The coronavirus pandemic has presented challenges for employers trying to remain responsive to the crisis but also struggling to absorb the burden it has imposed on their businesses. With much anxiety, employers have also been anticipating a new law, H.R. 6201, that would expand family and medical leave requirements to cover COVID-19. As of yesterday, Congress passed and President Trump signed the final version of H.R. 6201, titled the Families-First Coronavirus Response Act.
The Act will take effect on April 2, 2020 and will remain effective until December 31, 2020. All emergency provisions within the Act are designed to be temporary unless that period is expanded by subsequent regulations. As of today, the Act applies to all private-sector employers with fewer than 500 employees. However, certain health care providers and emergency responders may be excluded from the definition of eligible employee, and businesses with fewer than 50 employees may be exempt from the Act’s paid leave requirements “when the imposition of such requirements would jeopardize the viability of the business as a going concern.”
The new law, among other things, imposes new emergency paid sick leave requirements, expands the Family and Medical Leave Act (FMLA) to include COVID-19 related absences, and provides tax credits to help employers with the costs of providing these benefits.
Emergency Paid Sick Leave
All employers with fewer than 500 employees must provide two weeks of paid sick leave to any eligible employee who is unable to work, including telework, if the employee:
- is subject to a federal, state, or local quarantine or isolation in response to COVID-19; or
- has been advised by a health care provider to self-quarantine due to concerns related to COVID-19; or
- is experiencing symptoms associated with COVID-19 and is seeking a medical diagnosis; or
- is caring for an individual (not necessarily limited to family members based on how the Act is written now but this may be subject to revision) who is subject to a federal, state, or local quarantine or isolation due to COVID-19; or
- is caring for his/her child whose school has been closed or whose place of care is unavailable due to COVID-19 precautions; or
- is experiencing any other “substantially similar condition” specified by the Secretary of Health and Human Services in consultation with the Secretaries of Treasury and Labor (precise meaning to be clarified by the Secretary of Health and Human Services).
The Secretary of Labor is required to issue guidelines to assist employers in calculating leave benefits by April 2, 2020. Employers must also post a notice that advises employees of their rights under the Act. The Secretary of Labor is required to create this notice by March 25, 2020.
Family and Medical Leave Act Expansion
All employers with fewer than 500 employees must permit current employees who have been employed with them for at least 30 days to take FMLA-leave if the child of the employee has had his/her school or place of care closed due to COVID-19. If an employee is no longer able to work (including telework), then the emergency expansion of FMLA benefits means up to 12 weeks of leave for qualifying employees. This leave may be administered as follows:
The initial 10 days of leave are unpaid, but the employee may elect to use accrued paid sick leave and/or accrued vacation during this otherwise unpaid period.
After the initial 10-day period, the employer must provide the employee with two-thirds of his/her normal wages for the number of hours he/she would regularly be scheduled to work, up to a maximum of $200 per day and $10,000 in total.
All eligible employees may apply for expanded FMLA leave beginning on April 2, 2020.
Tax Credits for Paid Leaves
The new Act provides for a number of tax credits to ease the financial burdens imposed on employers by this new expansive leave requirements. The credits created by the Act for employers include:
A refundable tax credit equal to 100% of paid family or medical leave wages paid by the small business each quarter, which employers may use against social security taxes and may apply to amounts paid to employees who are sick or quarantined;
A smaller credit for amounts paid to employees caring for a family member or for a child whose school or place of care has been closed.
As an emergency measure, the Act will need to be clarified and expanded in the coming days via subsequent regulations and directions from the Secretary Labor. California may also have legislation on the way, but when and in what form remains to be determined. In the meantime, employers should be prepared to provide leave in accordance with the new Families First Coronavirus Response Act beginning on April 2, 2020.
We will be sure to post the required notice here as soon as it becomes available.
