The United States Senate passed The Families First Coronavirus Response Act (the “Act”), without any changes to H.R. 6201, passed by the House earlier this week. The Senate followed suit, passing the Act, including technical amendments, on the afternoon of March 18, 2020. The President signed the Act into law that same day, meaning it will go into effect in 15 days. The Act is one of what appears will be a number of pieces of federal legislation coming from Washington designed to deal with the unprecedented events triggered by the outbreak of COVID-19. All the details of the law remain as was previously explained in our alert found here.
The law expands leave right for workers who need to take off due to events created by the COVID-19 crisis, including the shutdown of schools. There are two main questions employers will have to determine if they are covered by the law:
(1) If I’m a small employer with less than 50 employees, am I covered? Yes, unless you apply for and are granted a small business exemption under regulations (which have not yet been issued) drafted by the Department of Labor. Until those regulations are issued, you should consider yourself covered by this new law.
(2) The law covers every employer with less than 500 employees. But, how do I count employees to determine if I meet that threshold? Because the new law is an amendment to the existing Family and Medical Leave Act, definitions under that law continue to apply. The regulation on how to count coverage under the FMLA is as follows:
§ 825.104 Covered employer.
(a) An employer covered by FMLA is any person engaged in commerce or in any industry or activity affecting commerce, who employs 50 or more employees for each working day during each of 20 or more calendar workweeks in the current or preceding calendar year. Employers covered by FMLA also include any person acting, directly or indirectly, in the interest of a covered employer to any of the employees of the employer, any successor in interest of a covered employer, and any public agency. Public agencies are covered employers without regard to the number of employees employed. Public as well as private elementary and secondary schools are also covered employers without regard to the number of employees employed. See § 825.600.
(b) The terms commerce and industry affecting commerce are defined in accordance with section 501(1) and (3) of the Labor Management Relations Act of 1947 (LMRA) (29 U.S.C. 142(1) and (3)), as set forth in the definitions at § 825.102 of this part. For purposes of the FMLA, employers who meet the 50-employee coverage test are deemed to be engaged in commerce or in an industry or activity affecting commerce.
(c) Normally the legal entity which employs the employee is the employer under FMLA. Applying this principle, a corporation is a single employer rather than its separate establishments or divisions.
(1) Where one corporation has an ownership interest in another corporation, it is a separate employer unless it meets the joint employment test discussed in § 825.106, or the integrated employer test contained in paragraph (c)(2) of this section.
(2) Separate entities will be deemed to be parts of a single employer for purposes of FMLA if they meet the integrated employer test. Where this test is met, the employees of all entities making up the integrated employer will be counted in determining employer coverage and employee eligibility. A determination of whether or not separate entities are an integrated employer is not determined by the application of any single criterion, but rather the entire relationship is to be reviewed in its totality. Factors considered in determining whether two or more entities are an integrated employer include:
(i) Common management;
(ii) Interrelation between operations;
(iii) Centralized control of labor relations; and
(iv) Degree of common ownership/financial control.
(d) An employer includes any person who acts directly or indirectly in the interest of an employer to any of the employer's employees. The definition of employer in section 3(d) of the Fair Labor Standards Act (FLSA), 29 U.S.C. 203(d), similarly includes any person acting directly or indirectly in the interest of an employer in relation to an employee. As under the FLSA, individuals such as corporate officers “acting in the interest of an employer” are individually liable for any violations of the requirements of FMLA.
If you meet the “separate entities” threshold under (c)(2), and thus can aggregate employees across your related companies to exceed a 500 employee headcount, then you are not covered by the law. Employees outside the U.S. are typically not counted toward the employee headcount under a normal FMLA analysis, and thus we do not believe they will be counted here, either.
For more information about recommended steps, please contact your Foley relationship partner. For additional web-based resources available to assist you in monitoring the spread of the coronavirus on a global basis, you may wish to visit the CDC and the World Health Organization.
Foley has created a multi-disciplinary and multi-jurisdictional team, which has prepared a wealth of topical client resources and is prepared to help our clients meet the legal and business challenges that the coronavirus outbreak is creating for stakeholders across a range of industries.
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