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Small-business exemptions to COVID-19 emergency leave, expanded FMLA clarified

Health care provider exemption does not apply to dental practices

April 03, 2020 42199

The Emergency Paid Sick Leave and Emergency Family and Medical Leave Expansion acts took effect April 1 with clarification on exemptions to the requirements to provide employees with leave for COVID-19-related reasons. Exemptions were clarified for small businesses with fewer than 50 employees.

Updated April 15 to clarify that dentists and, thus, their employees are not included in the "health care provider" exemption under the two leave expansion acts.

The Emergency Paid Sick Leave Act (EPSLA) and the Emergency Family and Medical Leave Expansion Act (EFMLEA) took effect April 1 with some clarification on employer exemptions to the requirements to provide employees with leave for reasons related to COVID-19. The Department of Labor issued temporary regulations clarifying the exemptions for small businesses with fewer than 50 employees and also clarified that in order for eligible employees to request the leave under EFMLEA or EPSLA, they must be working in some capacity.

If an employer’s business closed prior to April 1 and temporarily furloughed employees, those furloughed employees would not be eligible for the emergency leave benefits until the practice is operational. Any employees who have continued to work or are working at a minimal part-time capacity on or after April 1 may be eligible under the qualifying circumstances as listed in the law.   

The two federal leave acts are part of the larger Families First Coronavirus Response Act, phase II, which was signed into law March 18 by President Donald Trump. Most private businesses with fewer than 500 employees are required to comply with the requirements to provide the emergency paid leave and expanded FMLA to eligible employees.

There are two optional exemptions that the labor department further clarified April 1 through the temporary regulations: (1) the exemption for businesses with fewer than 50 employees and (2) the exemption for health care providers, which is specifically defined and does not include dental offices per clarification CDA received from the U.S. Department of Labor, Wage and Hour Division. Earlier this month, CDA had advised dentists to assume they could not take advantage of the health care provider exemption unless CDA received different direction from the Department of Labor. 

According to the regulations, employers can consider claiming the small-business exemption from complying with the EPSLA an EFMLEA if they determine that one of the following apply:

  • The provision of paid sick leave or expanded FMLA would cause the business’s expenses and financial obligations to exceed available business revenues and cause the business to cease operating at a minimal capacity.
  • The absence of the employee or employees requesting paid sick leave or expanded FMLA 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.
  • There are no sufficient workers who are able, willing and qualified to perform, when and where needed, the labor or services of the employee or employees requesting paid sick leave or expanded FMLA, and the labor or services are needed for the small business to operate at minimal capacity.

Any exemptions should be carefully considered. Employers who are considering the small-business exemption may find it difficult to “prove” that providing this emergency leave or paid sick leave would jeopardize the viability of the business given that the wages provided will be refunded dollar for dollar as a tax credit.

Businesses must currently be operating at a minimal capacity to claim the small-business exemption. Many businesses in California have closed temporarily to comply with either the statewide stay-at-home order or their county shelter-in-place order and therefore will not be able to claim the small-business exemption.

Documentation required for employer reimbursement

Employers who are required to comply with the emergency leave will qualify for a dollar-for-dollar reimbursement through tax credits for all qualifying wages (including health care premiums) paid to an employee who takes leave under the act for a qualifying reason up to the appropriate per diem and aggregate payment caps. In order to obtain that reimbursement, employers must obtain from employees any documentation related to the requested leave, such as a notice of school closure from the school administration, a doctor’s note or communication from a child care provider.  

Read the labor department’s temporary regulations and latest Q&A for complete details. The department published a required workplace notice and also has a fact sheet for employers that covers qualifying reasons for leave, duration of leave, calculation of pay and more.

Dentists may also want to watch the recorded April 3 CDA webinar, "COVID-19 and Your Practice: Recent Updates and HR Guidance," which discusses implications of the Families First Coronavirus Response Act.