Podcast: Families First Coronavirus Response Act - Key Employer Takeaways
Millions of US workers are able to receive federally mandated paid leave for the first time under the Families First Coronavirus Response Act (FFCRA). But with few employers unscathed by the COVID-19 crisis, many are wondering what this emergency law means for them.
Littler employment attorney Jeff Nowak, a leading authority on leave law issues, joins XpertHR Legal Editor David Weisenfeld to break down the FFCRA. "This new law is fraught with compliance issues," said Nowak. What concerns him the most is how employers will take paid leave into account in conjunction with the Family and Medical Leave Act and state and local leave laws. But Nowak said the availability of immediate tax credits eases the burden on employers somewhat.
David Weisenfeld: I'm David Weisenfeld for XpertHR.com, published by Reed Business Information and proudly partnered with LexisNexis.
On this podcast our focus turns to the Families First Coronavirus Response Act. Millions of US workers are now entitled to paid leave for the first time under this emergency law, which took effect April 1st. But what will this mean for employers, especially small and medium-sized businesses that have been so unbelievably hard-hit by the COVID-19 crisis? And will it slow down the economic haemorrhaging across the country?
We'll look at those questions and more with Jeff Nowak, an employment law shareholder with Littler. Jeff also authors the highly regarded FMLA Insights blog, which earned him entry into the ABA Journal's Blogger Hall of Fame. So, he's well suited to discuss the emergency law's paid leave provisions. Jeff, welcome. [0:01:14.9]
Jeff Nowak: Hi David. Great to be with you today.
David Weisenfeld: Well great to have you. And Jeff, you've said this law is just fraught with compliance issues. So with that said, what do you see as the biggest? [0:01:27.7]
Jeff Nowak: Well David, let's just start from very simple terms. Think about how this law came together. It came together literally in days. Within, what, two or three weeks the law was passed. It was signed by the President, became law, sent off to the Department of Labor where they said, "DOL, get us a set of rules back within two weeks, would you?" You can imagine how difficult now it becomes to interpret that law and put it into place by April 1st.
Everyone covered by this law was supposed to understand it and become experts at it. So it's entirely difficult to interpret and then follow a law like that. Normally, as we all know, laws take months even years before they're enacted and then there's a lengthy regulatory period where everyone gives input into the process, and then we come up with rules. We may not all agree with them but at least they've been vetted and everyone has a basic understanding of them coming in. So here we don't have that. So even just from those simple terms, that's the compliance issue we face perhaps first and foremost.
Aside from that, the biggest issues are the ones you might expect - the reasons for leave. At what point is someone eligible to take leave? Because there are a number of reasons that someone might be eligible to take leave under this new law:
- Issues involving intermittent leave, notification and documentation;
- And you also have to worry about substitution of an employer's paid leave program;
- Substitution of potential state and local laws.
So there are plenty of compliance issues that employers have to grapple with under this new law.
David Weisenfeld: Jeff, you've written that employers need a new policy and new forms in order to comply with the Families First Coronavirus Response Act. Why is that? [0:03:37.3]
Jeff Nowak: This law is a bit unique in that it doesn't necessarily require employers to put in place a new policy. It doesn't necessarily require them to use the forms that we know as notice of eligibility and designation notice that we see under the classic FMLA. But all of the compliance issues are still there, right? So you still want to notify your employees of not only their rights under this new law but their responsibilities. And that should come in the form of a policy.
So at a minimum I'm encouraging my clients to put in place a policy that lays out this new law for their employees so that everyone is aware of what the law is. They're aware of what the expectations are for requesting leave, the documentation that's to be provided by this new law, and also use forms and notices that we might typically use under the classic FLMA. Given the, as I've noted, the compliance issues that are potentially going to create problems for employers here - things like:
- Reason for leave;
- Is the employee requesting intermittent leave?
- How is an employee using employer-accrued paid leave in conjunction with this new federal law?
These are all things that we want to know from the employee upfront. So we're certainly recommending that the employer utilize a form or some method like a request form. Does it have to come within the four corners of an 8.5 x 11 sheet of paper? No, it doesn't. But these are still the kind of questions that you want to ask your employee.
You want to know, "Why do they want leave?" You want to know whether intermittent leave is being requested and why, so that you can properly analyze that. You want to know about substitution of leave.
So whether that comes in an actual form or whether that comes through a back-and-forth that you might have by email, you want to have that process documented because as we know in the HR or the legal world, if it's not documented it didn't happen, right? So we want to make sure that this stuff is down on paper, or it's communicated in some kind of written form.
And then of course the notices that are involved, we too recommend, just as you might do in the classic FMLA situation, that you are also sending notices out to your employees so that it's memorialized forever. Everyone is on the same page. Everyone knows how you're designating that time, and how it works with classic FMLA because, as we know, these run together. The time that you take off under the paid FMLA leave, this new law for example, that also exhausts your regular or your classic FMLA that you are allowed in a 12-month period of time.
David Weisenfeld: It sure seems like the $64,000 question is, "Why weren't the Googles and Home Depots of the world included in this law?" because those with 500 or more employees essentially got off scot free. They're not covered by it. So what are your thoughts about that? [0:07:04.8]
Jeff Nowak: Great question, David. It's anyone's guess as to exactly why the cutoff made itself at 500 but it did. What we understand is, at least the thought process going on behind the scenes as this bill was being drafted, was that larger employers likely would be providing some form of paid leave to their employees already.
And whether that's in the form of a typical employer policy, PTO, vacation time, sick leave that you might find under an employer policy or otherwise, or perhaps emergency leave provided due to this crisis, this pandemic, the thought process was that larger employers likely would be providing that already. And so there needed to be some mandate for smaller employers who might not otherwise provide that leave to their employees.
David Weisenfeld: Interesting, yeah. It just struck me because with other employment laws, including the FMLA, you have all of these floors where you must have 50 or more employees to be covered, but there isn't necessarily a ceiling, and this one had that. So that's why that really kind of jumped out. [0:08:17.4]
Jeff Nowak: Yeah, absolutely. And there's been some talk of whether that's Stimulus Bill 3 or 4 or 10 - wherever we end up - that might include larger employers. I'm not hearing much lately about that, though, and I wonder whether we have passed that point now and we're seeing here what we're left with.
David Weisenfeld: Well Jeff, I'm sure you're getting just tons of calls in relation to this law, and the Department of Labor announced a temporary rule not too long ago relating to the FFCRA. But I was just wondering from your perspective if that really clarified anything for employers? [0:09:00.8]
Jeff Nowak: First of all I've got to hand it to the Department of Labor. I think they generally have put together a fairly decent set of regulations and FAQs to help employers and employees understand the law, understand what each rights are and responsibilities are in this process. As I mentioned earlier, DOL is tasked with a very tough job, and that was to analyze this law, somehow harmonize it with the classic FMLA, and then put in paid leave within a matter of weeks. So given the time constraints that they were under, my hat's off to them for the job that they've done.
Sure, are there areas where we might expect some greater detail or more guidance? Yeah, I think we could all quibble about that. But generally speaking I've been pretty happy with the guidance that we've received - and timely guidance that we received - even days after this law was enacted.
David Weisenfeld: So in light of that, Jeff, is there anything about this law, though, that especially concerns you? And if so, how are you advising companies to adjust to it? [0:10:14.6]
Jeff Nowak: Well like any other paid leave law, the details create certainly some compliance issues for employers. When you have to take into account the reasons for leave under this new paid leave law, in conjunction with the other forms of leave that employees can take under classic FMLA, in conjunction with other state and local laws, that's what perhaps concerns me the most in terms of compliance, and making sure that you are analyzing this under all of the laws that apply to you. So those are a number of the discussions I'm having now with clients involve just the coordination of what comes first, what comes next, what comes after that.
Generally speaking, the emergency paid sick leave law comes first, followed by the new paid FMLA leave. But to kind of harmonize that and use both forms of leave, of paid leave, under this new emergency paid leave law, it's critical that you've got that set up properly and that you are also administering it properly under your own policies.
David Weisenfeld: Again we're speaking with Chicago employment attorney Jeff Nowak, a shareholder with Littler. And Jeff, another aspect of the law that we hadn't really delved into yet involves the tax credits in it that employers can get for paid sick and paid FMLA leave. What can you tell employers about that? [0:11:49.8]
Jeff Nowak: Well the unique part of this law is that for all of the paid leave that an employer is providing under this law they're obtaining a tax credit for that leave. For the paid leave that they are actually paying out they are, in many cases, immediately being reimbursed by the government for that amount of money. So that's a significant component of this bill.
David Weisenfeld: And speaking of those tax credits, the IRS has provided guidance for small businesses claiming COVID-19 paid leave tax credits, which you've called "welcome news" for employers. So talk a little bit about that. [0:12:30.8]
Jeff Nowak: As the statute was drafted we were troubled as to whether employers would be reimbursed in a timely manner. The concern of course was you pay out now but then you don't get the tax credit until next year when you're doing your taxes? That's not going to help employers, especially the small employers that are covered by this new law.
Thankfully the IRS issued guidance several weeks back, making it clear that an employer at the very time that they are submitting or depositing this money to the federal government on behalf of the employee through federal income tax and the like, they are able to retain some of that money that they have paid out to their employees to immediately reimburse them for the paid leave that they have provided in that same payroll period. So it is presumably for the far majority of employers actually paying out under this leave law, they are able to immediately recoup that money in the same payroll period.
David Weisenfeld: So that definitely seems like an important safeguard because on the one hand you hear, "Oh, you have to pay paid leave," and that could be a burden for a lot of employers in these times, but getting those credits really is a help in preparing for this. [0:13:52.9]
Jeff Nowak: Sure, it absolutely eases the burden.
David Weisenfeld: Well I mentioned at the top, Jeff, that the Families First Coronavirus Response Act took effect April Fools' Day, April 1st. But it also does have a sunset provision of December 31st. But of course no one knows what the future will hold, so should employers be prepared for the likelihood that paid leave may, in fact, not end December 31st and could be extended? [0:14:21.5]
Jeff Nowak: Well you're asking me to look in my crystal ball here as to this law.
David Weisenfeld: That's right!
Jeff Nowak: I suppose that it's possible that this law could be extended. Sadly we don't know what the future holds in terms of this pandemic, and will employees continue to need leave beyond December 31st to the point where Congress has to extend this bill further past that deadline? I think it's anyone's guess as to whether that's going to happen.
However, I do think that this makes it more likely, certainly depending on who wins the White House in November, we could very easily see more aggressive calls for federal paid leave, separate and apart from this emergency law. And now that employers have got a taste of federally mandated paid leave, will it be, at least from Congress's point of view, will it be more palatable, again depending on the party that is in power, will it be more palatable to sell to employers or at least force upon employers in the future? I think we're certainly guessing at that at this point. But I think we certainly have seen an increased likelihood that we will see paid leave at the federal level in some form in the future.
David Weisenfeld: Definitely that's going to be an issue to watch, and as you noted, certainly an issue that could hinge on what happens in the election in November. Well there's no question that this is a historic law, so as we wrap up, being the first time that paid leave has been mandated nationally, can you leave HR professionals with a final takeaway? [0:16:13.6]
Jeff Nowak: Well this is sadly a historic time in the wrong way. And from an HR standpoint we generally get this, but we're going to be long remembered for how we treated people during this very difficult time. So I'm encouraging my clients who are covered by this law to make every effort to first make sure their employees know about the law, work with their employees if they are covered by this law and they're legitimately taking leave under this law, to work with them to make sure that they get the leave that they need during this very difficult time, where they are either dealing with the pandemic in their own families, they're having to stay home because schools have been closed down or day cares have been closed down. It's very difficult for so many of us at so many different levels.
So I encourage employers to stand by their employees during this tough time, giving employees the benefit of the doubt where it's not entirely clear, giving employees additional time to provide information and documentation to comply with this law, so that in the end employees will remember this as a time when their employer supported them, helped them get through this very difficult personal time for them.
David Weisenfeld: That's a great point because the economy going through just unbelievably tough times right now, but that might not always be the case. And when the job market bounces back, hopefully some day in the not too distant future, certainly employees are going to remember how they've been treated for sure, for good or ill. [0:18:00.0]
Jeff Nowak: Right, exactly.
David Weisenfeld: Well Jeff Nowak is an employment law shareholder with Littler in Chicago. He's also the author of the FMLA Insights blog and a sought-after speaker on a host of leave law issues. Jeff, thanks so much for shedding light on the Families First Coronavirus Response Act for us. [0:18:19.8]
Jeff Nowak: Thanks for having me, David.
David Weisenfeld: I'm David Weisenfeld. Thanks for listening. Continue checking our website for other timely coronavirus-themed podcasts, including Stay-at-Home Orders and What Makes a Job Truly Essential, plus Managing Employees During a Global Pandemic.
The opinions expressed in this program do not represent legal advice, nor should they necessarily be taken as the views of XpertHR or its employees. XpertHR.com is published by Reed Business Information, and is proudly partnered with LexisNexis.
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