March 31 - FFCRA regular rate of pay & more on furloughs vs. quits
Updated: Apr 3, 2020
Sorry for the delay in getting something out to everyone. It's been a busy day. Unfortunately, after spending lots of time trying to track down answers to some of the really big questions we’ve been asking on this blog, we have fewer answers than we might like and some we just didn’t care for. Some of this I’ll pass along now, some I’ll refrain from doing so for reasons I’ll explain as we go.
Let's start with the FFCRA…which goes into effect tomorrow.
As a quick reminder the FFCRA is a new law which expands the Family Medical Leave Act to include emergency sick leave and paid family medical leave for a host of reasons related to COVID-19. Click here for a summary of who the act covers and reasons for coverage.
I won’t go into all that now, but instead focus on the items we haven’t covered yet due to a lack of answers.
The act has two tiers of paid benefits triggered by different provisions of the law. 2/3rds of “regular rate of pay” (capped at $200 per day) and full “regular rate of pay” capped at $511 per day.
OK… so how do we calculate regular rate of pay?
I’m glad you asked!
For purposes of the FFCRA, the regular rate of pay used to calculate your paid leave is the average of your regular rate over a period of up to six months prior to the date on which you take leave. If you have not worked for your current employer for six months, the regular rate used to calculate your paid leave is the average of your regular rate of pay for each week you have worked for your current employer.
If you are paid with commissions, tips, or piece rates, these amounts will be incorporated into the above calculation to the same extent they are included in the calculation of the regular rate under the FLSA.
You can also compute this amount for each employee by adding all compensation that is part of the regular rate over the above period and divide that sum by all hours actually worked in the same period.
Regular rate, defined by FLSA Section 207e
"Regular rate" defined
As used in this section the "regular rate" at which an employee is employed shall be deemed to include all remuneration for employment paid to, or on behalf of, the employee, but shall not be deemed to include-
(1) sums paid as gifts; payments in the nature of gifts made at Christmas time or on other special occasions, as a reward for service, the amounts of which are not measured by or dependent on hours worked, production, or efficiency;
(2) payments made for occasional periods when no work is performed due to vacation, holiday, illness, failure of the employer to provide sufficient work, or other similar cause; reasonable payments for traveling expenses, or other expenses, incurred by an employee in the furtherance of his employer's interests and properly reimbursable by the employer; and other similar payments to an employee which are not made as compensation for his hours of employment;
(3) Sums 1 paid in recognition of services performed during a given period if either, (a) both the fact that payment is to be made and the amount of the payment are determined at the sole discretion of the employer at or near the end of the period and not pursuant to any prior contract, agreement, or promise causing the employee to expect such payments regularly; or (b) the payments are made pursuant to a bona fide profit-sharing plan or trust or bona fide thrift or savings plan, meeting the requirements of the Administrator set forth in appropriate regulations which he shall issue, having due regard among other relevant factors, to the extent to which the amounts paid to the employee are determined without regard to hours of work, production, or efficiency; or (c) the payments are talent fees (as such talent fees are defined and delimited by regulations of the Administrator) paid to performers, including announcers, on radio and television programs;
(4) contributions irrevocably made by an employer to a trustee or third person pursuant to a bona fide plan for providing old-age, retirement, life, accident, or health insurance or similar benefits for employees;
(5) extra compensation provided by a premium rate paid for certain hours worked by the employee in any day or workweek because such hours are hours worked in excess of eight in a day or in excess of the maximum workweek applicable to such employee under subsection (a) or in excess of the employee's normal working hours or regular working hours, as the case may be;
(6) extra compensation provided by a premium rate paid for work by the employee on Saturdays, Sundays, holidays, or regular days of rest, or on the sixth or seventh day of the workweek, where such premium rate is not less than one and one-half times the rate established in good faith for like work performed in non-overtime hours on other days;
(7) extra compensation provided by a premium rate paid to the employee, in pursuance of an applicable employment contract or collective-bargaining agreement, for work outside of the hours established in good faith by the contract or agreement as the basic, normal, or regular workday (not exceeding eight hours) or workweek (not exceeding the maximum workweek applicable to such employee under subsection (a),2 where such premium rate is not less than one and one-half times the rate established in good faith by the contract or agreement for like work performed during such workday or workweek; or
(8) any value or income derived from employer-provided grants or rights provided pursuant to a stock option, stock appreciation right, or bona fide employee stock purchase program which is not otherwise excludable under any of paragraphs (1) through (7) if-
(A) grants are made pursuant to a program, the terms and conditions of which are communicated to participating employees either at the beginning of the employee's participation in the program or at the time of the grant;
(B) in the case of stock options and stock appreciation rights, the grant or right cannot be exercisable for a period of at least 6 months after the time of grant (except that grants or rights may become exercisable because of an employee's death, disability, retirement, or a change in corporate ownership, or other circumstances permitted by regulation), and the exercise price is at least 85 percent of the fair market value of the stock at the time of grant;
(C) exercise of any grant or right is voluntary; and
(D) any determinations regarding the award of, and the amount of, employer-provided grants or rights that are based on performance are-
(i) made based upon meeting previously established performance criteria (which may include hours of work, efficiency, or productivity) of any business unit consisting of at least 10 employees or of a facility, except that, any determinations may be based on length of service or minimum schedule of hours or days of work; or
(ii) made based upon the past performance (which may include any criteria) of one or more employees in a given period so long as the determination is in the sole discretion of the employer and not pursuant to any prior contract.
There you go! We actually have an answer for something which is nice.
What about benefits?
You just had to ask didn’t you? Here’s where I’m going to get cagey on supplying you with an answer. For one thing, you won’t have to worry about this until later. Secondly, we still have a lot of different answers on this. Some of you might have been on the webinar today and heard Jeff Fagan state his opinion quite explicitly. I’ll tell you that I’ve heard other interpretations that are far different and I’m not going to issue guidance at this point until I hear it directly from the DOL.
What about all the NDERA questions from yesterday?
Well, unfortunately we didn’t’ get a lot of help today. If anything, I received further confirmation that the Q&A I distributed yesterday is accurate. You can’t contest the unemployment of someone who elects to not go to work due to the “genuine belief that there is an imminent danger of contracting Coronavirus.”
However, after doing a zoom meeting with my Indianapolis Division Members I am once again reminded that the true strength of any Association is its members when they associate, share, and come together for a common objective. It was generally agreed that while we wouldn’t “contest” a person’s unemployment, there is nothing in the document which stipulates that we need to give a layoff and that that even granting a furlough is still optional. It only says they can ask for either… not that you need to give it to them. Furthermore, communicating the stated reason for them not agreeing to work when you have work available for them is also allowable on Indiana Unemployment claim responses.
None of this is to say that you can’t grant furloughs or layoffs if you find their concerns valid. However, if there is no reason to believe that the site where a person is working has “imminent danger” you don’t necessarily have to roll over and not at least be honest with the unemployment office about the nature of their cessation of work.
Any good news?
Actually yes! The SBA has posted a sample Paycheck Protection Program Application form on their site. If you have this ready to go when the application goes live, you should be first in line when the actual form is released. Here’s the link. As a reminder, this loan will allow you to cover the cost of your payroll during this period and not have to pay it back if qualified. Very useful.
That’s it for now everyone. It was so nice seeing some of your faces today. I hope to do more of that soon. As always, stay safe and never hesitate to give me a call.