Force Account Labor & Equipment Costs

Appeal Brief

Summary Paragraph

The coronavirus (COVID-19) pandemic resulted in a major disaster declaration for New York on March 20, 2020. The Village of Lynbrook’s (Applicant) request for Public Assistance (PA) included the reimbursement of $78,880.96 for payments to 10 employees that the Applicant classified as essential. The Applicant stated that, during the first year of the pandemic, it prevented the 10 employees from using leave because it required them to remain at work to perform COVID-19-related tasks. The Applicant claimed that, as a result, an employment contract required it to pay these employees the cash value of their unused leave. FEMA issued a Determination Memorandum denying PA funding for the payment of unused leave, concluding the requested costs were not tied to the performance of eligible work for the COVID-19 declaration. The Applicant appealed, stating that its legal responsibility to protect public health and safety as a local government required it to restrict the use of leave by the 10 employees. The Applicant acknowledged that the employees worked straight-time hours, but argued that, because an employment contract provision required the cash payment of unused leave, the payments should be considered an eligible contract expense FEMA denied the appeal, stating that: (1) the claimed expenses were for the Applicant’s own labor; (2) PA reimburses force account labor costs based on an employee’s wages for work performed; and (3) the Applicant was not seeking reimbursement for actual work performed. The Applicant submits its second appeal, reiterating its prior positions.

Authorities

• 44 C.F.R. §§ 206.206(a), 206.228(a)(2)(iii).
• PAPPG, at 23-25, and 160.
• Baptist Health Madisonville, Inc., FEMA-4497-DR-KY, at 3; Cuyahoga Community College, FEMA-4507-DR-OH, at 3.

Headnotes

• For emergency work, except in limited circumstances, the straight-time of an applicant’s budgeted employees performing emergency work is not eligible.
  • The Applicant’s employees performed only straight-time labor, so the claimed straight-time (and associated fringe benefits) force account labor costs for budgeted employees performing claimed emergency work are not eligible.
• Extraordinary costs (such as call-back pay) for essential employees who are called back to duty during administrative leave to perform eligible emergency work are eligible if the costs are paid in accordance with a labor policy that meets certain criteria.
  • The Applicant’s employees were not called back to duty during administrative leave.

Conclusion

The claimed costs for unused leave are ineligible. Therefore, this appeal is denied.

Appeal Letter

Appeal Analysis

Background

The coronavirus (COVID-19) pandemic resulted in a major disaster declaration for New York on March 20, 2020, with an incident period of January 20, 2020, through May 11, 2023. Relevant to this appeal, the Village of Lynbrook (Applicant) requested $78,880.96 for payments to 10 employees that the Applicant classified as essential. The Applicant stated that, between March 14, 2020, and September 11, 2020, it prevented the 10 employees from using leave because it required them to remain at work to perform COVID-19-related tasks. The Applicant claimed that, as a result, the employment contract with its employees required it to pay these employees the cash value of unused leave. The Applicant provided narrative summaries of the claimed expenses and proof of payment documentation for unused leave.

On November 20, 2023, FEMA issued a Determination Memorandum denying $78,880.96 for the unused leave payments.[1] FEMA concluded that the requested costs were not tied to the performance of eligible work for the COVID-19 declaration.

First Appeal

On December 26, 2023, the Applicant submitted its first appeal, requesting $78,880.44 for the unused leave payments. The Applicant stated that its legal responsibility to protect public health and safety as a local government compelled it to restrict the 10 employees (out of its 253 employees) from using leave due to demanding daily responsibilities throughout the first year of the pandemic. The Applicant explained that the requested amount equaled an average of 11 days of pay for each of the 10 employees. It claimed that, because an employment contract provision required the cash payment of unused leave, the payments should be considered an eligible contract expense and likened the situation to one in which the Applicant would have been required to pay third-party vendors. The Applicant also stated that the claimed expenses were reasonable, unbudgeted, and for tasks not typically performed by the employees.

In a letter dated February 23, 2024, the New York State Division of Homeland Security and Emergency Services (Recipient) transmitted the Applicant’s appeal with its support. The Recipient described the Applicant’s request as akin to extraordinary call-back pay, stating that the only reason the employees were not called back to perform emergency work was because they were already performing emergency work.

In a letter dated May 13, 2024, the FEMA Region 2 Regional Administrator denied the appeal. FEMA emphasized that these costs are related to payments to the Applicant’s employees, not  contractors, and it evaluated the claimed expenses under that category. FEMA stated that PA reimburses force account labor costs based on an employee’s wages for work performed and the Applicant sought reimbursement of payments for leave time, not actual work performed. Accordingly, FEMA denied the claimed payments for unused leave because the Applicant did not demonstrate it was associated with eligible work.

Second Appeal

The Applicant submits its second appeal in a letter dated July 10, 2024, reiterating its prior positions and requesting $78,880.96 for unused leave payments it provided to employees. The Recipient transmits the Applicant’s appeal and its support in a letter dated September 3, 2024.

Discussion

FEMA reimburses force account labor, defined as an applicant’s personnel (i.e., its own labor force), based on actual hourly rates plus the cost of the employee’s actual fringe benefits (for example, accrued vacation leave).[2]For emergency work, except in limited circumstances, the straight-time of an applicant’s budgeted employees performing emergency work is not eligible.[3] Extraordinary costs (such as call-back pay) for essential employees who are called back to duty during administrative leave to perform eligible emergency work are eligible if the costs are paid in accordance with a labor policy that meets certain criteria.[4]

The Applicant contends that its pay to employees for unused leave should be regarded as contract costs because its employment agreements triggered the pay. However, the employees at issue were the Applicant’s own employees, not contractors. Accordingly, FEMA’s policies for force account labor costs apply. The Applicant acknowledges that its employees worked straight-time hours throughout the pandemic and does not claim the employees at issue were unbudgeted.[5] In this case, even if FEMA were to consider the unused leave payments to be a fringe benefit, straight-time costs (and associated fringe benefits) for budgeted employees performing emergency work are ineligible.[6] Furthermore, despite the Recipient’s claim that the payments for unused leave should be treated as extraordinary pay, the Applicant’s employees were not placed on administrative leave and subsequently called back to work.[7]

Conclusion

The claimed costs for unused leave are ineligible. Therefore, this appeal is denied.