DC Tax Flash: DOL Adds New FFCRA FAQs; PBGC Issues CARES Act FAQs for Single-Employer Plans

Tax Alert
07.20.2020

The Department of Labor today posted several new FAQs on the paid leave provisions of the Families First Coronavirus Response Act (FFCRA) (P.L. 116-127).

Also today, the Pension Benefit Guaranty Corporation (PBGC) issued several FAQs for single-employer plans relating to missed contribution reporting requirements and premium filings for single-employer plans under the Coronavirus Aid, Relief, and Economic Security (CARES) Act (P.L. 116-136).

The DOL guidance under FFRCA adds the following four new FAQs:

  • Question 94: My employee used two weeks of paid sick leave under the FFCRA to care for his parent who was advised by a health care provider to self-quarantine because of symptoms of COVID-19. I am concerned about his returning to work too soon and potentially exposing my other staff to COVID-19. May I require him to telework or take leave until he has tested negative for COVID-19?
    • It depends. In general, an employee returning from paid sick leave under FFCRA has a right to be restored to the same or an equivalent position, although exceptions apply as described in Question 43. However, due to the public health emergency and your employee's potential exposure to an individual with COVID-19, you may temporarily reinstate him to an equivalent position requiring less interaction with co-workers or require that he telework. In addition, the employee must comply with job requirements that are unrelated to having been out on paid sick leave. For instance, a company may require any employee who knows he has interacted with a COVID-infected person to telework or take leave until he has personally tested negative for COVID-19 infection, regardless of whether he has taken any kind of leave. Such a policy would apply equally to an employee returning from paid sick leave. However, you may not require the employee to telework or be tested for COVID-19 simply because the employee took leave under the FFCRA.
  • Question 95: I was working full time for my employer and used two weeks (80 hours) of paid sick leave under the FFCRA before I was furloughed. My employer said I could go back to work next week. Can I use paid sick leave under the FFCRA again after I go back to work?
    • No. Employees are limited to a total of 80 hours of paid sick leave under the FFCRA. If you had taken fewer than 80 hours of paid sick leave before the furlough, you would be entitled to use the remaining hours after the furlough if you had a qualifying reason to do so.
  • Question 96: I have an employee who used four weeks of expanded family and medical leave before she was furloughed. Now I am re-opening my business. When my employee comes back to work, if she still needs to care for her child because her child care provider is unavailable for COVID-related reasons, how much expanded family and medical leave does she have available?
    • Under the FFCRA, your employee is entitled to up to 12 weeks of expanded family and medical leave. She used four weeks of that leave before she was furloughed, and the weeks that she was furloughed do not count as time on leave. When she returns from furlough, she will be eligible for eight additional weeks of leave if she has a qualifying reason to take it. Because the reason your employee needs leave may have changed during the furlough, you should treat a post-furlough request for expanded family and medical leave as a new leave request and have her give you the appropriate documentation related to the reason she currently needs leave. For example, before the furlough, she may have needed leave because her child's school was closed, but she might need it now because her child's summer camp is closed due to COVID-19-related reasons.
  • Question 97: My business was closed due to my state's COVID-19 quarantine order. I furloughed all my employees. The quarantine order was lifted and I am returning employees to work. Can I extend my former employee's furlough because he would need to take FFCRA leave to care for his child if he is called back to work?
    • No. Employers may not discriminate or retaliate against employees (or prospective employees) for exercising or attempting to exercise their right to take leave under the FFCRA. If your employee's need to care for his child qualifies for FFCRA leave, whether paid sick leave or expanded family and medical leave, he has a right to take that leave until he has used all of it. You may not use his request for leave (or your assumption that he would make such a request) as a negative factor in an employment decision, such as a decision as to which employees to recall from furlough.

The text of these and all FFCRA FAQs posted by DOL are posted here.

In a separate move, the PBGC today issued its first set of FAQs on the CARES Act that focus on missed contribution reporting requirements, premium filings and the PBGC's general operating procedures regarding single-employer plans during the coronavirus outbreak.

These FAQs are posted here and below: 

COVID-19-Related Single-Employer Plan Sponsors and Administrators Questions and Answers

The following questions and answers provide guidance related to plan sponsor obligations and PBGC operations in light of the Coronavirus Aid, Relief, and Economic Security (CARES) Act and the COVID-19 pandemic.

Reportable Events – Missed Contributions

As a result of the CARES Act, required contributions (including quarterly contributions) that would otherwise be due in 2020 are now due January 1, 2021.

  • How does this delay impact the requirement to report a failure to make a minimum required contribution provided in section 4043.25 of PBGC's Reportable Events regulation (29 CFR part 4043)?
    • Because the due date for contributions that would otherwise have been due in 2020 has been extended until January 1, 2021, the event cannot be triggered before then. If required contributions are made by that date, there is no event and no need to notify PBGC.
  • If a required contribution that would otherwise have been due during 2020 is not made by January 1, 2021, when is reporting due and which form should be used? 
    • If the accumulated value of missed contributions exceeds $1 million, a Form 200 is due on January 11, 2021 (i.e., 10 days after January 1st). Otherwise, unless one of the waivers provided in section 4043.25(c) of PBGC's Reportable Events regulation (29 CFR part 4043) applies, a Form 10 must be submitted. In general, the Form 10 is due 30 days after the missed contribution, but because January 31 is a Sunday, the due date moves to the next business day, February 1, 2021. As always, PBGC encourages filers to use the e-filing portal to prepare and submit all reportable event filings.

Premiums

PBGC's premium regulation provides that the assets used to determine the variable rate premium (VRP) include the discounted value of prior year contributions receivable to the extent received by the plan by the date the premium is filed (29 CFR 4006.4(c)). As a result of the CARES Act, required contributions that would otherwise be due before the premium due date are now due after such date.

  • Does the extended due date for required contributions have any effect on the treatment of contributions receivable for VRP purposes?
    • As a result of the CARES Act extension, plans have an additional month to make prior year contributions that will be reflected in the VRP calculation, as illustrated below for a calendar year plan:< >The 2020 premium is due October 15, 2020. If not for the CARES Act, the last date for making a required contribution for the 2019 plan year would have been September 15, 2020. Because of the CARES Act, the last date for making a required contribution for the 2019 plan year is January 1, 2021.
  • If a contribution for the prior year is made after the premium is filed, may the plan administrator amend the filing to increase the originally reported asset value by the discounted value of the prior year contribution made after the premium filing date and then request a refund?
    • No. As noted above, under PBGC's premium regulation (29 CFR 4006.4(c)), prior year contributions are included in assets for VRP purposes only to the extent received by the plan by the date the premium is filed (October 15, 2020 in the example above). Reflecting prior year contributions received after the premium is filed as part of an amended filing would be inconsistent with that rule.

PBGC Single-Employer Program Operations

  • During the COVID-19 pandemic, will PBGC continue to review Distress Termination applications, and can a notice be filed with financial projections that may be subject to change in the next few weeks/months?
    • PBGC continues to process Distress Termination applications. All plan sponsors considering filing a distress termination notice are encouraged to schedule a pre-filing consultation with PBGC. During this consultation, PBGC can provide information on the criteria and process for a distress termination to aid in determining the appropriateness of a distress termination based on the facts and circumstances of each case. PBGC recognizes that the impact of COVID-19 on plan sponsors is not fully known and financial projections may change as a result. Specific facts impacting a plan sponsor's financial projections can be discussed during the pre-filing consultation. A distress termination pre-filing consultation can be scheduled by sending an email to distress@pbgc.gov or calling 202-326-4070.
  • Will PBGC initiate termination of pension plans during the COVID-19 pandemic?
    • PBGC has the discretion to initiate termination of a pension plan when the statutory criteria are met. PBGC exercises this discretion based on the facts and circumstances of the specific case. This most often occurs when a plan sponsor goes out of business and protection of the participants' benefits is necessary (including ensuring participants receiving benefits are paid). PBGC will continue to review cases to determine whether initiating a termination is appropriate.
  • Will PBGC suspend efforts to collect termination liabilities until 2021?
    • When a pension plan terminates, PBGC works with plan sponsors to resolve the termination liability owed. PBGC will continue to work with plan sponsors to resolve the termination liability, considering their financial ability to pay based on the facts and circumstances of each case.
  • Will Early Warning Program inquiries be suspended during the COVID-19 pandemic?
    • Under the Early Warning Program, PBGC regularly monitors corporate transactions or events that could affect a plan sponsor's ability to continue to support its pension plan. During the COVID-19 pandemic, PBGC will continue to review transactions or events that may pose an increased risk to plans and the pension insurance system, and where necessary, contact the plan sponsor to get more information.

The PBGC cautions that its FAQs are intended to provide clarity and "do not have the force and effect of law and are not meant to bind the public."


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