USDOL Issues Updated FFCRA FAQs

The United States Department of Labor (USDOL) recently issued further clarification around several technical aspects of the Families First Coronavirus Response Act (FFCRA). As with our earlier advisories on past USDOL guidance (which can be viewed here, here, and here), we have summarized the new guidance which addresses the following topics:

• HCP and Emergency Responder Exceptions
• Calculating Regular Hours and Related Issues
• Calculating Regular Rate
• Quarantine Orders
• Requiring Leave
• USDOL Monetary Recovery

HCP and Emergency Responder Exceptions

Can an employer choose to exempt healthcare providers and emergency responders from certain aspects of FFCRA and not others?

Yes, to minimize the spread of the virus associated with COVID-19, the USDOL encourages employers to be judicious when exempting healthcare providers and emergency responders from the provisions of the FFCRA.

As such, an employer may decide, for example, to exempt these employees from leave for caring for a family member but choose to provide them paid sick leave in the case of their own COVID-19-related condition.

Calculating Regular Hours and Related Issues

How do employers calculate the FFCRA hours entitlement for an employee with an irregular schedule?

The Emergency Paid Sick Leave Ace (EPSLA) and Emergency Family Medical Leave Expansion Act (EFMLEA) use different methods to calculate the number of leave hours per day to which an employee with an irregular schedule is entitled. It is important that employers perform the calculation that is specific to the employee’s applicable leave.

For employees taking overlapping EPSLA and EFMLEA leave for childcare, this requires two different calculations that will likely yield different results. This is because, although both leaves are based on a six-month lookback period, EPSLA looks to the average hours per calendar day, while EFMLEA looks to the average hours per workday.

Determining the Six-Month Lookback Period

Employers determine the six-month lookback period by identifying the day the employee first takes paid sick leave or expanded family and medical leave under FFCRA, then counting back six calendar months from that date. That six-month period will be used to calculate the hours entitlement for all ESPLA and EFMLEA leave the employee takes under the FFCRA. Employers are not required to review a new six-month period each time an employee takes leave.

Please note, if an employee has been employed for less than six months, the employer computes the average regular rate over the entire employment period the employee was on the employer's payroll.

Rounding Hours

For the purposes of computing an employee's hours worked under the FFCRA, employers may round to the nearest time increment they customarily use to track the employee's hours worked.

For example, if an employer typically tracks hours worked in quarter-hour increments, the employer may round to the nearest quarter hour. The same employer may not round to the nearest quarter-hour for EPSLA/EFMLEA purposes if the employer typically tracks time in tenth-of-an-hour increments. Also, employers must use a consistent rounding methodology for all employees and may not round for some employees who request leave but not others.

Calculating Available Hours for Purposes of EPSLA

Employees with no regular schedule are entitled to two weeks of their average hours worked during the six-month lookback, up to a maximum of 80 hours. If an employee has an irregular schedule, an employer must conduct the following calculation and retain the documentation of this calculation for four years:

• 1. Start with the day on which leave is to start (for example, April 13, 2020);
• 2. Determine the six-month lookback period as discussed above (in this example, beginning October 14, 2019);
• 3, Total the number of hours the employee actually worked during this six-month period, including any leave hours;
• 4. Divide by the total number of calendar days in this period (in this example, 183);
• 5. Multiply this number by 14;
• 6. If this number is less than 80, that is the number of EPSLA hours to which the employee is entitled; if the number is greater than 80, the employee is entitled to the maximum 80 hours of EPSLA.

Calculating Available Hours for Purposes of EFMLEA

Eligible employees with no regular schedule are entitled to 12 weeks of EFMLEA of which the first two weeks are unpaid.¹ The final 10 weeks of leave under EFMLEA are paid based on a formula. If an employee has an irregular schedule, an employer must conduct the following calculation and retain the documentation of this calculation for four years:

• 1. Start with the day on which leave is to start (for example, April 13, 2020);
• 2. Determine the six-month lookback period as discussed above (in this example, beginning October 14, 2019);
• 3. Total the number of hours the employee actually worked during this period, including any leave hours;
• 4. Divide by the total number of workdays in this period;
• 5. This will result in the average hours per workday for which the employee is entitled to compensation while on EFMLEA.

Calculating Regular Rate

How do employers calculate an employee's average regular rate for purposes of paid EPSLA and paid EFMLEA?

Payments under both EPSLA and EFMLEA are based on the employee's average regular rate. Fortunately, the two statutes use the same formula to calculate this rate depending on the compensation method by which an employee is paid. 

Employees Paid a Fixed Hourly Rate

The average regular rate for employees paid exclusively on a fixed hourly rate is their fixed rate.

Employees Paid a Fixed Salary

The average regular rate for employees paid exclusively on a salary is determined by taking the employee's weekly salary (employers may need to do a pro rata calculation if the employee is paid a salary on a bi-weekly, semi-monthly, or monthly basis) and dividing the weekly salary by the number of hours the employee is understood to work per workweek (which is a consecutive period of seven days as designated by the employer).

If the hours actually worked vary per workweek, as is often the case, the average regular rate is calculated by dividing the total salary for the last six months by the number of hours actually worked or a best estimate thereof.

Employees Receiving Compensation Other Than or in Addition to a Fixed Hourly Rate or a Fixed Salary

Many employees receive additional compensation (e.g., bonuses, commissions, shift differentials, or premium pay of various kinds). This additional compensation must be included in a "regular rate" calculation, in the same manner as the established USDOL regulations in 29 CFR part 778 for computing the regular rate for FLSA minimum wage and overtime pay purposes. Experienced payroll administrators and HR managers should be well familiar with these regulations. Employers should consult with expert wage/hour legal counsel to the extent they have any uncertainty regarding when compensation, such as a performance -based bonus, must be included in the employees' regular rate.

The types of compensation that can be excluded from the regular rate calculation are very limited, and the default under the regulations is that all compensation must be included unless it is expressly excluded. In response to frequent areas of inquiry, the USDOL explains that:

• Commissions and piece-rate pay are included in the regular rate.
• Tips are included only if the employer is taking a tip-credit for tips.
• Certain overtime premiums (narrowly defined) are not included in the regular rate calculation.²

For each of these examples, the USDOL refers back to the wage/hour regular rate regulation (29 CFR part 778).

To calculate the regular rate for employees who receive compensation aside from a fixed wage or fixed salary, the employer must:

• 1. Start with the day on which leave is to start (for example, April 13, 2020);
• 2. Determine the six-month lookback period as discussed above (in this example, beginning October 14, 2019);
• 3. Determine the number of full workweeks in this period, using the employer's normal definition of a workweek (which consists of seven consecutive days). In this example, assuming the employer has designated the workweek as Monday 12:01 a.m. through Sunday midnight, there are 26 full workweeks.
• 4. Total the amount of compensation received during the 26 full workweeks (include all compensation unless it is compensation that can be excluded under 29 CFR part 778). The USDOL guidance refers to this as "non-excludable remuneration."
• 5. Divide the total non-excludable compensation by the total hours worked in the full workweeks to determine the regular rate of pay.

Quarantine Orders

Are stay-at-home and shelter-in-place orders considered "quarantine or isolation orders" under the EPSLA?

Yes, a "Federal, State, or local quarantine or isolation order" for purposes of the first qualifying reason for EPSLA paid sick leave includes shelter-in-place or stay-at-home orders issued by any federal, state, or local government authority.

However, for such an order to qualify an employee for leave under the EPSLA, being subject to the order must be the reason the employee is unable to perform available work or telework. An employee is not eligible for EPSLA paid sick leave if the employer does not have work for the employee to perform, even if the lack of work may be the result of a stay-at-home order that restricts the business from operating or results in too few customers for the business to maintain operations or similar reasons.

Requiring Leave

Can an employer require use of accrued PTO concurrently with EPSLA leave?

No. Paid sick leave under EPSLA is in addition to any form of paid or unpaid time off provided by an employer, law, or an applicable collective bargaining agreement. An employer may not require an employee to use employer-provided paid time off concurrently with EPSLA sick time.

Can an employer require use of accrued PTO concurrently with EFMLEA leave?

An employer may require that an employee use employer-provided paid time off concurrently with the 10 weeks of paid EFMLEA (for school/place of care closures for COVID-19 related issues). In this situation, the employer must pay the employee's full pay during the leave until the employee has exhausted employer-provided paid time off—including vacation and/or personal leave (typically not sick or medical leave). But note, the employer may only obtain tax credits for wages required by the statute (two-thirds of the regular rate up to $200 per day or $10,000 in total).

If the employee exhausts employer-provided paid time off, the employee will still be eligible to use remaining EFMLEA, subject to the daily and aggregate limits set forth in the law. Additionally, if an employee has exhausted employer-provided paid time off, the employer and employee may agree that the employer will supplement the two-thirds pay under the EFMLEA so that the employee receives the full amount of regular compensation. Such an arrangement is subject to applicable law.

When does an employee have the option of using PTO or paid statutory leave?

The new USDOL guidance states that an employee may elect—but may not be required—to take either ESPLA or employer-provided paid time off during the first two weeks of unpaid EFMLEA. Consistent with the regulations, the guidance states that employers cannot require that employees use employer-provided paid time during the unpaid portion of EFMLEA.

If an employee is taking EPSLA and EFMLEA concurrently for school/childcare closure issues, "the benefits provided by the EPSLA run concurrently with those provided by the EFMLEA."³Therefore, if the employee elects to use ESPLA for school/place of care closures, it will run concurrently with EMFLEA.

USDOL Monetary Recovery

Are there monetary remedies for failure to provide EPSLA?

Yes. EPSLA violations are considered violations of the FLSA. Under the FLSA, either the USDOL can bring an enforcement action or the employee can bring a private action.

If the USDOL brings an enforcement action on behalf of an employee, the employee is entitled to recover the full amount due under the EPSLA, which is the greater of an employee's regular rate of pay or the applicable minimum wage (federal, state, or local) for each hour of uncompensated paid sick leave taken, subject to the applicable EPSLA maximums. An employee is limited to receiving payment for only what he or she should have received under the EPSLA, and not anything more.

In many circumstances, employees also have a private right of action to sue in court for damages, which could exceed the above amount.

FOOTNOTES

1  Unless the employee elects to use other paid leave available to the employee.
2  29 CFR 826.60. Please note, although there are some inconsistencies between the USDOL guidance and the regulations (and within the regulations themselves) about the concurrent use of EPSLA with EFMLEA, employers should not require the use of EPSLA during the unpaid period of EFMLEA, based on the current USDOL guidance.
3 State laws regarding premiums included in a "regular rate" calculation may vary from USDOL regulations, but federal rules will govern for purposes of FFCRA compliance.