Do Multiemployer Health and Welfare Funds Have to Provide Paid Sick Leave and Paid Family Leave Under the FFCRA to Their Participants?

By: James S. Beall, Kelly A. Brogan, Louise “Wendy” F. Pongracz and Susan Bahme Blumenfeld

BACKGROUND

Under the newly-enacted Families First Coronavirus Response Act (FFCRA), all public employers and private employers with fewer than 500 total employees must provide 80 hours of paid sick leave to their full-time employees, and paid sick leave to part-time employees based on the average number of hours they work over a two-week period, in the following circumstances:

If the employee is subject to a quarantine order, advised to self-quarantine or is experiencing COVID-19 symptoms, the employee must be compensated at her or his regular rate of pay, but no more than $511 per day or $5,110 in total.

If the employee takes leave to care for an individual who is subject to an isolation order or self-quarantine or to care for a son or daughter whose school or place of care is closed due to COVID-19 reasons, the employee must be compensated at 2/3 of his or her daily rate, but no more than $200 per day or $2,000 in total.

Also, under an emergency expansion of the Family and Medical Leave Act (FMLA), an employee who has worked for the employer for at least 30 calendar days will be entitled to paid family and medical leave for up to an additional 10 weeks if the employee cannot work (or telework) due to the need to care for a child under the age of 18 whose school or place of care has closed due to the coronavirus. The employee would be compensated for these additional weeks at 2/3 of his or her regular rate of pay, but not to exceed $200 per day or $10,000 in total.

For more details on these paid leave requirements, please see our Client Alert here.

MULTIEMPLOYER HEALTH AND WELFARE FUNDS AND THE FFCRA

The FFCRA paid sick leave and paid family and medical leave provisions include specific references to multiemployer health and welfare funds. These provisions suggest that, under certain circumstances, an employer can satisfy its FFCRA obligations through a multiemployer fund.

Does a multiemployer fund have an obligation to pay employees for sick leave or family and medical leave under the FFCRA?

Under the FFCRA, the paid leave obligations belong to the employers, not the multiemployer fund. The fund would owe paid leave only to the fund’s own employees if they satisfy the conditions for such benefits as identified in FFCRA.

May a contributing employer choose to satisfy its FFCRA paid leave obligations through a multiemployer fund to which the employer already makes contributions for short-term disability benefits?

FFCRA suggests that an employer who is signatory to a multiemployer collective bargaining agreement may, consistent with its bargaining obligations and the collective bargaining agreement, fulfill its paid leave obligations under FFCRA by making contributions to the multiemployer fund based on the hours of paid leave to which each of its employees is entitled under FFCRA, if the fund allows employees to obtain pay from the fund based on the hours they have worked and for the uses specified under the FFCRA paid leave provisions.

Can a contributing employer force a multiemployer fund to satisfy the paid leave obligations under the FFCRA on the employer’s behalf?

Nothing in the law suggests that contributing employers can force multiemployer plans to serve as their agents in fulfilling the employer’s FFCRA paid leave obligations.

If an employer wants a multiemployer fund to fulfill the employer’s paid leave obligations under FFCRA, and the fund agrees to facilitate payment of these obligations, will the employer have to make additional contributions to the fund to pay for such paid leave?

FFCRA provides that a contributing employer will have to pay for the multiemployer fund to satisfy the employer’s paid leave obligations on the employer’s behalf. Even though a contributing employer’s negotiated contributions might already pay for short-term disability benefits under the fund, the employer has not made contributions commensurate with the more expansive benefits that would satisfy the employer’s paid sick leave obligations under FFCRA.

For example, short-term disability benefits under a multiemployer fund are not typically provided for all of the reasons set forth in the FFCRA. That is, a multiemployer fund generally will not pay short-term disability benefits for an employee who cannot work because of an isolation order or due to the closure of his or her child’s day care center. Also, in the case of an illness, a multiemployer fund will often impose a short waiting period during which no disability benefits are paid; however, FFCRA does not impose waiting periods for the paid sick leave from the employer. The employer’s collectively-bargained contributions to the fund do not take this more expansive coverage into account.

If the contributing employer wants to satisfy its FFCRA obligations by making contributions to a multiemployer fund, how will the amount of contributions be determined?

It will be difficult to quantify what an employer will have to pay to a fund if the employer wants the fund to satisfy the FFCRA obligations on the employer’s behalf. In general, an employer’s contributions to a fund are based on an actuarial calculation that considers past utilization, but not the extraordinary paid sick leave benefits required under FFCRA. In accordance with their fiduciary duties, the fund’s trustees would have to determine, in consultation with the fund’s actuaries and professionals, whether to allow the fund’s existing short-term disability benefits to be used to satisfy the employer’s paid sick leave obligations under FFCRA and what additional contributions the employer would have to make to the fund for it to provide such benefits to the employer’s employees.

Should a fund’s trustees agree to allow an employer to satisfy its FFCRA paid family and medical leave obligations through the fund?

Although many multiemployer funds provide short-term disability benefits that, as discussed above, could be used to help facilitate the employer’s paid sick leave obligations under FFCRA, these multiemployer funds generally do not provide a family paid time-off benefit. Building such an infrastructure at this point in order to facilitate the payment of the employer’s obligations under the paid family leave obligation would be neither practical nor prudent.

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