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The CARES Act Increases Unemployment Compensation Coverage and the DOL Clarifies Exemptions to the FFCRA

March 30, 2020

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Last week, President Trump signed two Legislative Acts – the Families First Coronavirus Response Act ("FFCRA") and the Coronavirus Aid, Relief, and Economic Security Act (CARES).

Effective April 1, 2020, the FFCRA requires employers with more than 50 but fewer than 500 employees to provide emergency paid sick leave and expanded Family Medical Leave Act ("FMLA") leave to employees. The Department of Labor ("DOL") has provided additional guidance about which employers and employees are exempt from these provisions.

Separately, the CARES Act, signed March 27, greatly expanded unemployment insurance benefit amounts and eligibility to coronavirus affected employees. Indeed, the CARES Act increased unemployment benefits could result in some employees earning more than they would earn by continuing to work, thus, potentially incentivizing some employees to cease working.

CARES Act Unemployment Insurance Benefits

Under the recently signed CARES Act, unemployed workers may be entitled to receive state unemployment insurance benefits as well as additional "Federal Pandemic Unemployment Compensation."  This could incentivize employees to cease work.

Under the CARES Act, unemployment insurance expansion would give jobless workers an extra $600 per week for four months on top of state benefits. State agencies will make payments of regular compensation to individuals in amounts and to the extent determined by state law plus an additional $600 in "Federal Pandemic Unemployment Compensation."

Individuals will receive 13 weeks of extended benefits covered by the federal government (beyond unemployment checks provided by the state). To receive additional federal unemployment, the individual must not be eligible for regular compensation or extended benefits under State or Federal Law; must be able and available to work except the individual is unemployed or unable or unavailable to work because:

  1. The individual has been diagnosed with COVID-19 or is experiencing symptoms and is seeking a medical diagnosis;
  2. An individual in their household has been diagnosed with COVID-19;
  3. The individual is providing care for a family member in their household diagnosed with COVID-19;
  4. A child or other person in the household for which the individual is a primary caregiver is unable to attend school or another facility that is closed as a direct result of the pandemic;
  5. The individual is unable to reach the place of employment because of quarantine imposed as a direct result of COVID-19;
  6. The individual is unable to reach the place of employment on advice of a healthcare provider to self-quarantine due to concerns related to COVID-19;
  7. The individual was scheduled to commence employment and does not have a job or is unable to reach the job as a result of the public health emergency;
  8. The individual has become the "breadwinner" or major support for a household because the head of the household has died as a direct result of COVID-19;
  9. The individual has to quit their job as a direct result of COVID-19;
  10. The individual's place of employment is closed as a result of COVID-19;
  11. The individual meets any additional criteria established by the secretary for unemployment assistance; or
  12. The individual is self-employed, is seeking part-time employment, does not have sufficient work history, or otherwise would not qualify for regular employment or extended benefits under State or Federal law or pandemic emergency unemployment compensation.

Unemployment assistance under the Act does NOT include 1) an individual who has the ability to telework with pay; or 2) an individual who is receiving paid sick leave or other paid leave benefits, regardless of whether the individual meets one of the above-described qualifications.

Assistance is authorized for unemployment or inability to work caused by COVID-10 between January 27, 2020 and December 31, 2020.

The total number of weeks for which a covered individual may receive assistance shall not exceed 39 weeks, and such total shall include any week for which he/she received regular compensation or extended benefits under any Federal or State law.

Unemployment assistance from the Federal pandemic unemployment compensation paid to an individual is not subject to Social Security and Medicare taxes.

States are required to waive the one week waiting period for individuals of that state to receive unemployment compensation.

The amount of pandemic emergency unemployment compensation which shall be payable to any individual for any week of total unemployment shall be equal to 1) the amount of the regular compensation payable to the individual during such individual's benefit year under the state law for a week of unemployment; plus 2) the amount of Federal Pandemic Unemployment Compensation under Section 2104.

This could give unemployed workers more than the paychecks they were receiving while they were employed. However, this is a state-specific inquiry and will depend on how each state's unemployment insurance program is established. The Department of Labor is authorized to issue guidance in the upcoming weeks, so stay tuned for how this plays out.

FFCRA Integrated Employer Test

The FFCRA applies only to employers with fewer than 500 employees. Depending upon how the relationships are set up, employers might be able to aggregate all employees to exceed the 500 employee threshold under the "integrated employer" test. If two (or more) entities are an integrated employer under the FMLA, then employees of all entities making up the integrated employer will be counted in determining employer coverage for purposes of the FFCRA.

The Department of Labor Guidelines for the FFCRA provide that, in general, two or more entities are separate employers unless they meet the integrated employer test under the FMLA. If two entities are an integrated employer under the FMLA, then employees of all entities making up the integrated employer will be counted in determining employer coverage for purposes of expanded family and medical leave under the Emergency Family and Medical Leave Expansion Act.

Separate entities will be deemed to be parts of a single employer for purposes of FMLA if they meet the integrated employer test. Where this test is met, the employees of all entities making up the integrated employer will be counted in determining employer coverage and employee eligibility. A determination of whether or not separate entities are an integrated employer is not determined by the application of any single criterion, but rather the entire relationship is to be reviewed in its totality. Factors considered in determining whether two or more entities are an integrated employer include:

  1. Common management;
  2. Interrelation between operations;
  3. Centralized control of labor relations; and
  4. Degree of common ownership/financial control.

This is a fact-specific inquiry. Not all criteria need to be met. Employers should carefully review their organizational structure to determine if they meet the integrated employer test and can aggregate their employees.

FFCRA Small Business Exemption

Rather than aggregating employees, some employers may wish to remain separate. Small businesses with fewer than 50 employees may qualify for exemption from the FFCRA if the imposition of such requirements would jeopardize the viability of the business as a going concern.

The DOL issued guidance regarding this exemption. According to the DOL, this means a small business is exempt from mandated paid sick leave or expanded family and medical leave requirements only if the:

  1. employer employs fewer than 50 employees;
  2. leave is requested because the child’s school or place of care is closed, or child care provider is unavailable, due to COVID-19 related reasons; and
  3. an authorized officer of the business has determined that at least one of the following three conditions is satisfied:
    1. The provision of paid sick leave or expanded family and medical 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;
    2. The absence of the employee or employees requesting paid sick leave or expanded family and medical leave would entail a substantial risk to the financial health or operational capabilities of the small business because of their specialized skills, knowledge of the business, or responsibilities; or
    3. 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 family and medical leave, and these labor or services are needed for the small business to operate at a minimal capacity.

Small businesses electing this small business exemption should carefully document the reasons that they meet the criteria for this exemption.

The Department encourages employers and employees to collaborate to reach the best solution for maintaining the business and ensuring employee safety.

Both these new laws require a studied review in conjunction with employer policies and any local or state laws that may address these same issues.

FFCRA Health Care Provider Exemption

Effective April 1, 2020, the FFCRA requires employers with more than 50 but fewer than 500 employees to provide emergency paid sick leave and expanded Family Medical Leave Act ("FMLA") leave to employees. The DOL recently clarified the a greater list of "health care provider" employees that may be exempted from these provisions.

The FFCRA exempts "health care providers" from the Family Medical Leave Act expansion and emergency paid sick leave provision. The FFCRA adopts as its definition of “health care provider” the definition set forth in the FMLA. Section 101(6) of the FMLA, 29 U.S.C. § 2611(6) defines "health care provider" as:

  1. a doctor of medicine or osteopathy who is authorized to practice medicine or surgery (as appropriate) by the State in which the doctor practices; or
  2. any other person determined by the Secretary to be capable of providing health care services.

The DOL just issued FAQ Guidance regarding the definition of "health care provider" for the purposes of employees who an employer may exempt from FFCRA paid sick leave or expanded family and medical leave. A health care provider now includes 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 definition includes any individual employed by an entity that contracts with any of the above institutions, employers, or entities institutions to provide services or to maintain the operation of the facility. This also includes anyone 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.

The DOL encourages employers to be "judicious" when using this definition to exempt health care providers from the provisions of the FFCRA.

This is good news for senior living providers and other impacted employers with "fewer than 500 employees" whose employees would not otherwise be encompassed by the definition of "health care provider" set forth in the FMLA and thus who would be covered under the FFCRA's new benefit provisions.

For more information, please contact:

Emily Leahy

415-995-5155 Direct Phone
415-995-3557 Fax

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Raymond Lynch

415-995-5055 Direct Phone
415-995-3507 Fax

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Diane Marie O'Malley

415-995-5045 Direct Phone
415-995-3459 Fax

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