Brunini Law

Christopher R. Fontan

U.S. Department of Labor Unveils Newest Effort to Expand Employee Overtime Eligibility

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To borrow a phrase from the incomparable Yogi Berra, “[i]t’s like déjà vu all over again.” On Wednesday, August 30, 2023, the United States Department of Labor (“the DOL”) released its newest Proposed Rule that, if implemented, would broaden federal overtime pay regulations to cover millions of additional workers who are currently exempt from overtime eligibility.  Entitled Defining and Delimiting the Exemptions for Executive, Administrative, Professional, Outside Sales and Computer Employees, the Proposed Rule seeks to dramatically increase the standard salary level and the highly compensated employee total annual compensation threshold, as well as providing a built-in updating mechanism that would allow for automatic updating of all the thresholds.

 

New 2023 Proposed Rule

Under its new Proposed Rule, the DOL seeks to significantly raise the exempt salary threshold from $684 per week to $1,059 per week.  Stated another way, U.S. employees would need to earn $55,068 or more per year to be exempt from overtime pay – a change the agency says would impact 3.6 million workers who are currently exempt from overtime eligibility.  Additionally, the new Proposed Rule would make the following changes:

  • Automatically update the salary threshold every three (3) years.
  • Raise the threshold for the “highly compensated employee” exemption to $143,988 (from the current threshold of $107,432).
  • Apply salary thresholds in U.S. territories that are subject to federal minimum wage with some exceptions for American Samoa.

The Proposed Rule seeks to update the regulations that govern which executive, administrative, and professional employees (the so-called “white collar” workers) are entitled to minimum wage and overtime pay protections under the Fair Labor Standards Act (“the FLSA”).  The FLSA requires employers to pay its “non-exempt employees” overtime (1.5x the workers’ “regular rate of pay”) for all hours worked in excess of forty (40) per week.  See 29 U.S.C. § 207.  The DOL’s regulations implementing the FLSA sets forth a variety of employment classifications that are “exempt” from the FLSA’s overtime requirement—including employees performing executive, administrative, and/or professional job duties.

Since the 1940’s, in order for an employee to qualify as an exempt, “white collar” employee, he/she had to meet three “tests”:

  • The employee must be paid a predetermined and fixed salary that is not subject to reduction because of variations in the quality or quantity of work performed;
  • The amount of salary paid must meet a minimum specified amount; and
  • The employee’s job duties must primarily involve executive, administrative, or professional duties (as defined by the regulations).

 

Stroll Down Memory Lane

Until rather recently, the DOL’s last update to these regulations came in 2004, when the agency set the minimum salary threshold at $455 per week (or $23,660 per year).  Then, in May 2016, the Obama-era DOL kicked off a highly-contentious legal fight when it attempted change to the overtime rule by nearly doubling the minimum salary level from $23,660 to nearly $48,000 per year.  At the same time, the 2016 proposal would have also increased the total annual compensation requirement needed to exempt “highly compensated employees” to $134,004 annually (previously set at $100,000), established a mechanism for automatically updating the minimum salary level every three years and allowed employers to use nondiscretionary bonuses and incentive payments to satisfy up to 10% of the new standard salary level.

Ultimately, the May 2016 proposal was challenged in court.  On November 22, 2016, the U.S. District Court for the Eastern District of Texas enjoined the DOL from implementing and enforcing the proposal. On August 31, 2017, the court granted summary judgment against the DOL, invalidating the May 2016 proposal.  Currently, the Department is enforcing the regulations that have been in place since 2004, including the $455 per week standard salary level.

Ultimately, the Trump-era DOL formally rescind the Obama-era DOL’s 2016 proposal with its own new Proposed Rule, issued on March 7, 2019.  The Trump-era Proposal was formally adopted in 2020.  With its passage, the DOL officially raised the minimum salary level for exempt employees to $679 per week, or $35,308 annually—the level it currently sits at today.  Additionally, the 2020 rule change allowed employers to count nondiscretionary bonuses and incentive payments (including commissions) to satisfy up to 10% of the standard salary level test (provided such bonuses are paid annually or more frequently); and increased the total annual compensation requirement needed to exempt “highly compensated employees” to $107,432 annually.  Additionally, the 2020 rule change did not adopt any changes to the standard duties test for the white collar exemptions.

 

Moving Forward

Make no mistake—the DOL’s goal with the new Proposed Rule is to increase the number of employees eligible for overtime. As with the prior proposals, observers feel the number could rise well above the projected increase.  If implemented, the Proposed Rule will undoubtedly result in greater expense or operational change for many employers as they struggle to deal with a shrinking pool of workers who are eligible for an exemption from the overtime pay.

This newest Proposed Rule from the DOL is sure to face its own set of legal hurdles, especially in the face of an election cycle.  Experts predict another battle over whether or not the DOL actually possesses the statutory authority to issue a salary-basis or salary-level test.  The Proposed Rule is also still subject to a lengthy comment period before any final implementation.

In the meantime, employers are encouraged to be proactive and engage their legal counsel to begin planning for the change now.  Preparations should include auditing current practices and projecting the cost of change and FLSA compliance under the anticipated new framework. This includes evaluating the possibility and effects of significantly higher operating costs.

Brunini’s Labor & Employment specialists are monitoring these events and will update you accordingly.  In the meantime, feel free to contact any member of Brunini’s Labor & Employment Practice Group if you wish to discuss.

 

 

 

 

 

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Federal Government Releases New Form I-9 for U.S. Employers

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Federal Government Releases New Form I-9 for U.S. Employers

By:  Chris Fontan

 

On August 1, 2023, the U.S. Citizenship and Immigration Services (“USCIS”) released its newest version of the federal Form I-9.  U.S. employers are allowed to continue using the previous version of the Form I-9 through October 31, 2023.  However, starting on November 1, 2023, all employers are required to use this new, updated form.

 

Updates to the Form I-9

The USCIS made a number of material changes to the Form I-9 with this latest update, including:

  • Reducing Sections 1 and 2 to a single page; previously, these sections took up two pages.
  • Relocating Section 1 (Preparer and/or Translator Certification area) to a separate, standalone supplement for employers to provide to its applicants or employees as needed.
  • Revising the Lists of Acceptable Documents page—for use with Section 2—to include:
    • Adding some acceptable receipts, and
    • Providing guidance and links to information on automatic extensions of employment authorization documentation
  • Moving Section 3 (Reverification and Rehire area) to a standalone supplement for employers to utilize as needed.
  • Including a checkbox that allows employers to indicate that they have examined an applicant’s/employee’s Form I-9 documentation remotely pursuant to newly authorized virtual procedures (as opposed to traditional physical examination).

 

The updated Form I-9 virtually cuts its instruction section in half, reducing it from fifteen pages down to eight pages.  Additionally, the form has also been re-designed to be fillable on mobile devices, such as tablets and other smart phones.

 

Remote Verification

 

The biggest change with the new Form I-9 is the ability for employers to indicate they “virtually” examined an applicant’s/employee’s identity and employment authorization documents—as opposed to the traditional method of reviewing these documents in person. To participate in the remote examination option, employers must:

 

  • Be enrolled in E-Verify and be in good standing,
  • Examine and retain “clear and legible” copies of all documents,
  • Conduct a live video interaction with the employee during the verification process, and
  • Create an E-Verify case if the employee is a new hire.

 

Employers who were participating in E-Verify and created cases for employees whose documents were examined virtually between March 20, 2020, and July 31, 2023, may choose to use the new alternative procedure to satisfy the physical document examination requirement by August 30, 2023. Note however, that employers who were not enrolled in E-Verify during the COVID-19 flexibilities time frame must complete an in-person physical examination by August 30, 2023.

While the new Form I-9 is shorter and more streamlined, employers and job applicants are advised to use caution.  While the Form I-9 began as a one page document, it has existed as a multi-page form for over a decade.  As a result, experts fear that employees or employers will accidentally supply information for each other’s sections, which is prohibited under federal law. In addition, there is an increased likelihood that employees and employers will make more mistakes in completing the document, which could lead to serious consequences since individuals execute the Form I-9 “under penalty of perjury.”

 

In addition, questions also remain concerning the remote verification option.  For example, how and where should employers note whether employees that went through remote verification over the prior three years have brought in new documents?  Do employers need to document and retain proof of the video call required for virtual review on file?  Employers are advised to remain alert for further guidance on these and additional issues from USCIS in the coming months.

 

Brunini’s Labor & Employment specialists are monitoring these events and will update you accordingly.  In the meantime, feel free to contact any member of Brunini’s Labor & Employment Practice Group if you wish to discuss.

 

 

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New Stimulus Package and the Families First Coronavirus Response Act

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On Sunday, December 27, 2020, President Donald Trump officially signed into law Congress’ most-recent major stimulus package, aimed at blunting the continuing economic effects of on-going COVID-19 pandemic.  Earlier this year, Congress passed a larger series of similar measures, including the $2.2 trillion Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”), as well as $104 billion Families First Coronavirus Response Act (“FFCRA”).  This most recent stimulus package totals $900 billion, and was signed in conjunction with a separate $1.4 trillion government funding bill.

The December 2020 stimulus package provides continued funding for a wide range of governmental assistance programs initiated earlier this year—including the Paycheck Protection Program and expanded unemployment assistance.  One question most HR and employment professionals had concerning the December 2020 stimulus package was what, if any, impact it would have on the fate of the FFCRA.

 

The Families First Coronavirus Response Act (FFCRA)

Signed into law on March 18, 2020, the FFCRA contained two principal mandates: (1) the establishment of new, paid sick leave rights for workers impacted by COVID-19 and those serving as caregivers for others with COVID-19; and (2) the establishment of new, enhanced leave entitlements under the Family Medical Leave Act (FMLA), including limited paid leave rights.  Over the past nine months, human resources professionals have worked hard to interpret and implement these new leave provisions.

 

The December 2020 Stimulus Package’s Impact on the FFCRA

One key feature of the FFCRA was the fact that it was set to automatically expire on Thursday, December 31, 2020.  Many experts felt that Congress would use the December 2020 stimulus package as an opportunity to extend the obligations/benefits of the FFCRA.  However, the final text of the December 2020 stimulus package does not extend the paid sick leave and paid family and medical leave requirements of the FFCRA. Therefore, an employer’s obligation to provide paid leave under the FFCRA will cease at the end of the year.  (Note: It is possible that the employee could be entitled to normal unpaid leave under the FMLA even after the FFCRA expires, if they still have weeks available under the FMLA.)

Congress did take the opportunity to extend the tax credit contained for both the Emergency Paid Sick Leave and the Emergency Family and Medical Leave contained within the FFCRA.  So, while employers are not required to provide paid leave under the FFCRA after December 31st, if they voluntarily elect to do so (and assuming covered employees have eligible leave remaining), these employers can continue to claim the payroll tax credit for those payments through March 31, 2021.

Despite Congress’ decision not to extend the FFCRA with the December 2020 stimulus package, we strongly encourage employers to continue to monitor this issue into early 2021, as President-elect Biden has already discussed plans to pass an even larger stimulus package once both he and the “new” Congress take office.  It is possible that this legislation could expand/enhance the FFCRA.

Can U.S. Employers Require Employees to Receive COVID-19 Vaccine?

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As most everyone has seen or heard, the first wave of vaccines targeting the COVID-19 outbreak are beginning to emerge and progress at a breakneck pace.  On December 11, 2020, after months of research and development, the U.S. Food and Drug Administration (FDA) granted an “emergency use authorization” (EUA) for Pfizer’s COVID-19 vaccine. One week later, on December 18, 2020, the FDA granted a similar EUA for Moderna’s COVID-19 vaccine.  Given the astronomical rise in the infection rate, employer interest in the vaccines is extremely high. Thus, employers are asking whether they can, or should, require employees to take the vaccine.

The Current State of Approval of the Vaccines

Biological products such as vaccines are typically approved and regulated by a division within the FDA. For a vaccine to be approved, the FDA must determine that it is both safe and effective, based on data from laboratory studies and clinical trials. The FDA assesses both the quality and the quantity of the data provided when determining whether a vaccine meets this standard.

While this generally is a lengthy process, the FDA has the authority to accelerate the development and review process for vaccines used to treat/prevent serious conditions or life-threatening diseases, such as COVID-19. Even under an expedited approval process, however, priority review may take up to six months or more from the time of application.  In fact, the FDA previously announced the issuance of EUAs for COVID-19 vaccines will also requires at least two months of follow-up safety data after trial participants have been fully vaccinated.

The FDA’s issuance of EUAs to Pfizer’s and Moderna’s vaccines signifies that the US Department of Health and Human Services (HHS) has concluded: (1) COVID-19 is a serious or life-threatening disease; (2) it is reasonable to believe that the vaccine may be effective in treating or preventing the disease; (3) the known and potential benefits of the vaccine outweigh the known and potential risks; and (4) there is no adequate, approved, and available alternative.

Can Employers Mandate Employee Inoculation

With the impact of COVID-19 on business and the economy only continuing to intensify, many employers want to know if they can require their employees to receive one of these COVID-19 vaccines.  As a threshold matter, it is important to remember that FDA approval via a EUA is different from full FDA approval.  It remains somewhat unclear whether employers may require employees to be inoculated with a vaccine approved only pursuant to a EUA.

Practically speaking, some feel that the language within the EUAs could preclude employers from enforcing a requirement to take a vaccine issued under a EUA, though this issue has never been legally tested.  When a vaccine is issued under a EUA, the FDA (and the vaccination provider) has an obligation to inform vaccine recipients about its potential benefits and risks, the extent to which such benefits and risks are unknown, whether any alternative products are available, and “that they have the option to accept or refuse the vaccine.”  This language comes from the federal statute governing the EUA.

While this statement would seem to preclude mandatory vaccination—at least during a EUA stage—it is probable that this directive is towards government entities—in other words, prohibiting the government from forcing the public at large to receive the vaccine. It does not appear targeted towards private employers and their ability to condition an individual’s continued employment on taking the vaccine.  (This analysis may be different in unionized settings governed by a collective bargaining agreement.)

Assuming that the language within the EUA is not an issue, other laws touch on the ability of an employer to mandate inoculation of its workforce.

OSHA

At present, there is no OSHA standard that would mandate employers to offer a COVID-19 vaccine when one becomes available. Similarly, OSHA has not yet provided guidance on COVID-19 vaccines. There is some speculation in the legal community that OSHA may use the OSH Act’s so-called General Duty Clause to issue citations to employers that fail to offer COVID-19 vaccines. OSHA issues citations under its General Duty Clause when no specific OSHA standard applies.

In a 2009 letter of interpretation, OSHA previously said that employers that wished to require employees to receive a seasonal flu vaccine could do so, subject to certain exceptions.  OSHA emphasized that employees need to be properly informed of the benefits of the vaccinations. It clarified that if employees refuse the vaccine due to a reasonable belief that they have a medical condition creating a real danger of serious illness or death (for example, a serious reaction to the vaccine), they may be protected as a whistleblower under Section 11(c) of the Occupational Safety and Health Act.

Ultimately, OSHA’s statutory authority to issue a General Duty Clause citation will depend on a variety of factors, including (1) guidance from the CDC and OSHA on use of the vaccine in the workplace, and (2) the strength of the employer’s COVID-19 safety and health program and whether it follows other guidance from public health officials.

EEOC

On December 16, 2020, the EEOC updated its ongoing COVID-19 guidance with questions-and-answers specifically addressing mandatory COVID-19 vaccination policy issues.  In sum, the guidance stated that employers can implement and enforce mandatory COVID-19 vaccination policies for employees, with certain exceptions and caveats.

More specifically, the EEOC stated that employers can require that employees receive the COVID-19 vaccine as a condition of returning to, or remaining in, the workplace. However, employers must attempt to accommodate employees who, due to medical disabilities or sincerely-held religious beliefs, decline or refuse to receive the vaccine.  If an employer determines, based on objective evidence, that the presence of an unvaccinated employee (i.e., one who declines or refuses to be vaccinated against COVID-19 for disability or religious reasons) presents a “direct threat to the health and safety of persons in the workplace that cannot be reduced or eliminated through a reasonable accommodation,” the employer can exclude the employee from the workplace. When the employer excludes an unvaccinated employee from the workplace due to the perceived direct threat presented by his or her presence in the workplace, the employer may not automatically terminate the employee, but instead must assess whether other accommodations, such as remote work, can be provided.

According to the EEOC, administration of a COVID-19 vaccine by an employer, or by a third-party with which the employer has contracted to provide vaccinations to employees, is not a “medical examination” for purposes of the Americans with Disabilities Act (ADA). Similarly, employers can either administer the vaccine or requiring its employees to provide proof of vaccination without implicating the Genetic Information Non-Discrimination Act (GINA).

NLRB

Employers with unionized workforces should be mindful of the National Labor Relations Act (NLRA) and any labor contract obligations. Absent a “legal” mandate that employees be vaccinated (by a federal, state or local government), a vaccine requirement likely would be considered a mandatory subject of bargaining that gives rise to a duty to bargain prior to implementation, unless there’s an existing labor contract that provides for a management right to implement such a decision without bargaining. Employers also should consider any labor contract language that would foreclose mandatory vaccination.

Even in a nonunionized setting, there are potential NLRA implications. Section 7 of the NLRA grants employees the right to engage in “concerted activities” for the purpose of “mutual aid and protection.” This provision may protect the rights of employees who engage in concerted activities with regard to a mandatory workplace vaccine—such as: protesting against a mandatory vaccination policy, organized office communications or flyers among coworkers concerning such a policy, or even simple coworker discussions about the vaccine.

State Laws

State laws may also play a role with respect to regulation of a COVID-19 vaccine. To date, it does not appear that any state laws have been enacted regarding the COVID-19 vaccine.  However, nearly all states require certain healthcare facilities to mandate, or at least offer various immunizations, such as seasonal influenza, Hepatitis B, and Measles, Mumps, Rubella (MMR), to their workers. Some states strictly limit the reasons a vaccination may be declined.  At the same time, a significant number of other states—including Alabama, Kentucky and Tennessee—permit an employee to decline the influenza vaccination for any reason, so long as the employee was informed of the health risks beforehand. Therefore, before implementing any workplace COVID-19 vaccination policy, employers should consider any relevant legislative developments in their local jurisdictions.

CONCLUSION

Currently, there are more questions than answers regarding COVID-19 vaccines. Even though an employer likely can require its employees to get the COVID-19 vaccine, employers should weigh the full scope of employee relations concerns and potential legal challenges associated with doing so. While the federal government has issued projections which indicate that there may be enough vaccine to reach the vast majority of Americans who want to take it by early April 2021, initial supplies of both vaccines are expected to be limited throughout the remainder of 2020 and early 2021. As a result, widespread vaccines will not be available for most people or businesses right away, making compliance with a mandate tricky.

Employers should consider the practical impacts of a mandatory inoculation policy before mandating that employees get vaccinated, such as: the supply of available vaccines; pay or time off for the time an employee spends getting vaccinated, or who has side effects afterwards; and reimbursement or coverage of any cost for the vaccine.

You are STRONGLY encouraged to consult with your Labor & Employment counsel before designing and/or implementing any type of mandatory COVID-19 vaccination policy.

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U.S. Department of Labor Provides Additional Guidance on Employers’ OSHA Recordkeeping Responsibilities During COVID-19

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During the COVID-19 pandemic, employers have been forced to address the application of virtually every legal labor and employment obligation in the context of the pandemic.  One of these obligations includes an employer’s responsibilities under the federal Occupational Safety and Health Act (OSHA), which is administered by the U.S. Department of Labor (DOL).  The DOL previously published its Guidance on Preparing Workplaces for COVID-19, in which it outlined steps for employers to protect their employees.

On April 10, 2020, the DOL issued additional guidance addressing the agency’s enforcement of OSHA’s recordkeeping requirements amid the COVID-19 pandemic.  Generally, OSHA recordkeeping requirements command “covered employers” to record certain work-related injuries and illnesses on their OSHA 300 log. However, since the on-set of this pandemic, employers have wrestled with whether they are required to record an employee’s COVID-19 illness—and if so, when.

According to the DOL, COVID-19 is “recordable” and must be included on an employer’s OSHA 300 log, if:

  • The case is a confirmed case of COVID-19, as defined by Centers for Disease Control and Prevention (CDC);
  • The case is “work-related,” (as defined by 29 CFR § 1904.5); and
  • The case involves one or more of the general recording criteria, (as outlined by OSHA and set forth in 29 CFR §1904.7). Per OSHA, cases meet this recording criteria if it results in death, days away from work, restricted work or transfer to another job, medical treatment beyond “first aid,” or loss of consciousness.

In the same guidance, the DOL expressly stated that it will not require covered employers to make a determination regarding “work-relatedness” (Step # 2 above), except where:

  • There is objective evidence that a COVID-19 case may be work-related; and
  • The evidence was reasonably available to the employers.

The DOL expressly states that this limited recordkeeping waiver does not apply to employers in the healthcare industry, emergency response organizations (e.g., emergency medical, firefighting and law enforcement services), and correctional institutions.

The DOL’s stated goal of this limited enforcement is to “help employers focus their response efforts on implementing good hygiene practices in their workplaces, and otherwise mitigating COVID-19’s effects, rather than on making difficult work-relatedness decisions in circumstances where there is community transmission.”

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New Guidance for Employers on Obtaining COVID-19/Paid Sick Leave Tax Credits

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The Internal Revenue Service (IRS) has finally provided employers covered by the Families First Coronavirus Response Act (FFCRA)—those employers with less than 500 employees—with guidance concerning the documentation needed in order to seek the refundable payroll tax credits provided for under the FFCRA.  In so doing, the IRS has essentially established the documentation employees should be prepared to provide to employers in order to obtain the new COVID-19 related paid sick leave rights.

As previously reported, President Trump officially signed the FFCRA into law on March 18, 2020.  Among its provisions, the FFCRA set out several key mandates that impact employers, including:

  • New, separate paid sick leave rights for employees impacted by COVID-19 and those serving as caregivers for individuals with COVID-19; and
  • New, enhanced leave entitlements under the federal Family Medical Leave Act (“FMLA”), including paid leave under FMLA.

Since its passage, employers covered by the FFCRA have worked to understand and implement the FFCRA, including how to obtain the refundable tax credits provided by Congress as a way to offset the costs of these new mandates.

Recently, the Internal Revenue Service (IRS) provided its own initial guidance to assist covered employers with the mechanics of complying with the FFCRA.  Of particular importance to employers, the IRS provided some guidance regarding what information covered employers should receive from an employee in order to “substantiate” eligibility for the FFCRA tax credits.  You should maintain all records noted below for at least four (4) years after the payroll tax becomes due or is paid, whichever is later.

General Required Documentation

According to the IRS guidance, a covered employer will “substantiate eligibility” for the FFCRA’s paid sick leave and/or paid family leave credits if the employer receives a written request for such leave from the employee in which the employee provides:

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

In addition, the IRS directs covered employers to “create and maintain records” that include the following information:

  1. Documentation to show how you determine the amount of qualified sick and family leave wages you paid to each employee, including records of work, telework, and qualified family leave;
  2. Documentation to show how you determine the amount of qualified health plan expenses that the employer allocated to wages;
  3. Copies of any completed Forms 7200, Advance of Employer Credits Due to COVID-19, that you submit to the IRS;  and
  4. Copies of the completed Forms 941, Employer’s Quarterly Federal Tax Return, that you submit to the IRS.

Reason-Specific Documentation

In addition to the general requirements outlined above, several of the specific COVID-19 related reasons for leave require their own additional details.  For example, in the case of a leave request based on “a quarantine order or self-quarantine advice,” the statement from the employee should include the name of the governmental entity ordering quarantine or the name of the health care professional advising self-quarantine, and, if the person subject to quarantine or advised to self-quarantine is not the employee, that person’s name and relation to the employee.

Similarly, in the case of a leave request 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.

Additionally, with respect to the employee’s inability to work or telework because of a need to provide care for a child older than fourteen (14) during daylight hours, a statement that special circumstances exist requiring the employee to provide care.

While this IRS guidance does provide covered employers with additional clarity on the types of forms and other documentation needed to obtain the sought-after refundable tax credits under the FFCRA, the IRS guidance also raises other questions that will need to be answered. For example, the IRS guidance does not specify what would satisfy “statement of the COVID-19 related reason the employee is requesting leave and written support for such reason.”  Legal commentators recommend that any certification forms distributed to employees requesting leave also include language indicating that “additional documentation may be required.”

As the IRS and DOL continue to release additional information on the process for employers to receive these important tax credits, we will continue to monitor further proposed legislation and its potential effects on employers.

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U.S. Department of Labor Releases Model Posting for Families First Coronavirus Response Act

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On Wednesday, March 25, 2020, the U.S. Department of Labor (DOL) released the first version of the required notice posting that is required as part of the Families First Coronavirus Response Act (FFCRA).  You can find the current version of this poster by going to this DOL website: https://www.dol.gov/sites/dolgov/files/WHD/posters/FFCRA_Poster_WH1422_Non-Federal.pdf.  While the DOL did not indicate the date by which employers would need to post this notice poster, covered employers are advised to post it by at least April 1, 2020, the effective date of the FFCRA.  Each “covered employer”—those with 500 or less employees—must post this notice of the FFCRA requirements in “a conspicuous place on its premises of the employer where notices to employees are customarily posted.”  An employer may also satisfy this requirement by emailing (or directly mailing) the notice to its employees.  An employer may also post this notice on an employee information website (such as an intranet).

At this time, Brunini’s Labor & Employment Practice Group suggests that employers wait to print out and post this material until March 31, 2020, as the DOL may issue an updated version.  If such an update is provided, the DOL should post the update in this location.

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U.S. Department of Labor Issues First Guidance Concerning Families First Coronavirus Response Act (FFCRA)

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On Wednesday, March 18, 2020, President Trump officially signed the Families First Coronavirus Response Act (FFCRA) into law.  The text of the FFCRA provided broad details concerning its two principal mandates: (1) new, paid sick leave rights for workers impacted by COVID-19 and those serving as caregivers for others with COVID-19; and (2) new, enhanced leave entitlements under the Family Medical Leave Act (FMLA), including limited paid leave rights.  However, Congress failed to address many of the details concerning the implementation of the FFCRA, instead deferring to the Secretary of Labor.

On Tuesday, March 24, 2020, the U.S. Department of Labor (DOL) issued a series of guidance attempting to answer preliminary questions concerning the mechanics of the FFCRA.  Specifically, the DOL issued a General Question and Answer page, along with Fact Sheets for Employers and Employees.  The DOL also stated it also will be issuing implementing regulations regarding the new law in the near future, as well as additional guidance.  Of note, the DOL indicated that the FFCRA will officially go into effect on Wednesday, April 1, 2020—not on April 2nd as originally expected.

While circumstances remain fluid, we will continue to monitor further proposed legislation and its potential impact on our clients.

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Internal Revenue Service & Department of Labor Issue New Guidance on Employer Tax Credits under Families First Coronavirus Response Act

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As previously reported, President Trump signed the Families First Coronavirus Response Act (FFCRA) into law on Wednesday, March 18, 2020.  Among its provisions, the FFCRA set out several key mandates that impact employers, including:

  • New, separate paid sick leave rights for employees impacted by COVID-19 and those serving as caregivers for individuals with COVID-19; and
  • New, enhanced leave entitlements under the federal Family Medical Leave Act (“FMLA”), including paid leave under FMLA.

Since its passage, employers covered by the FFCRA—those with 500 employees or less—have expressed concerns with the FFCRA, ranging from interpretation of its exemption to financing of the new mandates.

Under the FFCRA, employers are entitled to reimbursement for up to 100% of the cost of wages for such leave, including health insurance costs in the form of payroll tax credits. The credits max out at $511 per day for employees who unable to work because they are in Coronavirus quarantine or self-quarantine or have Coronavirus symptoms and are seeking diagnosis and at $200 per day for employees who are caring for someone with Coronavirus or is caring for a child because the child’s school or child care facility is closed or provider is unavailable due to the Coronavirus.   An additional credit is available for health insurance costs for such affected employees during the time they are on leave from work.

Over the past few days, the Internal Revenue Service (IRS) and U.S. Department of Labor (DOL) each issued administrative guidance concerning the mechanics of the tax credits for small and midsized businesses to help cover the cost of providing COVID-19 related paid leave to employees. The highlights include:

  • Employers may keep, rather than deposit, the payroll taxes due in an amount equal to the employer’s cost of qualifying sick and childcare leave paid.
  • The federal government is offering a way to shorten the waiting time for employers to receive the payroll tax refund. A new refund request form is coming soon that may be filed immediately to cover employer costs of qualified sick or childcare leave if the costs exceed payroll withholdings due. Refunds should be processed within 2 weeks.
  • 30-day non-enforcement period for good faith compliance efforts.

The IRS and DOL plan to release additional information on the process for employers to receive an advance payment for the credit.  While circumstances remain fluid, we will continue to monitor further proposed legislation and its potential effects on employers.

https://www.dol.gov/newsroom/releases/osec/osec20200320

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President Trump Signs Revised Families First Coronavirus Response Act into Law

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On Wednesday (March 18, 2020), Congress passed a revised version of the Families First Coronavirus Response Act (“the Act”), which President Donald Trump wasted little time signing into law.  The final version of the Act mirrored much of the original version of the legislation passed by the U.S. House of Representatives on March 14, 2020, but also contained several substantive revisions.  The Act applies only to employers with fewer than 500 employees. Employers’ obligations under the Act become effective within 15 days of enactment—or on April 2, 2020—and automatically expire on December 31, 2020.

As outlined previously, the Act includes a variety of provisions, including:

  • Free COVID-19 testing
  • Multiple types of paid emergency leave
  • Enhanced unemployment insurance
  • Additional funding for nutritional programs
  • Protections for health care workers and employees responsible for cleaning at-risk places.
  • Additional federal funds for Medicaid

Among these provisions, the Act sets out several key mandates that impact employers: (1) new, separate paid sick leave rights for employees impacted by COVID-19 and those serving as caregivers for individuals with COVID-19; and (2) new, enhanced leave entitlements under the federal Family Medical Leave Act (“FMLA”), including paid leave under FMLA.

Emergency Paid Sick Leave Act

First, the Act requires employers with fewer than 500 employees to provide full-time employees (regardless of how long the employee had been employed prior to the leave) with 80 hours of paid sick leave for qualifying reasons. Part-time employees receive only the number of hours they have worked over an average two (2) week period.

The Emergency Paid Sick Leave benefits are available only to employees who are absent from work for qualified, Coronavirus-related. Specifically, to qualify for the Emergency Paid Sick Leave benefits under the Act, an employee’s leave must be for one of the following purposes:

  1. The employee is subject to a government quarantine/isolation order related to Coronavirus;
  2. The employee has been advised by a health care provider to quarantine for Coronavirus concerns;
  3. The employee is experiencing symptoms of Coronavirus and seeking a medical diagnosis;
  4. The employee is caring for an individual who is subject to an order as described above or has been advised by a health care provider as described above;
  5. The employee is caring for a son or daughter if the child’s school or place of care has been closed or the child’s child care provider is unavailable due to Coronavirus precautions; or
  6. The employee is experiencing any other substantially similar condition specified by the Secretary of Health and Human Services in consultation with the Secretary of the Treasury and the Secretary of Labor.

Employees who need leave to care for themselves (reasons 1-3 above) are entitled to their full regular rate of pay for the number of hours they would work per day. However, employers are now allowed to cap this amount of paid benefits at $511 per day ($5,110 aggregate) per employee. Employees who need leave to care for others—including children home from school or without childcare— (reasons 4-6 above) are entitled to only 2/3 of their regular rate of pay (or the applicable minimum wage, if greater). The amount of paid sick leave for this leave is capped at $200 per day ($2,000 aggregate) per employee.

Significantly, employers must provide these benefits in addition to any existing paid leave benefits. In other words, employees are entitled to exhaust all available emergency paid leave provided by this Act before they are required to use any otherwise available leave benefits their employer may offer.

The Act does not address employers’ right to request certification or documentation from employees in need of leave, or how the 500 employee threshold is determined. Many anticipate that the Department of Labor will issue regulations addressing these issue at a later time.

Emergency Family Medical Leave Expansion Act

The Act also significantly amends and expands FMLA on a temporary basis.  This FMLA expansion covers all employers with fewer than 500 employees—not just employers of 50 or more employees. It also lowers the eligibility threshold to employees who have worked for only 30 days (or more).  As a result, thousands of employers not previously subject to the FMLA may be required to provide job-protected leave to employees for a COVID-19 coronavirus-designated reason.

The Act now includes language allowing the Secretary of Labor to exclude “healthcare providers and emergency responders” from the definition of employees who are allowed to take such leave—although these terms themselves remain undefined.  The Act also allows the Labor Department to exempt small businesses with fewer than 50 employees, if the required leave would jeopardize the viability of their business.

Any individual employed by the employer for at least 30 days (before the first day of leave) may take up to 12 weeks of job-protected leave to allow an employee (who is unable to work or telework) to care for the employee’s child (under 18 years of age), if the child’s school or place of care is closed or the childcare provider is unavailable due to a public health emergency. Under the final version of the Act, this is now the only qualifying basis for Coronavirus-related FMLA leave, and represents a significant departure from the original version passed by the House (which contained several other COVID-19-related reasons to provide Emergency FMLA).

Employers may provide the first 10 days of this leave without pay. While employees can elect to substitute or use otherwise accrued paid leave during these initial 10 days, employers may not require employees to do so, no matter how their policies may read. Employees could elect to use their paid sick leave provided by the Emergency Paid Sick Leave Act (see above) for this time to be paid. After this initial 10-day period, employers must provide additional paid leave to their employees for the remaining 10 weeks, but only at two-thirds of the employee’s regular rate of pay for the number of hours the employee would normally be scheduled to work. The amount of pay during these 10 weeks is capped at $200 per day ($10,000 aggregate) per employee.

Employees are required to give their employers “as much notice as practicable” when this type of leave is foreseeable.  Like the Emergency Paid Sick Leave portion of the Act, the FMLA Expansion does not include any reference to an employer’s right to request certification or documentation of an employee’s need for leave.  Many anticipate that the Department of Labor will issue regulations addressing these issues at a later time.

Employers must also remain aware that the Act’s paid-leave obligations are supplemental to existing federal employee leave laws. Employers are still bound by traditional FMLA, FLSA and ADA analyses for employees. For example, although an employee diagnosed with COVID-19 may not qualify for paid leave under the Act’s expanded FMLA paid leave, that same employee may have a “serious health condition” under traditional FMLA analysis, which would entitle the employee to unpaid, job-protected leave.

Lastly, employers with 25 or more employees will have the same obligation as under traditional FMLA to return any employee who has taken Emergency FMLA to the same or equivalent position upon the return to work. Conversely, employers with fewer than 25 employees are generally excluded from this requirement if the employee’s position no longer exists due to an economic downtown or other circumstances caused by a public health emergency during the period of Emergency FMLA. This exclusion is subject to the employer making reasonable attempts to return the employee to an equivalent position and requires an employer to make efforts to return the employee to work for up to a year following the employee’s leave.

Employer Tax Credits

Many small-business owners are worried about how to pay for these benefits, especially at a time when business across numerous industries has basically come to a halt. The Act aims to defray these costs for employers through a tax credit.  In order to mitigate the cost of the Paid Sick Leave mandate, the Act grants to employers a credit against their federal payroll tax obligations (the 6.2 percent tax employers pay on each employee’s salary) equal to 100% of the cost of up to 10 days of Paid Sick Leave, subject to a maximum daily rate of $511 for each employee that is directly impacted by COVID-19 or $200 per day for each employee that is caring for a family member impacted by COVID-19 or a child whose school is closed or for whom childcare is unavailable due to COVID-19.  If the amount of the allowable credit exceeds the employer’s payroll tax liability, the U.S. Government will refund the excess amount back to the employer.

Employers are also entitled to a refundable payroll tax credit for 100% of the cost of wages for Paid Family & Medical Leave subject to maximum amounts of $200 per day per employee and $10,000 in the aggregate for all calendar quarters.  In addition, employers are entitled to a credit for an allocable share of the costs of providing group health plan coverage associated with such wages.  Self-employed individuals are granted a similar refundable credit against their federal income tax liability based upon their average daily self-employment income, subject to the same $511 and $200 daily limits that apply to Paid Sick Leave.

What Does This Mean For Your Business?

For employers with fewer than 500 employees, the Act obviously imposes new paid-leave requirements for certain employees. Although larger employers are not bound by the legal obligations set forth in this legislation, they should become familiar with the terms of this law to assist in formulating voluntary, temporary internal policies and answering questions from employees. It is also possible that legislation impacting larger employers will follow.

Employers must view these new paid leave obligations in conjunction with existing federal, state, and local leave laws when examining their employees’ rights to protected leave. While circumstances remain fluid, we will continue to monitor further proposed legislation and its potential effects on employers.