DOL Issues More FFCRA Compliance Guidance on Paid Leaves

Now that covered employers are providing paid leaves under the Families First Coronavirus Act (the “FFCRA”), more questions about the FFCRA’s nuances are surfacing. In an effort to further guide employers who are trying to navigate the new law, the Department of Labor has added to its growing list of FAQs about the FFCRA, which includes clarification of some of its earlier answers. The substantive changes are contained in FAQs 80 through 88, in which the DOL focuses on the calculation of available leave time and regular rates of pay to be used for FFCRA paid leaves. The following will highlight these new guidance topics.

Employer-Provided Leave Can Run Concurrently with FFCRA Expanded Family and Medical Leave, but NOT with FFCRA Paid Sick Leave

The DOL regulations issued on April 6, 2020, (29 C.F.R. § 826.10, et seq.) left some questions open about how concurrent leave works under the FFCRA, i.e., how paid leaves under the FFCRA interact with leaves otherwise available to employees pursuant to an employer’s policy, such as paid time off.

For instance, the updated DOL guidance clarifies that the up to 80 hours of FFCRA paid sick leave that may be available to an employee under the FFCRA is in addition to any other leave an employee is entitled to, whether such paid leave is available under state law or an employer PTO policy. Therefore, an employer may not require other employer-provided leave or PTO to run concurrently with paid sick time. However, an employee can opt to use paid time off available pursuant to an employer’s policy to supplement any FFCRA paid sick leave.

For leaves allowed under the expanded family and medical leave terms of the FFCRA, however, the options are more challenging.

• The Guidance now provides that an employer may require that leaves taken under the FFCRA’s expanded family and medical leave[1] run concurrently with leaves otherwise available from the employer. If the employer chooses to do so, it must pay the employee’s full salary (instead of the two-thirds of regular pay required by the FFCRA) until the employee has exhausted the employer-provided leave (including vacation and sick days). The employer is only entitled to tax credits, however, for two-thirds of the employee’s regular rate of pay, up to $200 per day—or $10,000 total.
• Further, if both the employee and the employer agree, the employer may supplement the employee’s two-thirds pay while the employee is on expanded family and medical leave to bring the employee up to full pay [by using available paid time off or sick leave pursuant to the employer’s policies]. Again, the employer is only entitled to a tax credit for two-thirds of the employee’s regular rate.

Importantly, though, for the first two unpaid weeks of expanded family and medical leave, an employee has the following options for covering those weeks under the FFCRA, and an employer may not impose any of these options. 

• First, the employee may choose to take two weeks (up to 80 hours) of FFCRA paid sick time.
• Second, the employee may instead choose to use employer-provided leave or PTO to cover that lost time.
• Third, if an employee has already used some or all of his or her FFCRA paid sick time, the employee can use the remaining balance, employer-provided leave or PTO, or choose to take the two weeks without pay.

Calculating FFCRA Paid Sick Leave for Employees with Irregular Hours

Where an employee works irregular hours, calculating the employee’s leave entitlement can get complicated. In general, such an employee is entitled to leave for the average number of hours the employee is typically scheduled to work in a two-week period, up to 80 hours. If that number cannot be readily determined due to the employee’s irregular work schedule, the employer must look at the employee’s schedule for a six-month period, as follows:

• The employer must look at all of the hours the employee was scheduled to work (including hours actually worked and hours the employee took PTO or leave) during that six-month period.
• Once the total number of hours worked and leave taken over the six-month period is calculated, that number has to be divided by the number of calendar days (not workdays) in the six-month period.[2] 
• Next, that number should be multiplied by 14 days, and the product is the total number of hours of paid sick leave the employee is entitled to—up to 80 hours.

For an employee who has not yet worked six months, employers should use the number of hours the employer and employee agreed the employee would work at the time of hire. In the absence of such an agreement, the employer should calculate the average number of hours the employee has worked while employed by the employer.

Calculating Expanded Family and Medical Leave for Employees with Irregular Hours

The calculation of the amount of leave available to employees working irregular schedules for expanded family and medical leave under the FFCRA is different than it is for FFCRA paid sick leave. The calculation is as follows:

• First, the employer looks at all hours the employee was scheduled to work (including hours actually worked and hours of leave and PTO taken) during those six months.
• Next, that number is divided by the total number of days the employee worked during that six-month period (not calendar days). That is the number of hours the employee is considered to work per workday.
• The employer then must pay the employee two-thirds of the employee’s regular rate for that number of hours for each day of expanded family and medical leave.

For an employee who has been employed less than six months, the employer should again look to an agreement between employer and employee for the number of hours worked, and in the absence of that, calculate the average over the employee’s entire tenure.

Calculating an Employee’s Regular Rate of Pay for the FFCRA

Under the FFCRA, an employee’s regular rate must be calculated based on the six-month period ending on the day the leave starts (or the employee’s entire employment in the case of newer employees). For employees who are paid a fixed hourly wage or a salary, their regular rate is simply their hourly wage or the hourly equivalent of their salary. 

But how do employers calculate the hourly equivalent of an employee’s salary? It depends. 

• If the salary is understood to compensate the employee for a set number of hours worked each week, simply divide the weekly salary over the number of hours the employee is expected to work. That is the regular rate.
• If, however, the salary is understood to compensate the employee regardless of how many hours the employee works, the employer should add up the employee’s salary for the last six months and divide that by the total number of hours the employee worked during that period. For employers without records of how many hours their salaried employees work, the DOL provides only that they should use a “reasonable estimate.”

Things get even more complicated for employees who receive other types of compensation, such as commissions or tips. For those employees, employers must:

• First, compute the employee’s total compensation (excluding overtime, holiday and weekend premiums of at least time and one-half, paid time off, and other payments excludable from the regular rate of pay under the Fair Labor Standards Act) for each full workweek during the six-month period; commissions are included in this amount, but tips only apply to the extent that they are applied toward minimum wage obligations (i.e., are subject to the “tip credit”). 
• Second, employers must calculate the number of hours the employee worked during the six-month period—not including any leave or PTO.
• Finally, the employer must take the total compensation and divide it by the total hours. That outcome is the employee’s regular rate of pay for FFCRA purposes.

Conclusion

Determining how much paid leave employees are entitled to under the FFCRA and how their pay should be calculated may be complex, but employers should ensure their numbers are accurate in order to receive the FFCRA’s tax credits. 

Employers with questions about conforming to the FFCRA should contact any of the attorneys in Dykema’s Labor national Labor and Employment Law Practice Group for assistance.

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[1] Expanded family and medical leave (i.e., leave taken under the Emergency Family and Medical Leave Expansion Act) is only available to care for children whose school or child care is closed due to COVID-19 and no one else is available to care for the children, and telework is also not an option.

[2] This number will vary based on what six-month period the employer chooses, but it should still be around 180 days.

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