The Wage & Hour Division of the U.S. Department of Labor issued a “Field Assistance Bulletin,” providing more information regarding how it will be enforcing the new Families First Coronavirus Response Act (FFCRA).  (In case you missed it, you can find an overview of the requirements in the FFCRA here.) The bulletin gave exact dates for when the Department would begin enforcement of the provisions in the Act and provided more information about what types of conduct it will and will not punish during the enforcement stay. The bulletin also briefly addressed issues regarding cash flow and how soon the payments required under the Act must be paid to eligible employees.

Stay of Enforcement

Violations of labor laws are typically enforced “strictly,” which means that employers are penalized for breaking the laws whether the violation was intentional or accidental. But in recognition of the fact that new legislation takes time to understand and implement, the Department of Labor has assured employers that it will not bring enforcement actions against any public or private employer for violations of the FFCRA until after April 17, 2020, as long as the employer has made “reasonable, good faith efforts to comply” with the Act.

Good-Faith Efforts Defined

The Department of Labor explained in its bulletin that an employer acts “reasonably” and “in good faith” if 1) the employer corrects any mistakes it makes as soon as practicable; 2) if the violation was not “willful” (defined below); and 3) the employer sends the Department a “written commitment” to comply with the Act in the future.

In other words, try to comply with the Act, and if the Department of Labor notifies you that you are not in compliance, fix the mistakes immediately and promise not to make those, or any other, mistakes again. If an employer does that, the Department has promised it will not take any further action for violations that occur before April 17.

Willful Violation Defined

A willful violation is a violation that the employer either 1) knew was a violation, or 2) “showed reckless disregard for the matter of whether its conduct was prohibited.” McLaughlin v. Richland Shoe, 486 U.S. 128, 133 (1988). If you know something is a violation of the Act, or you think it may be, so you “turn a blind eye” by not asking legal counsel or doing any research, then you are probably acting willfully and may face consequences from the Department of Labor.

Because nobody can read minds, it can be difficult to prove willfulness without an email saying, “I know this is against the law, but I am doing it anyway.” This means that in determining willfulness, the Department of Labor will look at circumstantial evidence surrounding the employer’s actions. So employers should do all they can to avoid even the appearance of willful violations of law. One way to do this is to educate yourself on the requirements of the new laws. Review the resources the Department of Labor has published to assist employers with compliance or seek advice from legal counsel. Being able to show that you attempted to find answers to questions and to understand all the legal requirements of FFCRA will help prove to the Department that any inadvertent violations were truly inadvertent.

Post-Stay Enforcement

After April 17, 2020, good-faith efforts to comply with the law will not be enough to protect employers from enforcement actions from the Department of Labor. So take this time to understand what the law requires of you so that you can make sure you are strictly complying by April 17, 2020.

On a slightly unrelated note, the Department’s field bulletin also addressed an issue that many employers may be wondering about: when the payments required under the Act must be paid to eligible employees.

How Soon FFCRA Payments Must be Made

One problem some employers may anticipate with the passage of the FFCRA is that the requirement to provide paid leave will disrupt their cashflow. The FFCRA attempts to alleviate this concern by allowing employers to be refunded for every dollar they pay to employees under the Act. There are two ways an employer can receive the refund:

Option 1: Employers may deduct any amounts paid under the FFCRA from the amounts they would normally pay in federal payroll taxes.

Option 2: If the amount an employer must pay to its employees under the FFCRA is more than the amount it pays in payroll taxes, the employer can request a credit from the IRS to cover the amount needed for the paid leave.

If the employer has exhausted its federal payroll tax deposit, Option 2 may not be immediately helpful if it does not have sufficient cash flow to allow it to pay employees for leave under the FFCRA while waiting for a refund from the IRS. But according to the field bulletin, leave paid under the Act does not need to be paid until after the employer has received reimbursement from the federal government.

The bulletin states in a footnote that employers should make payment of FFCRA leave as soon as possible, but no later than:

• 7 calendar days after withdrawing funds from Federal payroll tax deposits; or

• 7 calendar days after receiving a refund credit from the IRS.

So it appears that you are not required to bankrupt the company to comply with the Act, as long as you pay your employees’ FFCRA leave payments as soon as you have the cash either from your federal payroll tax deposits or from a refund check from the IRS.

If you have questions about this article or other issues related to your company’s compliance with the FFCRA, call Crook & Taylor Law at 801.326.1943 to set up a meeting with a lawyer.

This article was written for informational and educational purposes only. It is not intended as legal advice or as a substitute for legal advice. Reading this article does not create a lawyer-client relationship between the reader and Crook & Taylor or any attorney. The rules and recommendations discussed in this article are valid as of the date this article was published or last updated, if applicable.