The Families First Coronavirus Response Act, which became law yesterday, will require most employers with fewer than 500 employees to provide paid leave, through December 31, 2020, to workers who have had to take time off because of COVID-19. (See additional insight here.)

Which employees are entitled to leave? Covered employers are required to provide two weeks of paid sick leave to any full-time or part-time employee who has been employed for at least 30 days and who needs to take leave for any of the following reasons:

• To comply with a government quarantine or isolation order;
• To self-quarantine on advice of a health care provider;
• To obtain a medical diagnosis after experiencing symptoms related to COVID-19; or
• To care for an individual who is subject to any of the preceding circumstances.

Full-time employees taking any of these leaves are entitled to up to 80 hours of paid leave at their regular rate of pay. Part-time employees taking these leaves are entitled to sick leave with pay measured by the number of hours they work, on average, over a two-week period. However, paid sick leave is capped at $511 per day for these employees.

Employers also must provide up to twelve weeks of paid leave to any employee who is unable to work because they have to take care of a child whose school or place of care has closed as a result of COVID-19. Employees on that leave must be paid at a rate equal to two-thirds their usual rate of pay; however, that amount is capped at a maximum of $200 per day.

Who is going to pay for this? Initially, employers will have to front the cost of this mandate. The good news, however, is that the government will reimburse employers in the form of a payroll tax credit. To offset the increase in business costs, the law provides a quarterly tax credit to employers. Employers are eligible for a refundable tax credit of 100% of qualified sick leave wages paid and family leave wages paid against their employer-side tax liability. The amount of qualified family leave wages taken into account for each employee is capped at $200 per day and $10,000 for all calendar quarters. The Act does not impose an aggregate limit on the amount of paid sick leave wages taken into account.

What happens if an employer already provides paid leave to its employees? Paid sick leave under this law supplements any paid leave to which employees are entitled under their employers’ existing policies. Employers may not require employees to exhaust other forms of paid leave available to them before using the paid leave provided under this law. However, employees who are receiving two-thirds pay because they are taking care of their children because their schools have closed may elect to substitute accrued vacation leave, personal leave, or medical or sick leave during the first ten days of the leave.

Are any employers with fewer than 500 employees exempt from these new requirements? The law allows the Secretary of Labor to exempt employers with fewer than 50 employees when compliance with the Act would jeopardize the viability of such businesses as a going concern. The Secretary of Labor may also exclude certain health care providers and emergency responders from the employees who are eligible for leave under the Act. We expect to understand more about these exemptions, and how they can be obtained, in the coming weeks.

Does the employer have to provide paid leave to employees whose jobs are eliminated? Many employers have already laid off employees in the midst of the economic downturn, and many more will be contemplating layoffs in the weeks to come. An employer still may make legitimate business decisions that it would have made with respect to job eliminations – i.e., the same decisions that it would have made with respect to an employee’s position regardless of whether he or she was on leave. However, employers should proceed carefully and must be comfortable that their decisions were not made because an employee took a protected leave. Further, employers may wish to delay certain layoff decisions with respect to employees taking advantage of the new leave, since the federal government will ultimately reimburse employers for the costs of that leave.

Does the law require anything else besides paid leave? With respect to those employees who are entitled to extended FMLA leave – e.g., parents who cannot work because they are caring for a child whose school has closed – employers will have a duty to restore the employee to their former position, or make reasonable efforts to find an equivalent position if the former position no longer exists, much like they would for most employees returning from FMLA leave, unless the employer has fewer than 25 employees. Employers will also be required to post a model notice regarding the new paid sick leave law that the Secretary of Labor will make available within the next seven days.

When does the law take effect? The Families First Coronavirus Response Act’s leave provisions take effect 15 days after the Act’s enactment. Since President Trump signed the Act into law on March 18, the leave provisions take effect on April 2 and remain in effect until December 31, 2020.