DOL Guidance on Small Business Exemption from Emergency Paid Sick and FMLA Expansion Leave Requirements

The Department of Labor has issued some Q&A guidance explaining the limited circumstances under which an employer with fewer than 50 employees (i.e., a “small business”), can claim the exemption from the requirements to provide paid sick leave or expanded family and medical leave under the Families First Coronavirus Response Act (FFCRA) because providing such leave would jeopardize the viability of the small business as a going concern.

The Small Business Exemption:

Under the guidance, a small business can exempt itself from mandated paid sick leave or expanded family and medical leave requirements only if:

  • the employer employs fewer than 50 employees on the date the leave is requested; and
  • 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
  • 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; or
    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.

Notes on the above:

Before you “pull the trigger” on claiming an exemption, talk to experienced benefits counsel. This is fraught with potential to make costly mistakes. For example:

  • Employers will need to be very careful to thoroughly document a claimed exemption.
  • Failure to adequately document a claimed exemption would seriously jeopardize the claimed exemption, and thereby lead to failure to provide mandated paid leave under the FFCRA. The determinations made by the authorized officer are particular to the employee requesting leave and must be made in light of a request for leave.
  • When documenting the exemption in a particular case, employers will need to be very careful to consider other similarly situated employees, who may or may not have requested FFCRA paid leave. It will be very easy to inadvertently set a retaliation or disparate impact trap for yourself if you are arguably inconsistent in how you claim the exemption between arguably similarly situated employees.
  • The exemption can only apply to leave due to school or place of care closures or child care provider unavailability for COVID-19 related reasons. Other kinds of leave (related to actual or suspected cases of COVID-19) cannot be exempted.
  • A business, no matter how small, cannot exempt itself generally from the FFCRA leave requirements.

Bookmark the DOL’s COVID-19 and the American Workplace web site and visit it regularly for updated guidance on implementation and administration of the FFCRA leave requirements. https://www.dol.gov/agencies/whd/pandemic

Author: Erwin

Erwin Kratz practices exclusively in the areas of ERISA and employee benefits law, focusing on tax and regulatory matters relating to qualified and nonqualified deferred compensation and welfare benefits.