Analyzing the Department of Labor’s March 28, 2020 Compliance Assistance Materials Concerning COVID-19 Paid Leave.

By: David S. Schwartz, 3.30.20

On March 28, 2020, the Department of Labor (“DOL”) issued guidance concerning the implementation, scope, and requirements of the Families First Coronavirus Response Act (“FFCRA”).  This guidance from DOL is presented in a Question and Answer (“Q&A) format and includes fifty-nine questions with answers.  These questions and answers run the gamut from useful and enlightening to confusing and overly complicated, and everything in between.

 

You can read the DOL’s March 28, 2020 Guidance Q&A here.

 

Small Business Exemption

In our last analysis piece dated March 24, 2020 we challenged whether DOL had the capacity and ability to provide clear and effective guidance regarding the paid leave exemption for businesses with less than fifty employees, or whether this would ultimately lead to a rash of litigation.  The FFCRA is set to be implemented on April 1, 2020.  The DOL guidance states that small businesses may claim the exemption if an authorized officer of the business determines that:

 

  1. The provision of paid sick leave or expanded family and medical leave would result in the small business’s expenses and financial obligations exceeding available business revenues and cause the small business to cease operating at a minimal capacity;  

  2. The absence of the employee or employees requesting paid sick leave or expanded family and medical leave would entail a substantial risk to the financial health or operational capabilities of the small 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 or employees requesting paid sick leave or expanded family and medical leave, and these labor or services are needed for the small business to operate at a minimal capacity.

 

Put simply, these criteria are entirely too vague.  While they appear to give small businesses substantial leeway in claiming the exemption, the nature of employment laws is that they are oftentimes analyzed in an employee-friendly manner.  The reality is that the businesses most in need of the exemption are the same businesses that will be severely harmed expending future resources claiming and proving their entitlement to the exemption.

 

Notable Points in the DOL Guidance

Some notable points that DOL did clarify include:

  • Employees taking leave under the Emergency Paid Leave Act are subject to a maximum of $511 per day, or $5,110 total over the entire paid sick leave period, in instances where the employee themself is subject to an isolation or quarantine order or experiencing symptoms of COVID-19.

 

  • Employees taking Paid Sick Leave to care for another or to care for a child whose school or childcare provider is closed are entitled to receive pay at 2/3rds their rate of pay, subject to a maximum of $200 per day, or $2,000 over the entire two week period.

  • An employer who had previously given an employee paid sick leave for COVID-19 related reasons prior to April 1, 2020 cannot subsequently deny an employee paid leave under the FFCRA after April 1, 2020 due to the allowance of this prior leave.

 

  • Employers may require employees taking leave under the Expanded Family Medical Leave Act to provide documentation supporting their entitlement to such leave.

 

  • Employees generally cannot take Paid Sick Leave intermittently, but rather once they take Paid Sick Leave they must continue on leave until they have used the full amount of the leave, or the qualifying reason for their leave is no longer present.

 

  • Employees who are furloughed by their employer due to there being not enough work because of COVID-19 are not entitled to take Paid Sick Leave, but may be eligible for unemployment benefits.

 

Intermittent Expanded Family and Medical Leave

The DOL guidance provides that employees may take Expanded FMLA leave intermittently “but only with [their] employer’s permission.”  While it is admirable that DOL is seemingly attempting to strike some balance here by giving employers the choice to provide intermittent leave under Expanded FMLA, in reality stronger language from DOL is likely warranted to avoid future litigation.  Given the soft language in the guidance, some employees will undoubtedly attempt to circumvent this “employer choice” provision through allegations of discrimination, disparate treatment impact, or a violation of the original FMLA provisions. 

 

FFCRA Enforcement

For now, it appears as though only DOL will have enforcement authority regarding employer violations of paid sick leave, as the language states that DOL’s Wage and Hour Division will be “responsible for enforcing and administering” the paid sick leave provisions.  Whether DOL has the resources, capacity, and manpower to deal with enforcement of paid sick leave violations remains to be seen.  One would imagine that the number of violations would be greatly reduced as businesses will be able to recoup the amount expended for paid sick leave as subsequent tax credits; however, businesses that are currently cash-strapped may not be able to do so.

 

By contrast, unlike the Paid Sick Leave Act, violations of the Expanded Family Medical Leave Act would allow for private right of action by employees for employer violations so long as the employer has more than 50 employees.

 

Right to Return to Work

The FFCRA requires that employees who take leave be returned to their same or an equivalent position upon their return from leave.  This requirement creates a litany of challenges for businesses even under normal circumstances, and is likely to be the primary compliance challenge for businesses in adhering to the FFCRA.  While many businesses may try and keep on all or as many employees as possible, many may nonetheless be forced to reduce their workforce as the shelter-in-place orders continue.  Businesses will be faced with decisions regarding who to terminate or furlough. Even if these decisions are not based whatsoever on a particular employees use of paid leave, an employee who is terminated while on leave or shortly thereafter may nonetheless attempt legal action and force the employer to defend its business decisions and prove that the terminations or furloughs were made due to business necessity and not retaliation.  Indeed the DOL guidance itself states that an “employer must be able to demonstrate that [the employee] would have been laid off even if [the employee] had not taken leave.” 

 

Conclusion

The FFCRA is a massive piece of legislation, drafted and passed extremely quickly in the midst of a global pandemic and a hostile political climate.  Most of the provisions seem to strike a fair balance between the need to provide a safety-net for employees while also understanding economic realities for many employers.  Large portions of DOL’s guidance adequately expand on, and encourage, this harmony.  That said, there are clear issues with various facets of DOL’s guidance which are likely to lead to future litigation.  While many new employment laws work just fine taking time to be deciphered and interpreted by the courts, the nature of the FFCRA, as well as current circumstances, may not afford for such considerations.  It remains to be seen whether the DOL will be reactive to practical challenges with the FFCRA when it's implemented and whether they will swiftly shore up any implementation issues that arise.

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