added together to determine whether the Company has 500 employees?

The DOL’s guidance says that, typically, a corporation (including its separate establishments and divisions) is considered to be a single employer, with all of its employees to be counted toward the 500-employee threshold.

Where a company has an ownership interest in another company, the question is whether they are joint employers under the Fair Labor Standards Act and/or integrated employers under the FMLA’s integrated employer test. If the companies are joint employers under the FLSA, then their employees are added together for purposes of EPSL. If the companies are integrated employers under the FMLA, their employees are added together for purposes of E-FMLA. Whether the various tests are met is a very fact specific determination, so we strongly recommend you seek legal counsel for this analysis.

How do I calculate hours of EPSL?

Full-time employees are entitled to 80 hours of EPSL. The number of hours of EPSL an employee receives is based on the number of hours they would normally be scheduled to work, including overtime. However, EPSL is capped at 80 hours over a two-week period. So, for example, an employee who is scheduled to work 50 hours a week may take 50 hours of EPSL in the first week and 30 hours of EPSL in the second week.

Part-time employees are entitled to leave for their average number of work hours in a two-week period. If the normal hours scheduled vary, you may use a six-month average to calculate the average hours.

How do I calculate payment for EPSL?

Payment is based on the reason for the employee taking the EPSL and the employee’s regular rate of pay, subject to certain caps, as outlined in our original guidance.

The DOL’s guidance clarifies that the amount paid is based on the employee’s regular rate of pay. You can determine regular rate of pay by taking the average of the employee’s regular rate over a period of up to six months prior to taking leave (or if the employee has been employed for less than six months, the average of the regular rate of pay for each week employed).

What if an employee is eligible for both E-FMLA and EPSL?

An employee who needs leave to care for a minor child whose school or place of care is closed or whose childcare provider is unavailable due to COVID-19 related reasons may be entitled to both E-FMLA and EPSL.

In this instance, the paid sick leave provision would provide two weeks of paid leave, which would overlap with the first ten workdays of unpaid E-FMLA. After the first ten workdays, the employee would receive paid E-FMLA (if needed).

What if my business has already provided employees paid sick leave related to coronavirus?

Your employees will still be eligible to receive EPSL beginning April 1, regardless of leave already provided.

What if my business has already denied employees sick leave related to coronavirus?

The EPSL and E-FMLA requirements are not retroactive. However, beginning April 1, employers must begin providing EPSL and E-FMLA leave under the Act.

What if I’m trying to comply but make a mistake?

The U.S. Department of Labor (DOL) has indicated that it will not bring any enforcement actions against employers for violations of the Act during the first 30 days so long as the employer has acted reasonably and in good faith, which includes making employees whole as soon as possible for any non-compliance.

 

Tax Credit Guidance from DOL & IRS

What payroll tax credits can my business receive?

Employers are eligible for a dollar-for-dollar tax credit for EPSL and E-FMLA paid to employees. To be clear, the tax credit is only available for payments that are required by EPSL/E-FMLA, so any payments you make that aren’t required by the FFCRA likely won’t be subject to the tax credit.

Eligible employers also are entitled to a tax credit determined based on costs to maintain health insurance coverage for the eligible employee during the leave period.

When will my business receive the tax credit?

The IRS has stated that eligible employers who pay EPSL or E-FMLA benefits will be able to retain an amount of the payroll taxes equal to the amount paid, rather than deposit them with the IRS. Taxes an employer could retain include withheld federal income taxes, the employee share of Social Security and Medicare taxes, and the employer share of Social Security and Medicare taxes with respect to all employees.

If there are not sufficient payroll taxes to cover the amount of qualifying leave paid, employers will be able file a request for an accelerated payment from the IRS. They estimate that employers should be able to receive payment within 2 weeks.

The IRS will issue additional guidance on this process.

Open Questions

While the recent guidance has clarified a number of things, we still have a number of critical, unanswered questions:

Do the “Stay At Home” and “Shelter In Place” orders being issued by many states and localities constitute a “quarantine or isolation order” that would qualify employees for EPSL under category #1?

This remains unclear. The statutory language suggests that Category #1 is more focused on individual quarantines than broad ones, and the governmental authorities implementing these orders have in many cases emphasized that they are not quarantine orders. As such, it seems unlikely that the current state and local orders will be deemed to satisfy Category #1. We are hoping to receive additional guidance on this issue from the DOL.

If I have placed employees on furlough or temporary layoff due to our business having to be shut down or greatly diminished, will they be entitled to EPSL or E-FMLA?

Here too, we don’t have a clear answer. Employees on furlough or temporary layoff are likely counted for purposes of reaching the 500-employee threshold, but because their absence is due to lack of work – not one of the 6 categories for EPSL – it’s not clear that they qualify to receive EPSL or E-FMLA themselves. We will continue to monitor this issue and provide additional advice as appropriate.

New York Announces Emergency–And Ongoing—Paid Sick Leave

After announcing his intention to do so last week, New York Governor Cuomo has reached an agreement with the state legislature regarding paid sick leave. The agreement provides for immediate emergency paid sick leave for workers affected by the coronavirus (COVID-19) pandemic. The legislation also includes comprehensive paid sick leave for New York employees generally, which will become effective 180 days after passage.

Emergency Paid Sick Leave Provisions

These provisions are effective immediately.

The legislation provides for paid sick leave to employees under an order to quarantine, based on the size of the employer:

  • Employers with 10 or fewer employees and a net income less than $1 million are not required to provide paid sick leave, but must provide job protection for the duration of the quarantine order and guarantee their workers access to Paid Family Leave and disability benefits (short-term disability) for the period of quarantine including wage replacement for their salaries up to $150,000.
  • Employers with 11-99 employees and employers with 10 or fewer employees and a net income greater than $1 million must provide at least 5 days of paid sick leave, job protection for the duration of the quarantine order, and guarantee their workers access to Paid Family Leave and disability benefits (short-term disability) for the period of quarantine including wage replacement for their salaries up to $150,000.
  • Employers with 100 or more employees, and all public employers (regardless of number of employees), must provide at least 14 days of paid sick leave and guarantee job protection for the duration of the quarantine order.

These benefits must be provided in addition to any accrued sick leave an employee has under the employer’s current policies. In the event that the federal government provides for paid sick leave, employees will only be eligible for benefits above what is provided under federal law.

Employees who are subject to a quarantine order due to travelling to a country for which the CDC has issues a level two or three travel health notice, who travelled there not on company business, after the CDC issued the notice, will not be eligible for these benefits.

The legislation also amends Paid Family Leave and disability benefits requirements to allow for benefits to be paid upon the first full day of unpaid period of mandatory or precautionary order of quarantine, without any waiting period.

Separately, Governor Cuomo issued an executive order last week waiving the seven-day waiting period for Unemployment Insurance benefits for people who are out of work due to COVID-19 closures or quarantines.

 

Paid Sick Leave

These provisions will become effective 180 days after passage.

The legislation also generally requires employers to provide sick leave to their employees, based on the size of the employer:

  • Employers with 4 or fewer employees and a net income less than $1 million must provide at least 5 days of unpaid sick leave each year. Unused sick leave is carried over to the next year, but use may be limited to 40 hours per year.
  • Employers with 5-99 employees and employers with 4 or fewer employees and a net income greater than $1 million must provide at least 5 days of paid sick leave each year. Unused sick leave is carried over to the next year, but use may be limited to 40 hours per year.
  • Employers with 100 or more employees must provide at least 7 days of paid sick leave each year. Unused sick leave is carried over to the next year, but use may be limited to 56 hours per year.

Sick leave may be used for the employee’s or the employee’s family member’s medical care, diagnosis, or treatment as well as absence from work to obtain services or assistance related to domestic violence, sexual offense, stalking, or human trafficking of the employee or the employee’s family member.

Employees who already have paid sick leave or paid time off policies that exceed these requirements are not required to provide additional leave.

Levenfeld Pearlstein continues to monitor developments regarding COVID-19 and is available to provide advice and guidance—remotely—to employers with questions about managing their workforce during the pandemic.

 

For more resources and LP’s response to COVID-19, visit this webpage.