By: Brandon T. Glanz
Last week, President Trump signed into law the Families First Coronavirus Response Act (“FFCRA”) establishing circumstances in which employers must provide employees with paid sick or family leave due to the COVID-19 virus. The law applies to employers with fewer than 500 employees and goes into effect on April 1. As you prepare for compliance, here are the key factors you need to know.
Emergency Paid Sick Leave Act
- Employers Subject to the Act: The Emergency Paid Sick Leave Act (“EPSLA”) was enacted as part of FFCRA. It provides for paid sick leave at workplaces with less than 500 employees if specified conditions are met. The EPSLA authorizes the U.S. Department of Labor to exempt small businesses with fewer than 50 employees if compliance with the new law would jeopardize the viability of the business as a going concern.
- Effective Date: The EPSLA takes effect on April 1, 2020 and applies to leave taken between April 1, 2020 and December 31, 2020.
- Qualifying Leave: The employee is entitled to paid sick leave if he or she is “unable to work (or telework) due to a need for leave” under the following circumstances:
- The employee is subject to a federal, state or local quarantine or isolation order related to COVID-19;
- The employee has been advised by a health care provider to self-quarantine due to concerns related to
- The employee is experiencing symptoms of COVID-19 and seeking medical diagnosis;
- The employee is caring for an individual who is subject to a federal, state or local quarantine order, or the individual has been advised to self-quarantine due to concerns related to COVID-19;
- The employee is caring for the employee’s son or daughter, if the child’s school or child care facility has been closed or the child’s care provider is unavailable due to COVID-19 precautions; or
- The employee is experiencing any other substantially similar condition specified by Health and Human Services in consultation with the Department of the Treasury and the Department of Labor.
“Employees” under the FFCRA include anyone qualified as an employee under the Fair Labor Standards Act, which includes virtually all private sector employees, whether full- or part-time, temporary, or permanent, but does not include independent contractors.
- Amount of Leave:
- Full-Time Employees: Employers must provide two weeks (80 hours) of sick time to employees affected by COVID-19.
- Part-time Employees: Part-time workers are granted leave equivalent to their average hours worked in a two-week period.
- Amount of Pay:
- When emergency sick time relates to an employee’s own condition (see points 1-3 above), the benefit is calculated based on the employee’s regular rate or applicable minimum wage, whichever is greater, but is limited to $511 per day and $5,110 total.
- When emergency sick time relates to situations where the employee is acting as a caregiver (see points 4-6 above), the benefit is calculated based on two-thirds of the employee’s regular rate or applicable minimum wage, whichever is greater, but is limited to $200 per day and $2,000 total.
- Interplay with Current Leave Offered by Employer: Congress removed a provision in the original bill that would have prevented employers from changing their current policies and benefits in response to the EPSLA. However, an employer cannot require a worker to use any other available paid leave before using the sick time available under the new law.
- Notice Requirement: Employers must post a notice that advises employees of their rights under the FFCRA. The Department of Labor has issued a model notice, available at: https://www.dol.gov/sites/dolgov/files/WHD/posters/FFCRA_Poster_WH1422_Non-Federal.pdf. Per the DOL, an employer may satisfy the notice requirement by emailing or direct mailing the notice to employees or by posting the notice on an employee information internal or external website. The Department of Labor provides further guidance in a Questions & Answers page at: https://www.dol.gov/agencies/whd/pandemic/ffcra-questions.
- Employer Prohibitions: Employers are prohibited from requiring workers to find replacements to cover their hours during time off. Employers also are prohibited from discharging or discriminating against workers for requesting paid sick leave or filing a complaint against the employer related to such leave.
- Employer Tax Credits: Refundable credits for the employer portion (but not the employee portion) of the Old-Age, Survivors, and Disability Insurance (OASDI) component of payroll taxes (i.e., the 6.2 percent employer portion of the Social Security tax) will be provided to employers to cover wages paid to employees for time off under the sick leave programs. The sick leave credit for each employee will be for wages (including qualified health plan expenses relating to those wages) of up to $511 per day while the employee is receiving paid sick leave to care for himself or herself, or $200 if caring for a family member or child whose school has closed. The credit will be limited to 10 days per employee per quarter. The IRS has issued guidance that explains how the benefits will be subsidized by the federal government through a dollar-for-dollar refundable payroll tax credit.
Emergency Family and Medical Leave Expansion Act
The Emergency Family and Medical Leave Expansion Act (the “FMLA Expansion Act”) also was enacted as part of The Families First Coronavirus Response Act. This law temporarily amends the Family Medical Leave Act to address the employees caring for children during this pandemic.
- Qualifying Leave: Private sector employers with fewer than 500 workers must provide up to 12 weeks of FMLA leave for employees who are unable to work or telework because they have to care for a minor child if the child’s school or place of care has been closed, or if the child care provider of that child is unavailable due to a coronavirus emergency. This means, unlike the Emergency Paid Sick Leave Act outlined above, the closure of the child’s school or childcare provider is the only reason allowed for paid leave under the FMLA.
- Employers Subject to Act: Employers which employ 500 or less employees are subject to the FMLA Expansion Act. Like the paid sick leave provision of the Act, the U.S. Department of Labor is empowered to exempt small businesses with fewer than 50 employees from this FMLA Expansion Act requirement in certain circumstances.
- Eligible Employees: The provisions of the FMLA Expansion Act will apply to employees who have been employed for at least 30 calendar days. The usual FMLA requirements that the employee has been employed for a year and worked at least 1,250 hours for the employer do not apply.
- Effective Date: The Act becomes effective on April 1, 2020.
- Amount of Leave and Pay: The first 10 days of leave may be unpaid. During this period, an employee may elect, but cannot be required, to substitute any accrued vacation leave, personal leave, or medical or sick leave for the unpaid leave.
- After 10 days of unpaid leave have been taken, the employer must provide paid leave. Paid leave must be an amount that is not less than 2/3 an employee’s regular rate of pay for the number of hours the employee would otherwise be scheduled to work. However, paid leave is capped at $200 per day. There is a $10,000 cap on the aggregate amount of paid leave paid to an employee. Paid leave must continue until the qualifying condition no longer exists, until twelve weeks of leave have been taken, or until the $10,000 of aggregate pay is reached.
- Job Restoration Rights: The FMLA Expansion Act offers job protection. However, the FMLA’s requirement that an employee be restored to the same or equivalent position after leave does not apply to an employer with fewer than 25 employees if the employee’s position no longer exists due to economic conditions or other changes in the employer’s operations that affect employment and are caused by the public health crisis during the period of leave.
- The employer must make reasonable efforts to restore the employee to the same or an equivalent position. If the reasonable efforts fail, the employer must make efforts to reinstate the employee if an equivalent position becomes available within a one-year period beginning on the earlier of (a) the date on which the qualifying need related to a public health emergency concludes, or (b) the date that is 12 weeks after the date the employee’s leave started.
- Employer Tax Credits: Refundable credits for the employer portion (but not the employee portion) of the Old-Age, Survivors, and Disability Insurance (OASDI) component of payroll taxes (i.e., the 6.2 percent employer portion of the Social Security tax) will be provided to employers to cover wages paid to employees for time off under the family leave program. The family leave credit for each employee will be for wages (including qualified health plan expenses relating to those wages) of as much as $200 per employee per day, and $10,000 in the aggregate for all calendar quarters.
Questions? We’re Here to Help.
HKM’s attorneys are continually monitoring the ever-changing response to the unprecedented situation with COVID-19. We stand ready to assist you in these uncertain times, and we hope your families stay safe as we work through this difficult time together.