March 24, 2020
On March 18, 2020, the president signed the Families First Coronavirus Response Act (the “Act”) into law. The Act expands the Family and Medical Leave Act (the “FMLA”) such that employers who were not previously subject to the FMLA, and employees who were not previously eligible, are now eligible in certain circumstances as it pertains to COVID-19. The Act also requires employers with less than 500 employees to provide up to two weeks of paid leave for absences related to COVID-19 illness or preventative quarantine measures, as discussed in further detail below. To offset the effect on employers, the Act provides for tax credits in certain circumstances. Finally, the Act expands unemployment compensation benefits.
Does the new Act apply to your company?
The Act generally applies to companies employing fewer than 500 employees. Companies with fewer than 50 employees may be exempt from the new leave requirements if the new requirements would jeopardize the economic viability of the business. If your company has more than 500 employees, it is not impacted by this Act.
Does the new Act apply to your employees?
If your company has had to close down or cancel work shifts for lack of work, the employees impacted by the closure or cancelled work shifts will not be entitled to either emergency paid sick leave or leave pursuant to the Emergency Family and Medical Leave Expansion Act, which is included in the Act and discussed below. .
For any of your active employees, if your company has 500 employees or less, regardless of how long an employee has been employed, they are eligible for emergency paid sick leave as discussed below. Further, all active employees (full- or part-time) who have been employed for 30 calendar days who have a “qualifying need related to a public health emergency” as discussed below are entitled to partially paid Emergency Family Medical Leave.
Emergency Family and Medical Leave Expansion
The Act includes the FMLA through the Emergency Family and Medical Leave Expansion Act (“the EFMLEA”), which amends the FMLA to provide that any employer who employs fewer than 500 employees is required to provide up to 12 weeks of job-protected leave because of a “qualifying need” to any individual who has been employed for at least 30 calendar days. This modifies the typical requirement that an employee work for a full year before they are eligible for FMLA leave.
A “qualifying need” exists when an employee is unable to work or telework due to the need to care for a child under the age of 18 whose school or daycare has closed or whose caregiver is otherwise unavailable because of a public health emergency related to COVID-19.
The first 10 days of leave may be unpaid, but the employee may be eligible for emergency paid sick leave (see below) or may elect, but may not be required, to substitute accrued paid leave. After 10 days, the employer must pay the employee an amount that is not less than two-thirds (2/3) of the employee’s regular rate of pay and normal number of hours not to exceed $200 per day and $10,000 in the aggregate. The employer may not require the employee to exhaust or use available paid leave.
Under the traditional FMLA, employers are required to restore the employee taking leave to the same or similar position. That requirement is also applicable under the EFMLEA, except to employers with fewer than 25 employees if the position held when the paid emergency leave started no longer exists due to economic conditions or other operating changes caused by the public health emergency during the leave period. However, if a company has less than 25 employees, the company still must make reasonable efforts to restore the employee to the same position with equivalent pay and benefits.
Companies subject to the Act may not be sued by employees for not complying with the leave mandates unless the company has more than 50 employees.
Companies signed to multiemployer collective bargaining agreements (“CBAs”) may fulfill their obligations under the EFMLEA by contributing to a multiemployer plan/fund/program if the plan/fund/program allows employees to secure payment based upon hours they worked under the CBA for paid leave taken under the amended provisions.
Emergency Paid Sick Leave
The Act also includes the Emergency Paid Sick Leave Act (the “EPSLA”), which requires employers with less than 500 employees to provide 80 hours of paid sick leave to full-time employees and a prorated amount of paid sick leave for part-time employees. Part-time employees are eligible for paid sick leave equal to the average number of hours that the employee works over a two-week period.
Paid sick leave must be provided for the following reasons:
- The employee is subject to quarantine due to COVID-19;
- The employee has been advised by a health care provider to self-quarantine due to concerns related to COVID-19;
- The employee is experiencing COVID-19 symptoms and is seeking a medical diagnosis;
- The employee is caring for an individual who is subject to a quarantine order due to COVID-19 or caring for an individual who was advised by a health care provider to self-quarantine due to concerns related to COVID-19;
- The employee is caring for a child whose school or daycare has closed because of COVID-19, or whose childcare provider is unavailable due to COVID-19; or
- The employee is experiencing any other substantially similar condition as specified by the Secretary of Health and Human Services, the Secretary of the Treasury, or the Secretary of Labor.
Though the EPSLA requires paid sick leave in addition to regularly accrued sick time, it provides certain caps. If an employee takes leave for reasons 1 through 3 above, the employee receives paid sick leave at the greater of his or her regular rate of pay or applicable minimum wage; however, the rate of pay is limited to a maximum rate of $511 per day or $5,110 in the aggregate. Leave for reasons 4 through 6 above, is paid at the greater of two thirds of the employee’s regular rate of pay or applicable minimum wage; however, the rate of pay is limited to $200 per day or $2,000 in the aggregate.
Employees are immediately eligible for this emergency leave no matter how long they have been employed. Leave under the EPSLA does not carry over from year to year and expires on December 31, 2020. Companies may not require employees to use other paid leave before using the leave provided by the EPSLA.
Leave under the EPSLA must be provided in addition to any leave an employer is required to provide under applicable state or local laws, or any leave an employer already provides under its existing policies.
Employers are required to post notice of the EPSLA; however, this notice has not yet been provided by the Secretary of Labor. The Secretary of Labor is required to provide a model notice within 7 days of enactment for employer use.
It is important to note that the EPSLA includes an anti-retaliation provision and a mechanism for bringing claims for violations. Failure to comply with the EPSLA will be treated as a failure to pay minimum wages under the Fair Labor Standards Act (the “FLSA”) and subjects employers to the same penalties provided under the FLSA.
The Secretary of Labor is to issue guidelines to assist employers in calculating the amount of paid sick leave by April 2, 2020. Further, the Secretary of Labor may issue regulations providing exemptions for companies with less than 50 employees where complying with the requirements would jeopardize the viability of the business.
Effective Date and Duration
Both the EFMLEA and the EPSLA are effective no later than 15 days from after the date of enactment, which is April 2, 2020. Thus, on April 2nd, employers must begin providing benefits under the EFMLEA and the EPSLA. Both the EFMLEA and the EPSLA expire on December 31, 2020.
Tax Credits
To provide some relief to employers, the Act provides that costs incurred in providing the benefits required under the EFMLEA and the EPSLA may be reimbursed through refundable tax credits against the 6.2% Social Security payroll tax imposed on employers. The amount of the tax credit for benefits provided under the EPSLA will not exceed the $200 or $511 per-day maximum payment per employee. Similarly, the amount of the tax credit for benefits provided under the EFMLEA will not exceed the $200 per-day maximum. Only employers required to provide benefits under the EFMLEA and the EPSLA may be eligible to receive the refundable tax credits.
Unemployment Insurance
The Act also permits the Secretary of Labor to provide emergency funds to states meeting certain requirements in order to provide additional funds relating to unemployment benefits and processing.
The preceding information is provided for informational purposes only, should not be construed as or relied upon as legal advice and is subject to change without notice. If you have questions concerning particular situations, or specific payroll administration or labor relations issues, please contact your legal counsel.
