The FFCRA Small Business Exemption

The FFCRA Small Business Exemption
31 Mar 2020

According to the Families First Coronavirus Response Act (“FFCRA”), starting April 1, 2020 certain employers must provide employees with emergency paid sick leave and emergency family and medical leave (“paid emergency leave benefits”). However, the FFCRA provides an exemption for small businesses when providing paid emergency leave benefits “would jeopardize the viability of the business as a going concern.” This weekend, the U.S. Department of Labor shed light on the small business exemption. This article summarizes the small business exemption and provides guidance on its application. Larger companies can read our previous article explaining important information employers, regardless of size, should know about the FFCRA.

The small business exemption provides small businesses with a partial exemption from the provisions of the FFCRA requiring paid emergency leave benefits. Any employer, including a religious or nonprofit organization, with fewer than 50 employees constitutes a small business. When counting employees, businesses should include all full-time and part-time employees, regardless of whether any employees are on leave or temporary. Under the small business exemption, an employer could be exempt from providing emergency paid sick leave or emergency family medical leave to an employee whose child’s school or child care is closed for COVID-19 related reasons. It is important to note that the exemption does not apply to emergency paid sick leave benefits where the need for leave is due to the employee’s own health reasons as outlined in the FFCRA.

Further, the exemption is only available when imposition of paid emergency leave benefits “would jeopardize the viability of the business as a going concern.” This requirement is satisfied if an authorized business officer determines any of the following apply:

1. Providing paid emergency leave benefits to an employee would cause the business to cease operating at a minimal capacity (i.e. the business’s expenses and financial obligations exceed revenues);

2. The absence of the employee would entail a substantial risk to the financial health or operational capabilities of the 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 necessary for the business to operate at minimal capacity that are provided by the employee requesting leave.

To elect the small business exemption, an authorized business officer must document why the exemption applies. Please note that this is an employee-specific analysis. Additionally, small businesses need not, and should not, send any materials or documentation to the U.S. Department of Labor when electing the exemption.

During these uncertain and unpredictable times, the U.S. Department of Labor encourages collaboration among employers and employees to reach solutions that balance maintaining a small business while also ensuring employee safety. Due to the technical nature of the small business exemption, the below flow chart helps break down its application.

What is written here is intended as general information and is not to be construed as legal advice. If legal advice is needed, you should consult an attorney.

For more information contact employment law attorney Michelle B. Ferguson at 303-628-3658 or mferguson@irelandstapleton.com or employment law attorney Josephine B. Reid at 303-628-3674 or jreid@irelandstapleton.com.

Ireland Stapleton’s employees are working remotely, without any interruptions to the services we provide, to ensure we can help you navigate the impact that COVID-19 is having on you, your business, and your community. To help make sense of all the COVID-19 information that is unfolding, we’ve curated our resources providing insights and guidance into one location for your easy reference. You can obtain these resources on our COVID-19 Updates page.