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The United States Department of Labor’s (“DOL”) Wage and Hour Division has just published its first round of guidance addressing certain provisions of the newly-enacted “Families First Coronavirus Response Act” (“FFCRA”). Signed into law on March 18, 2020, the FFCRA is an emergency relief package aimed at assisting individuals impacted by the COVID-19 (“Coronavirus”) public health emergency. Among other support, the FFCRA provides eligible employees with temporary paid leave benefits, including paid sick leave and family leave.
While the DOL has not yet issued official regulations to help clarify the FFCRA’s paid leave provisions, it has released a preliminary set of “Questions and Answers” in an effort to provide employers and workers with general information about the law’s requirements. Following below are the key takeaways from the DOL’s initial guidance.
To see answers to frequently asked questions about the FFCRA’s paid leave benefits, please refer to our earlier notice titled “Information for Employers on New Coronavirus Relief Law”
DEPARTMENT OF LABOR GUIDANCE
FFCRA EFFECTIVE DATE:
While it was previously anticipated that the FFCRA would take effect on April 2, 2020, the DOL clarifies that the law’s effective date is April 1, 2020.
REQUIRED NOTICE TO EMPLOYEES:
The FFCRA requires employers to post a notice to employees of their rights to paid leave under the law. The notice must be posted in a conspicuous location in the workplace. On March 25, 2020, the DOL released a model notice, available here: DOL Notice.
HOW TO COUNT EMPLOYEES:
Both the paid sick leave and family leave provisions of the FFCRA apply to private employers with fewer than 500 employees. The DOL specifies that employers should include in that count:
Workers who are independent contractors (under the standards of the Fair Labor Standards Act) are not considered employees and should therefore not be included in the count.
COUNTING EMPLOYEES OF RELATED BUSINESSES:
For purposes of counting employees, the DOL clarifies that a corporation, including its separate establishments and divisions, is considered a single employer and all of its employees must be counted toward the 500-employee threshold.
If a corporation has an ownership interest in another corporation, the two corporations will typically be considered separate employers unless they qualify as joint employers under the Fair Labor Standards Act. If two entities qualify as joint employers, all of their common employees must be counted in determining whether FFCRA paid leave benefits are required.
The DOL’s guidance also refers to the integrated employer test under the Family and Medical Leave Act for determining whether two or more entities are separate or combined for purposes of calculating the number of employees. Whether two entities qualify as an integrated employer depends on multiple factors, including whether they have common management, shared operations, and a degree of common ownership. If the two entities constitute an integrated employer, then employees of both entities must be included in the count.
For more information on whether an entity qualifies as a joint or integrated employer, please contact the attorneys at Milligan Lawless.
EXEMPTIONS FOR SMALL BUSINESSES:
While the FFCRA’s paid leave requirements apply to all private employers with fewer than 500 employees, the law provides an exemption to businesses with fewer than 50 employees if the benefits would jeopardize the viability of the business.
The DOL’s guidance does not provide further information on the process for seeking the exemption, except to recommend that employers document why they qualify for the exemption.
The DOL notes that the small business exemption will be addressed in detail in its forthcoming regulations. It also emphasizes that employers should not send any materials to the DOL for purposes of seeking an exemption.
CALCULATING HOURS FOR PART-TIME EMPLOYEES:
The DOL reiterates that all part-time employees are entitled to paid leave based on their average number of work hours in a two-week period.
If an employee works a varied schedule, the employer may use a six-month average to calculate the employee’s average daily hours.
If the employee has not been employed for at least six months, then the employer may use the number of hours that it and the employee agreed the employee would work at the time of hiring.
If there is no such agreement, an employer may calculate the appropriate number of hours of leave based on the average hours per day the employee was scheduled to work over the entire term of his or her employment.
The DOL’s guidance makes clear that employers must pay employees for hours they would have been normally scheduled to work even if that number is more than 40 hours in a week.
With that said, the DOL emphasizes that paid sick leave benefits are still capped at 80 hours total over a two-week period, noting by way of example that an employee who is scheduled to work 50 hours in a week may take 50 hours of paid sick leave during that week but the employee would only be eligible to take 30 hours of paid sick leave the following week.
The FFCRA does not require employers to pay a premium rate of pay for overtime hours.
REGULAR RATE OF PAY:
The DOL reiterates that employers must pay an employee for paid leave based on the employee’s regular rate of pay or two-thirds of the regular rate, depending on the employee’s reason for taking leave (payment is subject to caps). Commissions, tips, and/or piece rates should be included in calculating an employee’s regular rate of pay.
For purposes of the FFCRA, the regular rate of pay is the average of an employee’s regular rate over a period of up to six months to the date on which the employee takes paid leave. If an employee has been employed for less than six months, the regular rate is the average of the employee’s regular rate of pay for each week he or she has worked for the employer.
An employer can also compute an employee’s regular rate of pay by adding all compensation that is part of the regular rate over the prior six months (or lesser period of time worked) and dividing that sum by all hours actually worked in the same period.
LEAVE FOR AN EMPLOYEE CARING FOR A CHILD DUE TO SCHOOL CLOSING OR CHILDCARE UNAVAILABLE:
The DOL’s guidance confirms that an employee who is using paid leave to care for a child whose school is closed, or whose childcare provider is unavailable due to COVID-19 factors, may be eligible to use both paid sick leave and family leave under the FFCRA.
In this case, an employee could initially utilize two weeks of paid sick leave. This period would cover the first ten days of family leave, which would otherwise be unpaid. The employee could then take an additional ten weeks of family leave, as provided under the FFCRA.
NO RETROACTIVITY; PRIOR LEAVE NOT COUNTED:
The DOL clarifies that paid leave benefits provided under the FFCRA are not retroactive – the law does not take effect until April 1, 2020.
Additionally, the DOL is clear that paid leave provided to an employee prior to the law’s effective date does not count toward the new requirements – even if the paid leave was taken for reasons covered by the FFCRA.
ADDITIONAL INFORMATION FOR EMPLOYERS
PAID SICK TIME PROVIDED UNDER ARIZONA LAW:
In addition to the paid leave requirements of the FFCRA, Arizona employers must ensure continued compliance with their obligations under Arizona’s Fair Wages and Healthy Families Act. This state law, which was enacted in 2017, entitles all Arizona employees to paid sick time, subject to certain caps and requirements.
Arizona’s law permits employees to use paid sick time for the following reasons:
EMPLOYEES ENTITLED TO OTHER PAID TIME OFF BENEFITS:
The FFCRA prohibits employers from requiring employees to use vacation or other paid time off benefits, including paid sick time provided under Arizona law, prior to utilizing the paid leave provided under the FFCRA.
An employee who takes family leave pursuant to the FFCRA may elect to utilize vacation or other paid time off benefits to cover the initial ten days of unpaid leave, but an employer cannot require it.
EXCLUSION OF HEALTHCARE PROVIDERS:
The FFCRA states that an employer of an employee who is a healthcare provider or an emergency responder may elect to exclude such employee from the paid leave provisions.
The FFCRA also authorizes the DOL to exclude certain healthcare providers and emergency responders from receiving paid leave benefits.
The FFCRA incorporates by reference the following definition of healthcare provider set forth in the Family and Medical Leave Act:
Notably, the definition of healthcare provider does not include nurses or medical assistants. As such, an employer should not (absent further direction from the DOL) exclude them from the paid leave benefits under the FFCRA.
The FFCRA does not define emergency responder, but it would be reasonable to assume that it includes EMTs and paramedics. As the DOL continues to issue guidance on the FFCRA requirements, it may address what constitutes an emergency responder for purposes of the law (including whether nurses and other healthcare personnel who do not meet the definition of healthcare provider may be considered emergency responders).
The FFCRA is also not clear on whether a healthcare provider or emergency responder can be excluded from all paid leave benefits or only specific benefits. For example, the law does not clarify whether healthcare providers or emergency responders may be entitled to paid sick time in the event they personally become ill with COVID-19.
The DOL will hopefully provide additional guidance on the healthcare provider/emergency responder exclusion prior to the FFCRA’s effective date.
The attorneys at Milligan Lawless will continue to update employers on various workplace issues arising from the rapidly-developing COVID-19 public health emergency.
If you have any questions regarding how the FFCRA’s paid sick leave or emergency leave requirements affect your workplace, please contact John Conley at (602) 792-3535 or Kylie Mote at (602) 792-3523.
Earlier this year, the EEOC’s Phoenix District Office filed suit against Community Care Health Network, Inc., doing business as Matrix Medical Network in Arizona, alleging Matrix violated federal law. The EEOC’s suit alleges Matrix rescinded a job offer to Patricia Pogue after discovering Ms. Pogue was pregnant.
Title VII of the Civil Rights Act of 1964, as amended by the Pregnancy Discrimination Act of 1978, the (“PDA”), prohibits employment discrimination based on sex, including pregnancy. Acts of pregnancy discrimination may include:
The PDA, which applies to employers with 15 or more employees, protects employees who go on leave due to pregnancy, childbirth, or a related medical condition. Employers must hold an employee’s job open on the same basis as it does for other employees who go on leave.
According to the EEOC’s suit, Matrix offered Ms. Pogue a position as credentialing manager. After Ms. Pogue accepted the offer, she informed Matrix she was pregnant and would need maternity leave. Approximately one week later, Matrix asked Ms. Pogue why she did not disclose her pregnancy during the job interview. Matrix then rescinded the job offer.
The EEOC’s suit against Matrix seeks back wages, compensatory, and punitive damages for Ms. Pogue. Further, the EEOC is seeking a permanent injunction enjoining Matrix from engaging in any discriminatory practices based on a person’s sex, including pregnancy.
The EEOC has focused in on PDA discrimination cases during the past couple of years. The EEOC receives, on average, more than 3,500 charges of pregnancy discrimination each year. In 2017, the EEOC settled multiple pregnancy discrimination cases for a total amount of $15 million in monetary damages.
All employers, including medical practices, should institute and carry out policies and practices to prevent pregnancy discrimination in the workplace. Employers that would like more information about pregnancy discrimination, including advice on creating and implementing effective anti-discrimination policies, may contact the attorneys at Milligan Lawless for assistance.
Effective January 1, 2019, Arizona-based small employers will be required to provide continuation of employer-sponsored health plan benefits to qualifying former employees and their covered dependents. Currently, employers who employ at least 20 employees (as calculated by determining the number of employees employed on more than fifty percent of the employer’s typical business days in the previous calendar year) are required to offer continuing group coverage pursuant to the Consolidated Omnibus Budget Reconciliation Act (COBRA or “federal COBRA”). Arizona’s new law, referred to as a “mini-COBRA,” will apply to employers with at least one but not more than 20 employees during the preceding calendar year.
Under the law, former employees who elect to continue coverage will receive benefits at the group cost, including the employer’s contribution and administrative fee (capped at five percent of the premium). To be eligible for continued coverage under the new law, employees and their covered dependents must 1) be enrolled in a group medical insurance plan for a minimum of three months, 2) be ineligible for Medicare coverage, and 3) experience a “Qualifying Event” thereafter losing coverage. The law defines a “Qualifying Event” as follows: voluntary or involuntary termination of employment for a reason other than gross misconduct or reduction of hours required to quality for coverage;divorce or separation from the employee; death of the employee; the employee becomes eligible for Medicare coverage; a dependent child ceases to be a dependent child under the insurance plan; a retired former employee and his or her dependents lose coverage within one year before or after the employer files for bankruptcy.
Within 30 days of the occurrence of a Qualifying Event, mandated employers must provide written notification to an employee of his or her right to continue coverage(though the law considers a written notice timely if it is postmarked within 44 days of the Qualifying Event and mailed to the employee’s last known address).In the event that a covered dependent resides at a different address than the employee, the employer must deliver a separate written notice to the dependent. The written notice must inform the employee and his or her dependents of their right to continue coverage, the amount of the full cost of coverage (including the employer’s administrative fee), the process and deadlines for electing continuation of coverage, the dates and times for making payments, and the consequence for failure to pay in a timely manner (i.e., loss of coverage). For those employees and/or dependents receiving mini-COBRA coverage, employers are also required to provide at least 30 days advance notice of any changes to coverage (e.g., rates, plan, benefits,etc.).
To continue coverage, employees must provide written notification to the employer within 60 days of the date of the employer’s notice. After electing coverage, employees have 45 days to submit the initial premium to the employer. Mini-COBRA coverage terminates upon the earliest of the following events: 18 months following the commencement of coverage; the employee’s failure to timely pay premiums; the date on which the employee or a covered dependent becomes eligible for coverage under Medicare, Medicaid, or any other health benefit plan (with respect only to that person); the date on which an employer terminates coverage under the health benefit plan for all employees (the employee and covered dependents are eligible to participate in a replacement plan); or the date a dependent child would otherwise lose coverage under the terms of the health benefit plan due to age (with respect only to that dependent child). In the event that a covered dependent is deemed disabled at the time of the Qualifying Event, the dependent may be eligible for extended coverage.
Mini-COBRA Broken Down
Continued Coverage: Employees and their covered dependents receive continued employer-sponsored health plan benefits at the group cost.
Mandated Employers: Employers with at least one but no more than 20 employees during the preceding calendar year.
Eligible Employees: Employees must be covered under a group medical insurance plan for a minimum of three months; ineligible for Medicare coverage; experience a Qualifying Event.
Notification Requirements: Employer’s notice required within 30 days of the Qualifying Event. Separate notice required if a covered dependent resides at a different address.
Employer’s Administrative Fee: Capped at five percent.
Election of Coverage: Employees have 60 days from the date of employer’s notice to submit written notice of their desire to continue coverage. Initial premium is due within 45 days of electing coverage.
How Long Does Coverage Last: Generally 18 months, though coverage time may vary under certain circumstances.
Employers who would like more information about Arizona’s mini-COBRA law are encouraged to contact the attorneys at Milligan Lawless for assistance.
If you are a member or manager of an Arizona limited liability company (or professional limited liability company), your obligations may be significantly expanded under a law that begins to take effect as early as August of 2019. This article summarizes the impact of the new law relating to fiduciary duties of members and managers, and provides some thoughts as to how you can understand and manage those obligations.
Fiduciary Duties Defined
A fiduciary, in simple terms, is a person who owes to another person certain duties, such as good faith, trust, special confidence, and candor. In the business context, fiduciary duties help ensure that each officer, director or manager of a business is acting in a manner that is consistent with the company’s objectives and the interests of other owners. Under Arizona law directors and officers of corporations, and members of a partnership have long been deemed to owe fiduciary duties to the corporation or partnership. Until relatively recently, it had been unclear whether managers or members of Arizona LLCs owe fiduciary duties to the company and the other members. There had not been a statute addressing the issue, and Arizona case law had generally been interpreted so as not to impose fiduciary duties on LLC members unless the Operating Agreements imposes such duties on the members.
Imposition of Fiduciary Duties on Members or Managers of LLCs
On April 10, 2018, Arizona Governor Ducey signed the Arizona Limited Liability Company Act (ALLCA). ALLCA will apply to all Arizona LLCs formed after August 31, 2019; on August 31, 2020, Arizona’s current LLC law will expire, and ALLCA will apply to all Arizona LLCs, regardless of their date of formation. One notable change brought about by ALLCA is the imposition of fiduciary duties on members and managers of Arizona LLCs. Under ALLCA, fiduciary duties will be imposed on members and managers if: (1) the LLC does not have a written Operating Agreement, or (2) if the LLC has an Operating Agreement that is silent on the subject of fiduciary duties.
For Members in a Member-Managed LLC
Under ALLCA, members of a member-managed LLC will owe a duty of loyalty and a duty of care to the LLC and to the other members; in addition, the members will be obligated to act in a manner consistent with a contractual obligation of good faith and fair dealing. See A.R.S §29-3409.
For Managers in a Manager-Managed LLC
Similarly, a manager of a manager-managed LLC will owe the LLC and the members essentially the same duties of loyalty and care as the members in member-managed LLCs owe to the company and to one another. A manager must also discharge his or her duties and obligations under the ALLCA in a manner that is consistent with the obligation of good faith and fair dealing. In a manager-managed LLC, the members will not owe fiduciary duties to one another solely because they are members of the LLC; the existence and scope of any fiduciary duties of a member in a manager-managed LLC will depend on the extent to which the member controls or participates in the management of the company.
Eliminating or Altering Fiduciary Duties in the Operating Agreement
An Arizona LLC can depart from certain ALLCA provisions in the LLC’s Operating Agreement, and with the exception of a few items, the LLC’s Operating Agreement will supersede the provisions of the ALLCA. A.R.S. §29-3105; See A.R.S. §29-3409(F) and A.R.S. §29-3409(N). This means that certain of the duties imposed under the statute can be expanded, limited or eliminated by the Operating Agreement. The Operating Agreement cannot, however, eliminate the managers’ or members’ contractual obligation of good faith and fair dealing, or the duty to refrain from willful or intentional misconduct.
To ensure that any fiduciary duties imposed on you as a member or manager of an Arizona LLC are aligned with your interests as a member or manager, you should consider whether you want to be bound by the provisions of ALLCA relating to fiduciary duties. If you want to modify or eliminate those duties, to the extent permissible under ALLCA, please contact us or another legal adviser.
This article is made available for informational purposes only and is not for the purpose of providing legal advice. You should contact your attorney to obtain advice with respect to any particular issue or problem.
 Arizona law recognizes an implied covenant of good faith and fair dealing in every contract; this covenant obligates parties to a contract to act in good faith, and in a manner that is consistent with fair dealing.
The Americans with Disabilities Act (ADA) requires employers to provide reasonable accommodations to qualified individuals with a disability, unless doing so would trigger significant operational difficulties or expenses for the employer. Employees on leave for a disability may request reasonable accommodations in order to return to work. The employee may make the request, or the request may be outlined in a doctor’s note releasing the employee to return to work with certain restrictions.
When an employer becomes aware of an employee’s need for a possible accommodation, it is the duty of the employer to discuss the accommodation needs with the employee. Employers run afoul of the ADA when they impose “100% healed or recovered” policies. These policies refer to a practice mandating an employee be released to work without any restrictions before she may return to work. For example, if an employee is on medical leave for a surgery to address a disability and the employee’s physician releases her to work with a 20-pound lifting restriction, the employer cannot refuse to allow the employee to return to work with the lifting restriction if the employee’s essential functions do not require lifting 20 pounds. To do so would violate the ADA.
In May 2016, the Equal Employment Opportunity Commission (EEOC) issued guidance entitled “Employer-Provided Leave and the Americans with Disabilities Act.” Since issuing that guidance, the EEOC has been targeting employers with 100% Healed Policies. Recently, the EEOC set its sights on Corizon Health Inc., and Corizon LLC, (Corizon), nationwide health care companies that operate in Phoenix, Arizona.
On September 19, 2018, the EEOC filed suit against Corizon in the District of Arizona. The EEOC suit alleges Corizon violated federal law by discriminating against employees with a 100% healed policy. The EEOC states Corizon required employees with disabilities to be 100% healed or to be without any medical restrictions before they were allowed to return to work. The EEOC states this practice is a clear violation of the ADA.
The EEOC’s Phoenix Office, in filing this suit, has made clear it is committed to challenging 100% healed policies. Elizabeth Cadle, District Director of the EEOC’s Phoenix District Office, stated in a press release,
“Employers should never have 100% return to work policies that require employees to have no medical restrictions. That policy tells employees that the company will not provide reasonable accommodations for employees with medical restrictions.”
What does this mean for Arizona employers?
If you are an Arizona employer with a 100% healed policy, you should contact legal counsel immediately to discuss policy revisions. While the ADA does not require employers to return every employee to work after medical leave, the law may prohibit automatic denials based on broad 100% healed requirements. Employers should consult with legal counsel to ensure their policies support a case-by-case analysis of employee accommodation requests. If you have a 100% healed policy, or have questions or concerns about your current accommodation and equal employment policies, contact the Milligan Lawless attorney with whom you usually work.