On March 18, 2020, the United States Senate passed the revised “Families First Coronavirus Response Act,” (“FFCRA”) that had been passed by the United States House earlier this week, which President Trump has now signed. The FFCRA becomes effective within 15 days (April 2, 2020), so employers should immediately begin preparations to ensure compliance with the law.
Importantly, the new law does not require that employers provide paid leave for employees who are off work just because of an office closure. Additional eligibility requirements must be met. Notable provisions of the FFCRA for employers include the following:
- Emergency Paid Sick Leave (“EPSL”). Private employers with fewer than 500 employees and all public employers must provide up to 80 hours of paid leave to all full-time employees who need to miss work and are unable to telework because of illness or quarantine, or to care for family members who are ill, quarantined or are children under the age of 18 without school or child care because of the COVID-19 pandemic. Part-time employees are also entitled to two weeks pro rata paid leave. This mandatory paid leave is in addition to any other paid leave already provided to such employees and is capped at a maximum of $511/day where the employee him or herself is ill or quarantined and $200/day if the leave is necessary to care for a family member.
- Expanded Family Medical Leave (“FMLA”). Covered employers with fewer than 500 employees will be required to providepaid FMLA leave to employees who have been employed for at least 30 days and are unable to work or telework because they are needed to care for a child under the age of 18 due to school closures or childcare unavailability resulting from the COVID-19 pandemic. The first 10 days of this FMLA may be unpaid but thereafter, the leave must be paid at a rate of two-thirds of the employee’s regular rate of pay, capped at $200 per day or $10,000 total per employee.
- Tax Credits. Employers who are required to provide their employees with EPSL and/or paid FMLA may apply for and receive certain tax credits for those payments. Employers may receive a tax credit up to a maximum of $511/day in the case of payment to an employee for his or her own illness or $200/day if the employee is receiving leave to care for a family member. Employers may receive a tax credit of up to $200/day or $10,000 in the aggregate for paid FMLA provided to employees.
- Limited Exceptions. The final bill contains language providing authority to the Secretary of Labor to exempt employers with fewer than 50 employees from the EPSL and expanded FMLA requirements, if complying would jeopardize the business as a going concern, and to exclude certain healthcare providers and emergency responders from receiving such benefits.
Further details of these provisions are described below:
Emergency Paid Sick Leave
The EPSL Act requires all private employers with up to 500 employees and all public employers to provide up to 80 hours of paid sick leave in addition to any leave already provided by the employer to any employees who must be absent from work and is unable to telework (work remotely) 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 subparagraph (1) or has been advised as described in paragraph (2);
- 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; or
- 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.
Employers of health care providers and emergency responders may elect to exclude such employees from receipt of EPSL. Notably, all employees are eligible for EPSL immediately upon hire, and employers may not require employees to use other paid leave before using EPSL.
EPSL is paid at the employee’s regular rate of pay if the employee is absent for his or her own illness (No. 1, 2, or 3 above), but is capped at $511/day or $5,110 total. EPSL is paid at two-thirds of the employee’s regular rate of pay if the employee is absent to care for a family member (No. 4 or 5 above), capped at $200/day or $2,000 total.
Under the final law, employers are still prohibited from requiring employees to find a replacement employee to cover their shift during a time when the employee is using EPSLA. EPSL need not be paid out on termination of employment and cannot be used intermittently. The provisions of the EPSL 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.
Employers will be required to post a Notice, advising employees of their rights under the EPSL, which the Department of Labor is to have prepared within 7 days of the enactment of the FFCRA.
The requirements of the EPSL Act 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 expands the FMLA, albeit on a temporary basis, to provide paid leave to those employees who are 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 related to COVID-19.
To be eligible for this FMLA, employees need only to have been employed for 30 days, rather than the usual 12 months.
The first 10 days of this FMLA may be unpaid, though the employee may elect to substitute paid time off, or EPSL 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 10 days of leave, the remaining 10 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, capped at $200/day or $10,000 total per employee.
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.
These requirements will also 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.
Employers should review their current policies and prepare to comply with the terms of this new law, which we can expect to be in effect in little more than 2 weeks. If you have questions about the law or its applicability to your specific situation, please contact your counsel to discuss.
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. The author has provided the links referenced above for information purposes only and by doing so, does not adopt or incorporate the contents. 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.
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