On March 18, 2020, President Trump signed into law the Families First Coronavirus Response Act (“Act”). The Act is intended to address some of the work-related impacts of the coronavirus outbreak. While the Act covers paid sick leave, free coronavirus testing, expanding food assistance and unemployment benefits, as well as providing additional protections for health care workers, this alert will only address the paid leave provisions of the Act.
EMERGENCY PAID LEAVE
The first paid leave provision called the Emergency Family and Medical Leave Expansion Act (“Emergency Leave Act”) expands The Family and Medical Leave Act (“FMLA”). This expansion allows employees who are unable to work (or telework) to take 12 weeks of paid job-protected leave to be used to care for an employee’s child if the child’s school or place of care has been closed or the child-care provider is unavailable due to a coronavirus.
Employers with 500 or fewer employees are required to comply with this Emergency Leave Act. Moreover, unlike FMLA which requires the employees to be employed for 12 months to be eligible for FMLA leave, employees who have been employed for thirty (30) days are eligible for this emergency paid leave.
Small businesses with less than 50 employees may be exempt if the imposition would jeopardize the viability of the business as a going concern. Additionally, certain health care providers and emergency responders may be exempt.
According to the Emergency Leave Act, the first 14 days of leave may be unpaid. However, employees can use accrued vacation, personal, or sick leave during the first 14 days. Unlike FMLA, employers cannot require employees to use accrued vacation, personal, or sick leave. After 14 days, employers must provide paid leave. The paid leave must be no less than two-thirds of the employee’s regular rate of pay (as determined under the Fair Labor Standards Act (the “FLSA”)) based on the number of hours the employee would otherwise be normally scheduled to work. However, the paid leave cannot exceed $200 per day and $10,000 in the aggregate.
This Act takes effect not later than 15 days after the date of enactment and expires on December 31, 2020
PAID SICK LEAVE
In addition to the above paid leave, employers with 500 or fewer employees also have to provide paid sick leave for employees. Employers must provide 2 weeks (80 hours) of paid sick leave for full time employees and paid sick leave in the amount of the average number of hours worked in a 2 week period for part time employees. All employees are eligible for this paid sick leave, regardless of how long the employee has been employed by an employer, with the exception that certain health care providers and emergency responders may be exempt.
Under the Emergency Paid Sick Leave Act, employers must provide this paid sick time to employees who are unable to work (or telework) 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 quarantined or under self-quarantine.
- The employee is caring for his or her child due to the school being closed, or the child care provider is unavailable, due to COVID–19 precautions.
- The employee is experiencing any other substantially similar condition specified by the Secretary of Health and Human Services.
This sick leave must be paid at two-thirds the employee’s regular rate (as determined under the FLSA). Total paid leave is capped at $511 per day and $5,110 in the aggregate (per employee) for leave due to items 1, 2 and 3 above. For items 4, 5 and 6 above, total paid leave is capped at $200 per day and $2,000 in the aggregate (per employee).
An employer may not require an employee to use other paid leave provided by the employer to the employee before the employee uses the paid sick time. Employers can require employees to follow reasonable notice procedures in order to continue receiving such paid sick time.
The Emergency Paid Sick Leave Act requires employers to post a notice on its premises of the requirements set forth in the Act. The Secretary of Labor will make publicly available a model of a notice that meets this requirement within 7 days of enactment of the Act.
A violation of the Act will be considered a failure to pay minimum wages pursuant to the FLSA, and FLSA penalties will apply. Further, employers are prohibited from discharging, disciplining, or in any other manner discriminating against any employee who takes leave in accordance with the Act.
This Act takes effect not later than 15 days after the date of enactment and expires on December 31, 2020.
Tax Credits for Paid Sick and Paid Family and Medical Leave
To offset some or all of the cost of providing paid leave, employers who have to provide emergency paid leave under the Act are eligible to receive a refundable tax credit. These tax credits are allowed against the employer portion of Social Security taxes. These tax credits are temporary, as they are only available for wages paid for the period beginning on the date selected by the Secretary of the Treasury (which will be within 15 days of March 18, 2020) and ending on December 31, 2020. In addition, the Act clarifies that the additional wages paid to provide these benefits do not increase the employer’s social security or Medicare tax obligations.