Force Account Labor

Appeal Brief

Summary Paragraph

The coronavirus (COVID-19) pandemic resulted in a major disaster declaration for the State of Iowa. The Applicant, an eligible Private Nonprofit (PNP), requested Public Assistance (PA) reimbursement for straight time Force Account Labor (FAL) reassigned from their normal work duties to perform emergency work related to COVID-19 from January through June 2020; materials and supplies; and telehealth supplies and contract services. FEMA issued an eligibility Determination Memorandum for the project, denying the claimed costs as increased operating costs and ineligible for PA funding. The Applicant appealed the determination requesting straight-time FAL costs for non-exempt employees, who were reassigned from their normal duties, to perform emergency protective measures. The Applicant asserted the requested FAL costs were unbudgeted due to the pandemic. FEMA Region 7 denied the Applicant’s first appeal stating the Applicant’s reassigned employees who were not placed on administrative leave finding they were budgeted, permanent employees, not funded through an external source, and therefore not eligible for PA funding. Additionally, FEMA found the Applicant had not demonstrated that the remainder of its budgeted permanent employees were recalled from administrative leave to perform otherwise eligible emergency protective measures and paid in accordance with its pre-disaster pay policies. The Applicant submitted a second appeal requesting $377,237.90 for employees placed on Low Census Time status which the Applicant equates to administrative leave without pay consistent with its Staff Reduction and Reassignment Policy. The Recipient transmitted the Applicant’s second appeal, recommending FEMA approve the appeal.

Authorities and Second Appeals

• Stafford Act § 403(a)(3).
• 44 C.F.R. §§ 206.223(a), 206.225(a)(3), 206.228(a)(2)(iii).
• PAPPG, at 23-24.
• Town of Lyons, FEMA-4145-DR-CO, at 3.
• Lutheran Senior Services, FEMA-4490-DR-MO, at 3.
• Broward Cnty. Sch.Dist., FEMA-4283-DR-FL, at 2.

Headnotes

• Except in limited circumstances, straight-time labor of a budgeted/permanent employee performing emergency work is ineligible for funding.
• FEMA may reimburse extraordinary costs (such as call back pay and hazardous duty pay) for essential employees who are called back to duty during administrative leave to perform eligible emergency work if costs are paid in accordance with a labor policy that meets certain criteria.

Conclusion

The Applicant has not demonstrated that straight-time for its permanent, budgeted employees were funded by an external source, nor that they were called back from administrative leave. Therefore, this appeal is denied.

Appeal Letter

Appeal Analysis

Background

The coronavirus (COVID-19) pandemic resulted in a major disaster declaration for the State of Iowa on March 23, 2020, with an incident period of January 20, 2020, through May 11, 2023. The Genesis Health System (Applicant), a Private Nonprofit (PNP) that provides health services, requested reimbursement under FEMA’s Public Assistance (PA) program for $2,612,397.52. The Applicant sought funding for straight-time (regular) hours for its force account labor (FAL) employees reassigned from their normal work duties to perform work responding to COVID-19 from January through June 2020, as well as for materials and supplies, and contract services.[1]

On December 20, 2021, FEMA issued an eligibility Determination Memorandum (DM) for the project, denying $2,273,573.39 for straight-time costs, materials and supplies, and contract services.[2] Although FEMA approved a portion of the Applicant’s claim, FEMA denied the entire FAL request, stating the straight-time FAL cost to perform COVID-19 tasks was ineligible for PA funding because only costs associated with overtime labor for emergency work performed by permanent, budgeted employees was eligible.

First Appeal 

In a letter dated February 25, 2022, the Applicant appealed the denial of $2,109,646.62 for straight-time FAL, materials, equipment, supplies, and telehealth services.[3] In terms of FAL costs, the Applicant requested $1,762,534.00 in straight-time FAL costs for employees, who the Applicant reassigned from their normal duties, to perform emergency protective measures.[4] The Applicant asserted that $377,237.90 of these costs were eligible because those costs were associated with employees who were furloughed and then rehired. The Applicant argued that the DM incorrectly classified all of its force account employees as budgeted, and that the FAL costs claimed were not budgeted, as the FAL were performing work activities that did not exist prior to the pandemic, such as employee and patient COVID-19 screenings. Lastly, the Applicant stated that FEMA should use available statutory authority to reimburse straight-time FAL costs for emergency work, even if FEMA’s regulations and policies are more limited in what they allow. 

In a letter dated April 25, 2022, the Iowa Department of Homeland Security and Emergency Management (Recipient) recommended that FEMA remand the appeal to reconsider eligibility and that as part of that remand FEMA should review the claimed costs for potential duplication of benefits. The Recipient also noted that $377,237.90 of the requested costs pertained to straight-time FAL costs associated with employees that were called back from what the Applicant classifies as furlough (or administrative leave), which is eligible under FEMA policy.

In letters dated June 2, 2022, and August 4, 2022, FEMA sent Requests for Information (RFI). In the first RFI, FEMA asked the Applicant to clarify the pay policy that applied to the requested $377,237.90 for furloughed employees, and for employment/payroll records showing a change in status for furloughed employees. The Applicant responded to FEMA’s RFI by providing its Staff Reduction and Reassignment Policy (Pay Policy), dated November 15, 2019, and explaining there was no official change in employee status within its payroll system. The Applicant attached payroll registers for a sample of 10 employees for the period from February 1, 2020 to July 31, 2020 that were part of the labor claim and note “unpaid” hours within various pay periods. The Applicant stated it used “CTNP” (Census Time No Pay) within the payroll registers as the pay code for unpaid time, which the Applicant stated was effectively the furlough time. The Applicant said it did not use this code before COVID-19. In the second RFI, FEMA asked for a copy of the Pay Policy dated prior to the disaster, as well as additional FAL source documentation. In its response, the Applicant provided sample FAL logs and reports.

On November 18, 2022, FEMA Region 7 denied the Applicant’s first appeal. FEMA denied $1,385,296.10 for costs associated with straight-time labor of the Applicant’s employees who were reassigned, and not placed on administrative leave. FEMA found they were budgeted, permanent employees, not funded through an external source, and therefore not eligible for PA funding for straight-time FAL. FEMA also denied $377,237.90 for straight-time FAL costs of employees the Applicant claimed were called back from furlough, finding the Applicant had not demonstrated that these budgeted permanent employees were recalled from administrative leave to perform otherwise eligible emergency protective measures and paid in accordance with its pre-disaster pay policies.[5] 

Second Appeal

In a letter dated January 17, 2023, the Applicant submitted a second appeal requesting only the $377,237.90 associated with claimed FAL costs associated with employees called back from furlough/administrative leave. The Applicant asserts it placed employees on Low Census Time (LCT) status which the Applicant equates to administrative leave without pay consistent with its Pay Policy. Accordingly, the Applicant states the costs incurred for its employees placed on LCT status and then called back to perform COVID-19-specific job duties is eligible under FEMA policy regarding essential employees called back from administrative leave. In addition, the Applicant contends due to the pandemic it was not typical to implement and use its Pay Policy, as there was no need prior to the pandemic. On March 17, 2023, the Recipient transmitted the appeal to FEMA recommending approving the appeal. 

Discussion

FEMA may provide assistance for emergency protective measures that eliminate or lessen immediate threats to lives, public health, or safety.[6] For emergency work, except in limited circumstances, the straight-time of an applicant’s budgeted employees performing emergency work is ineligible.[7] An applicant’s permanent employees are considered to be budgeted employees.[8] Straight-time of a permanent employee funded from an external source is eligible if the employee is reassigned to perform eligible emergency work that the external source does not fund.[9] FEMA may reimburse extraordinary costs (such as call back pay and hazardous duty pay) for essential employees who are called back to duty during administrative leave to perform eligible emergency work if costs are paid in accordance with a labor policy that meets certain criteria.[10]

The Applicant is requesting PA for costs related to straight-time hours worked by permanent, budgeted employees.[11] The Applicant’s contention that these employees were reassigned from their normal job functions to perform COVID-19 duties or could have otherwise been furloughed does not make them unbudgeted under FEMA policy. Furthermore, the Applicant did not provide documentation indicating that its reassigned employees were funded from an external source to perform eligible emergency work that the external source did not fund.[12]

The Applicant states that its employees who were required to report to work were called in from administrative leave, but does not provide documentation to support that its employees were, for example, sent home and then called back to work.[13] Instead, the documentation in this appeal shows the employees were placed on LCT status. This LCT status appears to be equivalent to an on-call status in that employees receive pay to remain on notice to report to work. Consequently, the straight-time FAL costs are not eligible for PA funding.

Conclusion

The Applicant has not demonstrated that straight-time for its permanent, budgeted employees were funded by an external source, nor that they were called back from administrative leave. Therefore, this appeal is denied.