What Employers Need to Know about the Coronavirus Response Act
By: Abbey Furlong
On March 18, 2020, President Trump signed into law the Families First Coronavirus Response Act (the Act), legislation designed to offer initial mitigation of the continually evolving hardships faced by those impacted by the unprecedented COVID-19 outbreak. Among the measures included in the Act are a number of provisions applicable to employers which drastically (and abruptly) alter the traditional landscape of the Family Medical Leave Act (FMLA) and paid sick leave for employees on a temporary basis. Because the goal of the Act is to begin providing emergency relief, its provisions become effective just 15 days after President Trump signed the bill into law. Meaning employers must fully implement the changes by April 2, 2020. By the same token, the expanded provisions are scheduled to expire on December 31, 2020.
Expansion of FMLA for Leave Related to COVID-19 Public Health Emergency (Emergency Family and Medical Leave Expansion Act)
In perhaps the most significant change to employers, for qualifying needs related to COVID-19, the Act expands the definition of covered employers and lowers the eligibility requirement for qualifying employees. In its current form, the FMLA applies only to employers with 50 or more employees. Effective April 2, the FMLA is being expanded to cover those employers with fewer than 500 employees. This may require many small businesses – which have not previously been subject to the FMLA – to provide protected leave to their employees for certain COVID-19 related reasons. Read on for a summary of the changes coming to the FMLA:
- Coverage: As noted above, the Act expands FMLA coverage to employers with fewer than 500 employees. There are exceptions which exclude health care providers and emergency responders from the definition of eligible employees (excluding those employees from taking leave under the expanded FMLA provisions) and for small businesses with fewer than 50 employees if implementing the expanded requirements “would jeopardize the viability of the business as a going concern.”
- Eligibility: For an employee to qualify for leave under the expanded FMLA, he or she must have been employed for at least 30 calendar days by the employer. In its current form, an employee must have been employed with the company for a full 12 months before becoming eligible for job protected leave.
- Qualifying Reasons for Leave: The expanded FMLA provisions apply only to leave for a qualifying need related a public health emergency with respect to COVID-19. If a Federal, State, or local authority has declared such a public health emergency, eligible employees are entitled to job protected leave if they are unable to work (or telework) due to the need to care for the employee’s son or daughter under 18 years of age if the child’s school or place of care has been closed or if the child’s care provider is unavailable due to a COVID-19 related reason. Under the Act, this is the only qualifying need for the emergency expansion to the FMLA.
- Paid and Unpaid Leave: Under the expanded FMLA provisions, the first 10 days of an employee’s leave for the qualifying reason above may be unpaid. During this 10 day period, the employee may elect to utilize available paid leave (including accrued vacation leave, personal leave, sick leave etc.). After the 10 day period, the employer must provide paid leave of at least two-thirds of the employee’s regular rate of pay for the number of hours the employee would otherwise be normally scheduled to work. The amount of paid leave is limited to $200 per day and $10,000 in the aggregate per employee meaning that highly compensated employees are not entitled to the full two-thirds equivalent of their regular rate.
- Paid Leave for Employees with Varying Schedules: Paid leave for employees whose schedule varies from week to week is calculated based on the average number of hours the employee was scheduled per day in the six month period immediately prior to taking leave. If such an employee has not been employed for a full six months, the employee is entitled to the average number of hours he or she reasonably expected at hiring.
- Job Restoration: Employers with 25 or more employees are subject to the standard obligation to (1) return employees who have taken leave to the position they held before going on leave; (2) return employees who have taken leave to an equivalent position with similar pay and benefits; or (3) if no such positions are available after the employee’s leave, to make reasonable efforts to contact the employee if an equivalent position comes available within a certain time after the leave commences or the public health emergency concludes. Employers with fewer than 25 employees are exempt from the job restoration requirement.
Emergency Paid Sick Leave
This provision of the Act mandates that covered employers (defined in the same manner as the expansion to FMLA discussed above) provide 80 hours of paid sick leave for full time employees and the equivalent of two weeks’ hours for part time employees for qualifying reasons.
- Coverage: Similar to the expanded FMLA provisions, the emergency paid sick leave portion of the Act applies to private employers with fewer than 500 employees and to public agencies which employ 1 or more employees. Employers with fewer than 50 employees may be exempt from providing paid sick leave under the Act if such requirement would jeopardize the viability of the business.
- Eligibility: Covered employers must provide 80 hours of paid sick leave to each full time employee and for part time employees, the equivalent of the part-time employee’s average hours over a 2-week period. There is no tenure requirement for employees to become eligible for the paid sick leave, it is available for immediate use regardless of how long the employee has been employed. However, paid sick leave provided under the Act does not carry over from one year to the next.
- Need for Leave: Paid sick leave under this provision of the Act applies to employees who are unable to work (or telework) due to the following reasons:
- (1) The employee is subject to a Federal, State, or local quarantine or isolation order related to COVID-19;
- (2) The employee has been advised by a health care provider to self-quarantine due to concerns related to COVID-19;
- (3) The employee is experiencing symptoms of COVID-19 and seeking a medical diagnosis;
- (4) The employee is caring for an individual who is subject to an order as in paragraph (1) or has been advised as described in paragraph (2);
- (5) The employee is caring for his or her son or daughter if the child’s school or place of care has been closed, or the child care provider is unavailable due to COVID-19 precautions;
- (6) 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.
- Rate of Pay: For employees who utilize paid sick leave under this Act for reasons (1) through (3), above, the hours of paid sick leave are calculated based on the employee’s regular rate of pay (subject to the cap discussed below). For employees who utilize paid sick leave under this Act for reasons (4) through (6), above, the hours of paid sick leave are calculated at a rate of two-thirds of the employee’s regular rate.
- Cap on Paid Sick Leave Wages: Under the Act, paid sick leave wages are limited to $511 per day and $5,110 in the aggregate if the employee needs leave for reasons (1) through (3) above or $200 per day and $2,000 in the aggregate if the employee needs leave for reasons (4) through (6), above.
- Other Paid Leave: An employee may use the paid sick time available under the Act first and employers may not require an employee to use other paid leave before utilizing the paid leave under the Act.
- Notice: Employers are required to post and keep posted, in conspicuous places where notices to employees are customarily posted, a notice of these requirements. Within seven days of enactment of this Act, the Secretary of Labor will issue a model notice that satisfies this requirement.
Tax Credits for Paid Sick Leave and Paid Family and Medical Leave
The Act creates sweeping new requirements of paid leave for many employers, including small business owners who have not previously been subject to the requirements of FMLA. But there is some relief built into the Act for employers in the form of tax credits. For those employers who are required to provide emergency paid family and medical leave and emergency paid sick leave as discussed above, the Act provides a series of refundable tax credits against their share of Social Security taxes. The paid emergency family leave wages tax credit can be claimed on a quarterly basis equal to 100 percent of the amount of family leave wages for each employee, subject to the daily and aggregate limits discussed above. The paid emergency sick leave wages tax credit can be claimed on a quarterly basis equal to 100 percent of the amount of sick leave wages for each employee, subject to the daily and aggregate limits discussed above. These credits are refundable to the extent they exceed the amount the employer owes in payroll tax. Similar credits are also available for certain self-employed individuals.
If you have questions about the new Families First Coronavirus Response Act and how it impacts you and your business, reach out to one of our employment attorneys for further guidance.
Abbey joined Lane & Waterman in 2010. Her trial law practice primarily consists of professional malpractice, employment law, and products liability.