Guidance on Exemptions for Small Businesses from Federal Paid Leave under the Families First Coronavirus Response Act

The Families First Coronavirus Response Act requires that employers provide paid sick leave in certain circumstances related to the current COVID-19 pandemic; the law also requires that employers provide paid family leave to employees who must take leave because schools and childcare are unavailable due to COVID-19.  The sick leave may be for a number of reasons, including the lack of childcare.  The paid family leave is only for leave due to a lack of childcare.

The US Department of Labor will issue regulations exempting small businesses in certain circumstances from the requirements of providing the paid leave relating to childcare being unavailable.  The Department of Labor recently released guidance on what factors must be met to be exempt; they have not yet published the actual regulations.

The Small Business Exemption

A small business (which includes religious or nonprofit organizations) is exempt from the mandated paid sick or family leave requirements only if:

  1. The employer has fewer than 50 employees; AND
  2. The leave is requested because, due to COVID-19 related reasons, the child’s school or place of care is closed or the childcare provider is unavailable. (Note that the exemption from paid sick leave is ONLY for leave requested because childcare is unavailable; a small business is not exempt from paying an employee whose sick leave is due to the employee being quarantined, sick, or having to take care of another who is sick); AND
  3. An authorized officer of the business has determined that:
  • Providing paid sick or family leave would result in the small business’s expenses and financial obligations exceeding available business revenues and cause the small business to cease operating at a minimal capacity;  OR
  • The absence of the employee(s) requesting paid sick or family leave 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; OR
  • There are not sufficient workers who are able, willing, and qualified, and who will be available at the time and place needed, to perform the labor or services provided by the employee or employees requesting paid sick or family leave, and these labor or services are needed for the small business to operate at a minimal capacity.