Management Update

DOL Issues Three New Q&A's Regarding FFCRA School Leave

Those of you who are keeping up with the pronouncements of our federal government regarding an employer's obligations under the Families First Coronavirus Response Act are aware that there are still some questions outstanding. Yesterday the DOL answered three of those questions when it issued Q&A's 98, 99 and 100. (You can find the Q&A's here https://www.dol.gov/agencies/whd/pandemic/ffcra-questions.) Specifically, the DOL indicated that:

98. If a child's school requires the child to alternate between in-person and remote-learning on a day-to-day basis, the parent is entitled to take FFCRA leave on the days that the child is required to remote-learn, assuming that other requirements of the Act are met.

99. If a school gives parents a choice between remote or in-person learning, the parent may not take FFCRA leave if they choose to have their child remote-learn, even if the parent did so out of fear that the child would contract COVID-19.

100. A parent may take FFCRA leave even if a school is utilizing remote-learning on a temporary basis and intends to open to in-person schooling in the near future.

None of these Answers prohibit an employer from allowing an employee to take leave when it is not required by the FFCRA. However, if an employer does so, it should not deduct that leave from the employee's FFCRA leave "bank" or utilize the tax deduction allowed by the FFCRA for that additional leave.

Be Careful If You Allow Employees to Give Paid Leave to Each Other

Jerry L. Stovall, Jr.

Due to the pandemic some of your employees may have exhausted their paid leave and be in desperate need of more. Some of your other employees may have a surplus of accrued paid leave and want to assist their less-fortunate co-workers. While you can technically allow employees to “give” accrued paid leave to each other, the IRS says that you have to jump through some hoops if you don’t want the donor employees to take an unnecessary tax hit.

IRS Notice 2006-59 addresses this issue. You can find the Notice here: https://www.irs.gov/pub/irs-drop/n-06-59.pdf. The IRS also recently also published a brief Q&A addressing such plans related to the COVID-19 pandemic. You can find the Q&A here: https://www.irs.gov/newsroom/leave-sharing-plans-frequently-asked-questions

If the employer follows the IRS Notice, the employee who gives leave under such a plan will not have to include the donated leave in her income or wages. Conversely, the employee who receives the “given” paid leave will be taxed on the amount that she receives. Unfortunately, the employee giving the leave may not claim an expense, charitable contribution, or loss deduction for the amount of leave given. Again, remember that this works “If the employer follows the IRS Notice.” If you fail to do so, your employees will face some unexpected taxes on the paid leave that they “gifted.”

Please refer to Notice 2006-59 if you are considering implementing such a leave-sharing plan. Below is a summary of some of the key criteria:

The plan must allow a leave donor to deposit accrued leave in an employer-sponsored leave bank for use by other employees who have been “adversely affected by a major disaster” as defined by the Notice.
The plan cannot allow a leave donor to deposit leave for transfer to a specific leave recipient. (This has been a major point of contention with client plans. Most employees want to give leave to a particular co-worker, not to all eligible co-workers in general. Consider this before you spend your time and money drafting a plan.)
An employee cannot take more leave in a year than the maximum amount that she accrued in the year.
A leave recipient must use this leave for purposes related to the major disaster.
The plan must have a reasonable limit on the period of time that leave may be deposited and received from the bank.
A leave recipient cannot convert leave received into cash. (This is another common point of contention.)
The employer must make a reasonable determination, based on need, as to how much leave each approved leave recipient may receive under the leave-sharing plan. (Ouch! This will undoubtedly lead to cries of favoritism.)
Leave deposited on account of one major disaster may be used only for employees affected by that major disaster. (If you implement a plan for COVID-19, it could not also be used for our next hurricane.)
Unused leave must be returned to the donor.

DOL Issues New Q&As

Jerry L. Stovall, Jr.

In July, the DOL issued a couple of new Questions and Answers regarding the FMLA. One of them addresses the issue of whether a remote or telemedicine visit with a health care provider can qualify as an “in-patient” visit. As a rule, in order for a condition that does not require in-patient care to qualify as a serious health condition one must receive in-person treatment by a health care provider.

29 CFR Section 825.115(a)(3) provides:

(3) The requirement in paragraphs (a)(1) and (2) of this section (which require ‘treatment by a health care provider’) for treatment by a health care provider means an in-person visit to a health care provider.

Since the regulations clearly require an in-person visit, the initial thought was that the answer to this question would be “No.” Well, that was wrong. Q & A number 12 states:

12. Due to safety and health concerns related to COVID-19, many health care providers are treating patients for a variety of conditions, including those unrelated to COVID-19, via telemedicine. Telemedicine involves face-to-face examinations or treatment of patients by remote video conference via computers or mobile devices. Under these circumstances, will a telemedicine visit count as an in-person visit to establish a serious health condition under the FMLA?

Yes. Until December 31, 2020, the WHD will consider telemedicine visits to be in-person visits, and will consider electronic signatures to be signatures, for purposes of establishing a serious health condition under the FMLA. To be considered an in-person visit, the telemedicine visit must include an examination, evaluation, or treatment by a health care provider; be performed by video conference; and be permitted and accepted by state licensing authorities. This approach serves the public's interest because health care facilities and clinicians around the nation are under advisories to prioritize urgent and emergency visits and procedures and to preserve staff personal protective equipment and patient-care supplies.

So, until at least December 31, 2020, remote or telemedicine visits that meet the requirements above will qualify as in-person visits under the FMLA. All HR professionals who manage the application of their company’s FMLA program (and lawyers who think they know a thing or two about the FMLA), should make note of this change since it is going to expand the number of situations in which an employee will be eligible for FMLA leave.

New York Court Vacates Four Provisions of the FFCRA Final Rule

Jerry L. Stovall, Jr.

In early August, a federal court in New York vacated four key provisions of the U.S. DOL’s Final Rule implementing the Families First Coronavirus Response Act.

In April, the State of New York sued the DOL claiming that the DOL had exceeded its statutory authority in a way that denied FFCRA leave to eligible employees. The District Court largely agreed with the state of New York and vacated four provisions of the DOL’s Final Rule. Specifically, the Court vacated the provisions:

That employees are only eligible for paid FFCRA leave where the employer had work available (This opens the door for furloughed and laid-off employees to make claims for FFCRA paid leave); This could be huge.
Defining healthcare providers that can be declared exempt from the protections of the FFCRA. (This would eliminate a health care provider’s ability to exempt it's employees from the FFCRA.);
That employees may only take intermittent leave for certain reasons if their employer consents. (This would allow employees to take intermittent leave to care for a child without employer permission.); and
That employees must provide documentation before taking FFCRA leave. (Employers would still be able to require documentation, just not before the employee began leave.)

Before you start pulling your hair out, we do not know if or how this ruling will impact those of us blessed to live and work in the Fifth Circuit. This ruling was issued by the United States District Court for the Southern District of New York. Rulings of this Court will ordinarily not be binding on the Federal Courts of Louisiana. However, we can expect similar suits to be filed in other jurisdictions. Of course, if you employ employees in the jurisdiction of the Southern District of New York, this ruling will be controlling if it stands.

It is very likely that the DOL will either appeal this judgment on you or amend its Final Rule in such a way to make it compliant with this ruling. In the meantime, employers should make themselves familiar with this ruling and determine what, if any, steps they should take. You can read the opinion here:

https://www.fmlainsights.com/wp content/uploads/sites/813/2020/08/State-of-NY-v.-USDOL.pdf

New Payroll Tax Deferral

Jerry L. Stovall, Jr.

On August 8, 2020, President Trump signed an Executive Order (“Order”) to defer the withholding, deposit, and payment of payroll taxes for individuals making less than $4,000 bi-weekly. The deferral period is from September 1 through December 31, 2020. There seems to be more questions than answers as we all await additional guidance.

One question is whether the Order is mandatory or discretionary for employers. The Order would require employers to re-program their payroll systems to withhold the proper amount of tax from employees’ paychecks before September 1, 2020.

Another question is whether employees will be required to pay back the payroll taxes that are deferred. The Order directs the Secretary of the Treasurer to determine how the deferred payroll taxes could be forgiven, but it would take Congress to pass legislation to forgive the payroll tax. Would the employer be liable for making payment of the tax if the employee cannot make payment for whatever reason?

Another question is how to calculate compensation on which the payroll tax is calculated. The Order says wages and compensation for employees qualify for deferral if less than $4,000 per bi-weekly pay-period but the Order does not define wages and compensation, or say whether that includes things like bonuses, commissions, or overtime hours. It also does not clarify what happens if the individual has more than one job.

The Order request that the Department of Treasury develop rules on the application of the Order, so hopefully there will be additional information or guidance on how the Order applies to employers and employees in the very near future.