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Tuesday, March 31, 2020

How to Determine if you Have More, or Less, Than 500 Employees per CARES and FFCRA


Two new pieces of federal legislation, the Families First Coronavirus Response Act (FFCRA) and the Coronavirus Aid, Relief, and Economic Security (CARES) Act, apply to organizations based on their headcount. Here’s a quick look at what we know so far about how to determine if your organization qualifies.


CARES Act

More details will undoubtedly emerge as loan applications are submitted and pencils are actually put to forms. At this point, under the CARES Act, companies with “no more than” 500 employees are eligible for both Paycheck Protection Program (PPP) loans and Employee Retention Credits.

The easiest interpretation will tie back to the payroll returns and records you submitted under your organization’s Federal Employer Tax ID (FEIN). This is a federal, not state, program. In most cases, if there are several affiliates, locations or even state payer ID numbers, we presently assume that they will all count as being under one employer’s headcount. There are exclusions for businesses that employ more than 500 staff overall but fewer than 500 per location: hotels, restaurants and bars fall in this category.

At this point, there is some guidance with respect to full-time equivalent (FTE) staff. The assumption, for planning purposes, is that two people who work 20 hours a week are two head count, and only one FTE. Timesheets will matter.

The headcount will be established on the loan origination day (the day the funding comes through).


FFCRA (H.R. 6201)

The FFCRA provides for two kinds of paid leave that are specifically related to COVID-19. One is for illness/sick time, and the other is for time taken to care for children.

Employers that have “fewer than” 500 employees must comply with the paid leave requirements as of April 1. That’s the bad news, sort of. The good news is that the required leave pay is 100% refundable. (Note that the wording of this guidance is slightly different than the CARES Act guidance, which says “no more than” 500 employees. Just to make things more confusing...)

Headcount under the FFCRA is determined per the existing Family and Medical Leave Act of 1993 (FMLA) standard, under what is called the “integrated employer” test. This is not a black-and-white test; it requires a measure of common sense. Entities under common ownership, common management controls, common benefit plans and common board governance will be considered one entity, and one combined headcount.

Stay tuned. We expect more details by April 3, and we’ll update this information as more guidance is issued.

Have questions or need some help? Don’t hesitate to reach out to our experts. For the latest regulatory updates and other information on running your organization during disruption, visit our

COVID-19 Resource Center.

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