Emergency Paid Leave -- Making it Work
The Families First Corona Virus Response Act creates a new entitlement - for workers - to receive paid sick leave and paid FMLA between April 1 and December 31, 2020.[i] If the virus is contained in the next six to eight weeks as hoped, we can expect the economic impact on workers to be most severe in April, May and June 2020. The Families First Act is intended to help as many individuals as possible to avoid financial exigency, job loss and loss of health insurance during this critical window. Emergency paid leave is funded at 100 percent by a federal tax offset and rebate.
This is not an employer v. employee situation. Employers do not want to lay off their employees. Layoffs create instability and have a significant economic domino effect. Employees lose their income and benefits and, possibly, accept other employment in the short term out of necessity. Employers may struggle to regroup and regain their markets if their trained workers are unavailable. The ramifications of sudden mass unemployment are passed along through landlords and mortgage lenders, unpaid service providers and the emergency rooms that replace health insurance.
As clients adapt to the new normal, lawyers need to do the same. Risk mitigation in the current environment requires thoughtful legal analysis supported by the capacity for change. Two recent questions under the Families First Act illustrate the paradigm shift -
Emergency Paid Sick Leave – is a state shelter at home order a “State … quarantine or isolation order related to COVID-19”?
The Families First Act created temporary emergency paid sick leave accessible under six circumstances.[ii] The first is when the employee is “subject to a Federal, State or local quarantine or isolation order related to COVID-19.”[iii] Last month, as states rapidly issued shelter at home orders, employers and employees wanted to know whether a shelter at home order was a quarantine or isolation order entitling employees to paid sick leave.
The Wage and Hour Division published sub-regulatory guidance on March 23, 2020, (since updated several times) called Families First Coronavirus Response Act: Questions and Answers. The WHD’s guidance did not initially answer the quarantine order question. Questions 23-27 explained that emergency paid sick leave is not available when an employer has “closed” the employee’s worksite or furloughed the employee. [iv] The employee’s worksite is “closed” when the employer “sends the employee home” and “stops paying” the employee because the employer does not have work for the employee to do. Under these circumstances, the employee is not entitled to take emergency paid sick leave.
A shelter at home order requires all individuals present within the state or local government’s boundaries to “stay at home or in their place of residence” with exceptions described in the order.[v]
According to the common wisdom, although the Families First Act made no reference to it, the Centers for Disease Control and Prevention’s definition of quarantine applied. The CDC’s definition of quarantine -- separating and restricting the movement of people who were exposed to a contagious disease to see if they become sick -- is discussed on the CDC’s webpage regarding ports of entry and land border crossings.[vi] Using the CDC’s definition precludes the use of emergency paid sick leave for employees unable to work due to a state or local shelter at home order.
The legal analysis did not support the more restrictive reading. The Emergency Paid Sick Leave Act does not make any reference to the CDC’s definition. The related Congressional Record does not mention the CDC’s definition. The Congressional Record for the compressed time during which Congress debated and then passed the Families First Act is explicit in its bipartisan emphasis on using taxpayer funded emergency paid leave to mitigate hardship for employees and employers.
The rules of statutory construction would not allow a court or administrative agency to read the CDC’s definition into the legislation. The U.S. Supreme Court recently reiterated that courts are to enforce plain and unambiguous statutory language according to its terms. In Intel Corporation Investment Policy Committee v. Sulyma, the Court relied on the dictionary definition of the word “actual” (“existing in fact or reality”) to confirm the meaning of the ERISA notice requirement of “actual knowledge.”[vii]
The Merriam-Webster Dictionary defines “quarantine” as “a restraint upon the activities or communication of persons or the transport of goods designed to prevent the spread of disease or pests.” [viii] Shelter at home orders clearly qualify.
On April 3, 2020, the WHD confirmed that a state or local shelter at home order is a quarantine order for the purposes of the Emergency Paid Sick Leave Act. With this context in mind, rather than looking for ways to avoid it, affected employers and employees should be encouraged to use an expansive view of Emergency Paid Sick Leave.
Emergency Family and Medical Leave Expansion Act – is it reasonable for the WHD to limit or prevent employees who recently used FMLA leave from the full use of Emergency Family and Medical Leave?
In contrast to the WHD’s initial silence on shelter at home orders, the guidelines clearly advised that FMLA time is limited to 12 weeks regardless of the entitlement. The WHD’s guidance on this question does not seem reasonable when considered in light of the intent of the Families First Act and the likely consequences of applying it as advised.
An argument could be made that the WHD is creating, rather than interpreting, legislation by adding a limitation to the Families First Act that Congress did not intend.
Section 2612(a)(1) of the Family and Medical Leave Act entitles eligible employees to a total of twelve workweeks of unpaid leave during any 12-month period when the employee experiences “one or more” of five situations.[ix] The same definitions of eligible employee and covered employer apply for each category of unpaid leave.
The Emergency Family and Medical Leave Expansion Act adds a fifth entitlement. Section (F) creates a temporary nine month right to federally-financed paid childcare leave.[x] A completely different eligible employee is entitled to a total of 12 workweeks from a completely different covered employer between April 1 and December 31, 2020, for a completely different reason, “because of a qualifying need related to a public health emergency in accordance with section 2620 [i.e., loss of access to child care or school].”
Although it is a new entitlement that is temporary, limited in time and applicable to a different set of employees and employers, the WHD restricted access to Emergency Family and Medical Leave. Employees cannot take more than twelve total weeks of any FMLA leave during the employer’s 12-month unpaid leave administrative period.[xi]
This means employees who took unpaid FMLA leave in the first quarter of 2020 or earlier in their employer’s administrative period are partially or fully excluded from taking Emergency Family and Medical Leave. These employees, by definition, are now at a much higher risk of job loss through no fault of their own. Sudden job loss in the current environment is more likely to cause these families to lose their health insurance because they may experience longer periods of unemployment. Loss of health insurance and the inability to pay medical bills is the most significant contributor to financial hardship and bankruptcy with all of the related economic reverberations.
It could be argued that the WHD has legislated an unintended restriction into the EFML Expansion Act. Consistent with its decision in King v. Burwell, the U.S. Supreme Court recently limited Chevron deference in similar cases where agency guidance created prescriptive limits that do not exist in the legislation. In Smith v. Berryhill, the Court noted, “[a]lthough agency determinations within the scope of delegated authority are entitled to deference, it is fundamental ‘that an agency may not bootstrap itself into an area in which it has no jurisdiction.’”[xii]
The Emergency Family and Medical Leave Expansion Act entitlement is unique. It applies to small employers with fewer than 500 employees who will receive tax credits for the leave payments. The twelve-month availability period in the original FMLA is replaced by the quick start and hard stop nine-month Emergency Family and Medical Leave Expansion Act period of April 1 to December 31, 2020, after which the paid child care leave entitlement (hopefully) ends. The standard FMLA eligibility requirements are replaced with the 30-day employment eligibility period. The reason for the leave, to care for children because schools and daycare centers are closed, is situationally unique.
Most importantly, the EFML Expansion Act is a paid leave. It is a significant, and significantly enhanced, entitlement for the people it is intended to help. The legislative history clearly addresses the limited emergency parameters of this legislation and emphasizes that it is intended to be applied to workers as inclusively as possible.[xiii] Wages paid for EFML are reimbursed by the federal government at 100 percent.
Employees who used FMLA time in Q1 2020 (or within their FMLA administrative year) are, arguably, most in need of Emergency Family and Medical Leave. They may suffer the most extreme consequences without it.
Employees who used FMLA time in 1Q 2020/admin year gave birth or welcomed an adopted or foster child into their home, received treatment for their own serious health condition or cared for a family member. They are much more likely to need continuation of their employer-sponsored health insurance at this time. If they are now home-schooling their children or unable to access daycare, they have no resources. Loss of income and health insurance through a layoff or furlough would be a disaster that will affect the family well into the future.
It is difficult to understand how the WHD would not consider the effect of the guidance on overburdened hospitals, clinics and emergency rooms. What possible rationale could support an interpretation of the Emergency Family and Medical Leave Expansion Act that will force employers to deny paid Emergency Family and Medical Leave to the employees who may need it the most and push families into the ER for their health care because they have lost their health insurance?[xiv]
There is a workaround. Section 2653 of the FMLA, titled “Encouragement of more generous leave policies”, says “[n]othing in this Act or any amendment made by this Act shall be construed to discourage employers from adopting or retaining leave policies more generous than any policies that comply with the requirements under this Act or any amendment made by this Act.”[xv]
In response to specific Congressional encouragement, employers covered under the Emergency Family and Medical Leave Expansion Act could reset their FMLA administrative period to April 1, 2020. The reset would allow all eligible employees to receive up to 12 weeks of paid EFML between April 1 and December 31, 2020, when they may need it most.
Although the FMLA regulations require 60 day notice of an administrative period date change, they also re-emphasize that the employer should take every precaution to avoid reducing the employee’s FMLA entitlement and do everything possible to preserve the greatest benefit to the employee.[xvi] As long as the employer is enhancing the FMLA entitlement for employees, the 60 day notice period should be waived.
To contribute at a higher level, lawyers should guard against assuming a reflexive defensive crouch and help employers and employees use the emergency legislation to mitigate economic distress.
[i] FAMILIES FIRST CORONAVIRUS RESPONSE ACT, PL 116-127, March 18, 2020, 134 Stat 178
[ii] SEC. 5102. PAID SICK TIME REQUIREMENT.
(a) IN GENERAL.—An employer shall provide to each employee employed by the employer paid sick time to the extent that the employee is unable to work (or telework) due to a need for leave because:
(1) The employee is subject to a Federal, State, or local quarantine or isolation order related to COVID–19.
(2) The employee has been advised by a health care provider to self-quarantine due to concerns related to COVID–19.
(3) The employee is experiencing symptoms of COVID–19 and seeking a medical diagnosis.
(4) The employee is caring for an individual who is subject to an order as described in subparagraph (1) or has been advised as described in paragraph (2).
(5) The employee is caring for a son or daughter of such employee if the school or place of care of the son or daughter *196 has been closed, or the child care provider of such son or daughter is unavailable, due to COVID–19 precautions.
(6) The employee is experiencing any other substantially similar condition specified by the Secretary of Health and Human Services in consultation with the Secretary of the Treasury and the Secretary of Labor.
FAMILIES FIRST CORONAVIRUS RESPONSE ACT, PL 116-127, March 18, 2020, 134 Stat 178
[iv] Questions 23-27, https://www.dol.gov/agencies/whd/pandemic/ffcra-questions (accessed 04/14/2020)
[v] State of Wisconsin Department of Health Services Emergency Order #12 Safer at Home Order https://evers.wi.gov/Documents/COVID19/EMO12-SaferAtHome.pdf
NOW THEREFORE, under the authority of Wis. Stat. § 252.02(3) and (6) and all powers vested in me through Executive Order #72, and at the direction of Governor Tony Evers, I, Andrea Palm, Secretary-designee of the Wisconsin Department of Health Services, order the following:
1. Stay at home or place of residence. All individuals present within the State of Wisconsin are ordered to stay at home or at their place of residence, with exceptions outlined below.
[vi] See, https://www.cdc.gov/quarantine/.
[vii] Intel Corp. Inv. Policy Comm. v. Sulyma, 140 S. Ct. 768 (2020)
[ix] (a) In general
(1) Entitlement to leave
Subject to section 2613 of this title and subsection (d)(3), an eligible employee shall be entitled to a total of 12 workweeks of leave during any 12-month period for one or more of the following:
(A) Because of the birth of a son or daughter of the employee and in order to care for such son or daughter.
(B) Because of the placement of a son or daughter with the employee for adoption or foster care.
(C) In order to care for the spouse, or a son, daughter, or parent, of the employee, if such spouse, son, daughter, or parent has a serious health condition.
(D) Because of a serious health condition that makes the employee unable to perform the functions of the position of such employee.
(E) Because of any qualifying exigency (as the Secretary shall, by regulation, determine) arising out of the fact that the spouse, or a son, daughter, or parent of the employee is on covered active duty (or has been notified of an impending call or order to covered active duty) in the Armed Forces.
29 U.S.C.A. § 2612 (West)
[x] (F) During the period beginning on the date the Emergency Family and Medical Leave Expansion Act takes effect, and ending on December 31, 2020, because of a qualifying need related to a public health emergency in accordance with section 2620 of this title.
29 U.S.C.A. § 2612 (West)
[xi] Questions 44 and 45, https://www.dol.gov/agencies/whd/pandemic/ffcra-questions (accessed 04/14/2020)
[xii] Rather, “[a]lthough agency determinations within the scope of delegated authority are entitled to deference, it is fundamental ‘that an agency may not bootstrap itself into an area in which it has no jurisdiction.’”
Smith v. Berryhill, 139 S. Ct. 1765, 1778, 204 L. Ed. 2d 62 (2019) quoting Adams Fruit Co. v. Barrett, 494 U.S. 638, 649–650, 110 S.Ct. 1384, 108 L.Ed.2d 585 (1990).
[xiv] The issue of aggregating FMLA and EFML time is different than the question, not yet directly answered, of whether regular FMLA and EFML Expansion Act time runs concurrently after April 1, 2020. The WHD did clarify that the EFML entitlement is limited to a total of 12 weeks. In a temporary rule published April 10, 2020, the WHD explained that an eligible employee is entitled to no more than 12 weeks of EFML between April 1 and December 31, 2020, even if the employer’s FMLA administrative period runs from July 1 to June 30. See, 29 CFR 826.70.
[xv] 29 U.S.C.A. § 2653 (West)
[xvi] 29 C.F.R. § 825.200(d)(1) says:
(d)(1) Employers will be allowed to choose any one of the alternatives in paragraph (b) of this section for the leave entitlements described in paragraph (a) of this section provided the alternative chosen is applied consistently and uniformly to all employees. An employer wishing to change to another alternative is required to give at least 60 days notice to all employees, and the transition must take place in such a way that the employees retain the full benefit of 12 weeks of leave under whichever method affords the greatest benefit to the employee. Under no circumstances may a new method be implemented in order to avoid the Act's leave requirements.