Please note this ONLY applies to those employees who are still being paid under the Sick Leave or EFMLA portion of the FFCRA. Unless, of course, the ‘furloughed’ employees are still being paid under the PPP loan (which brings in a whole different law).
Unfortunately, the employers will need to make the ultimate decision about which other fringes to pay on FFCRA leave in a short time.
This guidance provided by NECA National contains the most concrete information currently available on this topic. NECA will update its guidance as more information becomes available.
Read the Full PDF Here.
By: NECA National Labor Relations and General Counsel Greg Ossi, Faegre Drinker Biddle and Reath, LLP
Local Chapters and Unions are encouraged to bargain arrangements on the payment of local fringe benefits to address the requirements of the Families First Coronavirus Re-sponse Act. The purpose of this document is to provide guidance if the local parties have not yet reached a solution.
What Does the Law Require?
If an employer must provide paid leave to an employee under the FFCRA, the law requires payment of wages (at that employee’s regular rate of pay as defined by the Fair Labor Stan-dards Act); payment of the employer’s portion of the Medicare tax (but not the employer’s portion of Social Security tax, click here for DOL Fact Sheet) on those wages1, and continued coverage under the group health plan on the same terms as if the employee did not take leave. The law is silent on contributions or deductions related to any other fringe benefits.
Employers are entitled to receive a credit in the full amount of the qualified sick leave wag-es and qualified family leave wages, plus allocable qualified health plan expenses and the employer’s share of Medicare tax, paid for leave during the period beginning April 1, 2020, and ending December 31, 2020.
While the payment of wages and Medicare tax is relatively straightforward, continuing coverage under the group health plan is not. If the employer contributes to health insur-ance provided by a multiemployer/union trust fund, then that is the kind of group health plan that must continue coverage. The conservative approach to this requirement is for the employer to pay the health fringe contribution on the amount of FFCRA leave it gives the employee. Employers should check with the local NECA chapter or plan administrator for any material modifications made to the plan to see if the employee’s coverage would not be impacted by a failure to make those contributions. Whether coverage would be impacted depends on the terms of that plan.
What Do the CBA and Other Fringe Funds Require?
Beyond the requirements of the law, an employer must consider the requirements of any contract to which it is bound, including a CBA or fringe benefit fund participation agree-ment. These contracts often incorporate other terms the employer must follow, like the terms of the plan and trust documents of the fringe benefit funds. It is possible that the CBA and/or the plan documents require the employer to make fund contributions on the amount of FFCRA leave it gives an employee. Employers should check with their local NECA chapters for interpretation of the CBA.
The first place to look is CBA’s provisions about fringe contributions:
• An employer likely must make contributions to fringes calculated by “Gross Labor Payroll,” like the NEBF or “Percentage of straight-time rate of pay,” unless specifically waived.
1 Note that the employer must still withhold the employee’s share of social security and Medicare taxes on the qualified leave wages paid.
• If the fringe is calculated by “hours paid,” or “hours worked” it falls into a legal grey area, and the local parties are encouraged to bargain for an acceptable solution or suspension of fringe payments on these calculations.
Employers should contact their local NECA chapter to determine any local practices on the payment of hours not worked. Evidence of those determinations should be considered in the following order (in decreasing order of importance):
• The language of the CBA regarding when fringes are owed and how they are calculated;
• The language of plan documents signed by the employer;
• The language of the plan;
• Guidance from the plan regarding when fringes are owed and how they are calculated;
• Past practice of employers paying those fringes;
• Evidence of what union and employer bargaining representatives said in bar-gaining about when fringes are owed and how they are calculated.
Current Decisions on National Contributions
- The NEBF Trustees have not waived the contributions on the FFCRA wages. The NEBF is Category I CBA language and must be paid on gross labor payroll pending any further Trustee or legal guidance. The local parties are not allowed to waive the payment of NEBF through bargaining.
- The NLMCC enabling language requires it to be paid on hours worked. The trustees have determined that these contributions are not due because the FFCRA wages are not hours worked.
- NECA National, with the approval of the Executive Committee, has agreed to waive the national services charges, which are paid on productive electrical payroll pursuant to the Bylaws, the extent that the productive electrical payroll is increased by wages that are paid pursuant to the FFCRA for sick and/or FMLA through June 15, 2020. NECA National will continue to review the status of the current pan-demic and the impact of the FFCRA wages on our contractors and may extend this waiver as necessary.
- The IBEW has advised that union assessments will be determined locally.
Conclusion
Ultimately, employers will need to make quick decisions about which other fringes to pay on FFCRA leave. While employers should seek the “right answer,” they likely will have incomplete information at the time they run payroll. In that case, employers should weigh the risks on both sides:
• If an employer makes a fringe contribution on FFCRA leave when it truly was not due, it may depend on the provisions in the Trust agreement as to whether the plan can repay the employer. While applicable law allows for refunds based on mistake of law or fact, it stops short of requiring that the plan make the re-fund. Any refund due must be made within 6 months after the plan determines is was made in error. It should be noted that if an employer determines that a contribution was made when it was truly not due, the responsibility is typically on the employer to request the refund from the respective fund.
• If an employer fails to make a fringe contribution on FFCRA leave when it truly was due, the fund may catch that in an audit. If so, it would likely demand payment for the delinquent contributions along with interest. If the employer does not satisfy the fund at that time, the fund can sue the employer for the amount of contributions, liquidated damages of 20%, interest and attorneys’ fees.
These are challenging times, where employers are forced to adapt to new challenges with little time and information. This guidance contains the most concrete information currently available on this topic. NECA will update its guidance as more information becomes available.
This material is for informational purposes only. The material is general and is not intended to be legal advice. It should not be relied upon or used without consulting a lawyer to consider your specific circumstances, possible changes to applicable laws, applicable CBAs, prime con-tracts, subcontracts, rules and regulations and other legal issues. Receipt of this material does not establish an attorney-client relationship.