Small Employer Exemption Under the FFCRA: Does it apply to my business?
Although the Families First Coronavirus Response Act (FFCRA) contains an exemption for employers with fewer than 50 employees, employers should be aware that this exemption is 1) optional and 2) extremely limited. Specifically, the FFCRA allows small employers to elect an exemption from its requirement to provide Emergency Paid Sick Leave (EPSL) and/or Emergency Family Medical Leave (EFML) benefits to eligible employees, but the exemption only applies if the following conditions are met:
- The employee’s leave is to care for the employee’s child whose school or place of care is closed (or child care provider is unavailable) due to COVID-19, AND
- Providing EPSL or EFML would jeopardize the viability of the business as a going concern.
In order to determine whether the second condition is met, an “authorized officer” of the business must determine that at least one of the following criteria apply:
- The leave would result in expenses and financial obligations exceeding available business revenues and cause the small business to cease operating at a minimal capacity; OR
- The employee or employee’s absence would entail a substantial risk to the financial health or operational capabilities of the business because of the employee’s specialized skills, knowledge of the business, or responsibilities; OR
- There would be insufficient employees able, willing, and qualified at the time and place needed to perform labor or services provided by the employee, and these labor or services are needed for the business to operate at a minimal capacity.
Once the applicable criteria have been identified, the employer must affirmatively elect the exemption by documenting which of the criteria was relied upon in making the determination for exemption eligibility. The documentation should not be submitted to the Department of Labor or any other government agency, but instead retained in the employer’s records. Other records related to time off requests for EPSL and EFML must be retained for four years, so we recommend the exemption documentation be retained for the same period of time. Although the regulations do not specify that additional supporting documentation is required, employers should retain independent evidence that supports their finding that one or more of the exemption criteria apply.
A small business employer who determines that it can meet one or more of the above criteria is exempt from providing EPSL or EFML benefits for requests for time off related to a child’s school or childcare closure or unavailability. While the exemption applies to all EFML benefits, an exempt employer must still provide EPSL for any other qualifying reason. Exempt employers must also post the required FFCRA notice, which means being prepared for questions when and if the employer denies employee benefits as a result of electing the exemption. See our March 19 and March 25 Bulletins for more information on qualifying reasons for EPSL and required postings.
If you think the small business exemption applies to your business, we recommend that you evaluate your business under the above criteria and carefully document your determination as soon as possible so you are prepared to respond to employee requests for leave.
If you need help evaluating the small business exemption, have questions about documenting your decision, or if you believe the exemption applies to some, but not all of your employees, contact an SMT employment attorney. We are working remotely to help you navigate this crisis and to advise you about the emergency aid programs available to your business and your employees. In addition, all SMT attorneys are available to assist you with your legal needs, whether or not they relate to COVID-19. You may email any attorney through our website at www.www.smlaw.com or contact us at 707-524-1900. We are here to help.
Kari J. Brown
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Spaulding McCullough & Tansil LLP
Employment Law Group