Department of Labor Corrects Temporary Rule and Provides Additional Q&A Regarding Families First Coronavirus Response Act

23 April 2020 Blog
Authors: Carrie Hoffman Daniel A. Kaplan Mark J. Neuberger Taylor Eric White Katelynn M. Williams
Published To: Coronavirus Resource Center:Back to Business Labor & Employment Law Perspectives

As we previously reported, on April 1, 2020, the U.S. Department of Labor (“DOL”) released a temporary rule (“the Rule”), at 29 C.F.R. § 826, regarding administration of the paid leave provisions in the Families First Coronavirus Response Act (“the Act” or “FFCRA”). The rule is effective from April 1, 2020 through December 31, 2020.  Since publication of the Rule, the DOL has issued some corrections to the Rule itself, and additional Q&A guidance.  The corrections and Q&A guidance clarify the DOL’s interpretation of the Act on some important employer questions.  

Stay-at-Home Orders vs. Quarantine or Isolation Orders (Q&A 87)

The question of whether a governmental stay-at-home order constitutes the type of “quarantine or isolation order” that triggers an employee’s right to Emergency Paid Sick Leave (EPSL) has generated some debate.  The DOL’s updated guidance reiterates the agency’s position that a stay-at-home order is indeed a quarantine or isolation order for purposes of the Act—but, the employee will not qualify for EPSL unless the order is the reason the employee cannot work or telework. The employer must have work for the employee to do.  In other words, if a workplace closes because of a stay-at-home order, an employee is not eligible for EPSL under the DOL’s interpretation.  So, when would a stay-at-home order effectively entitle an employee to EPSL? The new guidance cites examples of a containment zone that prohibits an employee from reaching his workplace, or an employee returning from a cruise and subject to a 14-day isolation order.  However, be aware that some members of Congress have taken issue with the DOL’s interpretation that an employer must have work for an employee to do on a particular day in order for the employee to take FFCRA leave.

Taking FFCRA Leave Concurrently with Employer-Provided Leave (Q&A 86)

The DOL guidance also reiterates that EPSL is in addition to any form of paid or unpaid leave provided by an employer policy, law, or collective bargaining agreement. An employer cannot require its own paid leave policies to run concurrently with EPSL, period. 

However, Emergency Family Medical Leave (EFML) is more complicated.  Prior to the Correction, the Rule had conflicting provisions regarding an employer’s ability to require employees to take EFML concurrently with employer-provided leave.  Now, the corrected Rule states that an employer can require an employee to take EFML concurrently with employer-provided leave, so long as the employer-provided leave would cover caring for children because their school or place of care is closed (or childcare provider is unavailable).  (For example, PTO or vacation leave could likely run concurrently, but paid sick leave for an employee’s heath condition likely could not.) The DOL’s new guidance further clarifies that an employer cannot require an employee to use such available paid leave during the initial two weeks of unpaid EFML, though the employee can elect to do so.  Bottom line, the DOL’s take is that employers can require concurrent use of certain employer-provided paid leave during the ten weeks of paid EFML. If an employer does go this route, keep in mind that the employee must receive full pay during the concurrent leave, but the Act’s tax credits are maxed out at wages paid equal to 2/3 pay the employee’s regular rate of pay, up to $200/day or $10,000 in total. 

Finally, remember that subject to federal or state law, an employer and employee may agree to supplement 2/3 pay under the EFML or EPSL, such that the employee receives his or her normal compensation. 

Computing EPSL and EFML Entitlement for Employees with Irregular Hours (Q&A 80-81)

Generally, employees are entitled to EPSL in an amount equal to the number of hours they are scheduled to work, on average, over a two-week period—up to 80 hours maximum.  For employees with irregular schedules, the employer must determine the average daily hours per calendar day and multiply by 14 calendar days. To calculate the average daily hours per calendar day: (1) determine the employee’s hours worked + leave taken in six-month period predating leave; (2) divide that amount of hours by the calendar days in the six-month period.

For EFML, employees are entitled to the number of hours they were normally scheduled to work on each workday of EFML taken.  If that number cannot be determined due to an irregular schedule, and the employee has been employed for at least six months, the employer must determine the employee’s average workday hours.  This calculation is similar to that for EPSL—but with a key distinction.  The EFML average is based on the number of hours the employee was scheduled to work per workday, not calendar day, divided by the number of workdays over the applicable six-month period. Again, the average includes both hours actually worked and hours of leave.  To calculate the average daily hours per workday: (1) determine the employee’s hours worked + leave taken in six-month period predating leave; (2) divide that amount of hours by the workdays in the six-month period.

The DOL guidance provides some helpful examples of computing EPSL and EFML entitlement pursuant to the above for employees with irregular schedules. 

Note on rounding hours of FFCRA leave (Q&A 84): The guidance also clarifies that employers can generally round the hours of FFCRA leave, so long as they use a consistent rounding principal applicable based on the increments they customarily use to track employees’ hours worked.  For example, employers cannot round FFCRA leave to the quarter hour if they customarily round the tenth-of-an-hour. Nor can employers round FFCRA leave for some employees who request it and not others.

Computing the Average Regular Rate for the FFCRA (Q&A 82-83, 85)

The average regular rate is computed over all full workweeks during the six-month period ending on the first day that paid sick leave or expanded family and medical leave is taken.  Note that according to the guidance, employers need not recalculate the average regular rate when employees take FFCRA leave intermittently, or, for example, on separate occasions weeks or months apart.  Rather, the DOL instructs employers to calculate an employee’s average regular rate one time, using the six-month period pre-dating the employee’s first use of either EPSL or EFML.  (Or, the duration of employment if the employee has not yet been employed six months.)  How that calculation is done depends on the employee’s type of compensation arrangement: 

  • Fixed hourly wages. If, during the six months predating the employee’s leave, the employee was paid exclusively on a fixed hourly wage, the average regular rate equals the hourly wage. 

  • Fixed salary compensation – specific hours.  If, during the six months predating the employee’s leave, the employee was paid a fixed salary that is understood to be compensation for a specific number of hours each workweek, the average regular rate is simply the hourly equivalent of that salary.

  • Fixed salary compensation – varying hours. If, during the six months predating the employee’s leave, the employee was paid a fixed salary that is understood to compensate the employee regardless of the number of hours they worked, the regular rate may vary.  Because exempt employees are paid a salary that compensates them regardless of the number of hours worked, this is the more likely scenario for salaried exempt employees.  In this case, follow the three steps outlined below for varying compensation arrangements.  If the employer does not know the number of hours the employee worked, use a reasonable estimate. 

  • Varying compensation arrangements. If, during the six months predating the employee’s leave, the employee was paid through a non-fixed arrangement (e.g., commissions, tips; multiple hourly rates), the regular rate might fluctuate from week to week.  In that case, compute the average regular rate using these steps: 

    • Step 1. Compute the employee’s non-excludable remuneration for each full workweek during the six-month period.  In computing this amount:
      • Include commissions and piece-rate pay. 
      • Count tips count only to the extent the employer applies them towards minimum wage obligations (i.e., takes a tip credit). 
      • Do not include overtime premiums.   
      • Do not count payments employees received for taking leave.

    • Step 2. Compute the number of hours the employee actually worked for each full workweek during the six-month period.  (Do not count hours for which employees took leave).

    • Step 3. Divide the sum of all non-excludable remuneration received over the six-month period (Step 1 total) by the sum of all countable hours worked in that same time period (Step 2 total). The result is the average regular rate.

As above, the DOL also illustrates calculation of the average regular rate at which FFCRA leave is paid with examples. 

Disclaimer 

The COVID-19 pandemic presents an unprecedented and still-evolving legal landscape for employers.  Therefore, the above interpretation is based on Foley & Lardner’s best judgment of available information in a rapidly changing and uncertain environment, and to that end we cannot guarantee that governmental authorities concur with the above.  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. Click here for Foley’s Coronavirus Resource Center to stay apprised of relevant developments, insights and resources to support your business during this challenging time. To receive this content directly in your inbox, click here and submit the form. 

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