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Paid Leave for COVID-19 -- Is Your Small Business Exempt?

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The Families First Coronavirus Response Act (FFCRA) requires employers with fewer than 500 employers to provide paid emergency sick and family leave to their employees. However, if your small business cannot afford to provide paid leave, you might be eligible for the FFCRA's small business exemption.

Is Your Small Business Eligible for the Exemption?

If your business has fewer than 50 employees, then a FFCRA exemption may apply which relieves the company from any duty to provide paid leave for requests based on a COVID-19-related closure of their child's school or place of care. Small businesses may only claim this exemption if providing the requested leave would jeopardize the business' "viability." This can be shown three different ways:

  1. Granting the leave request would result in the business' expenses exceeding revenue, causing it to cease operations.
  2. Granting the leave request would result in a "substantial risk to the financial health or operational capabilities" of the business because of the employee's unique skills or responsibilities.
  3. Granting the leave would result in an insufficient number of workers to perform labor necessary to operate at minimal capacity.

Keep in mind, this exemption is limited to situations involving COVID-19 related closures of schools and childcare. The Emergency Paid Sick Leave Act provisions in the FFCRA covers a number of other COVID-19 situations that are outside of this exemption. As such, businesses with fewer than 500 employees will not be exempt from giving paid leave to employees who:

  • are subject to a stay-at-home order
  • have been advised by a doctor to self-quarantine
  • are experiencing symptoms and seeking a diagnosis
  • are caring for someone who is subject to a stay-at-home order or has been advised to quarantine.

Is Claiming the Exemption Worth It?

If an employer can establish one of the above criteria, then they should claim the exemption. However, employers on the borderline of eligibility should weigh the pros and cons. If a small business denies an employee's request for leave, and the employee files a claim with the Department of Labor (DOL), the DOL could determine that the employer did not actually qualify for the exemption. In that case, the small business would not only need to pay the employee what they are owed, but may also have to pay attorney's fees and liquidated damages in the amount of double the award. Furthermore, because the FFCRA provides refundable tax credits equaling 100% of the paid leave offered under the Act, it may not be worthwhile for some businesses to claim the exemption if they are unsure that they truly qualify. Whether a small business is eligible for the exemption will require a case-by-case analysis, and employers should consult with a lawyer before deciding that they will not grant an employee's request for leave under the FFCRA.

How Do I Claim the Exemption?

Employers that claim the exemption must prepare documentation that explains their qualifications. The employer must keep these documents for 4 years following the employee's request. The DOL has specifically instructed that employers seeking the exemption not send any documents to the DOL. This means that small businesses have the burden of making a good faith determination as to whether they qualify. Small businesses should not adopt a blanket policy to deny leave requests. Instead, they should adopt a case-by-case approach to determine the potential impact of every individual leave request.

Finally, even if a small business qualifies for the exemption, they must still provide notice of the FFCRA's requirements to their employers. The DOL has prepared a poster that employers can post in their offices to satisfy this requirement.

If you have any questions related to the FFCRA, or any other aspect of employment law, contact Thatcher Law Firm at 301-441-1400. www.ThatcherLaw.com. Email me at [email protected].

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