By Blerina Kotori and Christopher Morehead
On April 20, 2020, the Department of Labor (DOL) released further Q&A guidance (questions 80-88) regarding the Families First Coronavirus Response Act (FFCRA). The new guidance focuses on a number of issues, including how sick leave hours and pay should be calculated for employees with irregular hours, computing an employee’s average regular rate, and further clarification on circumstances where stay at home and shelter in place orders count as quarantine or isolation orders for purposes of determining whether an employee qualifies for Emergency Paid Sick Leave (EPSL). Perhaps the most noteworthy guidance, however, pertains to how existing employer-provided leave policies interact with EPSL and the paid and unpaid portions of Emergency Family Medical Leave (EFML).
As discussed in our prior Tonkon Tip, the DOL recently corrected the FFCRA regulations to make clear that employers may require employees to use employer-provided leave concurrently with EFML. The DOL’s new Q&A guidance attempts to explain how that correction plays out when employers want to require employees to use existing leave, what rights employees have to tap into existing leave, and how supplemental pay fits in. Although the Q&A guidance is less than clear, we endeavor to explain the way it fits with our existing understanding of FFCRA principles:
EFML 10-Day Waiting Period: As we know, the first 10 days of EFML are unpaid, but an employee may use EPSL during the 10-day waiting period, which is paid at two-thirds the employee’s regular rate (subject to daily and aggregate caps). But what happens if the employee wants to be paid more than two-thirds pay? Can the employer require the employee to exhaust existing paid leave? The guidance tells us the following about the 10-day waiting period:
- The employee may elect to use employer-provided leave in lieu of EPSL.
- The employee may elect to take the first 10 days of EFML unpaid (perhaps to save their leave for a later date).
- The employee cannot use EPSL and employer-provided leave simultaneously.
- However, the employee and the employer may mutually agree to supplement (i.e., “top off”) the employee’s EPSL with preexisting paid leave, up to the employee’s normal earnings. (Note: the employer will not get tax credit for this “top off,” but it will draw down the employer-provided leave.)
- Similarly, if the employee exhausts EPSL before the 10-day waiting period concludes, the employee may use employer-provided leave.
- The employer cannot require the employee to use employer-provided leave or EPSL during the 10-day waiting period.
Paid Portion of EFML: Again, as we know, once the 10-day waiting period expires, EFML is paid at two-thirds the employee’s regular rate (subject to daily and aggregate caps). At that point, the options are as follows:
- The employee may elect to take any existing employer-provided leave that would otherwise allow the employee to care for their child due to a school or childcare closure due to COVID-19 concurrently with EFML.
- Likewise, the employer may also require the employee to take existing employer-provided leave that would otherwise allow an employee to care for their child due to a school or childcare closure due to COVID-19 concurrently with EFML.
- Alternatively, the employer and the employee may agree to supplement or top off the employee’s two-thirds EFML wages up to the employee’s normal earnings (again, no tax credit is available for this supplemental pay, but it will draw down the employee’s leave bank).
As noted, the DOL takes the position that neither the employee nor the employer may require concurrent use of paid EFML with existing employer-provided leave where the existing employer-provided leave would not cover an absence related to caring for a child during a school closure. The general guideline provided by DOL is that personal leave or PTO would usually qualify for concurrent use, whereas medical or sick leave that is limited to an employee’s illness may not qualify for concurrent use. This is a noteworthy point for Oregon employers, since Oregon Sick Leave may be used by employees when their child’s school is closed by order of a public official for a public health emergency.
Further, if an employee requests or is required to take paid EFML concurrently with employer-provided leave, the employer must pay the employee the full amount to which the employee is entitled under the employee’s existing paid leave policy for the period of leave taken. The employer is not entitled to tax credits, however, for amounts paid above two-thirds of the employee’s regular rate of pay (subject to daily and aggregate caps).
Lastly, if the employee exhausts employer-provided leave, the employee is still entitled to use any remaining paid EFML leave.
Putting it all together in an example, let’s assume an employee regularly works 40 hours per week, and also has a bank of 40 hours of PTO. The employee needs to take leave to stay home to care for a child and meets all the qualifications for leave, and therefore requests 12 weeks of EFML.
- Scenario 1 – Employee Wants, and Employer Allows, Employee to Maintain Regular Pay as Long as Possible: The first 10 days of unpaid leave, the employee may request EPSL at two-thirds pay. The employee can request, if the employer agrees, to take one-third of a day of PTO (2.667 hours) for the 10 days of unpaid leave to supplement their earnings up to their normal pay. By the time the 10-day waiting period ends, the employee will have used 26.667 hours of PTO (leaving 13.333 hours in the PTO bank). By the time the third paid week of EFML leave kicks in, the employee will be able to use their remaining PTO hours to bring their pay up to their regular amount for one more week. Thereafter, the employee will continue to be paid at two-thirds pay.
- Scenario 2 – Employer Does Not Agree to Supplemental Pay: If the employer does not agree to let the employee supplement their two-thirds pay (either EPSL or EFML), the employee may still use their PTO bank during the 10-day waiting period. However, the employee cannot use both PTO and their two-thirds EPSL leave during the 10-day waiting period. This means the employee may elect to use their 40 hours of PTO the first five days (week one) of unpaid EFML leave. Once their 40 hours of PTO are exhausted, the employee may then utilize their two-thirds pay for EPSL leave during the second five days of unpaid EFML. Because the employee has no remaining PTO, they will be paid at two-thirds pay the entirety of their 10 weeks of EFML.
- Scenario 3 – Employer Requires Concurrent Use of Leave: Assume now that the employee gets to the paid (last 10 weeks) portion of EFML and still has 40 hours of PTO in their bank (perhaps because they chose EPSL or unpaid leave for the first 10 days). But, in this scenario, the employee wants to save their PTO for a later date, and is content receiving two-thirds pay for EFML. That is also permissible. However, if the employer has a policy that requires employees to use any available employer-provided leave that normally can be used to care for a child during a school closure (e.g. PTO and, in Oregon, Oregon Sick Leave) concurrently with their EFML, in this scenario the employee would have to use all 40 hours of qualifying employer-provided leave the first week. The employer would only receive reimbursement for two-thirds of the employee’s pay (up to the daily caps).
Of course, there are many other hypothetical scenarios. Employers should exercise caution when making decisions about employees’ use of alternative sources of leave in conjunction with EPSL/EFML, as the DOL continues to refine its guidance and states, as well as the courts, begin to grapple with these developments. Employers with questions about how existing leave rights coexist with EPSL and EFML are encouraged to contact their employment counsel.
If you have questions about the issues raised here, please contact any of the attorneys in our Labor & Employment Practice Group.
Filed under