Two weeks in, we know a lot more about the paid leave requirements under the COVID-19 legislation, and the news is generally good for small employers and healthcare-related businesses. I wanted to do a longer update to share some thoughts on how this has progressed, and where I think things are headed.
For the past two weeks, I have been counseling employers about their responsibilities under the Families First Coronavirus Response Act (FFCRA), and the Coronavirus Aid, Relief, and Economic Security (CARES) Act. Our discussions have focused on whether or not the employer would be required to provide paid leave to employees who cannot work for any number of reasons associated with COVID-19, who would qualify for unemployment, how much the employees could work (if at all) and not lose unemployment benefits, and what to do about health insurance. It has been challenging to give precise advice to individual employers because until late yesterday, we only had the statutes to look to, and those statutes anticipate that the Department of Labor will flesh out the details through the administrative rule making. About the only clear cutoff we could discern was that if an employer did not have workers as of April 1, then they would not have financial exposure to pay their staff for up to 12 weeks of paid leave. Thus, many employers simply terminated all of their employees before yesterday. This was the most conservative action that an employer could take. Though it was certainly a hard decision, until we knew more about economic relief to employers through loans and grants, the initial waves of Congressional response certainly seemed to impose a harsh burden on our nation’s small businesses. The blow stung all the more because the statutes themselves expressly exempted the nation’s large businesses from the paid leave requirements that were suddenly thrust upon everyone from the solo law firm with one secretary to the construction company with 499 workers. Mom and Pop convenience store – pay 3 months’ leave. Wal-Mart? You get a pass. It just didn’t seem fair, and it seemed that the consequences were coming faster than businesses could sort out what to do. Result: roughly 1/3 of the American workforce on unemployment virtually overnight; a level exceeding even the Great Depression.
Yesterday, the Department of Labor released its temporary rule regarding paid leave under the FFCRA. The document is 125 pages long, but the actual regulation is only about 40 pages (double spaced for now), and its introductory text is written in plain English and provides a useful summary of the underlying statutes and the evolution of the landscape since March 18. Like all regulations in this area, the “what” and “how much” answers regarding a particular situation will vary. Thus, that response that clients love to hear from lawyers, “it depends,” will come up often when you are wondering generally what to do. The best advice I can give is to call your lawyer and discuss your workplace, your industry, and the specific circumstances.
That said, we did get significant clarity yesterday around a couple of concepts, notably the definition of a health care provider, the opt-out provisions for employers with fewer than 50 employees, and the poster circulation requirement. So here’s the straight dope on those issues.
The Fewer than 50 Exemption.
This will be a relief to most small businesses in Maine. It allows an exemption from the paid sick leave and the extended family medical leave requirements if “an officer of the business” determines at least one of the following:
- the requested 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”; OR
- the loss of the employee(s) “would entail a substantial risk to the financial health or operational capabilities of the business because of their specialized skills, knowledge of the business, or responsibilities;” OR
- there simply are not enough workers who are “able, willing, and qualified, and who will be available at the time and place needed, to perform the labor or services” of the workers who go out on leave, AND those services “are needed for the small business to operate at minimal capacity.”
The business must document its determination that one or more of these tests has been met. The employer does NOT have to obtain permission from the DOL to be exempted. But you must keep the records for at least 4 years.
I had previously questioned whether a small business subject to this exemption would be considered a “Covered Employer” under the law such that it would be required to send out the required posting notice. The regulation provided an answer on this in Section 826.50(b)(3), which states: “Regardless of whether a small Employer chooses to exempt one or more Employees, the Employer is still required to post a notice pursuant to § 826.50.”
TAKE-AWAYS: If you’re one of those small employers with fewer than 50 workers, you probably have a good basis to be exempt. Not just because you can’t afford to pay the time, but also based on the essential nature of the work your employee does. I suppose some work with less skill, maybe sweeping a floor or flipping burgers, might be replaceable (with no offense intended), but so much of our work is specialized these days. You can’t just get a different bookkeeper who knows your systems and your accounts. You can’t just swap out a field service engineer for the technology your company invented. In a weird way, for the employee to push back against his, they would have to argue that they are easily replaced, wouldn’t they?
So, I think that as small businesses had hoped, this exception gives them some relief from the initial sting of thinking they were being asked to fund our nation’s payrolls while the Fortune 500 got a pass.
However, it doesn’t mean that you are prohibited from doing the best you can for your people, even if you don’t pay the full thing. Employees and relationships matter of course, and everyone wants to be treated according to the Golden Rule.
Pro Tips: Remember that even if you’re not required to give the full leave requested, you will have to document the request for leave and an officer of the company should certify in writing how and why the test has been met if the leave is to be denied. Your attorney can help you with preparing that documentation, but it should be done contemporaneously when leave is requested. And no matter what, take the simple step and email the poster to all your employees ASAP and post it onsite where you post other employment related documents. If you are not sure about how to do your headcount, contact us. The rule provides technical guidance on how to count and how to handle things like independent contractors and part-time workers. I won’t belabor them here, but that’s part of the “it depends” nature of this work.
Who is a Healthcare Provider?
This one may surprise you in its breadth. Here’s the definition:
anyone employed at any doctor’s office, hospital, health care center, clinic, post- secondary educational institution offering health care instruction, medical school, local health department or agency, nursing facility, retirement facility, nursing home, home health care provider, any facility that performs laboratory or medical testing, pharmacy, or any similar institution, Employer, or entity. This includes any permanent or temporary institution, facility, location, or site where medical services are provided that are similar to such institutions.
But wait, there’s more…
It also includes “any individual employed by an entity that contracts with any of these institutions described above to provide services or maintain the operation of the facility where the individual’s services support the operation of the facility,” as well as those “employed by any entity that provides medical services, produces medical products, or is otherwise involved in the making of COVID-19 related medical equipment, tests, drugs, vaccines, diagnostic vehicles, or treatments.”
So, my many dental clients have asked me if they are “healthcare providers.” Yes, you are. In fact, I think I might even qualify, though the closest I ever got to organic chemistry probably involved discarded bottles of Otter Creek beer.
Why is this Important?
Why is this definition so crucial? Because even if you don’t meet the small employer test above, which itself is pretty broad, this alone would be a basis for an exemption from paid sick and family leave. Not only are the expected doctors and nurses included, but it also includes by my reading, the cook at the catering company, the cleaning company worker hired to disinfect healthcare offices, and maybe even the lawyer advising dentists, all of whom could be employed by a separate entity but who has a business relationship providing services to a health care institution, constitutes “services that support the operation of the facility.” Janitor cleaning a CVS? CPA for a nursing home? You see where I’m going.
Since the “health care provider” definition is so broad, employers who may fall under its scope should consider documenting BOTH the basis for them serving as a health care provider as well as whether they would qualify under the small employer exception.
Notably, these definitions are only for purposes of the expanded sick and leave requirements under the COVID-19 related legislation, and do not cross over for the “normal” FMLA.
Where do we go from here?
I hope that the dust is starting to settle on the employment questions, and that the considerable financial assistance that came out with the CARES Act will start to make a difference. As employers get a better sense of their financial exposure, as well as the capital to give them confidence to bring people back to work, even if their revenues dip a bit, I hope that we will “flatten the curve” on unemployment as well as on infections, in the next couple of weeks. My philosophy is to try to add value and to work as much as possible. Society depends on us doing our best to not only stay safe, but to also find smart and new ways to contribute to the economy and to help one another. A big part of that, and one that in my view has been too often overlooked in the public messaging about quarantines, is our need to still do what it is that we are called to do in this life. For me right now, that involves reading laws at breakneck pace and doing my best to help employers figure out what they can do. That’s how this practice works to help the people of Maine build and protect the work that the gives their own lives meaning.
With warm wishes for your health and economic security,