DOL temporary rule provides definitive guidance on small business exemption to Families First Coronavirus Response Act

Yes, employers are struggling with the application of the Families First Coronavirus Response Act (FFCRA). For a small employer that has never been subject to the Family and Medical Leave Act, implementing paid sick leave and expanded FMLA rights are a double-whammy.

That is why Congress attempted to strike a balance between providing economic assistance to employees who are navigating the social and economic impacts of COVID-19 and making sure that application of the economic assistance does not significantly increase the likelihood that small businesses are forced to close

Look at it like this: Congress expanded employee rights in two ways: 1) it provided for 80 hours of sick leave, at full or partial pay depending on the reason for the sick leave, pursuant to the Emergency Paid Sick Leave Act of the FFCRA; and 2) it provided for up to 12 weeks of expanded family and medical leave, up to 10 weeks of which must be paid at partial pay, when, due to COVID-19 reasons, an employee is unable to work because a school or place of care is closed or because a child care provider is unavailable, pursuant to the Emergency Family and Medical Leave Expansion Act of the FFCRA. To that end, the temporary rule issued by the DOL on April 1 explains when a small employer is exempt from certain of the requirements of paid sick leave and expanded family and medical leave under the FFCRA.

Small employers have been quick to assume they are exempt from the FFCRA entirely. Not so. Small employers are not exempt from paying up to 80 hours of full or partial sick leave to an employee who requires it for himself or to care for a covered individual due COVID-19 related reasons. The small business exemption is narrow in scope and relates only to sick leave and expanded FMLA necessitated by lack of child care as a result of COVID-19 reasons.

So, let’s back up. A small business is an employer (including a religious or nonprofit organization) with fewer than 50 employees. The exemption is available to the small employer from providing paid sick leave and expanded family and medical leave when the imposition of these requirements would “jeopardize the viability of the business as a going concern.”

A small business is entitled to this exemption if an authorized officer of the business has determined that:

  • The leave requested would result in the small business’s expenses and financial obligations exceeding the available business revenues and cause the small business to cease operating at a minimal capacity;
  • The absence of the employee requesting leave would entail a substantial risk to the financial health or operational capabilities of the business because of his or her specialized skills, knowledge of the business, or responsibilities; or
  • There are not sufficient workers who are able, willing, and qualified, and who will be available at the time and place needed, to perform labor or services provided by the employee requesting leave, and those labor or services are needed for the small business to operate at a minimal capacity.

To elect this small business exemption, on what appears to be a case-by-case basis, the employer must document that a determination has been made pursuant to one of the three criteria above and retain this record in its files. The DOL has specifically directed that the documentation should not be sent to it.

This temporary rule is in effect from April 1 through December 31, 2020.

Additionally, whether or not the small business has elected to exempt an employee who requests such leave, it still must post the notice that is required under the FFCRA.

Here’s a summary of when the exemption may apply:

FFCRA chart