On March 24, 2020, the Department of Labor (“DOL”) issued the first guidance related to the new Families First Coronavirus Response Act. It answered a few questions of general interest, but a lot of questions that relate to small businesses (by that, I’m talking about businesses with under 50 employees) are still up in the air. The DOL further indicated that we should not hold our breath for any regulations before the enactment date. Instead, regulations are promised sometime in April.
New effective date
The biggest surprise was the DOL announcing that the law is now going to become effective on April 1 rather than April 2. Taking advantage of some flexible language in the Act, the DOL obviously decided that it made the most sense to make a pay-related law effective on the first day of most employers’ pay periods, rather than on the second day, which was likely to create payroll nightmares. So, April 1 it is.
Benefits are not retroactive
The DOL also made it clear that the Act did not apply retroactively. This means that someone who is on leave right now is not eligible for any of the Act’s benefits until April 1. Likewise, an employer cannot take a tax credit under the Act for any paid leave that takes place before April 1.
Employers with under 50 employees
If you are a small employer (under 50), you have been waiting for the DOL to issue the promised guidance on the standard for the “jeopardize the viability” of the business exemption. This guidance did not give that information. It did specifically say don’t send the DOL anything or any exemption requests. You are instructed to simply document your reasons why you need the exemption, and hold on to it for now. Supposedly, the answer will come with the regulations, later in April. It is certainly possible the DOL will issue some additional guidance between now and then.
Caution for large employers
If you are a larger employer, particularly one with multiple related businesses, this guidance contains important information for you to determine whether you fall under the 500-employee cap for coverage under the Act. This may be one of the few times employers are actually trying to say they are actually larger than they are. However, I caution employers watch what you ask for, because it’s possible it could be used against you later in a case such as an FLSA collective action. As always, you should consult with your employment attorney if this is an issue for your business.
Finally, the DOL announced that a workplace poster would be available by March 25. Here’s a link to the poster: https://www.dol.gov/sites/dolgov/files/WHD/posters/FFCRA_Poster_WH1422_Non-Federal.pdf. If you are a covered employer, you should plan to have the poster up by April 1. The DOL recognizes there are a lot of unanswered questions, and plans to give a 30-day grace period for enforcement. Employers should be wary of that, however, because the Emergency Paid Sick Leave Act allows for a private employee lawsuit. Plaintiffs’ attorneys may not see the 30-day grace period as applying to their initiation of private lawsuits.
We will be back with more updates. The Senate just passed the Stimulus bill, which could have an effect on decision making for businesses. The bill currently includes, among other things, expanded unemployment benefits and loan programs for small businesses to help them cover payroll and other expenses.