About 3 weeks ago, we shared some guidance concerning how you, as an employer, can help protect against the spread of the novel coronavirus. Since then, much has transpired and while that guidance remains relevant, there are certain developments of which you should be aware.
On March 18, 2020, President Trump signed into law the Families First Coronavirus Response Act (the “Act”). The Act will be effective as of April 1, 2020, and makes several changes to employers’ legal obligations with regard to employee leave time. While the Act contains multiple provisions, we are focusing solely on those that apply to and affect employers.
The Department of Labor has stated that it will observe a temporary period of non-enforcement through April 17, 2020, so long as an employer has acted reasonably and in good faith to comply with the Act. For purposes of this non-enforcement provision, “good faith” exists when violations are remedied and the employee is made whole as soon as practicable by the employer, the violations were not willful, and the Department of Labor receives a written commitment from the employer to comply with the Act in the future. After April 17, the limited stay of enforcement will be lifted, and the Department of Labor will be fully enforcing violations of the Act.
The Emergency Family and Medical Leave Expansion Act
Expanded Coverage and Eligibility
This portion of the Act significantly amends and expands FMLA on a temporary basis. Currently, FMLA applies to employers with 50 or more employees. Under the Act, the threshold for FMLA coverage will change to cover employers with fewer than 500 employees. The Act also reduces the eligibility requirement so that any employee who has worked for the employer for at least 30 days prior to the leave may be eligible to receive paid family and medical leave.[1] As a result, thousands of smaller employers who are not currently subject to FMLA may be required to provide job-protected leave to employees for a designated reason. Note, however, that the Act allows the Secretary of Labor to exclude healthcare providers and emergency responders from the definition of employees who are allowed to take leave under the Act, and to exempt small businesses with fewer than 50 employees if the required leave would jeopardize the viability of their business. The Act also provides an exception for employers of healthcare providers or emergency responders to exempt such employees at their election.
Reasons for Emergency Leave
Under the Act, any person 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 old) if the child’s school or place of care is closed or the childcare provider is unavailable due to a public health emergency. Absent a later amendment of the Act, this is the only qualifying need for Emergency FMLA.
You may require an employee taking Emergency FMLA leave under the act to provide you with documentation in support of such leave to the extent permitted under the certification rules for conventional FMLA leave requests. And you must retain such documentation in order to show your entitlement to the tax credit created by the Act.
Partially Paid Leave for Full-Time Employees
While the first 10 days of Emergency FMLA may be unpaid, after the expiration of the 10-day period, the employer generally must pay full-time employees at two-thirds of the employee’s regular rate for the number of hours the employee would otherwise be normally scheduled. The Act limits this pay entitlement to $200 per day and $10,000 total per employee. During the initial 10-day period, under the Act, an employee may elect to use any accrued paid leave (e.g., vacation, PTO, sick leave) to cover some or all of the 10-day unpaid period.
Calculating Pay for Non–Full-Time Employees
If you have employees who work a part-time or irregular schedule, they are entitled to be paid based on the average number of hours the employee worked for the 6 months immediately prior to taking Emergency Leave. If an employee has worked for less than 6 months prior to taking Emergency Leave, he is entitled to be paid based on the employee’s reasonable expectation at hiring of the average number of hours the employee would normally be scheduled to work.
Job Restoration
Any employer with 25 or more employees will have the same obligations as under regular FMLA to return any employee who has taken Emergency FMLA to the same or equivalent position upon the return to work. Employers with fewer than 25 employees are generally excluded from this requirement if the employee’s position no longer exists following the Emergency FMLA leave due to an economic turndown or other circumstances caused by a public health emergency during the Emergency FMLA period. This exclusion is subject you 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 one year following the employee’s emergency leave.
The Emergency FMLA Leave program will remain in effect until December 31, 2020.
The Emergency Paid Sick Leave Act
Reasons for Paid Sick Leave
This portion of the Act allows an eligible employee to take paid leave for enumerated reasons, specifically, because the employee is:
- subject to a federal, state, or local quarantine or isolation order related to COVID-19;
- advised by a healthcare provider to self-quarantine due to COVID-19 concerns;
- experiencing COVID-19 symptoms and seeking medical diagnosis;
- caring for an individual subject to a federal state, or local quarantine or isolation order or advised by a healthcare provider to self-quarantine due to COVID-19 concerns;
- caring for the employee’s child if the child’s school or place of care is closed or the child’s care provider is unavailable due to public health emergency; or
- 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.
Of particular note, caring for another who is subject to an isolation order or is advised to self-quarantine as listed above is no longer limited to just family members.
Eligibility
Under the Act, employers with fewer than 500 employees are required to provide full-time employees (without regard to the employee’s duration of employment prior to leave) with 80 hours of paid sick leave at the employee’s regular rate (or at two-thirds of the employee’s regular rate for leave due to qualifying reasons 4, 5, or 6 listed above). There is, however, an exception for employers of healthcare providers or emergency responders to exempt such employees at the employer’s election. Lastly, the Emergency Family and Medical Leave Expansion Act above, permits the Secretary of Labor the authority to exclude certain businesses from these requirements.
Cap on Paid Sick Leave Wages
The Act also places limits on paid sick leave wages. Specifically, the Act limits the paid sick leave entitlement to $511 per day up to $5,110 total per employee for their own use and to $200 per day up to $2,000 total to care for others and any other substantially similar condition.
Calculating Rate of Pay
If you have employees who work a part-time or irregular schedule, they are entitled to be paid based on the average number of hours the employee worked for the 6 months prior to taking paid sick leave. Employees who have worked for less than 6 months prior to leave are entitled to be paid based on the average number of hours the employee would normally be scheduled to work over a 2-week period. Any business employing fewer than 500 employees is required, at the employee’s request, to pay a full-time employee for 80 hours of mandated emergency paid sick leave instead of the initial 10 days of unpaid leave permitted by the Emergency Family and Medical Leave Expansion Act (discussed above).
Carryover/Interaction with Other Paid Leave
This paid sick leave will not carry over to the following year and may be in addition to any paid sick leave currently provided by employers. Additionally, you may not require an employee to use up accrued, paid leave time prior to being allowed to take paid sick leave (or Emergency FMLA Leave) under the Act.
The Emergency Paid Sick Leave program will remain in effect until December 31, 2020.
Small Business Exemption
The Emergency FMLA Act and the Emergency Paid Sick Leave Act include an exemption for small businesses, including religious or nonprofit organizations, with fewer than 50 employees. Thus, such small businesses are exempt from providing paid sick leave or emergency FMLA leave when doing so would jeopardize the viability of the small business as a going concern. As a small business, you may claim this exemption if an authorized officer of your business has determined that:
- The provision of paid sick leave or expanded family and medical leave would result in the business’s expenses and financial obligations exceeding available business revenues and cause the small business to cease operating at a minimal capacity;
- The absence of the employee(s) requesting paid sick leave or expanded family and medical leave would entail a substantial risk to the financial health or operational capabilities of the business because of their specialized skills, knowledge of the business, or responsibilities; or
- There are not sufficient workers who are able, willing, and qualified, and who will be available at the time and place needed, to perform the labor or services provided by the employee(s) requesting paid sick leave or expanded FMLA leave, and these services or labor are needed for the business to operate at a minimal capacity.
Tax Credits for Paid Sick Leave and Paid Family and Medical Leave
This section of the Act provides a series of refundable tax credits for employers who are required to provide the Emergency Paid Sick Leave and/or the Emergency Paid FMLA Leave described above. These tax credits are allowed against the employer portion of Social Security taxes. Though this limits application of the tax credits, employers will be reimbursed if their costs for qualified sick leave or qualified FMLA leave wages exceed the taxes they would owe.
More specifically, employers are entitled to a refundable tax credit equal to 100% of the qualified sick leave wages paid by the employer for each calendar quarter in adherence with the Emergency Paid Sick Leave Act. Similarly, employers are entitled to a refundable tax credit equal to 100% of the qualified family leave wages paid by the employer for each calendar quarter in adherence with the Emergency Family Medical Leave Expansion Act.
Only those employers who are required to provide Emergency FMLA Leave and/or Emergency Paid Sick Leave are eligible for these tax credits.
The Emergency Unemployment Insurance Stabilization and Access Act of 2020
This portion of the Act provides $1 billion in 2020 for emergency grants to states for activities related to unemployment insurance benefit processing and payment, under certain conditions.
Half of the funds will be allocated to provide immediate funding to all states for administrative costs so long as they meet some basic requirements, including: (1) requiring employers to provide notification of the availability of unemployment compensation at the time of separation; (2) ensuring applications for unemployment compensation and assistance with the application process are accessible in at least 2 ways (in-person, by phone, or online); and (3) notifying applicants when their application is received an being processed, as well as providing information about how to ensure successful processing if, for any reason, the application cannot be processed.
The other half of the funds will be reserved for emergency grants to states that experience an increase of unemployment compensation claims of at least 10% in comparison to the same quarter in the prior calendar year. Those states would be eligible to receive an additional grant to assist with costs related to such an unemployment spike if they meet certain additional requirements, including: (1) expressing a commitment to maintain and strengthen access to unemployment compensation; and (2) taking or planning to take steps to ease eligibility requirements and access (like waiving work search requirements and the waiting period). The Act will provide those states that meet these requirements with 100% federal funding to provide extended unemployment benefits, up to an additional 26 weeks after the initial 26 weeks – in other words, up to 52 weeks of benefits.
This provision of the Act will also remain in effect until December 31, 2020.
COVID-19 Testing Coverage
This section of the Act requires private health plans to provide coverage for COVID-19 diagnostic testing (and related services) to employees and their covered dependents without cost-sharing (e.g., deductibles, copayments, and coinsurance). Covered services and related cost waivers apply to: (1) diagnostic testing; (2) healthcare provider services (both in-person and telehealth); and (3) facility costs (physician’s office, urgent care center, and emergency room) to the extent the costs are related to evaluating the need for, or furnishing, COVID-19 diagnosis and treatment. In addition to coverage and cost-waiver provisions, plans may not require prior authorization or similar medical care management requirements as a precondition to COVID-19 testing or services.
This is effective from enactment of the Act through the end of the national emergency period.
At this time, management should be thinking about how to best ensure your business’s compliance with the Emergency Paid Sick Leave and Emergency Paid FMLA Leave requirements, including providing notice to employees through postings and written policies. A copy of the required poster for employees other than federal workers is available here.
Should you require assistance with implementation of the Families First Coronavirus Response Act, please email Frank Laws (FLaws@tandllaw.com) or Sima Fried (SFried@tandllaw.com) and we gladly work with you to ensure compliance.
[1] The Department of Labor has clarified that any employee who is on an employer’s payroll for the 30 calendar days immediately prior to the day they seek to begin leave is covered for purposes of the Act. Additionally, a temporary employee who is subsequently hired on a full-time basis may count their days previously worked as a temporary employee towards this 30 calendar day requirement.