In addition to providing financial support to individuals and small business, the much discussed CARES Act also authorized government agencies like the US Patent and Trademark Office (USPTO) to extend certain deadlines prescribed by statute. As of time of publication, the USPTO has granted a 30 day extension for (1) the specific filings set forth below that (2) had deadlines which fell between March 27, 2020 and April 30, 2020.  To invoke this extension, the filing must be accompanied by a statement that the delay in responding was due to the COVID-19 outbreak as specified in the Order.

Patent:

i. reply to an Office notice issued during pre-examination processing by a small or micro entity;

ii. reply to an Office notice or action issued during examination or patent publication processing; issue fee;

iii. notice of appeal under 35 U.S.C. § 134 and 37 C.F.R. § 41.31;

iv. appeal brief under 37 C.F.R. § 41.37;

v. reply brief under 37 C.F.R. § 41.41;

vi. appeal forwarding fee under 37 C.F.R. § 41.45;

vii. request for an oral hearing before the Patent Trial and Appeal Board (PTAB) under 37 C.F.R. § 41.47;

vii. response to a substitute examiner’s answer under 37 C.F.R. § 41.50(a)(2);

x. amendment when reopening prosecution in response to, or request for rehearing of, a PTAB decision designated as including a new ground of rejection under 37 C.F.R. § 41.50(b);

xi. maintenance fee, filed by a small or micro entity; or

xii. request for rehearing of a PTAB decision under 37 C.F.R. § 41.52.

Trademark:

i. response to an Office action, including a notice of appeal from a final refusal, under 15 U.S.C. § 1062(b) and 37 C.F.R. §§ 2.62(a) and 2.141(a);

ii. statement of use or request for extension of time to file a statement of use under 15 U.S.C. § 1051(d) and 37 C.F.R. §§ 2.88(a) and 2.89(a);

iii. notice of opposition or request for extension of time to file a notice of opposition under 15 U.S.C. § 1063(a) and 37 C.F.R. §§ 2.101(c) and  § 2.102(a);

iv. priority filing basis under 15 U.S.C. § 1126(d)(1) and 37 C.F.R. § 2.34(a)(4)(i);

v. priority filing basis under 15 U.S.C. § 1141g and 37 C.F.R. § 7.27(c);

vi. transformation of an extension of protection to the United States into a U.S. application under 15 U.S.C. § 1141j(c) and 37 C.F.R. § 7.31(a);

vii. affidavit of use or excusable nonuse under 15 U.S.C. § 1058(a) and 37 C.F.R. § 2.160(a);

viii. renewal application under 15 U.S.C. § 1059(a) and 37 C.F.R. § 2.182; or

ix. affidavit of use or excusable nonuse under 15 U.S.C. § 1141k(a) and 37 C.F.R. § 7.36(b).

Note that the Order opens the door for an applicant to petition for additional relief; however, the Order does not extend the deadlines to file patent applications with the USPTO. Anyone seeking to maintain provisional patent application priority should immediately consult with his or her attorney.

For a full copy of the USPTO’s notices, please see:

https://www.uspto.gov/sites/default/files/documents/Patents%20CARES%20Act.pdf for patent and

https://www.uspto.gov/sites/default/files/documents/TM-Notice-CARES-Act.pdf for trademark.

On March 26, 2020, Governor John Bel Edwards issued Emergency Proclamation 37 JBE 2020 (the “Proclamation”) providing certain measures intended to aid Louisiana businesses in navigating the COVID-19 pandemic, including a temporary suspension of the statutory requirement that Louisiana corporations notice and hold annual and special shareholder meetings at a physical location.

Generally, corporations governed by the Louisiana Business Corporation Act (the “Act”) are required to hold annual shareholder meetings, as well as “special” shareholder meetings under certain circumstances. The Act provides that annual and special shareholder meetings are to be held at the corporation’s principal office, unless the time and location is designated in the corporate bylaws, in the case of annual meetings, or in the corporate bylaws or through resolutions adopted by the corporation’s board of directors, in the case of special meetings.

Section 5 of the Proclamation suspends any such physical location requirements contained in the Act for any shareholder meeting that either:

(a) has a record date that falls within the public health emergency declared by Governor Edwards pursuant to Emergency Proclamation Number 25 JBE 2020 (originally in effect commencing March 11, 2020 to April 9, 2020), or any extension thereof pursuant to a subsequent proclamation;

(b) requires notice to be given in connection with such shareholder meeting during the public health emergency declared by Governor Edwards pursuant to Emergency Proclamation Number 25 JBE 2020 (originally in effect commencing March 11, 2020 to April 9, 2020), or any extension thereof pursuant to a subsequent proclamation; or

(c) is scheduled to occur during the public health emergency declared by Governor Edwards pursuant to Emergency Proclamation Number 25 JBE 2020 (originally in effect commencing March 11, 2020 to April 9, 2020), or any extension thereof pursuant to a subsequent proclamation.

In light of federal and state guidelines on social distancing implemented in connection with the novel coronavirus, corporations governed by the Act may want to take advantage of the Proclamation and conduct shareholder meetings by means of remote communication utilizing the remote participation provisions contained in the Act. Alternatively, in lieu of a shareholder meeting, the Act permits shareholders to approve by written consent any corporate action requiring a vote of the shareholders, provided such written consent is signed by all of the shareholders entitled to vote on the action. Corporations considering conducting a shareholder meeting remotely or taking action pursuant to shareholder written consent should carefully review their bylaws and other corporate governance documents prior to taking any such action.

The Proclamation does not apply to entities not governed by the Act, including, for example, limited liability companies and partnerships.

A copy of the Proclamation can be found here.

On March 27, 2020, President Trump signed H.R. 748, the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act” or the “Act”).  The CARES Act makes significant changes tax related employment and employee benefits changes in the form of a number of relief provisions designed to mitigate the negative economic consequences of the novel coronavirus or “COVID-19” pandemic. The Act complements prior relief legislation, the Families First Coronavirus Response Act (PL 116–127, H.R. 6201).  Due to the unusual speed of the legislative process, the CARES Act may contain technical issues or drafting errors that may have to be addressed in future legislation.

This blog post summarizes several of the most significant employment and employee benefits tax changes for businesses and individuals.  A separate blog post containing a more detailed review of the other tax and accounting changes is available here.  The Kean Miller Tax Group will post additional updates as the situation develops.

In addition to the tax changes, the CARES Act contains provisions designed to provide relief to small businesses, large businesses, and changes designed to support the U.S. health care system.

Section 2202 – Special Rules for Use of Retirement Funds –

Section 2202(a) – Tax Favored Withdrawals from Qualified Plans

The CARES Act provides for tax favored withdrawals from qualified plans.  Under the Act, Internal Revenue Code (“IRC”) Section 72(t) shall not apply to any “Coronavirus related distribution”.  IRC Section 72(t) imposes a 10% penalty on any premature distribution from a qualified plan.  This relief provision applies broadly to eligible retirement plans, including individual retirement accounts and annuities, plans qualified under IRC Section 401(a) and 403(a), tax sheltered annuities under IRC Section 403(b) or governmental  deferred compensation plans under IRC Section 457(b).  A distribution is considered to be a coronavirus related distribution if it is made between January 1, 2020 and December 31, 2020 to an individual that satisfies one of the following criteria:

  1. An individual diagnosed with COVID-19 virus by a test approved by the Centers for Disease Control and Prevention (the “CDC”); or
  2. An individual whose spouse or dependent is diagnosed with COVID-19 virus; or
  3. An individual who has incurred adverse financial conditions resulting from quarantine, furlough, layoff, or reduction of hours associated with COVID-19; or
  4. An individual that is unable to work due to lack of childcare resulting from COVID-19; or
  5. An individual who is unable to work as a result of the closing of a business owned or operated by the individual due to the COVID-19 virus.

The plan administrator of a qualified plan may rely on a certification from the employee that he or she meets the conditions of an individual entitled to such a distribution.

The amount of the Coronavirus related distribution may not exceed $100,000 for any taxable year with respect to an individual.  Notwithstanding this, the employer sponsor of a qualified plan is permitted to make a distribution from the plan to a particular individual provided that all such distributions from all such plans maintained by the employer and any members of the employer’s controlled group to that individual do not exceed $100,000 in the aggregate.

The consequences of a distribution being a Coronavirus related distribution are that: (1) the distribution is permitted under a plan notwithstanding the other limitations on distributions from the plan for 401(k) distributions, or distributions by 403(b) or 457 plan; (2) the distribution is not subject to penalty under IRC Section 72 (t) of 10% of the amount of the early distribution; (3) although the distribution is taxable, the income from the distribution is spread ratably over three years, unless the employee elects to have it taxed in the year of the distribution; (4) the distribution is exempt from withholding; and (5) the distribution may be repaid in whole or in part (thereby avoiding income taxation to the employee/distributee) at any time within three years from the date of the distribution.  The repayment may be made to any eligible plan, in which case it is treated as a rollover within 60 days from the date of distribution; that is, it is not taxable.  The amount of the distribution to be repaid may not exceed the amount of the distribution.

If a plan sponsor chooses to allow Coronavirus related distributions, the sponsor must amend its plan to do so. Specifically, employers have until the last day of the plan year beginning on or after January 1, 2022 to make an amendment to their plan incorporating these provisions, provided that the amendment is consistent with the CARES Act, the plan is operated in accordance with the amendment, and the amendment is retroactive.

Section 2202(b) – Increase to Limits on Loans Made from Qualified Plans

The CARES Act increases the limits on loans that are permitted to be made from qualified plans to certain “qualified individuals” without tax.  Qualified plans for this purpose include plans qualified under IRC section 401(a), 403(a) and 403(b), as well as governmental plans.  The dollar limit is increased from $50,000 to $100,000, and the percentage of the participant’s vested accrued benefit that can be loaned is increased from 50% to 100%.  The loan may be made during the 180 day period beginning on the date of enactment; after that date, the old limits will apply to any new loans.

Example:  Employee C, who has been diagnosed with COVID-19 virus, has accrued a vested benefit under his employer’s defined benefit pension plan that has a present value of $150,000 as of April 1, 2020.  He may borrow $100,000 from the plan as of that date.

In addition, if any payment is due on any loan to a qualified individual (including pre-existing loans outstanding on March 27, 2020) between March 27, 2020 and December 31, 2020, the payment may be delayed for one year.  Subsequent payments will be adjusted to reflect the delay and interest accrued during the period of the delay.  In determining the 5-year period during which the loan is required to be paid, the period from March 27, 2020 to December 31, 2020 is disregarded; that is, the 5-year period is extended by that period of time.  A qualified individual is an individual that satisfies one of the criteria required for an individual to receive a coronavirus related distribution (see above).

The employer sponsoring the plan is permitted to amend the plan to allow for such loans by the end of the plan year beginning on or after January 1, 2022, provided that the plan is operated in accordance with the CARES Act, is operated as if the amendment had been made, and the amendment is retroactive.

Section 2203 – Temporary Waiver of Required Minimum Distribution Rules For Certain Retirement Plans and Accounts – The CARES Act provides for the elimination of the required minimum distributions (“RMDs”) due in 2020 from certain defined contribution plans (including plans qualified under IRC Section 401(a), annuity plans under IRC Section 403(a), tax sheltered annuities under IRC Section 403(b), as well as governmental 457(b) plans) and individual retirement accounts and annuities.  For persons who turned 70 1/2 before 2019,  the RMD due for 2020, is not required.  For persons who turned 70 1/2 during 2019 and who did not take the RMD during 2019, the required beginning date is April 1, 2020; That is, the April 1, 2020 RMD has been eliminated by the CARES Act, as well as the second RMD otherwise due for 2020 by December 31, 2020.  The elimination of the RMD, however, does not apply to defined benefit plans, including cash balance plans.

It may be possible for persons who have taken an RMD during 2020 to treat the distribution as a rollover under the 60-day rollover rules and recontribute it to an eligible retirement plan within 60 days of the original distribution date.  It may also be possible to treat the distribution as a coronavirus related distribution, in which case it may be recontributed over a 3-year period.

Example:  Employee D participates in a cash balance plan and a 401(k) plan with his employer.  He also has a separate IRA.  Employee D turned age 70 1/2 during 2019 and did not take any RMD distribution from the qualified plans or from the IRA during 2019.  Employee D will not have to take an RMD from the 401(k) plan or from the IRA during 2020, including the 2019 distribution that was due by April 1, 2020.  However, Employee D will have to take the 2019 RMD from the cash balance plan by April 1, 2020 and continue to take distributions from the cash balance plan under the payment method selected under the cash balance plan.  If Employee D chooses to take a lump sum distribution from the cash balance plan and roll over to an IRA by April 1, 2020, he will not be able to roll over the value of the RMD payments required for 2020 and he will be able to roll over the remainder to the IRA.  During 2021, he will be required to take an RMD from the rollover IRA in an amount based on the IRA balance at December 31, 2020.

The Act also permits the extension of the 5-year period applicable to a beneficiary of a deceased participant who dies before RMDs have begun, which beneficiary does not elect to commence RMDs within the year following the date of death.  Such beneficiary will have an additional year to take the full amount of the distribution, i.e., the year 2020 is disregarded in determining the end of the 5-year period.

Section 2206 – Exclusion for Certain Employer Payments of Student Loans – The CARES Act provides for the exclusion from the employee’s income of employer payments of student loans on behalf of an employee.  The exclusion applies to payments by employers made after March 27, 2020 (the date of enactment) and before January 1, 2021 and made by the employer on behalf of the employee of payments on principal and interest on a “qualified education loan”.  IRC Section 221(b)(1).  The education loan must have been incurred by the employee for education expenses, e.g., the cost of attendance at an eligible education institution as well as eligible fees, books, supplies and equipment.  The exclusion from income is pursuant to IRC Section 127(c)(1) and means that the employee does not pay income taxes on the amount of the loan payment, but also that payroll taxes do not apply.  The employer, in turn, may take a deduction.  Payments may be made of both principal and interest, but the maximum amount of the exclusion is $5,250.00.  The employer may pay the lender directly on behalf of the employee, but may also pay the employee the amount to be paid to the lender and the employee must use the funds to pay to the lender..

Section 2301 – Employee Retention Credit for Employers Subject to Closure Due to COVID-19 – The CARES Act provides an employee retention credit to employers, based on wages (and a proportionate amount of qualified health plan expenses) paid to employees.  The credit is limited to 50% of wages paid between March 12, 2020 and December 31, 2020 and cannot exceed $10,000 per employee.  An eligible employer is a nongovernmental employer that carried on a trade or business during 2020 and that meets either of the following tests:

  1. Operation of the business was fully or partially suspended due to government orders limiting commerce, travel or group meetings due to COVID-19; or
  2. The business experienced a reduction in gross receipts (determined quarterly as compared with the prior year) of at least 50%, with the credit continuing until the gross receipts in a quarter exceed 80% of prior year levels.

The credit applies to wages paid to employees by the employer, with respect to which the employee is not performing services (for an employer with over 100 employees in the prior year), to wages paid during the period of suspension (for employers with fewer than 100 employees and which are subject to suspension order), and to wages paid with respect to an employee in the calendar quarter during which the substantial reduction in gross receipts applies (for an employer with fewer than 100 employees and which had a 50% decline in gross receipts).  Affiliated employers are considered a single employer for purposes of the 100 employee determination.  Self-employed persons may also claim the credit for their self-employment income.  Tax exempt employers are eligible for the credit.

Wages credited under the Paid Sick Leave or Paid Family and Medical Leave provisions of the Families First Coronavirus Recovery Act are not included.  Employers taking a small business interruption loan are not eligible for the credit.  In addition, an employee for which the employer retention credit is taken is ineligible for purposes of the work opportunity tax credit in IRC Section 51.

The credit is claimed by the employer by reducing the employment taxes payable for all of its employees.  If the credit exceeds the employment taxes, then the employer can claim a refund, which is payable by Treasury under the refund rules for excess employment tax payments.

Section 2302 – Deferral of Payment of Employer Payroll Taxes – The CARES Act provides that the payment of “applicable employment taxes” for the “payroll tax deferral period” is not due until a later date.  Applicable payroll taxes include Social Security and Medicare as well as self-employment taxes.  In the case of self-employment taxes only 50% of the self-employment taxes may be delayed.  The payroll tax deferral period is the period from the date of enactment (March 22, 2020) to December 31, 2020.  One-half of the taxes must be paid by December 31, 2021 and the remainder must be paid by December 31, 2022.  The delayed payment of payroll taxes may not apply to the employer if the employer made a small business loan that is the subject of debt forgiveness under CARES Act Sections 1106 or 1109.

Sections 3201-3203 – Diagnostic Testing and Preventative Services – Section 3201(a)(1) requires that health plans cover the cost of an in vitro diagnostic test for the detection of the coronavirus that causes COVID-19, if the test: (1) is approved by the Food and Drug Administration (the “FDA”); (2) has been requested for emergency use by the developer and certain other conditions are met; (3) has been developed in and authorized by a stateafter notice is given to DHHS; or (4) otherwise approved for use under appropriate guidance.  Health plans and health insurance issuers are required to reimburse the provider of the diagnostic testingat a prenegotiated or for no more than the price of the testing, as published on the provider’s website..

Preventive services and vaccines are also required to be covered by group health plans and health insurance issuers offering group or individual health insurance.  Such plans or policies are required to cover, without cost sharing, any qualified coronavirus preventive services.  Qualified coronavirus services include an item, service, or immunization to prevent or mitigate coronavirus as approved or recommended by testing facilities and CDC.  The effective date of the coverage is 15 business days after the recommendation date.  The coverage must be provided, without cost sharing, by group health plans, health insurance issuers and individual health insurance issuers.

Sections 3601-3606 – Technical Corrections to the Family First Coronavirus Response Act (“FFCRA”) – The CARES Act makes several technical corrections to the limitations that apply per employee to paid leave and emergency paid sick leave under the FFCRA.  Section 3604 provides that the Office of Management and Budget may waive paid family and paid sick leave for certain federal executive branch employees.

Section 3605 of the CARES Act clarifies the FFCRA by providing that re-hired employees are to be eligible for the Family and Medical Leave.  In particular, eligible employees include persons who are employed at least 30 calendar days by the employer from whom leave is requested, who are laid off by the employer not earlier than March 1, 2020, who had worked for the employer for at least 30 of the last 60 days before the layoff and who are rehired by the employer.

CARES Act Section 3606 provides for the advanced refund of credits due under the FFCRA.  In particular, the CARES Act permits treasury to issue rules whereby the credit is refundable and the manner under which the refund may be issued.  It also states that the emplpoyer making late deposits will not be penalized if the failure to make the deposit is done in anticipation of the allowance of the credit.  This is consistent with the allowance by Internal Revenue Service of employers to withhold all payroll taxes of employer and employee and federal income tax withholding payments to the treasury in anticipation of the allowance of the credit, see IR 2020-57.

Section 3608 – Single-Employer Plan Funding Rules – The CARES Act provides for funding relief for single employer defined benefit pension plans.  IRC Section 430(a) and Employee Retirement Income Security Act of 1974 (“ERISA”) Section 303 are modified to permit the minimum required contribution due under IRC Section 430(j), including quarterly contributions, to be deferred during calendar year 2020.  The due date for such amounts that would have been required to have been made during 2020 shall be extended to January 1, 2021.  The amount of the required contribution will be increased by interest.

Section 3701 – Exemption for Telehealth Services – The Act provides for an exemption from the deductible and co-pay requirements for high deductible health plans associated with health savings accounts in the case of telehealth services.  The exemption applies for plan years beginning on or before December 31, 2021.  If a health plan fails to impose the deductible on telehealth expenses and other remote services, the plan shall not lose its status as a high deductible health plan.  The effective date of the change is the date of enactment.

Section 3702 – Inclusion of Certain Over-the-Counter Medical Products As Qualified Medical Expenses – The CARES Act provides that certain over-the-counter medical products can qualify as qualifying medical expenses so as to be payable by a health savings account, an Archer medical savings account, or a health flexible spending account under IRC Section 125.  The medical products include amounts paid for menstrual care products such as tampons, liners, etc.  The change is effective for amounts paid after December 31, 2019 and is a permanent change in the law.

Implications

The CARES Act contains an unprecedented economic stimulus and the tax provisions are designed to facilitate getting cash to individuals and businesses as soon as possible.  In general, there is not much downside to permitting qualified plans to offer the distributions and loans to employees.  Most of the other employee and benefit provisions are favorable to both employees and employers and it is desirable for both to become aware of the benefits of these provisions.  . As noted above, employers should review their unique situation as well as their employee benefits plans to determine whether and to what extent to amend sponsored plans in light of the changes in the CARES Act.  For other provisions, such as employee retention credits, it is necessary to consider whether to take advantage of the credit or to use another option, such as SBA loans that may be forgiven, because they are mutually exclusive

For additional information, please contact the Kean Miller Tax Group:

Robert Schmidt at (225) 382-4621; Jaye Calhoun at (504) 293-5936; Kevin Curry at (225) 382-3484; Jason Brown at (225) 389-3733; Angie Adolph at (225) 382-3437; J. Mark Miller at (318) 562-2701; Phyllis Sims at (225) 389-3717; or Willie Kolarik at (225) 382-3441.

When we meet with clients concerning their estate planning, we want to focus on assets such as IRA’s, life insurance policies, annuities, 401k accounts, and 403b accounts.  We normally refer to these accounts as “non-probate assets”.   Non-probate assets normally pass at death by way of a written beneficiary form.  These forms are usually provided by the IRA custodian, 401k plan trustee, life insurance company, or administrator of the plan.  IMPORTANT – these assets do not pass under the will or through the succession unless the estate has been named as the beneficiary.   There can be negative income tax consequences by naming the estate as the beneficiary of a tax deferred account such as an IRA or 401k plan account.

When consulting with your attorney concerning estate planning, you should review your beneficiary designations on your non-probate assets to confirm they are still correct.  Questions to consider can include:

  • Has a beneficiary died?
  • Has the plan participant remarried?
  • What is the purpose of the use of the plan accounts, annuities or life insurance proceeds at death?
  • Who do you name as a contingent or successor beneficiary if the primary beneficiary dies before you?
  • Is a beneficiary a minor (in which case a trustee of a trust for the minor should likely be named as the beneficiary)?

Yes, a trust can be named as the beneficiary of non-probate assets, which is common for minors, disabled individuals, or to preserve the principal of the asset.  However, before naming a trust as the beneficiary of tax deferred accounts, the income tax issues related to naming a trust as the beneficiary should be considered as part of the equation.  We can help you review your beneficiary forms as part of your estate planning.

For more information, please contact: Kevin Curry (225.382.3484).

The State Bond Commission has approved an expedited application process for local governments to help manage decreased revenues and increased expenses while dealing with COVID-19.  The application requires a ranking official of a local government to certify that the purpose of the loan is to carry on existing essential local government functions and/or to expand such functions as a result of the COVID-19 pandemic, and to provide information about the local governmental entity’s financial situation, including cash on hand, budgeted revenues, projected revenue losses and increased expenditures, and outstanding debt service.  The ranking official must also identify which bank has approved the financing and terms.  Other ordinary application attachments still must be provided, including the local government resolution, application parameters form, financial disclosure form, debt service analysis, and specified financial documentation.  However, the requirement to provide original documents has been temporarily waived.  The next State Bond Commission meeting is scheduled for April 16, 2020.

Physicians enrolled in Medicare are all-to-familiar with the constraints of the Stark Law which prohibits physicians from making referrals for designated health services (“DHS”) payable by Medicare when the physician (or immediate family member) has a financial relationship with the entity performing the DHS.  On March 30, 2020, CMS announced a number of Stark Law waivers to help put “patients over paperwork” and allow certain referrals and submission of claims that would ordinarily violate the Stark Law.  The waivers include: paying below fair market value for rent, equipment and services; loans between healthcare providers; providing free benefits to hospital medical staff; and increasing the number of beds at physician-owned hospitals.  For physician group practices, medically necessary DHS can be furnished to a patient by a technician or nurse in the patient’s home contemporaneously with a telehealth physician service. Group practices can also furnish medically necessary MRIs, CT scans or clinical laboratory services from mobile units the group practice may rent on a part-time basis.

Supervision requirements are also being waived by CMS. Services requiring direct supervision by a physician or other healthcare provider can now be supervised virtually through real-time audio/video technology.  For services ordinarily provided “incident to” a physician’s service, a physician can enter into a contract with auxiliary personnel such as a home health agency, infusion therapy supplier, or entities that furnish ambulance services to provide care where the physician would bill for the service and the contractor would seek payment from the billing physician.  For non-surgical extended duration therapeutic services provided in hospital outpatient departments and critical access hospitals, general rather direct physician supervision will now be required.  CMS is also waiving the requirement for patients in the hospital to be under the care of a physician.  Hospitals can use other practitioners such as physician assistants and nurse practitioners “to the fullest extent possible.”

During the public health emergency, CMS is waiving national coverage determination (“NCD”) and local coverage determination (“LCD”) requirements for face-to-face visits for evaluations and assessments.  CMS is also waiving the requirement for physicians and non-physician practitioners to perform in-person visits for nursing home residents and allowing telehealth visits instead.  If a NCD or LCD requires a specific practitioner type or physician specialty to furnish or supervise a service, the Chief Medical Officer or equivalent of a hospital or facility has the authority to make the staffing decision.

CMS is temporarily waiving the Medicare and Medicaid requirements for physicians and non-physician practitioners to be licensed in the state where they are providing services.  The healthcare provider:  (1) must be in enrolled in Medicare; (2) must possess a valid license to practice in the State which relates to his or her Medicare enrollment; (3) is furnishing services in a state in which the emergency is occurring in order to contribute to relief efforts; and (4) is not affirmatively excluded from practice in any State that is part of the emergency area.  The physician or non-physician practitioner can seek a waiver by contacting the Medicare Administrative Contractor (“MAC”) for the geographic area.  This waiver allows physicians to bill Medicare for services provided outside of their state of enrollment.  However, it is important to note that this CMS waiver does not waive state or local licensure requirements.   CMS is also allowing practitioners to provide telehealth services from their homes without reporting their home address on their Medicare enrollment and continue to bill from the currently enrolled location.  CMS is also allowing currently opted-out practitioners to terminate their opt-out status early and enroll in Medicare.

On Monday, March 30, 2020 the U.S. Department of Health and Human Services (DHHS) issued a notice in the Federal Register declaring certain goods as “scarce,” which means it is illegal to hoard those items. The DHHS is acting under authority granted by President Trump under the Defense Production Act of 1950 (the “Act”).[1]

By declaring certain goods as scarce, the accumulation of those goods (1) in excess of the reasonable demands of business, personal, or home consumption, or (2) for the purpose of resale at prices in excess of prevailing market prices is prohibited.[2] Any person or business who willfully fails to comply is subject to fines up to $10,000 and/or up to one year imprisonment.[3] This is a federal crime that may be investigated by federal law enforcement agencies and prosecuted by the United States Attorneys in each federal district.

The 15 categories identified by the DHHS are:

  1. N–95 Filtering Facepiece Respirators;[4]
  2. Other Filtering Facepiece Respirators (e.g., those designated as N99, N100, R95, R99, R100, or P95, P99, P100);[5]
  3. Elastomeric, air-purifying respirators and appropriate particulate filters/ cartridges;
  4. Powered Air Purifying Respirators (PAPRs);
  5. Portable Ventilators, including portable devices intended to mechanically control or assist patient breathing by delivering a predetermined percentage of oxygen in the breathing gas;
  6. Drug products with active ingredient chloroquine phosphate or hydroxychloroquine HCl;
  7. Sterilization services for any device as defined in section 201(h) of the Federal Food, Drug, and Cosmetic Act and sterilizers as defined in 21 CFR 880.6860, 880.6870, and 880.6880;[6]
  8. Disinfecting devices and products intended to kill pathogens and other kinds of microorganisms by chemical means or physical means;[7]
  9. Medical gowns or apparel, e.g., surgical gowns or isolation gowns;
  10. Personal protective equipment (PPE) coveralls, e.g., Tyvek Suits;
  11. PPE face masks, including any masks that cover the user’s nose and mouth and may or may not meet fluid barrier or filtration efficiency levels;
  12. PPE surgical masks, including masks that covers the user’s nose and mouth and provides a physical barrier to fluids and particulate materials
  13. PPE face shields, including those defined at 21 CFR 878.4040 and those intended for the same purpose;
  14. PPE gloves or surgical gloves, including those defined at 21 C.F.R. § 880.6250 (exam gloves) and § 878.4460 (surgical gloves) and such gloves intended for the same purposes;
  15. Ventilators, anesthesia gas machines modified for use as ventilators, and positive pressure breathing devices modified for use as ventilators (collectively referred to as ‘‘ventilators’’), ventilator tubing connectors, and ventilator accessories as those terms are described in FDA’s March 2020 Enforcement Policy for Ventilators and Accessories and Other Respiratory Devices During the Coronavirus Disease 2019 (COVID–19) Public Health Emergency located here.

The DHHS Notice is available here.

For more information, contact Kean Miller attorneys: Lauren Rucinski (Environmental Regulatory), Jennifer Jones Thomas (Health Law) and Scott Huffstetler (Labor and Employment Law, OHSA).

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[1] The Defense Production Act is found at 50 U.S.C. § 4501 et seq. via  Executive Order 13910 (https://www.whitehouse.gov/presidential-actions/executive-order-preventing-hoarding-health-medical-resources-respond-spread-covid-19/), President Trump delegated authority to the Secretary of DHHS to designate materials as scarce under section 102 of the Defense Production Act of 1950, 50 U.S.C. § 4502.

[2] 50 U.S.C. § 4512.

[3] 50 U.S.C. § 4513.

[4] Includes devices that are disposable half-face-piece nonpowered air-purifying particulate respirators intended for use to cover the nose and mouth of the wearer to help reduce wearer exposure to pathogenic biological airborne particulates.

[5] Includes single-use, disposable half-mask respiratory protective devices that cover the user’s airway (nose and mouth) and offer protection from particulate materials at an N95 filtration efficiency level per 42 C.F.R. § 84.181.

[6] Includes devices that already have FDA marketing authorization and those that do not have FDA marketing authorization but are intended for the same uses.

[7] Includes those defined in 21 C.F.R. § 876.1500, § 880.6992, and § 892.1570. and other sanitizing and disinfecting products suitable for use in a clinical setting.

The Families First Coronavirus Response Act (“FFCRA”) was enacted as HR 6201 and signed into law on March 18th, 2020. The Act consists of three divisions which are relevant to the provision of family and medical and sick leave and providing for tax credits in connection with the mandatory family and medical and sick leave. Division C is entitled the Emergency Family and Medical Leave Expansion Act (“EFMLEA”). This division amends the Family Medical Leave Act (“FMLA”) to include certain required leave in connection with sickness and family care requirements associated with the coronavirus COVID-19. Division E of the FFCRA is entitled the Emergency Paid Sick Leave Act (“EPSLA”) and it provides certain mandatory sick leave payments by employers to employees who are affected by the COVID-19 virus. Division G provides for tax credits for the paid sick and paid family medical leave, so that it should be read together with Division C and Division E so as to provide the federal tax credits for payments made by employers under Division C and Division E. The FFCRA and the divisions thereunder generally apply for the period April 1st, 2020 thru December 31st, 2020.

EMERGENCY FAMILY MEDICAL LEAVE EXPANSION ACT

The Emergency Family Medical Leave Expansion Act adds a provision to the FMLA to apply during the period April 1st, 2020 to December 31st, 2020 because of a qualifying need related to a public health emergency.  FFCRA Section 3102, the Expansion Act, adds at the end of FMLA Title 1 a new section Section 110 Public Health Emergency Leave. That section defines an eligible employee as a person who has completed 30 days of employment with the employer and who requests leave. An employer is defined to include a private person who employs fewer than 500 employees and a government employer; note that 500 is substituted for 50 or more employees in the definition of an employer that is subject to FMLA. Note further that this expanded definition of an employer only applies for qualifying needs related to the public health emergency associated with the COVID-19 virus.

In determining whether an employer has fewer than 500 employees, different employer entities may be aggregated under the FFCRA.  The 500-employee threshold is determined by aggregating employees of employers.  For the family and medical leave expansion, the test is determined by looking at the FMLA integrated employer test. This test is different from the common control rules that apply for employee benefit purposes. The FMLA rules are not as broad, and employers may not be aggregated necessarily even though they would be aggregated under the employee benefit rules of IRC Section 414(b) and (c).  Leased employees are covered, as well as part time and temporary employees.

The CARES Act, which was passed after the FFCRA, changed the 30-day rule for rehired employees.  An employee laid off March 1, 2020 or later, who worked for 30 out of 60 days prior to the layoff, and who was rehired is entitled to paid leave.

The EFMLEA provides for required leave payments to be made by an employer where the qualifying need is related to the public health emergency, the employee is unable to work or telework due to a need for leave to care for a child under 18 if the child’s school or place of care has been closed or the child’s care provider is unavailable due to the public health emergency.  A public health emergency is defined as an emergency with respect to COVID-19 declared by federal, state or local authority. A childcare provider is defined as a person who provides childcare services for compensation on a regular basis. Schools affected are elementary or secondary schools.

Generally, private employers with fewer than 500 employees and governmental employers are included; however, the Department of Labor (“DOL”) can exclude in its regulations employees of healthcare providers and emergency providers from the definition of eligible employees, and the DOL has indicated that this exclusion will be fairly broad. The DOL can also exclude small businesses with fewer than 50 employees if requiring them to provide the leave would jeopardize the viability of the business as a going concern.  It has been speculated that such a determination would be made on a case by case basis, in which situation there would inevitably be long delays; for that reason, such employers should not rely on the potential exemption unless and until further guidance is provided by DOL. Under the CARES Act, passed after the FFCRA, the Office of Management and Budget may exclude certain U.S. government employees from the paid leave requirement for good cause.

Under the EFMLEA, employers must extend leave to employees for an initial 10 days, but do not have to pay the employees for those initial 10 days. The employees may elect to substitute paid leave for this unpaid leave. After the 10 days unpaid leave is over, the employer is required to provide paid leave for the next 10 weeks in an amount not less than two-thirds of regular pay multiplied by the number of hours that the employee is regularly scheduled to work, but not in excess of a dollar limit per day per employee.  Both full time and part time employees are required to be provided the leave.  The amount required to be paid to an employee cannot exceed $200 per day or an aggregate of $10,000 per person. For employees who are not full-time and who have varying hours, the employer would look at the number of hours scheduled over the six-month period ending on the date that the leave started, including leave time, or if the employee did not work for at least six months, the amount of time that the employee reasonably expected to work determined as of his date of hire.

Employees are required to provide notice to the employer, but only as is practicable, which means that many employees may not be providing notice until such time as they actually go on leave.  Employers are expected to work with employees with regard to the notice requirement. That is, the regular employee notice requirement under FMLA is made less strict.  Employers are required to provide notice to employees of their rights under the Act, and the DOL will provide a sample notice for employers to distribute or post for the employees.

Employees also have an opportunity for restoration to their position under FMLA when the employee takes leave. This does not apply if an employer has less than 25 employees, if the employee takes leave as a result of circumstances caused by the public health emergency, and the employee’s position does not exist when the employee seeks to return to employment as a result of circumstances caused by the public health emergency during the period of leave. The employer must make reasonable efforts to restore the employee to the position or to a position with equivalent benefits, pay and other terms of employment. If the employer fails to find such work for the employee, the employer must keep the employee informed and attempt to find the employee a position for the next one-year period.

For union employees covered under a multiemployer bargaining agreement, leave may be funded through a funded leave plan under the multiemployer fund. If that is the case, then the employer satisfies the obligation under EFMLEA by making contributions to the fund and the employee has the right to ask the fund for payments in connection with such leave.

Employers who have employees who are healthcare providers or who are emergency responders may elect not to make such emergency leave payments and to exclude such employees from the consequences of the EFMLEA.

EMERGENCY PAID SICK LEAVE ACT (“EPSLA”)

Division E of the FFCRA provides for emergency sick leave. Employers are required to provide each employee with paid sick time to the extent the employee is unable to work (or telework) due to the need for leave as a result of: 1) quarantine or isolation order related to COVID-19, 2) advised by a healthcare provider to self-quarantine; 3) employee is experiencing symptoms of COVID-19 virus and is seeking diagnosis; 4) employee is caring for an individual who is quarantined or isolated or advised by a healthcare provider to self-quarantine; 5) the employee is caring for a child if the school or the child’s place of care is closed or the provider is unavailable due to COVID-19 precautions; and 6) the employee is experiencing similar conditions in accordance with rules issued by the Department of Health and Human Services. However, the employer of healthcare providers or emergency responders may elect to exclude such employees from the emergency leave payment.

The paid sick leave for a full-time employee is 80 hours of paid sick leave, and for a part-time employee is payment for the number of hours that the employee works on average over a two-week period. There is no carryover from one year to the next. This sick leave requirement terminates beginning with the next scheduled work shift immediately following the termination of the need for paid sick time. The employer may not request the employee to obtain a replacement worker or to use any other leave besides the EPSLA leave.

All employees are entitled to the emergency paid sick leave, including newly hired employees.

Employers are required to provide a notice to employees and the DOL will issue model notices. The employer may not retaliate against the employee for the use of leave or for making a claim or complaint.

The EPSLA terms are enforced as if the failure to pay the sick leave was a failure to pay minimum wages under the Fair Labor Standards Act (“FLSA”). The termination of an employee who makes the leave claim would be a violation of the FLSA and would be enforceable under the FLSA.

An employer who is covered by a collective bargaining agreement under which employees are covered by a multiemployer fund that provides for leave may in fact satisfy the obligation under the Act by making payment to the fund. The employee would have the right to go against the fund for any leave payments.

Employees keep all of the other rights under the law under the collective bargaining agreement or under employer policy. However, the employee may not request payment for unused sick leave (under the EPSLA) if he voluntarily terminates employment. Under the EPSLA all employees are covered.  Private employers with under 500 employees are covered as well as all public agencies regardless of the number of such employees.  The calculation of the number of employees is made in the same manner as for the EFMLEA, except that when aggregating employers, the FLSA test is applied.

The calculation of the paid sick leave is based on the employee’s regular compensation and the number of hours normally scheduled to work. If the payment is made for reasons 1 thru 3 above, the payment may not exceed $511 per day or an aggregate of $5,110. If the payment is made for reasons 4, 5 and 6 (generally for care for children and others) the rate of payment may not exceed $200 per day with a maximum of $2,000 in the aggregate per employee. Required compensation for the purposes of the paid leave is the greater of the employee’s regular rate of pay or the minimum wage under the FSLA, either state or federal. For the care of a family member the rate of pay is two-thirds of the regular rate of pay. Employees with varying schedules would have the six-month average utilized. The DOL is supposed to provide guidance on the calculations of these amounts. Employees are required to provide reasonable notice.

The DOL is permitted to issue regulations relating to the exclusion of healthcare providers and emergency responders. The DOL can also exempt businesses with fewer than 50 employees if the payment of such sick pay would jeopardize the employer’s ability to continue as a going concern. The DOL can also coordinate the rules under Division E with those under Division C (EFMLEA).

TAX CREDITS FOR PAID SICK LEAVE ANDPAID FAMILY AND MEDICAL LEAVE

Division G of the FFCRA provides for a payroll credit for required paid sick leave. The credit is a credit against the tax imposed by IRC Section 3111(and 3221), which is the employment taxes associated with Social Security or the Railroad Retirement Tax Act. The credit is calculated for each calendar quarter. The amount of the credit is equal to 100 percent of the “qualified sick leave wages” paid by the employer with respect to such calendar quarter. The qualified sick leave wages with respect to any individual cannot exceed $200 per day, or for any person who is quarantined or isolated, or who has been advised by a healthcare professional to self-quarantine, or who is symptomatic and is seeking diagnosis, no more than $511 per day for any day or portion thereof for which the individual is paid qualified sick leave wages. The number of days for which the credit applies will not exceed 10 days. The credit is limited to employment taxes on wages paid in respect to all employees of the employer. However, if the amount of the credit as calculated would exceed the amount of employment taxes for the quarter then the excess should be treated as an overpayment of employment taxes that shall be refunded under the rules for refunding employment taxes, IRC Section 6402 (and 6413).  Although the statute limits the credit to employment taxes,  the IRS has issued guidance in I.R. 2020-57, under which both the employer’s and the employee’s share of the Social Security and Medicare taxes, as well as Federal income tax withholding, can be used as the source of the credit.  In short, the limit to employment taxes does not prevent the employer from getting the benefit of the credit.

Qualified sick leave wages include regular 3121(a) wages and 3231(e) compensation paid by the employer which are required to by paid under the EPSLA.

Note further that the qualified sick leave wages are increased by the employer’s “qualified health plan expenses” which are properly allocable to the qualified sick leave wages.  Qualified health plan expenses are amounts paid or incurred by an employer to provide and maintain a group health plan but only to the extent the amounts are excluded from gross income under IRC Section 106(a). The allocation of health plan expenses among employees some of whom are provided the leave payments and some of whom are not may be paid on a pro rata basis among covered employees and may be made pro rata on the basis of periods of coverage relative to the employees who are recipients of the sick leave payments.

Double benefit of the credit is avoided by increasing the gross income of the employer by the amount of the credit. The employer may elect not to have the credit provisions apply; in which case the employer will not be subject to such limit. Finally, the credit does not apply to governmental employers. The Secretary of the Treasury is permitted to issue regulations intended to eliminate the credit for employers who avoid the purposes of the Act, to minimize record keeping, to waive penalties for failure to deposit amounts in anticipation in allowance of the benefit, recapture of the credit to the extent of any adjustments to the credit amount and the definition of what constitutes wages under the EPSLA.

Section 7002 of the FFCRA provides credit for sick leave for certain self-employed individuals. The amount of the credit is the qualified sick leave equivalent amount, and it is available to be taken against the self-employment tax. It applies for an eligible self-employed individual who carries on a trade or business regularly and who would be entitled to paid leave under the EPSLA if he were an employee of an employer other than himself.  The qualified sick leave equivalent amount is determined by taking the number of days the individual was unable to perform services in the trade or business for the reasons related to the Coronavirus multiplied by the lesser of $200 per day or sixty-seven percent of the average daily self-employment income for leave needed to take care of children or the lesser of $511 per day or 100 percent of the average daily self-employment income for leave taken in connection with quarantine or isolation, or a healthcare provider’s recommendation of self-quarantine, or symptoms of COVID-19 and an effort to seek a diagnosis.

Average daily self-employment income includes the net earnings for self-employment for the taxable year divided by 260. The number of days for which the payment is made equals the excess of 10 days over the number of days taken in the preceding year. The credit is a refundable credit and it applies to self-employment taxes that would ordinarily be due for the calendar quarter, of if the amount involved exceeds the self-employment tax then the credit can be refunded. The self-employed individual is required to provide documentation to maintain this documentation. Interestingly enough, Treasury is permitted to issue regulations to effect the purpose of the sick leave and to minimize record keeping.

Section 7003 of the FFCRA provides a payroll credit for required paid family leave. The credit is against the payroll tax of an amount equal to 100 percent of the qualified family leave wages. The maximum amount of the credit is $200 times the number of days up to a maximum of $10,000, and it is limited to employment taxes under IRC Section 3111(a) or 3221(a) reduced by credit allowed the employer for employment of qualified veterans and for research expenditures and by credits under Section 7001 which is the credit for required paid sick leave. The credit can be taken against the wages with respect to the employment of all employees not just the persons who took the sick leave. If after the wages of all the employees are taken into account, there remains an excess credit over the limit then that amount is refundable under the IRS rules relating to credits and refunds, IRC Sections 6402(a) and 6413(b), which give broad latitude to the Treasury to determine.  See guidelines under IR 2020-57.

Employers for whom the credit applies would be private employers with fewer than 500 employees, calculated in the same manner as for FMLA.  However, if an employer has 500 or more employees, the employer could still have the credit under IRC sec. 45S (pre-FFCRA law) available if the conditions for the credit were satisfied.

Qualified family leave wages include regular wages under IRC Section 3121 and compensation under the Railroad Retirement Tax Act, IRC section 3231(e) that are required to be paid by the EFMLEA. In addition, health plan expenses increase the credit by the amount that the employer spends to provide and maintain health plan to the extent that the health plan expenditures on behalf of the covered employees are excluded from income under IRC Section 106(a). In determining the amount attributable to an employee who receives paid leave, an allocation is made pro rata among all employees and over the time the employees received the paid leave. In order to avoid a double benefit, the gross income of the employer is increased by the amount of the credit. Wages paid under EFMLEA are not taken into account for purposes of the credit given under the FMLA paid leave provisions as it existed before the adoption of the FFCRA.

Note that the employer may elect not to have the tax credit section apply and may make this election on a quarterly basis. The credit does not apply to governmental employers.

Treasury regulations may be issued to prevent the avoidance of the purpose of the credit, to minimize record keeping, to waive penalties for failure to deposit amounts in anticipation of the allowance of the credit, to recapture credits resulting from a subsequent adjustment, and to conform with the EFMLEA.

Section 7004 provides credit for family leave for certain self-employed individuals. As discussed with respect to Section 7002, the credit is applied against the self-employment tax that applies to an eligible self-employed individual who regularly carries on a trade or business and who would be entitled to leave if he were employed by an employer rather than self-employed. The amount of the self-employment pay cannot be greater than the lesser of the average daily self-employment income multiplied by the number of days not greater than 50 and by sixty-seven percent, or $200 per day maximum. The average daily self-employment income is equal to the net earnings from self-employment divided by 260. If the credit exceeds the amount of the self-employment tax, then the application can be made for refund. The self-employed individual must provide and retain documentation demonstrating that he is entitled to the credit.

Finally, and not insignificantly, FFCRA Section 7005 provides that the sick leave payments and family leave payments are not considered wages under IRC Section 3111(a) or 3221(a). Thus, payroll tax does not apply on the sick leave or family leave payments. This would also have the consequence of not making such amounts includable in compensation for purposes of a qualified plan contributions, where the definition of compensation under the qualified plan was based on W-2 compensation or 3401(a) withholding compensation.

Tragedies generally get people thinking about their preparedness or the lack thereof.  This recent pandemic is a perfect case in point.  Yes, Congress is sending cash payments to individuals, but many are concerned about their current personal needs from a planning standpoint.

Do you have a general durable power of attorney or a healthcare power of attorney?  Hopefully, you do not have to go to the hospital, or you are in a high-risk category.  Have you thought about your living will or advanced directive?   Have you started or finished that will that you have been meaning to do? Do you have burial instructions in written form to guide your children when the time comes?

Yes, we do procrastinate on the above questions.  It’s not like the electric, water or cable service which could be turned off if we don’t pay our bill. A power of attorney can be very useful if one is incapacitated and can’t make financial decisions.  A healthcare power of attorney is important if you are a single individual and want that one particular person to make healthcare decisions for you if you can’t.

Wills are always important.  Keep in mind that Louisiana law does allow you to complete a handwritten will. With the current social distancing efforts and office closures, it may be impossible to meet with an attorney to do a notarial will. To have an effective handwritten will, it must be written entirely in the handwriting of the person making the will, it must be dated, and it must be signed.  There is no need for a witness or a notary.  So, DO NOT type it on your computer, DO NOT have your son or daughter write it. DO write the date as April 5, 2020 (if that is the date you sign) and DO NOT write 4-5-2020.  Writing out a bequest, appointing an independent executor and revoking prior wills and codicils can be problematic, but an attorney can guide you through those things over the phone.  We hope that you stay safe during this pandemic.  If we can answer any questions on the above during these times, please contact Kevin C. Curry at 225.382.3484.

The U.S. Department of Labor’s Wage and Hour Division continues to burn the midnight oil providing much needed guidance to employers and employees regarding leave issues under the Families First Coronavirus Response Act.  Overnight, Saturday, the DOL posted a third set of Q&As (Q&As 38-59) that address a number of recurring employer questions.

“Son or Daughter”.  Leave under the expanded FMLA and emergency paid sick leave is available in those instances when an employee needs leave to care for a “son or daughter” because the child’s school or place of care has been closed or is unavailable due to Covid-19 precautions.  In the latest set of questions and answers, the DOL took the position that a “son or daughter” includes the employee’s biological, adopted, or foster child, stepchild, legal ward, or a child for whom the employee is standing in loco parentis.  The phrase “son or daughter” also includes an adult son or daughter who has a mental or physical disability and is incapable of self-care because of that disability (Q&A 40).

12 Total Weeks of FMLA Leave.  A recurring question regarding the amount of FMLA leave to which an employee is entitled was answered by the DOL.  The expanded FMLA does not provide an additional 12 weeks of leave in addition to that provided by the existing FMLA.  If an employee has previously taken some of his or her 12-week FMLA entitlement during the FMLA leave year, then only the remaining FMLA leave is available for expanded FMLA purposes.  If the employee has previously taken all of his or her FMLA leave, then no additional leave is available under the expanded FMLA (until the employee becomes eligible for additional FMLA leave).  However, the amount of FMLA leave previously taken does not reduce the amount of leave available under the emergency paid sick leave provisions of the Act (Q&As 44-45).

Definitions of Health Care Provider and Emergency Responder.  Regarding health care providers, the DOL provided two different definitions, depending upon the context in which the term is used.  For purposes of determining who can advise an employee to self-quarantine due to concerns related to COVID-19, and thus create a qualifying reason for emergency paid sick leave, the term “health care provider” “means a licensed doctor of medicine, nurse practitioner, or other health care provider permitted to issue a certification for purposes of the FMLA.  This definition is consistent with the prior definition of health care provider set forth in the current FMLA regulations.” (Q&A 55).

Conversely, for purposes of determining who may be excluded by their employer from receiving expanded FMLA leave and emergency paid sick leave because they are a “health care provider,” the DOL definition of health care provider is very expansive.  “[A] healthcare provider is anyone employed at any doctor’s office, hospital, health care center, clinic, post-secondary educational institution offering health care instruction, medical school, local health department or agency, nursing facility, retirement facility, nursing home, home health provider, any facility that performs laboratory or medical testing, pharmacy, or any similar institution, employer, or entity.”  The definition also includes anyone employed by any medical services provider, medical products producer, or employer who is otherwise involved in the making of COVID-19 related medical equipment, tests, drugs, vaccine, diagnostic vehicles, or treatments (Q&A 56).  Thus, the universe of those health care providers who may be denied leave under the Act is expansive.  Nevertheless, the DOL expressly encouraged employers to be judicious when using the definition of health care provider to exempt healthcare providers from the leave provisions of the Act.

As is the case with health care providers, the term “emergency responder” was defined expansively and leads to a number of types of employees being excluded from the leave provisions of the Act.  In particular, “an emergency responder is an employee who is necessary for the provision of transport, care, health care, comfort, and nutrition of such patients or those who services or otherwise needed to limit the spread of COVID in 19.”  Included within the definition of “emergency responder” are “military or national guard members, law enforcement officers, correctional institution personnel, fire fighters, emergency medical services personnel, physicians, nurses, public health personnel, emergency medical technicians, paramedics, emergency management personnel, 911 operators, public works personnel, and persons with skill or training in operating specialized equipment or other skills needed to provide aid in a declared emergency as well as individuals who work for such facilities  . . . .”  The DOL also encouraged employers to be judicious when using this definition to exempt emergency responders from the leave provisions of the Act  (Q&A 57).

Small Business Exemption.  Finally, the DOL provided much anticipated guidance related to the leave exemption for small business (those employers with fewer than 50 employees).  However, the exemption appears to only apply to the need for leave to care for a son or daughter because the son or daughter’s school or place of care has closed because of COVID-19 (which is the only qualifying event for expanded FMLA leave under the Act, but is one of the six reasons for emergency paid sick leave).  Thus, it appears that a small businesses must otherwise provide emergency sick and care leave.

Pursuant to the Q&As, a small business is exempt from providing expanded FMLA leave and emergency paid sick leave “if the employer employs fewer than 50 employees; leave is requested because the child’s school or place of care is closed, or child care provider is unavailable, due to COVID-19 related reasons; and an authorized officer of the business has determined that at least one of the three conditions described in Question 58 is satisfied.”  (Q&A 59).

Under Q&A 58, a small business may claim this exemption if:

“[A]n authorized officer of the business has determined that:

  1. The provision of paid sick leave or expanded family and medical 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;
  2. The absence of the employee or employees requesting paid sick leave or expanded family and medical 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
  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 paid sick leave or expanded family and medical leave, and these labor or services are needed for the small business to operate at a minimal capacity.” (Q&A 58).

The new Q&As also address other topics, including topics related to public employers.

If you have questions, please contact Kean Miller labor and employment attorneys, Brian R. Carnie (318.562.2652), Chelsea G. Caswell (225.382.3405), A. Edward Hardin, Jr. (225.382.3458), Scott D. Huffstetler (225.389.3747), Michael D. Lowe (318.562.2653), Zoe W. Vermeulen (504.620.3367), and David M. Whitaker (504.620.3358).