On March 14, 2020, the United States House of Representatives passed with overwhelming bipartisan support the “Families First Coronavirus Response Act” (FFCRA), which if ultimately signed into law, would impose significant obligations on employers with fewer than 500 employees, including mandatory additional paid sick leave and expanded Family Medical Leave Act leave. The United States Senate is expected to take up the legislation this week, and while there may be some further changes, President Trump has expressed his support and indicated an intent to sign the legislation if it comes before him.
The FFCRA includes a number of provisions related to the COVID-19/Coronavirus pandemic, including provisions to protect children and others with food insecurity issues and provisions to pay for COVID-19 testing, but the most impactful portions of the legislation for employers include:
- Emergency Paid Sick Leave. Employers with less than 500 employees must provide 14 days of paid leave to all employees who need to miss work as a result of issues related to the Coronavirus pandemic. This mandatory paid leave is in addition to any other paid leave already provided to such employees.
- Expanded Family Medical Leave. Employers will less than 500 employees will be required to provide paid FMLA leave to employees requiring leave because of illness or care for family members resulting from the Coronavirus pandemic. This leave must be provided to all employees who have been employed for at least 30 days. The first 14 days may be unpaid but thereafter, the leave must be paid at a rate of two-thirds of the employee’s regular rate of pay.
- Tax Credits. Employers can apply for and receive certain tax credits for the payments they make to employees for the required Paid Sick Leave and expanded FMLA.
Further details of these provisions and the legislation are described below:
Emergency Paid Sick Leave
Within the FFCRA, the Emergency Paid Sick Leave Act (EPSLA) requires all employers with up to 500 employees to provide two weeks of additional paid sick leave to any employees who must be absent from work because:
- The employee was diagnosed with Coronavirus and must self-isolate;
- The employee is seeking medical diagnosis or care because he or she is experiencing symptoms of the Coronavirus;
- To comply with the recommendation or order of a public official or healthcare provider on the basis that the employee’s physical presence in the office would jeopardize the health of others because the employee has been exposed to Coronavirus or is exhibiting its symptoms;
- To care for a family member who is self-isolating following diagnosis or symptoms of Coronavirus or who has been advised or ordered by a public official or healthcare provider to stay home due to exposure or symptoms of the Coronavirus; or
- To care for the employee’s child whose school or child care provider is closed or unavailable due to the Coronavirus?
Full-time employees will be eligible for up to 80 hours of paid leave; part-time employees will be eligible to receive pay for whatever number of hours they normally work in a two-week period. Employees must be paid their regular rate of pay if they require leave because of their own illness; if the leave is necessitated to care for a child or other family member, the leave can be paid at two-thirds of the employee’s regular rate of pay. Notably, EPSLA leave is in addition to any other paid time off or sick leave already provided by an employer, and employers are prohibited from subsequently modifying their paid sick leave policies on or after the passage of the act.
All employees are eligible for EPSLA immediately upon hire, and employers may not require employees to use other paid leave before using EPSLA. Employers are also prohibited from requiring their employees to find a replacement employee to cover their shift during a time when the employee is using EPSLA. The definition of family member for whom an employee may take paid leave is extremely broad, and includes domestic partners and an individual who is pregnant, a senior citizen, disabled, or has access or function needs and who is a sibling, next of kin, grandparent or grandchild of the employee. EPSLA leave is not carried over into the next year and need not be paid out on termination of employment. It also cannot be used intermittently. The provisions of the EPSLA apply to employees who work under a multiemployer collective bargaining agreement where the employers pay into a multiemployer plan and provide eligible employees with leave.
The requirements of the EPSLA will go into effect 15 days after the passage of the legislation and will expire on December 31, 2020.
Family Medical Leave Act (FMLA) Expansion.
Presently, the FMLA provides 12 weeks of unpaid, job-protected leave (and 26 weeks in the case of certain military exigencies) for eligible employees who suffer from a serious health condition, are caring for a family member with a serious health condition, or require leave related to child birth or adoption / fostering of a child.
The FFCRA greatly expands the FMLA, albeit on a temporary basis, to provide paid leave to those requiring time off to deal with certain exigencies related to the current Coronavirus pandemic. Notable expansions include:
- The definition of “Employer” includes all entities with fewer than 500 employees (rather than the current requirement of 50 or more employees).
- Employees need only be employed for 30 days, rather than 12 months, to be eligible for public health emergency FMLA leave.
- The definition of family members for whom the leave can be taken is expanded to include domestic partners and a son, daughter, next of kin, grandparent or grandchild who is also a pregnant women, senior citizen, disabled, or who has access or functional needs.
Eligible employees may take public health emergency FMLA leave if they are unable to work because (1) a government official or healthcare provider has ordered that the employee should not come into work because he or she has been exposed or is experiencing symptoms of the coronavirus and the employee is unable to perform his or her work remotely; (2) the employee is needed to care for a family member for whom a government official or healthcare provider has determined is a danger to the community because he or she has or is experiencing symptoms of the coronavirus; or (3) to care for a child under the age of 18 if that child’s school or child care facility is closed due to the public health emergency.
The first 14 days of the public health emergency FMLA may be unpaid, though the employee may elect to substitute paid time off, or EPSL as described above. Unlike traditional FMLA, an employer may not require an employee to substitute paid time off for any of this public health emergency FMLA. After the first 14 days of leave, the remaining 12 weeks of leave must be paid at a rate of at least 2/3 of the employee’s usual rate of pay for the number of hours he or she would usually be scheduled to work.
Generally, employers will be required to reinstate employees who utilize the public health emergency FMLA in the same manner as traditional FMLA, except that employers with 25 or fewer employees may not have to reinstate an employee who takes leave pursuant to this section if the position held by the employee no longer exists due to economic conditions or other changes that were caused by the public health emergency. In that case, the employer must make reasonable efforts to restore the employee to an equivalent position with equal pay and benefits, and if not possible, must contact the employee over the following year if an equivalent position becomes available.
The legislation also provides that the Department of Labor may issue regulations that would exclude certain healthcare providers and emergency responders and exempt small businesses with fewer than 50 employees when the requirements would jeopardize the viability of the business as a going concern.
These requirements will take effect 15 days after the legislation is signed and will expire at the end of 2020.
Tax Credits for Paid Sick Leave and Public Health Emergency FMLA
The legislation provides that employers who are required to provide their employees with EPSL and/or public health emergency FMLA may apply for and receive certain tax credits for those payments. Employers may receive a tax credit of up to 100% of the amount of EPSLA paid to employees, up to a maximum of $511/day in the case of the employee’s own illness or $200/day if the employee is receiving leave to care for a family member. The tax credit is provided against the employer’s portion of Social Security taxes. These credits can be applied quarterly. In addition, employers may receive a tax credit for the pay they are required to provide employees for public health emergency FMLA. This credit is also provided against the employer’s portion of Social Security taxes, but it is capped at $200 per day and $10,000 for all calendar quarters. If the credit exceeds the employer’s total liability for all employees for any calendar quarter, the excess credit is refundable to the employer. Self-employed individuals may also be eligible for these tax credits.
Unemployment Benefits
The legislation also provides emergency funding to states who demonstrate a commitment to ease certain restrictions on obtaining unemployment insurance to assist with processing and paying unemployment insurance benefits. The purpose is to encourage states to allow employees who are ill or unable to work as a result of the public health emergency to obtain unemployment insurance benefits.
At this stage, it remains unclear exactly what the final legislation will be once the Senate takes up the bill this week. In addition, there remain a number of open questions related to enforcement, what documentation employers can require from employees, and the impact the federal statute will have on similar or competing state or local paid leave requirements. Regardless, impacted employers should review their current policies and prepare for the additional sick leave and expanded FMLA as described.
Opinions and conclusions in this post are solely those of the author unless otherwise indicated. The information contained in this blog is general in nature and is not offered and cannot be considered as legal advice for any particular situation. Any federal tax advice provided in this communication is not intended or written by the author to be used, and cannot be used by the recipient, for the purpose of avoiding penalties which may be imposed on the recipient by the IRS. Please contact the author if you would like to receive written advice in a format which complies with IRS rules and may be relied upon to avoid penalties.
