On March 14, 2020, the U.S. House of Representatives passed legislation in response to the increasing disruption that coronavirus (“COVID-19”) is having on businesses and daily life. The Emergency Families First Coronavirus Response Act (H.R. 6201) includes several measures to address the significant impact of COVID-19 on employment for American workers and their families, including provisions for emergency paid leave and sick time, as well as funds and support for state unemployment compensation programs. To protect against the creation of “permanent” paid leave benefits and limit it to addressing the COVID-19 impact, this bill sunsets at the end of 2020.

The Emergency Family And Medical Leave Act

The bill amends the Family and Medical Leave Act (“FMLA”) to provide employees of employers with fewer than 500 employees with the ability to take up to 12 weeks of job-protected leave on a partially paid basis under the FMLA for qualified reasons related to the COVID-19 public health emergency (“COVID-19 leave”).

Who is eligible for COVID-19 leave?

Any employee who has been employed for at least 30 calendar days by an employer with fewer than 500 employees. There is no minimum hours threshold like the normal FMLA eligibility requirement that an employee have worked at least 1,250 hours over the preceding 12 months.

What are qualified reasons to take COVID-19 leave?

• To comply with a recommendation or order by a public official or a health care provider for an employee who was exposed to or has symptoms of COVID-19.
• To care for a family member that has been determined to be a risk to the community due to exposure to or symptoms of COVID-19.
• To care for a child of an employee due to the closure of a school or place of care, or a childcare provider is unavailable, because of a COVID-19 public health emergency declaration.

How much must an employee be paid for COVID-19 leave?

The first 14 days of COVID-19 leave is unpaid. An employee can choose to use vacation or other paid time off during this period, but employers cannot require employees to do so.

Employers must pay two-thirds of an employee’s regular rate of pay after the first 14 days of COVID-19 leave.

THE EMERGENCY PAID SICK LEAVE ACT

The bill also includes a new law to provide employees of employers with fewer than 500 employees with emergency paid sick time. In addition to the qualified reasons for COVID-19 leave, emergency paid time could be used to:

• Self-quarantine or care for a family member who is quarantined because of a COVID-19 diagnosis.
• Obtain a medical diagnosis or care because the employee or a family member is experiencing COVID-19 symptoms.

Full-time employees receive 80 hours of paid sick time, and part-time employees are given paid sick time equivalent to their schedule or normal work hours in an average two-week period.

How much must an employee be paid for emergency sick time?

An employee that uses emergency paid sick time for himself or herself must be paid for that time based on the greater of the employee’s regular rate or applicable federal, state or local minimum wage. Emergency sick time used to care for a family member (including school closures) would be paid at two-thirds of that amount.

Can employers require existing paid time off be used before emergency sick time?

No. Employers are prohibited from requiring employees to use existing paid time off or sick time before or concurrently with emergency paid sick time. Employers are also barred from changing any existing paid leave policies.

EMERGENCY UNEMPLOYMENT INSURANCE STABILIZATION AND ACCESS ACT

The bill provides for emergency funds for state unemployment compensation programs. States are required to ease eligibility requirements and make other adjustments to increase access to unemployment compensation. Additionally, the U.S. Department of Labor would assist states in establishing, implementing, and improving employer awareness of short-term compensation programs. Subject to certain parameters, short-term compensation programs permit an employer to reduce the number of hours worked by employees in lieu of layoffs and such employees can be eligible for unemployment compensation on a pro rata basis.

WHAT IS NEXT?

The U.S. Senate is expected to take up the bill early this week. While the bill passed the House with bipartisan support and has been endorsed by the Trump administration, it is unknown what action the Senate will take and there are several important issues to watch:

• How will employers pay for this? The bill provides for employers to be reimbursed through payroll tax credits on wages paid to employees that take COVID-19 leave and emergency sick time. The payroll tax credits are subject to limitations and caps that may not fully reimburse companies, depending on the compensation levels of employees using the paid time. There is also concern that small and mid-size companies may not be able to advance the cost of these measures while waiting for reimbursement through tax credits.
• Will small employers be exempt? The U.S. Department of Labor is authorized by the bill to issue regulations to exempt small business with fewer than 50 employees from the paid COVID-19 leave requirements “when the imposition of such requirements would jeopardize the viability of the business as a going concern.” With the COVID-19 pandemic and public health response moving swiftly, smaller employers may need to act before the Labor Department is able to issue such regulation and almost certainly would need to do so before a determination on whether such an exemption applies to their business.
• Can this be administered without manipulation? The U.S. Treasure Department is directed to issue regulations or guidance to prevent misuse of the payroll tax credits and to minimize compliance and record-keeping burdens, among other things. Nonetheless, employers are going to face a significant burden and cost to administer COVID-19 leave requests and employees’ use of emergency sick time. Meanwhile, the payroll tax credit offered to employers for emergency sick time used for an employee is greater than the credit if the same time is used to care for a family member or due to school closure or childcare providing being unavailable.
• What about large employers? The provisions for paid COVID-19 leave and emergency sick time do not apply to large employers with 500 or more employees. It has been reported that, without including large employers, nearly 60 million employees would not be covered by those measures.

Employers should carefully follow this legislation and be prepared to provide paid leave to employees that are impacted by the COVID-19 pandemic.