While the federal government’s historic $2 trillion stimulus package recently made headlines, another law passed in response to the novel coronavirus pandemic has largely flown under the radar. Yet, it has significant implications for small and medium-sized businesses, including many franchisees.
The Families First Coronavirus Response Act is a federal law that extends the job-protected leave provisions of the Family and Medical Leave Act (FMLA) and entitles employees to additional paid time off (PTO) during the novel coronavirus pandemic.
Potentially, yes. While the FMLA ordinarily applies to companies with 50 more employees, the FFCRA extends FMLA coverage to all companies with “fewer than 500 employees.” The PTO provisions of the FFCRA (referred to as the “Emergency Paid Sick Leave Act”) also apply to small businesses, including franchisees. The law allows the Secretary of Labor to exempt businesses with fewer than 50 employees if, “the imposition of such requirements would jeopardize the viability of the business as a going concern.”
Under the FFCRA, franchisees must provide job-protected leave to employees who get sick with the coronavirus or who need to take time off from work to care for someone who has been infected. This leave is unpaid for the first 10 days only (unlike ordinary FMLA leave, which is unpaid for its duration). Franchisees must also give their employees up to 80 hours of additional PTO for coronavirus-related absences. More details can be found on the U.S. Department of Labor’s website: Employer Paid Leave Requirements.
No, just as franchisors are not required to cover franchisees’ ordinary legal compliance costs, they are not required to cover the cost of FFCRA compliance.
This is a difficult question that many franchisees will likely be forced to answer. While the FFCRA provides a payroll tax credit to businesses that comply, for many, this tax credit will be too little too late. In addition to the risk of violating the FFCRA, franchisees facing financial strain may be at risk for violating their contractual obligations to their franchisors as well. It is a very challenging situation, and the best advice we can give is that franchisees should seek help while they still have the chance.
If you have questions about FFCRA compliance or are concerned about your franchise’s financial stability, we encourage you to contact a knowledgeable franchise lawyer who is ready to guide you appropriately and willing to discuss the options you have available. Get the help you need -- don’t run the risk of losing everything you’ve worked so hard to achieve by obtaining a franchise in the first place.
