FAMILIES FIRST CORONAVIRUS RESPONSE ACT BECOMES EFFECTIVE TODAY

As we continue to strive to keep you updated on new legislative and regulatory actions that either will or might impact your credit union, you need to be mindful that the Families First Coronavirus Response Act (FFCRA), which Congress passed on March 18, becomes effective today, April 1, 2020.

The FFCRA applies to all businesses with 500 employees or less (although there is an exemption provision that could apply for businesses with fewer than fifty employees). Therefore, it certainly applies to credit unions that have an employee base of that amount.

While I am sure that your human resources staff has already been made aware of this new law from their HR associations and other sources, it is good for all executives to be aware of its provisions.

In this Client Update we will seek to provide an overview and synopsis that can help you understand its requirements and provisions as they relate to all qualifying businesses, including credit unions.

The FFCRA includes two key provisions, the Emergency Paid Leave Act and the Emergency Family and Medical Leave Expansion Act. We will hope to cover both provisions below.

We give credit to the National Federation of Independent Business (NFIB) which has published the most comprehensive overview of the FFCRA we have seen.

There are some important provisions in FFCRA with which all employers will be required to comply with.

Among those areas you should be aware of are the following

 There are two categories of leave that are specified as impacted by the FFCRA. These are:

• Paid Sick Leave (up to 10 days). Employees are eligible for up to two weeks, or 10 days, of paid sick leave, subject to an 80-hour cap for full-time employees.
• Expanded Family and Medical Leave (up to 10 weeks), After taking two weeks paid sick leave, employees who have been employed for at least 30 days may be eligible for up to an additional 10 weeks of partially paid expanded family and medical leave for reason #5 below.

Employers must comply with the FFCRA from April 1, 2020, until it expires on Dec. 31, 2020. Paid leave prior to April 1 will not count.

Businesses with fewer than 50 employees may qualify for exemption from the requirement to provide leave due to school closings or childcare unavailability if the leave requirements would jeopardize the viability of the business as a going concern.

All employees of private employers with 500 employees or fewer, regardless of how long they’ve been employed, are eligible for up to 10 days of emergency paid sick leave.

Employees will be eligible if they are unable to work (or telework) because:

• The employee is subject to a federal, state, or local quarantine or isolation order related to COVID-19.
• The employee has been advised by a health care provider to self-quarantine due to concerns related to COVID-19.
• The employee is experiencing symptoms of COVID-19 and seeking a medical diagnosis.
• The employee is caring for an individual who is subject to the previous provisions.
• The employee is caring for a son or daughter of such employee if the school or place of care of the son or daughter has been closed, or the childcare provider of such son or daughter is unavailable, due to COVID-19 precautions
• 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.

In its synopsis, the NFIB said if a business makes a decision to close or cancel work shifts for business reasons (i.e., lack of work), neither emergency paid sick leave nor expanded family leave will apply as they are available only to employees who are not working due to the specified reasons listed above, not including their employer’s decision to cease or reduce operations.

This determination seems to be agreed upon by others who have looked at the provisions of the FFCRA.

If an employee is out for reasons 1, 2 or 3 listed above, sick leave must be paid at the employee’s required compensation (as defined below); however, it is capped at $511 per day and $5,110 in the aggregate per employee. These are the numbers provided by the NFIB in their guidance.

The NFIB went on to say that if an employee is out for reasons 4-6 listed above, sick leave must be paid at 2/3 the employee’s required compensation and is capped at $200 per day and $2,000 in the aggregate per employee.

The FFCRA prohibits employers from requiring an employee to exhaust accrued paid-time-off (PTO) or state/local paid sick leave.

Employees are entitled to utilize federal emergency paid sick leave before using state or local paid sick leave or accrued employer-offered PTO.

Employer Reimbursement for Leave

Employers are entitled to receive 100% reimbursement for paid leave pursuant to the Act:

• Health insurance costs are also included in the credit
• Employers face no payroll tax liability
• Self-employed individuals receive an equivalent credit

Reimbursement will be in the form of:

• An immediate dollar-for-dollar tax offset against payroll taxes.

• Where a refund is owed, the IRS will send the refund as quickly as possible.

Employee Notice

All businesses covered by the law (i.e., private sector employers with fewer than 500 employees) are required to post a notice, even if they are a small business owner, the NFIB said.

We have included a link to the notice below:

https://www.dol.gov/sites/dolgov/files/WHD/posters/FFCRA_Poster_WH1422_Non-Federal.pdf

Employers may satisfy the notice requirements of the law by emailing or direct mailing the notice to employees or by posting the notice on an employee information internal or external website.

Since the law only applies to current employees, the notice does not have to be shared with laid-off individuals.

Additional Information from the Department of Labor

The Department of Labor has issued three forms of guidance to help employers and employees understand how the FFCRA will take effect: a fact sheet for employers, a fact sheet for employees and a question-and-answer document.

A link to each of these documents is provided below:

https://www.dol.gov/agencies/whd/pandemic/ffcra-employer-paid-leave

https://www.dol.gov/agencies/whd/pandemic/ffcra-employee-paid-leave

https://www.dol.gov/agencies/whd/pandemic/ffcra-questions

Even if an employee has already been provided paid leave due to COVID-19, they are still eligible to take paid leave under FFCRA on or after April 1, 2020 through Dec. 31, 2020. The emergency paid sick leave and expanded family and medical leave benefits are not retroactive.Calculating Total Number of Employees for Coverage DeterminationThe NFIB noted in its analysis that FFCRA applies to employers with 500 employees or less. In calculating the total number of employees, all full-time or part-time employees working within the United States (which includes all U.S. territories or possessions) are counted, including all employees on leave and temporary employees who are jointly employed with another company as determined under the Federal Labor Standards Act (FLSA).The DOL confirmed that the joint-employer test from the Fair Labor Standards Act and the integrated-employer test under the Family Medical Leave Act will be used to determine if multiple entities constitute a single employer for purposes of determining whether the employer has 500 employees or less.

Calculating Pay for Part Time and Variable Hour Employees

The FFCRA provides that for part-time employees, an employer must calculate the average number of hours an employee works in a two-week period to determine the amount of emergency paid leave that the part-time employee is entitled to receive.

When the employee’s hours vary, the employer can use a two-week average for the past six months.

If the employee has not been employed for the previous six months, the employer can look to the number of hours that the employer and employee agreed that the employee would work upon hiring.

If there is no agreement, the employer should use the average

There is no doubt but that the coronavirus era in which we are operating today has added some new compliance considerations. This is one that all credit union executives should be aware of – not because it is specific to credit unions, but because we are part of the covered business community under FFCRA.

While Dollar Associates is not a human resources consulting firm (thus our reason for utilizing the NFIB’s analysis to provide you with this guidance), we are committed to supporting our credit union clients in all matters compliance related.

However, an employee’s overtime premium is not used to calculate the employee’s regular rate of pay for purposes of calculating the amount of the paid leave benefit.

Overtime worked by an employee must be included for calculating the number hours paid to an employee in a single workweek under the Emergency Paid Sick Leave Act, subject to the 80-hour cap.

The regular rate of pay is calculated based on the average of an employee’s regular rate of pay as defined under the FLSA, for a period of up to six months prior to the date the employee takes leave.

The calculation of paid leave benefits under the FFCRA is based on the employee’s regular rate of pay subject to the caps specified in the law.

number of hours per day the employee was scheduled to work during the term of employment.

 

Until next time,