A bill passed by the House of Representatives on March 13 to address the coronavirus (COVID-19) public health emergency temporarily transforms what had been unpaid, job protected leave under the Family and Medical Leave Act (FMLA) into paid, job-protected leave for specific reasons relating to the COVID-19 emergency. This change in the law applies only to employers with fewer than 500 employees.

The bill is expected to be passed shortly by the Senate and signed by the president. Although employers with 500 or more employees are exempt from the mandate in this bill, it is useful for all employers to understand the approach taken by Congress since additional legislation may still be introduced to cover larger employers.

When the Expanded FMLA Starts and Ends

Beginning 15 days after the law’s enactment, employers with fewer than 500 employees must provide paid FMLA leave to eligible employees for specific types of leave relating to COVID-19. The paid FMLA provisions will expire on December 31, 2020.

Employees Who Are Eligible

One of the key changes the bill makes is to amend the FMLA’s definition of “eligible employee” to include any employee who has been employed by a covered employer for at least 30 days. This is significantly different from the general requirement that, to be eligible for FMLA leave, an employee must have been employed for one year. In addition, there is no requirement that employees work at least 1,250 hours to be eligible for this particular FMLA paid leave. Hence, part-time workers are covered as well.

Use of Paid FMLA Leave

An eligible employee must receive paid FMLA leave for any of the following reasons:

• The employee is unable to perform his or her job functions because of an order or recommendation from a healthcare provider or a public health official that the employee’s physical presence on the job would jeopardize the health of others because the employee was exposed to COVID-19 or exhibited symptoms
• The employee must care for a family member if a public health official or healthcare provider determines that the family member’s presence in the community would jeopardize the health of others in the community because of exposure to COVID-19 or exhibiting symptoms
• The employee must care for a child (under 18 years of age) if the child’s school or place of care has been closed, or if the child’s care provider (someone who receives compensation for providing child care on a regular basis) is unavailable, due to a declared public health emergency related to COVID-19. If the closure of the school or place of care, or the unavailability of the child care provider is foreseeable, the employee must provide the employer with notice of leave as is practicable. (The bill does not define what is “foreseeable” nor does it define what is “practicable.”)

Definition of Family Member under Paid FMLA

The bill expands the definition of “family member” for employees who take paid FMLA leave for a qualifying need under the bill. The following individuals are family members for purposes of this leave:

• A biological, foster, or adoptive parent, a stepparent, a parent-in-law, a parent of a domestic partner, or a legal guardian or other person who stood in loco parentis to an employee when the employee was a child
• A spouse
• A biological, adopted, or foster child, a stepchild, a legal ward, or a child of a person standing in loco parentis who is under 18 years of age
• A son or daughter of any age, a next of kin of the employee (the employee’s closest blood relative), a person for whom the employee is next of kin (their closest blood relative), a grandparent, or a grandchild if that individual is a pregnant woman, a senior citizen, or individual with a disability or with access or functional needs.

Tax Credit

The bill authorizes a refundable tax credit for qualified family medical leave wages that can be applied against the 6.2% Old-Age, Survivors, and Disability Insurance, or (“Social Security”) taxes that the employer/self-employed taxpayer pays on wages up to $137,700. 

• The credit is limited to $200/day with an aggregate $10,000 cap per qualifying employee. 
• Because of the effective date of the provisions, i.e., 15 days after action by the Secretary, the credit is only available for Q2 through Q4 2020. Enactment will take too long for the credit to have any application in Q1. 
• To the extent that a covered employer elects to receive the credit, the credit amount must be taken into the employer’s gross income, which effectively eliminates any potential double benefit because the employer will have deducted the family medical leave wages it paid. 
• The relief for qualified family medical leave wages paid is not available for railroads.
• The qualified family medical leave wages paid are not “wages” for the employer-portion of the Social Security tax. The legislation has no effect on the employee-portion of Social Security tax, nor does it have any effect on the employer or the employee-portion of the Medicare tax.

Compensation During Leave

• The first 14 days of leave taken for a reason provided by the bill may be unpaid. This is designed not to overlap with the days of additional paid sick leave available to employees. (One should expect that a conforming amendment will be made to decrease the number of the days that can be unpaid to 10, rather than 14, so as to conform with the number of paid sick days available under the new law.)
• Employees cannot be required to substitute any accrued vacation, personal, medical, or sick leave for unpaid leave during this 14-day time period. Employees may choose to substitute such leave if they so desire.
• After 14 days of leave, the employer must provide paid leave for each day of leave taken under the expanded FMLA.
• The employer must pay the employee not less than two-thirds of the employee’s regular wage, based on the number of hours the employee would otherwise normally be scheduled to work.
• If an employer cannot determine with certainty the amount of hours an employee would have worked (for example, because the employee’s schedule may vary week to week), the employer should calculate the average number of hours the employee was scheduled to work each day during the previous six months. (If the employee did not work during the previous six months, the employer should use the average hours per day that the employee was reasonably expected to work at the time of hiring.)

Job Protection

The bill requires employers to restore employees who take leave for a covered reason to their job position or to an equivalent position with equivalent employment benefits, pay, and other terms/conditions of employment.

If an employer has fewer than 25 employees, the job-protection requirement of the law will not apply if all of the following circumstances are also in place:

• The position held by the employee when the leave began no longer exists due to economic conditions, or other changes in the employer’s operating conditions, that affect employment and were caused by the public health emergency during the period of leave; and
• The employer made a reasonable effort to restore the employee to an equivalent position with equivalent benefits, pay, and employment terms/conditions; and
• The employer makes reasonable efforts for a period of one year to contact the individual if an equivalent position becomes available.

Multiemployer Collective Bargaining Agreements

For employers who participate in multiemployer collective bargaining agreements (CBAs), the employer can fulfill the bill’s family and medical leave requirements by making contributions to the multiemployer fund or plan based on the amount of paid leave each of its employees is entitled to under the bill. However, the fund or plan must allow employees to use the paid leave for the same reasons stated in the bill.

Role of the Secretary of Labor

The bill does not require the Secretary of Labor to issue regulations to provide general guidance on the bill’s requirements.

However, the bill gives the Secretary of Labor authority to create certain exemptions through regulations.

• The Secretary may exempt small businesses with fewer than 50 employees if the imposition of the bill’s requirements would jeopardize the business’s viability.
• The Secretary may exempt certain healthcare providers and emergency responders from the bill’s requirements.