The U.S. Department of Labor yesterday issued its first round of guidance on the provisions of the Families First Coronavirus Response Act (FFCRA), which goes into effect April 1. The guidance consists of a Fact Sheet for Employees, a Fact Sheet for Employers and Questions and Answers.
The Q&As address key threshold questions regarding how employers must count their employees to determine whether they are subject to the paid leave requirement and when separate entities must be combined for purposes of the headcount test. Many questions, however, remain to be answered.
The Q&As confirm that the paid leave provisions apply only to businesses that, at the time an employee’s leave is taken, have fewer than 500 full-time and part-time employees, including temporary employees—which is effectively a snapshot of the workforce at that point in time. Because staffing firm headcounts can fluctuate significantly from week to week—which could cause firms whose headcounts are close to the 500-employee threshold to move above and below the threshold—ASA will propose that firms that have fluctuating headcounts be permitted to use a fixed prior period for making the determination—for example, its average weekly headcount in the immediately preceding calendar year.
The Q&As also make clear that temporary employees who are jointly employed by a staffing firm and its client must be counted by both employers in determining their respective size for purposes of FFCRA. The Family and Medical Leave Act typically views staffing firms and clients as joint employers. Further guidance is needed to determine precisely how temporary employees will be counted. ASA has proposed that DOL adopt a “full-time equivalent” formula for calculating temporary employee headcount similar to the Affordable Care Act.
The Q&As also address when separate entities or corporations will be considered as a single employer for purposes of the 500-employee test, indicating that the FMLA “integrated employer” test will be used for that purpose. Factors in determining if separate entities are an integrated employer include common management, interrelation between operations, centralized control of labor relations, and the degree of common ownership or financial control. These are fact-based tests that staffing firms must apply on a case by case basis in consultation with their legal or accounting advisers.
The Q&As also briefly discuss the relief the Secretary of Labor is authorized to grant small businesses with fewer than 50 employees whose business would be jeopardized by the paid leave requirement. The Q&As urge firms seeking such relief to document why they need relief. The Q&As state that the criteria for granting relief will be set forth in upcoming regulations but, in the meantime, employers should not send any materials to the Department of Labor. Because the disproportionately large number of temporary employees distorts staffing firms’ headcount, ASA has proposed to DOL that temporary employees be excluded from the headcount for purposes of the 50-employee test—or, alternatively, that a revenue test be used based on the Small Business Administration’s size standard of $30 million in annual revenue for temporary help services (NAICS code 561320).
ASA will seek clarification of these and other issues in subsequent DOL fact sheets and Q&As.