Memo: FFCRA's "Fewer than 500 Employees" Requirement

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Memo: FFCRA’s “Fewer than 500 Employees” Requirement

March 23, 2020

Re:       FFCRA “Fewer than 500 Employees” Requirement

The Families First Coronavirus Response Act (“FFCRA” or the “Act”) addressed several aspects of the impact the COVID-19 outbreak is having on Americans during the COVID-19 pandemic. The Act also introduced paid sick leave and an expanded FMLA leave to the nation’s employers. However, one of the chief questions that remains unanswered is – what does “under 500” mean?

Both the expanded family and medical leave and paid sick leave provisions of the FFCRA apply to private employers with fewer than 500 employees. For single-entity employers with less than 500 employees, this is seemingly straightforward. Issues arise, however, when employers with more complex organizational structures (such as when the company has subsidiaries, divisions, or multiple work locations).

At present, no specific analysis as to how the 500 or less provisions was determined. Nor has there been any guidance issued by Department of Labor or any other federal agency on the issue. There is some general consensus among the legal community on this issue (at least on one aspect of this issue). Many of us think that the determination of whether an employer has fewer than 500 employees will be based on the number of U.S. employees, thereby excluding employees in foreign countries.

Consensus breaks when trying to figure out whether employee numbers are measured for each employing entity or not. Two groups of thoughts have emerged on this point and both lend support to their argument based on the observation that the FFCRA cross-references to the FMLA and FLSA. On one end of the spectrum, some think that the fewer than 500 employees requirement will be measured separately for each employing entity, rather than by aggregating all employees in an “enterprise” or “controlled group.” On the other hand, others have speculated that the determination of the 500 or fewer requirement will be governed by the “joint employer” or “integrated employer” tests described in the FMLA and/or FLSA.

We anticipate that additional governmental guidance on this topic will be issued in the near future. Until then, employers should be cautious in ‎attempting to avoid coverage because it will have the burden of establishing that these emergency rules don’t apply.