Families First Coronavirus Response Act: Small Business Exemptions

By: Theresa L. Nelson

The Department of Labor published regulations governing the Families First Coronavirus Response Act on April 1, 2020. While containing extensive explanations of terms and provisions throughout the entire FFCRA, one section is particularly noteworthy for small businesses. The language of the FFCRA provided that small private employers with fewer than 50 employees could be exempt from having to provide an employee with paid sick leave and expanded family and medical leave to care for a child whose school or place of care is closed, or child care provider is unavailable, when such leave would jeopardize the viability of the business as a going concern. It was clear the exemption was not meant to be automatic to employers with 50 or less employees, but the FFCRA did not provide any definition of what would “jeopardize the viability of the business as a going concern.” Section 826.40(b) provides clarification for small employers.

In sum, an employer with less than 50 employees may deny paid sick leave or expanded family and medical leave to otherwise eligible employees if their absence would cause the small employer’s expenses and financial obligations to exceed available business revenue, pose a substantial risk, or prevent the small employer from operating at minimum capacity, respectively.

The full language of the regulation provides that a small employer is exempt from having to provide an employee with paid sick leave and expanded family and medical leave to care for his or her child whose school or place of care is closed, or child care provider is unavailable when: (1) such leave would cause the small employer’s expenses and financial obligations to exceed available business revenue and cause the small employer to cease operating at a minimal capacity; (2) the absence of the employee or employees requesting such leave would pose a substantial risk to the financial health or operational capacity of the small employer because of their specialized skills, knowledge of the business, or responsibilities; or (3) the small employer cannot find enough other workers who are able, willing, and qualified, and who will be available at the time and place needed, to perform the labor or services the employee or employees requesting leave provide, and these labor or services are needed for the small employer to operate at a minimal capacity.

If a small employer decides to deny paid sick leave or expanded family and medical leave to an employee or employees who seek leave to care for his or her child whose school or place of care is closed, or child care provider is unavailable, the employer must document the facts and circumstances that meet the criteria set forth above to justify the decision. Employers do not need to send documentation to the Department of Labor, but must retain the records in their files.

Small employers, even if exempt, must still post the notice of rights under the FFCRA.

Theresa Nelson’s practice focuses on representing and defending clients in complex labor & employment, commercial litigation, and general civil litigation. She represents clients in employment-related disputes including wage and hour, harassment, discrimination, disability accommodation (ADA), FMLA, wrongful or retaliatory discharge, breach of contract, restrictive covenants and intellectual property disputes. She is licensed in Kentucky and Ohio.

Strauss Troy is a full-service law firm that delivers solution-oriented legal services to clients through expertise, communication, and collaboration. With offices in Ohio and Kentucky, Strauss Troy serves clients in practice areas including corporate and business law, criminal and white collar defense, domestic relations and family law, labor and employment law, local government, real estate law, tax planning and compliance, and trust and estate planning.