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Small-business exemptions of the Families First Act

As discussed previously, the Families First Coronavirus Response Act (Famlies First Act) requires employers to provide paid sick leave and expanded Family Medical Leave Act (FMLA) time. However, the act provided that the Secretary of Labor could exempt small businesses with fewer than 50 employees when the imposition of these requirements would jeopardize the viability of the business. In my earlier blog posts, I noted that lawyers were unable to identify the criteria for the exemption because the Department of Labor had not yet identified them. Notably, we anticipated regulations from the Department of Labor. However, as of this morning, we have informal “FAQ” guidance on the Department’s website that does give some clarity to the situation.

Apparently, the Department of Labor views the exemption as limited to one type of leave: childcare leave. As to all other types of leave available under the Emergency Paid Sick Leave Act, small businesses with fewer than 50 employees will still be subject to the law. As to the childcare leave, the Department essentially states in its guidance that the business will have to show, through a certification by a senior officer of the company, that the paid leave for child care would cause an insurmountable problem for the business’s continued operations. This is, as expected, a narrow exemption with tight requirements.

Until we receive further regulatory guidance from the Department, we suggest a two-step analysis in deciding if your small business is exempt. Step 1 asks whether you can answer “yes” to all four of the following questions:

  1. Do you have fewer than 50 employees?
  2. Has an employee requested leave because the employee has a child whose school or place of care is closed or the employee’s childcare provider is unavailable?
  3. Is closure or unavailability in question 2 related to COVID-19?
  4. Have you as the business owner determined that at least one of the conditions in step 2 is true? (This decision can also be made by any other officer of the business who is authorized to make such a decision, as when the owner has delegated this decision to a general manager or the human resources director.)

Step 2 looks to whether certain required conditions are true. For this step, a senior officer of the business will need to be able to truthfully certify that at least one of the following conditions is true:

  • The provision of paid sick leave or expanded family and medical leave would result in the your small business’s expenses and financial obligations exceeding available business revenues and cause your small business to cease operating at a minimal capacity.
  • The absence of the employee or employees requesting paid sick leave or expanded FMLA leave would entail a substantial risk to the financial health or operational capabilities of your small business because of their specialized skills, knowledge of the business, or responsibilities.
  • 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 FMLA leave, and these labor or services are needed for your small business to operate at a minimal capacity.

Your business is potentially exempt if can answer “yes” to all the questions in step 1 and identify at least one true condition in step 2.

Bigger question

However, there is a bigger question. The Department of Labor still has not explained to employers how they are to decide whether they have 50 or fewer employees  Under other laws, determining your number of employees is based upon a count taken over time. For example, the FMLA asks whether an employer has 50 or more employees not just at a moment in time, but over 20 or more calendar weeks in the current or preceding calendar year. We still aren’t sure whether that is the test that will be adopted for the Families First Act.

Accordingly, I strongly recommend you seek specific legal advice if you think that you might have fewer than 50 employees.

For further information, see the answers to questions 58 and 59 on the DOL’s question-and-answer page for the Families First Act.

Items on this web page are general in nature. They cannot—and should not—replace consultation with a competent legal professional. Nothing on this web page should be considered rendering legal advice.

© 2020

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