The Department of Labor (“DOL”) released guidance Tuesday regarding the implementation of the Families First Coronavirus Response Act, including details on how employers can determine whether they are covered by the Act.
500 Employee Threshold
One of the most common questions among employers regarding the Families First Act, which Congress passed last week to provide up to 12 weeks of paid leave for coronavirus-related reasons, involved how to count employees towards the 500 employee threshold for coverage under the law. If an employer has 500 or more employees, then it is not covered by the law. The DOL provided three key pieces of guidance to help employers determine whether they are covered.
First, the DOL clarified that an employer is covered by the law if, at the time the relevant leave is to be taken, the employer has fewer than 500 full-time and part-time employees within the United States, including any employees on leave. Temporary employees hired from staffing agencies and day laborers should be included in the count. Workers who qualify as independent contractors under the Fair Labor Standards Act are not considered employees.
Second, the DOL wrote that a corporation, including separate establishments and divisions, is generally considered to be a single employer. But, where a corporation has an ownership interest in another corporation, the two corporations are separate for the purposes of the Act unless they are joint employers under the FLSA. If employers are determined to be joint employers, then all of jointly employed employees count toward the 500 employee threshold.
The FLSA joint employer test considers four factors, including whether the potential joint employer (i) hires or fires the employee; (ii) supervises and controls the employee’s work schedule or conditions of employment to a substantial degree; (iii) determines the employee’s rate and method of payment; and (iv) maintains the employee’s employment records. It is a fact-specific balancing test and no single factor is dispositive.
Third, the DOL guidance also noted that two separate entities may aggregate their employees for the purposes of the 500-employee count if they meet the single integrated employer test under the Family Medical Leave Act. If two entities qualify as an integrated employer, then all of their employees will count toward the 500-employee threshold for both entities.
The single integrated employer test considers four factors: (i) common management; (ii) interrelation between operations; (iii) centralized control of labor relations; and (iv) degree of common ownership or financial control. Like the FLSA joint employer test, the integrated employer test is also fact-specific and no single factor will be dispositive.
12 Week Maximum for Benefits
The guidance also confirmed that the maximum duration of benefits under the Paid Sick Leave and the Family Medical Leave expansion portions of the law is 12 total weeks. The law provides for two weeks of leave at potentially full pay under the Paid Sick Leave provisions, and up to 12 weeks of leave paid at 2/3 of an employee’s regular rate for care of a child out of school or childcare because of coronavirus. But the DOL confirmed that the two laws cannot be stacked to create 14 total weeks of leave. An employee is entitled to up to 12 weeks of leave, but no more.
Small Business Exemptions
The DOL did not provide details on how it would administer the exemption from the law for businesses with fewer than 50 employees. However, it did say that employers should document evidence if they intend to claim an exemption on the basis that compliance with the law would jeopardize their business as a going concern. The DOL specifically instructed employers not to send materials to the Department to seek the exemption, and instead to wait for the regulations associated with the law to be released for further information.
The DOL’s full FAQ regarding the Families First Bill is available here.