DOL Issues Guidance for Employers with Certain Federal Contracts Regarding Emergency Leave
Contact Clara (C.B.) Burns, Charles C. High, Jr., Michael D. McQueen and Gilbert L. Sanchez -
August 3, 2020
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Today, the Department of Labor (“DOL”) issued guidance providing compliance assistance to employers with service contracts with the federal government covered by the Service Contract Act (“SCA”) and the Davis-Bacon Act. The guidance addresses wage and hour issues under both laws in light of COVID-19.
The DOL clarified that, if an employee is taking paid sick leave under the Families First Coronavirus Response Act (“FFCRA”) for reasons related to COVID-19, then employers with contracts under the SCA and Davis-Bacon Act are required to pay employees based on the higher of: the employee’s regular rate of pay, the federal minimum wage in effect under the Fair Labor Standards Act, or the applicable State or local minimum wage. If an employee is taking expanded family and medical leave under the FFCRA, employers are similarly required to pay based on the employee’s regular rate.
The guidance explained, however, that the SCA and Davis-Bacon Act health and welfare rate is not included in the regular rate of pay. Consequently, to the extent an employer pays cash in lieu of fringe benefits, an employer would not be required to pay the health and welfare fringe benefit rate for leave taken under the FFCRA. But, to the extent the employer has been providing health insurance to employees, the employer must maintain the employee’s health insurance while the employee is taking FFCRA paid leave as if the employee were working.
Importantly, the above conclusion applies only to leave taken under the FFCRA. Under the SCA and Davis-Bacon Act, employers must, unless otherwise specified in the wage determination, still provide health and welfare payments for all hours paid worked, including paid vacation, sick leave, and holiday hours, up to a maximum of 40 hours per week and 2,080 hours per year on each contract. Employers are therefore required to provide health and welfare payments to an employee who is using existing paid vacation, sick leave, or holiday hours under the SCA and Davis-Bacon Act at the same time he or she is using expanded family and medical leave under the FFCRA. Further, if employees are using expanded family and medical leave under the FFCRA concurrently with paid sick leave under Executive Order 13706, which establishes paid leave for federal contractors, employers must pay any health and welfare benefit, or monetary equivalent, required by the Executive Order 13706, for the hours paid under the Executive Order 13706.
If you have any questions about the DOL’s guidance, please feel free to contact Kemp Smith’s Labor and Employment Department at 915-533-4424.
The DOL clarified that, if an employee is taking paid sick leave under the Families First Coronavirus Response Act (“FFCRA”) for reasons related to COVID-19, then employers with contracts under the SCA and Davis-Bacon Act are required to pay employees based on the higher of: the employee’s regular rate of pay, the federal minimum wage in effect under the Fair Labor Standards Act, or the applicable State or local minimum wage. If an employee is taking expanded family and medical leave under the FFCRA, employers are similarly required to pay based on the employee’s regular rate.
The guidance explained, however, that the SCA and Davis-Bacon Act health and welfare rate is not included in the regular rate of pay. Consequently, to the extent an employer pays cash in lieu of fringe benefits, an employer would not be required to pay the health and welfare fringe benefit rate for leave taken under the FFCRA. But, to the extent the employer has been providing health insurance to employees, the employer must maintain the employee’s health insurance while the employee is taking FFCRA paid leave as if the employee were working.
Importantly, the above conclusion applies only to leave taken under the FFCRA. Under the SCA and Davis-Bacon Act, employers must, unless otherwise specified in the wage determination, still provide health and welfare payments for all hours paid worked, including paid vacation, sick leave, and holiday hours, up to a maximum of 40 hours per week and 2,080 hours per year on each contract. Employers are therefore required to provide health and welfare payments to an employee who is using existing paid vacation, sick leave, or holiday hours under the SCA and Davis-Bacon Act at the same time he or she is using expanded family and medical leave under the FFCRA. Further, if employees are using expanded family and medical leave under the FFCRA concurrently with paid sick leave under Executive Order 13706, which establishes paid leave for federal contractors, employers must pay any health and welfare benefit, or monetary equivalent, required by the Executive Order 13706, for the hours paid under the Executive Order 13706.
If you have any questions about the DOL’s guidance, please feel free to contact Kemp Smith’s Labor and Employment Department at 915-533-4424.
