News and Insights
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U.S. District Court Strikes Down Portions of the Department of Labor’s FFCRA Implementing Regulations
On August 3, 2020, a federal court in New York state struck down portions of the regulations implementing the Families First Coronavirus Response Act (“FFCRA”). In litigation brought by the state of New York against the United States Department of Labor (“DOL”), a U.S. District Court, among other things, substantially narrowed the “health care provider” exception to the FFCRA.
The FFCRA requires employers to provide employees paid leave benefits in connection with certain COVID-19-related absences. The health care provider exception allows employers to deny FFCRA’s leave benefits to employee health care providers. The court rejected as too broad DOL’s regulatory definition of “health care provider” which included:
“[A]nyone employed at any doctor’s office, hospital, health care center, clinic, post-secondary educational institution offering health care instruction, medical school, local health department or agency, nursing facility, retirement facility, nursing home, home health care provider, any facility that performs laboratory or medical testing, pharmacy, or any similar institution, Employer, or entity. This includes any permanent or temporary institution, facility, location, or site where medical services are provided that are similar to such institutions, as well as any individual employed by an entity that contracts with any of these institution . . . .”
DOL Final Rule at 19,351 (§ 826.25). Instead, after recognizing its applicability to the FFCRA, the court applied the narrower Family Medical Leave Act “health care provider” definition:
“(A) a doctor of medicine or osteopathy who is authorized to practice medicine or surgery (as appropriate) by the State in which the doctor practices; or (B) any other person determined by the Secretary to be capable of providing health care services.”
29 U.S.C. § 2611(6); State of New York v. U.S. Department of Labor, et al., No. 1:20-cv-03020 (S.D. N.Y. Aug. 3, 2020).
In that same decision, the court also: rejected a DOL rule which denied FFRCA leave to employees in the absence of available work for the employee to perform (e.g. during a furlough); vacated a DOL rule requiring employer consent to intermittent use of FFCRA leave; and struck down a DOL requirement that employees provide FFCRA documentation in advance of taking leave.
The court’s decision substantially affects key components of the FFCRA. Significantly, for healthcare sector employers, it may reduce the ability to exempt most employees from FFCRA leave benefits. It also raises the question of potential liability for employers who denied employees FFCRA leave based upon DOL’s now-vacated regulations. Finally, the impact of the court’s decision outside the state of New York is currently unclear. Employers are encouraged to speak with an attorney if they have questions about FFCRA compliance or other employee leave-related matters.
For more information regarding the implications of the court’s decision, the FFCRA or other employment-related matters, please contact attorney John Conley at (602) 792-3500.
In response to the COVID-19 pandemic, the Arizona Department of Economic Security (“AZDES”) has implemented the AZDES Unemployment Insurance Shared Work Program. Employers experiencing a business slowdown, as a result of the economic impact of COVID-19, may apply for the program. This program provides employers an alternative to layoffs and allows the retention of trained employees by reducing their hours and wages which may be partially offset with unemployment insurance benefits. Below are frequently asked questions and answers regarding the program.
What is the Shared Work Program?
The Shared Work Unemployment Compensation Program is an alternative for employers faced with a reduction in force. It allows an employer to divide the available work or hours of work among a specified group of affected employees in lieu of a layoff, and it allows the employees to receive a portion of their Unemployment Insurance (UI) benefits while working reduced hours. The Shared Work Program is not available to an employee unless the employer for whom the individual is currently working reduced hours completes an application which then must be approved by AZDES.
An approved Shared Work Plan is valid for one year and an employee may be eligible for up to 26 weeks of Shared Work benefits.
What are the eligibility requirements?
The employee is eligible for Shared Work benefits for each week in which:
His or her normal weekly hours are reduced by at least 10% but no more than 40%,
The employee files a claim and meets the eligibility requirements for regular Arizona benefits,
The employee has not exceeded the maximum benefit amount that is payable within the benefit year of his/her UI claim.
How does the Shared Work Program differ from regular Unemployment Insurance?
Under the Shared Work Program, employees:
- May refuse work offers from other employers
- May work for other employers without affecting their Shared Work benefits
- Whose normal weekly hours are not reduced by at least 10%, for more than two weeks, will be required to submit a work search for each week
An employee who participates in a Shared Work plan may not receive benefits for any week in which he or she receives regular UI benefits, nor may an employee participate concurrently in two or more Shared Work plans.
As an employer, how will the Shared Work Program affect my UI Tax Account?
Shared Work benefits are charged against reimbursement and experience-rated employer accounts in the same manner as regular benefits are charged. Prior to January 2017, any experience-rated employer with a negative reserve in his/her tax account and having employees paid Shared Work benefits during the fiscal year July 1 through June 30 may have had a surtax added. The surtax was added to the computed rate of negative reserve accounts. Due to the repeal of A.R.S. 23-765 through the passing of HB 2222, effective January 1, 2017, no surtax will be added to computed rates of any employer accounts for participating in the Shared Work Program.
What other criteria must the employer meet?
The employer must certify that, for the duration of the Shared Work plan, the reduction in hours replaces a layoff which would have resulted in a reduction of at least the same number of hours of work.
A business facing a 20% reduction in production usually lays off one-fifth of its workforce. Under an approved Shared Work plan, a company could employ its total workforce by reducing the workweek to four days. This allows the employer to carry out the 20% reduction without initiating layoffs. Each employee participating in the reduction would receive a partial payment equal to 20% of his or her individual weekly UI benefit amount in addition to income for the four days of work.
What are the advantages (and disadvantages) of participating in the Shared Work Program?
Advantages to the Shared Work Program
Production and quality levels are maintained and rapid recovery to full capacity is possible through retention of an experienced workforce.
When the economy recovers, administrative and training costs of hiring new employees are eliminated.
Affirmative action gains are protected.
Employee morale remains high.
The impact of a recession is more equitably distributed because most recently hired workers who would have been most susceptible to layoff are retained.
Employees retain their skills and advancement opportunities.
Consumer spending patterns remain more stable, which could result in a milder recession.
Public Assistance expenditures are lessened.
Disadvantages to the Shared Work Program
Valuable employees who are able to locate full-time employment elsewhere may be lost.
Overhead costs are not reduced proportionately to the reduction in hours.
Work scheduling may be more difficult.
Senior employees suffer a reduction in hours and income.
How can an employer apply for a Shared Work Plan?
A Shared Work Plan Application is available online (https://des.az.gov/file/7204/download). Your completed application and list of participants should be submitted at least 10 days prior to the date you wish your plan to begin. You will be notified by mail of the approval or disapproval of your plan.
An employer may have two or more plans in effect at the same time (to cover separate groups of employees). Each plan must include at least two employees, and all must be identified by name and Social Security Number. Each plan must specify the beginning date for the plan.
On the application, the employer must certify that:
Each employee listed on the plan has been paid at least $1,500 in wages from the business during the six months prior to the effective date of the plan.
For the duration of the Shared Work plan, the reduction in hours replaces a layoff, which would have resulted in a reduction of at least the same number of hours of work.
He or she has read and understands the Shared Work information and application instructions and is aware of the potential effects on his or her UI account if benefits are paid to his or her employees.
The plan application must specify any changes the affected employees will experience in fringe benefits.
Written approval of the plan must be obtained from any collective bargaining representative representing any employee listed on the plan.
For More Information
Information regarding the Shared Work Program can be found at: Unemployment Insurance Benefits – Arizona Shared Work Program | Arizona Department of Economic Security.
For additional information about adapting your employment policies and practices to meet the challenges of the COVID-19 pandemic, please contact John Conley at firstname.lastname@example.org.