The Small Business Exemption to the FFCRA: 3 Important Things to Note

By Kathryn Olon

With so many concerns about COVID-19 becoming a part of our daily lives, the last thing that small business owners and operators want to worry about is having to close their doors for good due to lack of employees.  But with laws such as the FFCRA, this worry has unfortunately become a reality for many small businesses. A previous blog details all of the relevant expanded leave that employees may be entitled to under the FFRCA. However,  the provisions of the FFCRA contains an important exemption for small businesses to ease the burden of required expanded FMLA leave.  

What is the Small Business Exemption?

 In addition to providing expanded FMLA leave, the FFCRA does take into consideration small businesses.  For businesses with less than 50 employees, there is the option to apply for an exemption under the FFCRA. To qualify for this exemption, a small business is required to document why their business meets the following criteria:

1. The business determines that providing paid sick leave or expanding FMLA leave would result in expenses and other financial obligations exceeding revenue, thus causing the business to operate at “minimal capacity”.
2. The business determines that allowing employees to request paid sick leave or expanded FMLA leave to take such leave would cause substantial risk to the financial health and operational capacities of the small business.  This is typically found when the employee or employees in question have specialized skills, knowledge of the business, or responsibilities.
3. The business determines that allowing leave would result in an insufficient number of workers who are willing, able, and qualified and who are available at the time and place needed, to fill in for the employees requesting leave.   Further, if the labor and services provided by the employees requesting leave are needed for the business to operate at minimal capacity, this is a consideration as well.

Small businesses are exempt from requirements to provide paid sick leave due to school closures or childcare as well as the expanded FMLA leave.

Things for the Small Business to Keep in Mind

Although at first glance the small business exemption may seem like an ideal solution to concerns small businesses may have regarding the FFCRA, the exemption is far from a perfect solution. Unfortunately, small businesses are exempt only from providing paid leave due to school closures and childcare unavailability.  This means that these businesses are not exempt from providing leave for any of the other types of permissible leave, such as maternity leave or military leave.

Another concern with this exemption is that the Wage and Hour Division of the U.S. Department of Labor has provided no appropriate way for small businesses to confirm that they are eligible for the exemption. The Act provides no instructions for how to submit proof of compliance for the three qualifying criteria. The only instruction offered is that small businesses should not send any materials to the Department of Labor.  

So what should small businesses seeking this exemption do? Without further instructions, the best course of action is most likely for an officer of the business to keep documentation of qualification relating to the three enumerated criteria. The officer should keep this record in the company’s files, just in case the company encounters legal problems in the future.

What the Small Business Exemption Means for Small Businesses Though the small business exemption is an imperfect solution to many of the COVID-19 related concerns, it does provide these businesses with options. So long as business owners can prove they have less than 50 employees and meet all three of the above criteria, they can continue to operate under the assumption that not all FFCRA expanded care provisions apply to their employees.