On Wednesday (March 18, 2020), Congress passed a revised version of the Families First Coronavirus Response Act (“the Act”), which President Donald Trump wasted little time signing into law. The final version of the Act mirrored much of the original version of the legislation passed by the U.S. House of Representatives on March 14, 2020, but also contained several substantive revisions. The Act applies only to employers with fewer than 500 employees. Employers’ obligations under the Act become effective within 15 days of enactment—or on April 2, 2020—and automatically expire on December 31, 2020.
As outlined previously, the Act includes a variety of provisions, including:
- Free COVID-19 testing
- Multiple types of paid emergency leave
- Enhanced unemployment insurance
- Additional funding for nutritional programs
- Protections for health care workers and employees responsible for cleaning at-risk places.
- Additional federal funds for Medicaid
Among these provisions, the Act sets out several key mandates that impact employers: (1) new, separate paid sick leave rights for employees impacted by COVID-19 and those serving as caregivers for individuals with COVID-19; and (2) new, enhanced leave entitlements under the federal Family Medical Leave Act (“FMLA”), including paid leave under FMLA.
Emergency Paid Sick Leave Act
First, the Act requires employers with fewer than 500 employees to provide full-time employees (regardless of how long the employee had been employed prior to the leave) with 80 hours of paid sick leave for qualifying reasons. Part-time employees receive only the number of hours they have worked over an average two (2) week period.
The Emergency Paid Sick Leave benefits are available only to employees who are absent from work for qualified, Coronavirus-related. Specifically, to qualify for the Emergency Paid Sick Leave benefits under the Act, an employee’s leave must be for one of the following purposes:
- The employee is subject to a government quarantine/isolation order related to Coronavirus;
- The employee has been advised by a health care provider to quarantine for Coronavirus concerns;
- The employee is experiencing symptoms of Coronavirus and seeking a medical diagnosis;
- The employee is caring for an individual who is subject to an order as described above or has been advised by a health care provider as described above;
- The employee is caring for a son or daughter if the child’s school or place of care has been closed or the child’s child care provider is unavailable due to Coronavirus precautions; or
- The employee is experiencing any other substantially similar condition specified by the Secretary of Health and Human Services in consultation with the Secretary of the Treasury and the Secretary of Labor.
Employees who need leave to care for themselves (reasons 1-3 above) are entitled to their full regular rate of pay for the number of hours they would work per day. However, employers are now allowed to cap this amount of paid benefits at $511 per day ($5,110 aggregate) per employee. Employees who need leave to care for others—including children home from school or without childcare— (reasons 4-6 above) are entitled to only 2/3 of their regular rate of pay (or the applicable minimum wage, if greater). The amount of paid sick leave for this leave is capped at $200 per day ($2,000 aggregate) per employee.
Significantly, employers must provide these benefits in addition to any existing paid leave benefits. In other words, employees are entitled to exhaust all available emergency paid leave provided by this Act before they are required to use any otherwise available leave benefits their employer may offer.
The Act does not address employers’ right to request certification or documentation from employees in need of leave, or how the 500 employee threshold is determined. Many anticipate that the Department of Labor will issue regulations addressing these issue at a later time.
Emergency Family Medical Leave Expansion Act
The Act also significantly amends and expands FMLA on a temporary basis. This FMLA expansion covers all employers with fewer than 500 employees—not just employers of 50 or more employees. It also lowers the eligibility threshold to employees who have worked for only 30 days (or more). As a result, thousands of employers not previously subject to the FMLA may be required to provide job-protected leave to employees for a COVID-19 coronavirus-designated reason.
The Act now includes language allowing the Secretary of Labor to exclude “healthcare providers and emergency responders” from the definition of employees who are allowed to take such leave—although these terms themselves remain undefined. The Act also allows the Labor Department to exempt small businesses with fewer than 50 employees, if the required leave would jeopardize the viability of their business.
Any individual employed by the employer for at least 30 days (before the first day of leave) may take up to 12 weeks of job-protected leave to allow an employee (who is unable to work or telework) to care for the employee’s child (under 18 years of age), if the child’s school or place of care is closed or the childcare provider is unavailable due to a public health emergency. Under the final version of the Act, this is now the only qualifying basis for Coronavirus-related FMLA leave, and represents a significant departure from the original version passed by the House (which contained several other COVID-19-related reasons to provide Emergency FMLA).
Employers may provide the first 10 days of this leave without pay. While employees can elect to substitute or use otherwise accrued paid leave during these initial 10 days, employers may not require employees to do so, no matter how their policies may read. Employees could elect to use their paid sick leave provided by the Emergency Paid Sick Leave Act (see above) for this time to be paid. After this initial 10-day period, employers must provide additional paid leave to their employees for the remaining 10 weeks, but only at two-thirds of the employee’s regular rate of pay for the number of hours the employee would normally be scheduled to work. The amount of pay during these 10 weeks is capped at $200 per day ($10,000 aggregate) per employee.
Employees are required to give their employers “as much notice as practicable” when this type of leave is foreseeable. Like the Emergency Paid Sick Leave portion of the Act, the FMLA Expansion does not include any reference to an employer’s right to request certification or documentation of an employee’s need for leave. Many anticipate that the Department of Labor will issue regulations addressing these issues at a later time.
Employers must also remain aware that the Act’s paid-leave obligations are supplemental to existing federal employee leave laws. Employers are still bound by traditional FMLA, FLSA and ADA analyses for employees. For example, although an employee diagnosed with COVID-19 may not qualify for paid leave under the Act’s expanded FMLA paid leave, that same employee may have a “serious health condition” under traditional FMLA analysis, which would entitle the employee to unpaid, job-protected leave.
Lastly, employers with 25 or more employees will have the same obligation as under traditional FMLA to return any employee who has taken Emergency FMLA to the same or equivalent position upon the return to work. Conversely, employers with fewer than 25 employees are generally excluded from this requirement if the employee’s position no longer exists due to an economic downtown or other circumstances caused by a public health emergency during the period of Emergency FMLA. This exclusion is subject to the employer making reasonable attempts to return the employee to an equivalent position and requires an employer to make efforts to return the employee to work for up to a year following the employee’s leave.
Employer Tax Credits
Many small-business owners are worried about how to pay for these benefits, especially at a time when business across numerous industries has basically come to a halt. The Act aims to defray these costs for employers through a tax credit. In order to mitigate the cost of the Paid Sick Leave mandate, the Act grants to employers a credit against their federal payroll tax obligations (the 6.2 percent tax employers pay on each employee’s salary) equal to 100% of the cost of up to 10 days of Paid Sick Leave, subject to a maximum daily rate of $511 for each employee that is directly impacted by COVID-19 or $200 per day for each employee that is caring for a family member impacted by COVID-19 or a child whose school is closed or for whom childcare is unavailable due to COVID-19. If the amount of the allowable credit exceeds the employer’s payroll tax liability, the U.S. Government will refund the excess amount back to the employer.
Employers are also entitled to a refundable payroll tax credit for 100% of the cost of wages for Paid Family & Medical Leave subject to maximum amounts of $200 per day per employee and $10,000 in the aggregate for all calendar quarters. In addition, employers are entitled to a credit for an allocable share of the costs of providing group health plan coverage associated with such wages. Self-employed individuals are granted a similar refundable credit against their federal income tax liability based upon their average daily self-employment income, subject to the same $511 and $200 daily limits that apply to Paid Sick Leave.
What Does This Mean For Your Business?
For employers with fewer than 500 employees, the Act obviously imposes new paid-leave requirements for certain employees. Although larger employers are not bound by the legal obligations set forth in this legislation, they should become familiar with the terms of this law to assist in formulating voluntary, temporary internal policies and answering questions from employees. It is also possible that legislation impacting larger employers will follow.
Employers must view these new paid leave obligations in conjunction with existing federal, state, and local leave laws when examining their employees’ rights to protected leave. While circumstances remain fluid, we will continue to monitor further proposed legislation and its potential effects on employers.