March 18, 2020 marks the enactment of the Families First Coronavirus Response Act—a relief package that, among other things, contains several provisions affecting employers, because it requires small and midsized employers to provide paid sick leave benefits and expanded FMLA leave to employees affected by coronavirus. The Act takes effect April 2, 2020 and expires on December 31, 2020.
Below is a summary of the key employment-related aspects of the Act. The Act only applies to employers with fewer than 500 employees. The Act clearly covers employers with 50 – 500 employees. It will also apply to employers with fewer than 50 employees if they will not be adversely impacted by the Act’s requirements. Further, the below provisions can be affected by specific state and local laws.
1. Paid Leave Under the Family and Medical Leave Act
The act provides employees of employers with fewer than 500 employees with the right to take up to 12 weeks of job-protected leave under the Family and Medical Leave Act (“FMLA”) for a qualifying need related to a public health emergency.
A qualifying need related to a public health emergency means the employee is unable to work (or telework) due to a need for leave to care for the son or daughter under 18 years of age of such employee if the school or place of care has been closed, or the child care provider of such son or daughter is unavailable, due to a public health emergency, which includes an emergency with respect to COVID-19 declared by the Federal, State or local authority.
The Act requires that ten of the twelve weeks be paid at a rate not less than two-thirds of the employee’s the regular rate of pay for the balance of the FMLA leave not to exceed $200 per day and $10,000 in the aggregate.
To be eligible for paid leave, employees must have been on the employer’s payroll for 30 days.
The first 10 days of leave may be unpaid; the employee may choose to substitute accrued paid time off or other medical or sick leave during this period, but an employer cannot require an employee to do so. After the first two weeks of unpaid leave, employers must continue paid FMLA leave at a rate of no less than two-thirds of the employee’s usual rate of pay.
Employees of employers with 25 or more employees are entitled to be restored to an equivalent position at the end of their leave. Employees of an employer with fewer than 25 employees are not entitled to job restoration if the position held by the employee when the leave commenced does not exist due to economic conditions or other changes in operating conditions of the employer that affect employment, and are caused by a public health emergency during the period of leave.
In that case, the employer must make reasonable efforts to restore the employee to a position equivalent to the position the employee held when the leave commenced, with equivalent employment benefits, pay, and other terms and conditions of employment. If these reasonable efforts to find an equivalent position fail, the employer must continue to make reasonable efforts to contact the employee if an equivalent position becomes available. This contact period runs from the 1-year period beginning on the earlier of the date on which the qualifying need related to a public health emergency concludes; or the date that is 12 weeks after the date on which the employee’s leave commenced.
Employers will be entitled to take certain payroll tax credits for payment of required paid family leave and paid sick leave.
The Act grants the Secretary of Labor the authority to issue regulations exempting:
- certain health care providers and emergency responders from taking leave under the Act; and
- small business with fewer than 50 employees from the requirements of the Act if it would jeopardize the viability of the business.
2. Emergency Paid Sick Leave Act
The Emergency Paid Sick Leave Act requires most employers having fewer than 500 employees to provide up to 80 hours of paid sick leave taken for full-time employees (part-time employees receive the number of hours they worked on average over a 2 week period) who are unable to work for certain COVID-19 caused absences. Employees are immediately eligible to take paid sick leave under the Act regardless of how long the employee has been employed by the employer.
3. Permissible Uses of Sick Leave
A covered employer shall provide paid sick leave to each eligible employee to the extent that the employee is unable to work (or telework) due to a need for leave because:
- 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 COVID–19.
- The employee is experiencing symptoms of COVID–19 and seeking a medical diagnosis.
- The employee is caring for an individual who is subject to an order as described in item (a) or has been advised as described in item (b) above.
- The employee is caring for a son or daughter of such employee if the school or place of care of the son or daughter has been closed, or the child care provider of such son or daughter is unavailable, due to COVID–19 precautions.
- 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.
- When an employee is taking leave for a qualifying reason, the employer cannot require the employee to search for or find a replacement employee to cover the hours that the employee is using paid sick time.
3. Tax Credits for Paid FMLA and Sick Leave and Grant of $1 Billion Dollars for Emergency Unemployment Insurance
The Act provides for a series of refundable tax credits for employers providing paid emergency sick leave or paid FMLA. The credits are as follows:
- A refundable tax credit for employers equal to 100 percent of qualified family leave wages required to be paid by the Emergency Family and Medical Leave Expansion Act that are paid by an employer for each calendar quarter. The tax credit is allowed against the tax imposed by section 3111(a) (the employer portion of Social Security taxes). The amount of qualified family leave wages taken into account for each employee is capped at $200 per day and $10,000 for all calendar quarters. If the credit exceeds the employer’s total liability under section 3111(a) for all employees for any calendar quarter, the excess credit is refundable to the employer.
- A refundable tax credit for employers equal to 100 percent of qualified paid sick leave wages required to be paid by the Emergency Paid Sick Leave Act that are paid by an employer for each calendar quarter. The tax credit is allowed against the tax imposed by section 3111(a) of the Internal Revenue Code (the employer portion of Social Security taxes).
The Act provides $1 billion in grants to states for emergency unemployment insurance, half of which will be transferred to the states within 60 days after the enactment of the Act (so long as the state complies with certain requirements, such as requiring employers to notify employees of the availability of unemployment compensation and permitting individuals to apply for unemployment compensation in at least two of the following ways—in-person, by phone, or online). The remainder of the grant will be reserved for states in which the number of unemployment compensation claims has increased by at least 10% over the same quarter in the prior calendar year. To receive access to the second portion of the grant, states must, among other things, make it easier for individuals to obtain unemployment compensation by waiving work search requirements and waiting periods.
Disclaimer: Because information on this topic is emerging and ongoing, the information in the article is subject to change without notice. Please consult your attorney for the most up to date information before instituting any action.