Updated Guidance on the Families First Coronavirus Response Act

Last week, the Families First Coronavirus Response Act (FFCRA) was signed into law. This Act provides a wide range of relief to individuals affected by the COVID-19 pandemic, including paid sick leave (the Emergency Paid Sick Leave Act or “EPLSA”) and paid FMLA leave (the Emergency Family and Medical Leave Expansion Act or “EFMLEA”).  Though we know that these laws will go into effect on April 1, 2020, a lot has remained unclear. Luckily, the Internal Revenue Service and Department of Labor both recently released guidance on how these new laws will work.

Complete reimbursement will be quick and easy to obtain.

Employees are entitled to 100% reimbursement for leave paid under the Act, including health insurance costs. The IRS will provide an immediate dollar-for-dollar tax offset against federal payroll taxes. Employers will not face any payroll tax liability for compliance.

Small business will likely be eligible for exemption.

Employers with fewer than 50 employees will likely be eligible for an exemption from the requirement to provide pay leave to employees who cannot work because they need to care for children when doing so would jeopardize the ability of the business to continue. Such exemptions will be available based on simple and clear criteria that will be articulated by the DOL the near future.

There is a 30-day non-enforcement period for good faith compliance efforts.

Don’t worry if you don’t have the new laws down perfectly. As long as you’re making a good faith effort, the government will afford you a grace period to get everything straight.

Employers may retain and access funds they would otherwise pay to the IRS in payroll taxes to provide the required leave.

While the tax credits are great, what are employers supposed to do if they don’t have the requisite cash up front? Money that would normally go towards payroll taxes, such as Medicare, Social Security, and federal income taxes, can be used to cover the cost of leave. If that is not enough, employers can seek an expedited advance from the IRS by submitting a claim. This claim form should be released this week.

Joint employers and integrated employers may count all employees towards the 500-employee threshold.

As we all know, the EPSLA and EFMLEA only applies to employers with fewer than 500 employees. Many employers have been left to wonder how exactly they should count their employees. Employers who are considered “joint employers” or “integrated employers” under the FLSA will need to count all those employees when determining whether it falls within the 500-empoyee threshold prescribed by the EFMLEA and EPSLA. Furthermore, a corporation (including its separate establishments or divisions) is considered to be a single employer, and its employees must each be counted towards the 500-employee threshold.

Posting a notice of the EFMLEA and EPSLA is sufficient.

Employers who post a notice of the EFMLEA and EPSLA in a conspicuous place will have satisfied the notice requirements under each of these new laws. The DOL is expected to release a poster this week.

The DOL will be releasing regulations soon.

Typically, the DOL releases corresponding regulations upon the passing of major employment legislation. Because of the unprecedented nature of the COVID-19 pandemic, employment attorneys were left wondering when if ever DOL regulations would become available. Fortunately, the DOL has confirmed it intends to introduce regulations in the very near future. Employers can look forward to a better understanding of how the DOL intends to interpret and enforce the EFMLEA and EPLSA.

Going Forward

The government’s response to the COVID-19 pandemic continues to change and develop at an exceedingly rapid rate. The HR attorneys at Thompson Coe are closely monitoring the government’s actions to provide to most accurate and up to date analysis of the laws and your obligations as an employer. Please keep an eye out for further tips and updates. If you have any questions, please contact us.

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