On July 29, 2021, the U.S. Department of Labor (DOL) filed a final rule rescinding the Joint Employer Status Under the Fair Labor Standards Act final rule (2020 rule) published on January 16, 2020 and
effective March 16, 2020. The DOL’s rescission discusses all elements of the 2020 rule (vertical and horizontal joint employment, etc.) and why it was rescinded. However, the DOL has not released new joint employer status guidance.
The DOL stated in a press release,
“The 2020 rule improperly narrowed the test for vertical joint employment and conflicted with DOL interpretation, the Fair Labor Standards Act, and Congressional intent. The 2020 rule’s vertical joint employment standard failed to account for prior DOL guidance and did not significantly impact courts’ resolution of vertical joint employment cases while it was in effect.
Additionally, the 2020 rule unlawfully limits the factors the department will consider in the joint employer inquiry by focusing on a control-based test to the exclusion of economic dependence and certain other considerations, as the 2020 rule’s approach is not consistent with the totality-of-the-circumstances economic realities standard that has generally been
used by the courts.”
The final rule is effective September 28, 2021 and rescinds 29 C.F.R. § 791.
IRS Update: Vaccinations and ARP Tax Credits for Paid Leave
On July 29 and June 11, 2021, the IRS updated existing and added new FAQs covering employer tax credits under the American Rescue Plan Act of 2021 (ARP) and qualified sick and family leave wages for employee leave taken April 1, 2021, through September 30, 2021 as follows:
Question 36. What is included in qualified family leave wages? (updated July 29, 2021)
Qualified family leave wages are wages and compensation that eligible employers (employers with fewer than 500 employees) pay for leave taken by an employee during which the employee is unable to work because the employee:
● Is subject to a federal, state, or local quarantine or isolation order related to COVID-19;
● Has been advised by a healthcare provider to self-quarantine due to concerns related to COVID-19;
● Is:
❍ Experiencing symptoms of COVID-19 and seeking a medical diagnosis,
❍ Seeking or awaiting the results of a diagnostic test for, or a medical diagnosis of, COVID-19 and the employee has been exposed to COVID-19 or the employee’s employer has requested the test or diagnosis, or
❍ Obtaining immunization related to COVID–19 or recovering from any injury, disability, illness, or condition related to the immunization;
● Is caring for an individual who is subject to a federal, state, or local quarantine or isolation order related to COVID-19, or has been advised by a healthcare provider to self-quarantine due to concerns related to COVID-19;
● Is caring for their child if their school or place of care has been closed (including the closure of a summer camp, summer enrichment program, or other summer program), or their childcare provider is unavailable due to COVID-19 precautions; or
● Is experiencing any other substantially similar condition specified by the Secretary of HHS in consultation with the Secretary of the Treasury and the Secretary of Labor. The Secretary of HHS has specified, after consultation with the Secretaries of Treasury and Labor, that a substantially
similar condition is one in which the employee takes leave:
❍ To accompany an individual to obtain immunization related to COVID-19, or
❍ To care for an individual who is recovering from any injury, disability, illness, or condition related to the immunization.
eligible employers may provide employees with qualified family leave wages for up to 12 weeks.
Question 37. Do qualified family leave wages include taxes imposed on or withheld from the wages? (added June 11, 2021)
For purposes of the credit, qualified family leave wages are calculated without federal tax taken from the wages, including the employee’s and employer’s share of Social Security taxes, the employee’s and employer’s share of Medicare tax, and federal income taxes required to be withheld.
Note: Qualified family leave wages are subject to the employer’s share of Social Security tax and Medicare tax, but the tax credit that an eligible employer receives for paying qualified family leave wages is increased by the employer’s share of Social Security and Medicare taxes imposed on the qualified family leave wages. Qualified family leave wages under the FFCRA
paid for leave taken by employees prior to April 1, 2021, are only subject to the employer’s share of Medicare tax (and not the employer’s share of Social Security tax); therefore, the eligible employer is entitled to receive credits to offset only Medicare tax for leave for those periods. For more information about qualified family leave wages paid for leave taken prior to
April 1, 2021, see Tax Credits for Paid Leave Under the Families First Coronavirus Response Act for Leave Prior to April 1, 2021 FAQs.
Question 38. Do qualified family leave wages include wages paid for leave taken for COVID-19 testing, to receive a vaccination or to recover from vaccination? (updated July 29, 2021)
Yes. The ARP further expanded the Emergency Family and Medical Leave Expansion Act (Expanded FMLA) reasons for employers to pay qualified family leave wages to include all of the reasons under the Emergency Paid Sick Leave Act (EPSLA) § 5102(a), as amended by the ARP, including for COVID-19 testing, to receive vaccination or to recover from vaccination.
That is, qualified family leave wages include wages paid for leave taken by employees beginning on April 1, 2021, through September 30, 2021, during which an employee is unable to work because the employee is seeking or awaiting the results of a diagnostic test for, or a medical diagnosis of, COVID-19 and the employee has been exposed to COVID-19 or the
employee’s employer has requested the test or diagnosis, or the employee is obtaining immunization related to COVID–19 or recovering from any injury, disability, illness, or condition related to the immunization.
Qualified family leave wages also include wages paid to an employee who is under a Federal, State, or local quarantine or isolation order related to COVID-19 or has been advised by a health care provider to self-quarantine due to concerns related to COVID-19, or has COVID-19 symptoms and is seeking a medical diagnosis, or the employee is caring for an individual who
is subject to a Federal, State, or local quarantine or isolation order related to COVID-19, or has been advised by a health care provider to self-quarantine due to concerns related to COVID-19, or for a child whose school or place of care is closed or child care provider is unavailable due to COVID-19 precautions.
Although the reasons for eligible employers to pay employees the qualified family leave wages are the same as for the qualified sick leave wages, the wages cannot be for the same hours for purposes of claiming the credits.
Question 38a. Do qualified family leave wages include wages paid for leave taken to accompany an individual who is obtaining a vaccination or to care for an individual who is recovering from vaccination? (added July 29, 2021)
Yes. Under the ARP, all of the reasons for which qualified sick leave wages may be paid are also reasons for which qualified family leave wages may be paid. Furthermore, under section 5102(a)(6) of the FFCRA, an eligible employer may pay qualified sick leave wages to an employee who is experiencing any other “substantially similar condition,” as specified by the
Secretary of HHS, in consultation with the Secretary of the Treasury and the Secretary of Labor, to a condition for which the eligible employer may otherwise pay qualified sick leave wages. Thus, because the Secretary of HHS has specified, in consultation with the Secretaries of Treasury and Labor, that an employee who takes leave to accompany an individual to obtain immunization related to COVID-19, or to care for an individual who is recovering from any injury, disability, illness, or condition related to the immunization, is experiencing a “substantially similar condition” under section 5102(a)(6) for which the eligible employer may pay qualified sick leave wages, an eligible employer may also pay qualified family leave wages
for these reasons.
The HHS Secretary further specified that, for this purpose, “individual” has the same meaning as was assigned to that term in 29 CFR 826.20(a)(5) for purposes of the FFCRA. Thus, “individual” means an immediate family member, someone who regularly resides in the employee’s home, or a similar person with whom the employee has a relationship that creates
an expectation that the employee would care for the person. For this purpose, “individual” does not include persons with whom the employee has no personal relationship.
Although the reasons for eligible employers to pay employees the qualified family leave wages are the same as for the qualified sick leave wages, the wages cannot be for the same hours for purposes of claiming the credits.
Question 39. What is the amount of the credit that an eligible employer may receive for qualified family leave wages? (added June 11, 2021)
An eligible employer may claim a fully refundable tax credit equal to 100 percent of the qualified family leave wages (plus allocable qualified health plan expenses, certain collectively bargained contributions, and the employer’s share of social security and Medicare taxes imposed on the qualified family leave wages) it pays. The maximum amount of qualified leave wages (including certain collectively bargained contributions) paid to an employee that may be considered is $200 per day, and $12,000 in the aggregate.
For more information about how to determine the amount of family leave wages for which an eligible employer may receive credit, see “How does an eligible employer determine the amounts and rate of pay of the qualified family leave wages to pay?”
Question 40. How does an eligible employer determine the amounts and rate of pay of the qualified family leave wages to pay? (added June 11, 2021)
Under the ARP, an eligible employer may provide an employee with qualified family leave wages for up to 12 weeks. To be able to claim the credit, the eligible employer pays the employee qualified family leave wages in an amount equal to at least 2/3 the employee’s regular rate of pay (as determined under section 7(e) of the FLSA), multiplied by the number of
hours the employee otherwise would have been scheduled to work, not to exceed $200 per day and $12,000 in the aggregate for leave taken by employees beginning on April 1, 2021, through September 30, 2021.
The $12,000 in qualified family leave wages for which an eligible employer may claim a tax credit under IRC § 3132 is determined without regard to any qualified family leave wages that it paid for leave taken by employees prior to the April 1, 2021. That is, the ARP “reset” the maximum amount of paid family leave for which an employer may claim tax credits for wages
paid for leave taken by employees beginning on April 1, 2021, through September 30, 2021; unused paid family leave for which an eligible employer did not claim tax credits under the FFCRA for periods prior to April 1, 2021 does not increase the paid family leave for which an
eligible employer may claim tax credits under the ARP, and paid family leave for which an eligible employer claimed tax credits under the FFCRA for periods prior to April 1, 2021 does not reduce the paid family leave for which an eligible employer may claim tax credits under the ARP.
Question 41. Are amounts other than qualified family leave wages included in the tax credit for paid family leave? (added June 11, 2021)
Yes. The credit for paid family leave under IRC § 3132 is increased by the amount of allocable qualified health plan expenses, certain collectively bargained contributions, and the employer’s share of social security tax and Medicare tax imposed on the qualified family leave wages paid for leave taken by employees beginning on April 1, 2021, through September 30,
2021.
For more information about the additions to the tax credit for allocable qualified health plan expenses and certain collectively bargained contributions, see “Determining the Amount of Allocable Qualified Health Plan Expenses,” and “Determining the Amount of Allocable
Collectively Bargained Contributions,” respectively.
Question 42. Are amounts other than qualified family leave wages included in the amounts subject to the maximum daily and aggregate limits? (added June 11, 2021)
Yes. The collectively bargained contributions are added to the qualified family leave wages in applying the maximum daily and aggregate limits. That is, the maximum amount of qualified family leave wages and certain collectively bargained contributions for which an eligible
employer may claim the tax credit is $200 per day or $12,000 in the aggregate. In contrast, the allocable qualified health plan expenses and the employer’s share of social security and Medicare taxes imposed on the qualified family leave wages are not included for the purposes
of the maximum daily or aggregate limits.
Question 43. Is a similar tax credit available to self-employed individuals? (added June 11, 2021)
Yes. Section 9643 of the ARP also provides a comparable credit for self-employed individuals carrying on any trade or business within the meaning of IRC § 1402 if the self-employed individual would be eligible to receive paid family leave that would have satisfied the requirements of the Expanded FMLA, as amended for purposes of the ARP, if the individual
were an employee of an eligible employer (other than the self-employed individual).
For more information, “Specific Provisions Related to Self-Employed Individuals.”
For information about the tax credits that may be claimed for qualified leave wages paid for leave taken by employees prior to April 1, 2021, under the Families First Coronavirus Response Act (FFCRA) and the COVID-related Tax Relief Act (Relief Act), see Tax Credits for Paid Leave Under the Families First Coronavirus Response Act for Leave Prior to April 1, 2021 FAQs.
Although the requirement that eligible employers provide leave under the EPSLA and Expanded FMLA under the FFCRA does not apply after December 31, 2020, the tax credits (under IRC §§ 3131—3133)
are available for qualified leave wages an eligible employer provides for leave taken by employees beginning on April 1, 2021, through September 30, 2021, if the leave would have satisfied the requirements of the EPSLA and Expanded FMLA, as amended for purposes of the ARP.
Note: Throughout these FAQs, the use of the word “work,” unless otherwise noted, is inclusive of telework.
CDC Updates Mask Guidance for Fully Vaccinated
On July 27, 2021, the Centers for Disease Control’s When You’ve Been Fully Vaccinated website was updated with the following:
● Fully vaccinated people can participate in many of the activities they did before the pandemic.
● Wear a mask indoors in public in areas of substantial or high transmission to maximize protection from the Delta variant and prevent possibly spreading it to others.
● Wear a mask if you have a weakened immune system or if, because of your age or an underlying medical condition, you are at increased risk for severe disease, or if someone in your household has a weakened immune system, is at increased risk for severe disease, or is unvaccinated.
● Wear a mask where required by laws, rules, regulations, or local guidance.
Following workplace guidance is still required even for people who are fully vaccinated.
OSHA’s National Emphasis Program for COVID-19 Revised and Interim Enforcement Response Plan Updated
On July 8, 2021, the U.S. Department of Labor’s Occupational Safety and Health Administration (OSHA) announced that it revised its National Emphasis Program (NEP) for COVID-19. OSHA launched
the NEP on March 12, 2021, to focus on companies with the largest number of workers at serious risk of contracting COVID-19 and on employers that retaliate against employees who complain about unsafe or unhealthful conditions or exercise other rights under the Occupational Safety and Health
Act.
The revised NEP:
● Adjusts the targeted industries to those most at risk for COVID-19 exposure, but still includes healthcare and non-healthcare, such as meat and poultry processing; and
● Removes an appendix that provided a list of Secondary Target Industries for the former COVID-19 NEP.
For inspections in healthcare, the revised NEP refers compliance safety and health officers (CSHOs) to the new directive, Inspection Procedures for the COVID-19 Emergency Temporary Standard, issued on June 28, 2021.
Inspections in non-healthcare establishments will follow procedures outlined in the Updated Interim Enforcement Response Plan (IERP) published July 7, 2021, it replaces the March 12, 2021 memorandum, and the updates include:
● Enforcing protections for workers in non-healthcare industries who are unvaccinated or not fully vaccinated;
● Where respirator supplies and services are readily available, OSHA will stop exercising enforcement discretion for temporary noncompliance with the Respiratory Protection standard based on employers’ claims of supply shortages due to the COVID-19 pandemic;
● OSHA will no longer exercise enforcement discretion for the same requirements in other health standards, where full compliance may have been difficult for some non-healthcare employers due to the COVID-19 pandemic;
● Updated instructions and guidance for OSHA area offices and CSHOs for handling COVID-19-related complaints, referrals and severe illness reports;
● Ensuring workers are protected from retaliation; and
● References to the revised NEP for COVID-19.
The IERPs goals are to identify exposures to COVID-19 hazards, ensure appropriate control measures are implemented, and address violations of OSHA standards (other than the ETS) and the General Duty Clause. The updated IERP will remain in effect until further notice and is intended to be time-limited to the current COVID-19 public health crisis.
The ETS became effective June 21, 2021. Healthcare employers must comply with most provisions by July 6, 2021, and with training, ventilation, and barrier provisions by July 21, 2021.
