This summary focuses on guidance provided by the DOL regulations on how to tabulate the number of employees for purposes of the FFCRA’s 500 employee rule, and the process and criteria for small businesses (under 50 employees) to seek an exemption from the FFCRA.

No surprises here—the FFCRA applies to all private employers with fewer than 500 employees and government employers with more than one employee. All employees (full-time and part-time) within the United States (to include the District of Columbia and all territories) count when determining the number of employees. Importantly, the number of employees includes temporary employees and day laborers regardless on which payroll the employee appears. Employers must also count all employees on leave, but this does not include employees that have been furloughed. Independent contractors, however, do not count.

If you happen to be a business that includes separate, distinct legal entities, you will count all employees across all entities if the businesses are joint employers (under the Fair Labor Standards Act) or integrated employers (under the Family Medical Leave Act). If your business happens to have an ownership interest in another business, those employees are not counted unless your business is a joint employer with the business it also has an ownership interest in. Thoroughly confused? Don’t worry. Most businesses are already aware if they are joint or integrated employers. If you have questions, be sure to consult with your legal department or outside employment law counsel.

Small Business Exemptions

If you’ve read this far, it’s because you’re looking for the small employer exemption. The much anticipated exemption from FFCRA’s leave requirements applies to employers with fewer than 50 employees. Now, a small business with fewer than 50 employees may be exempt from the mandatory paid sick leave or expanded family and medical leave requirements only if the leave is requested because the child’s school or place of child care is closed or a child care provider is unavailable due to COVID-19 related reasons and the small business can demonstrate it meets one of the three criteria below. The regulations still use the phrase “when the imposition of such [leave] requirements would jeopardize the viability of the business as a going concern” to determine exemptions from the FFCRA, but now provides three possible small-employer exemptions. Specifically, an “authorized officer” of the business must determine:

  1. The requested leave would result in the business’ expenses and financial obligations exceeding business’ revenues AND cause the business to cease operating at a minimal capacity;
  2. The absence of the employee requesting the leave would entail a substantial risk to the financial health or operational capabilities of the business because of his or her specialized skill, knowledge of the business, or responsibilities; or
  3. 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 leave and these labor or services are needed for the small business to operate at a minimal capacity.

The above is DOL’s test to exempt an employee. But it really boils down to three exemptions: (1) the business can’t afford to pay for the employee’s covered leave; (2) the employee requesting the leave is one of the only employees that performs a specialized job function; or (3) the business won’t be able to operate if its employees are on leave. The first exemption is pretty self-explanatory. An example of the second exemption would be a small design firm that completes engineering drawings. If only one engineer could approve drawings, then the business could exempt this employee when she requested leave under the FFCRA. An example of the last exemption would be a NASCAR pit crew. If a pit crew member who fueled the racecar requested leave, the employer would not have sufficient workers to perform its services (i.e., win races).

It’s important to note that the small employer exemption is not a blanket exemption. A small employer may exempt some employees but not others. A prudent small employer seeking to exempt an employee should conduct an analysis of each employee that requests leave under the FFCRA and make a determination based on that employee’s skill, knowledge, and abilities AND the current economic factors affecting the employer when deciding to exempt an employee. There are three ways to exempt an employee—the exemption for one employee may not apply to other employees.

A small employer electing this exemption does not need to send anything to the DOL, but instead should retain these records in its files. Regardless if a small employer exempts one or more of its employees, the FFCRA poster must still be posted in the workplace.

The DOL also clarified which federal employees the FFCRA applies to—essentially limiting coverage to just Title I employees. If you’re a Title I federal employer, you most likely know who you are. For the vast majority of federal employees, only the two weeks of paid sick leave is available. If you’re a state, county, municipal, or other governmental employer, the FFCRA’s leave provisions apply to your employees with limited exemptions for healthcare providers and emergency responders.