Small Businesses May Be Exempt from the Families First Coronavirus Response Act’s Paid Sick Leave Provisions

The Families First Coronavirus Response Act (FFCRA) is an effort to help the country combat the economic impact of the COVID-19 coronavirus by offering tax credits to all U.S. businesses with fewer than 500 employees. But some smaller employers can opt out.

FFRCA Employee Benefits

Employers are to use the FFCRA tax credits to provide workers with paid leave, either for the employee’s own health needs or to care for family members. The end goal is to enable employers to keep employees on their payrolls while ensuring employees are not forced to choose between their paychecks and the public health measures needed to combat the virus.

When the act takes effect on April 1, 2020, however, employers with fewer than 50 employees – including religious and nonprofit organizations – may claim an exemption from its emergency paid leave provisions. According to a U.S. Department of Labor (DOL) guidance, the exemption applies specifically to:

• Paid sick leave due to school closure, place of care closure or child care provider unavailability for COVID-19 related reasons; and
• Emergency paid leave under the Family and Medical Leave Act (FMLA).

These small businesses can except themselves from complying with the FFCRA “when doing so would jeopardize the viability of the business.” To exercise the exemption, an “authorized officer” of the business must determine that:

1. The provision of paid sick leave or expanded family and medical leave would result in the small business’s expenses and financial obligations exceeding available business revenues and cause the small business to cease operating at a minimal capacity;
2. The absence of the employee or employees requesting paid sick leave or expanded family and medical leave would entail a substantial risk to the financial health or operational capabilities of the small business because of their specialized skills, knowledge of the business, or responsibilities; or
3. There are not sufficient workers who are able, willing, and qualified, and who will be available at the time and place needed, to perform the labor or services provided by the employee or employees requesting paid sick leave or expanded family and medical leave, and these labor or services are needed for the small business to operate at a minimal capacity.

FFRCA Enforcement Delayed Until April 17th

Separately, the DOL’s Wage and Hour Division published a Field Assistance Bulletin regarding a temporary non-enforcement of the FFCRA until April 17. The DOL will not bring enforcement actions against any public or private employer for FFCRA violations before then, provided the violating employer acts “reasonably” and “in good faith.” The employer must also remedy any violations as soon as practicable, its violations must not be willful, and the DOL must receive from the employer a written commitment to comply with the law in the future.

After April 17, 2020, this limited stay of enforcement will be lifted, and the DOL will fully enforce FFCRA violations.

Speak With a Michigan Employment Law Attorney Today

If you have questions about employment issues involving COVID-19, including emergency FMLA or other paid sick leave coverage, the employment law attorneys at Kreis Enderle can provide you with sound, straightforward counsel to guide your decision-making.  We are working remotely during the crisis and can conference with you by telephone or video.