On March 18, the President signed the Families First Coronavirus Response Act. Among other emergency aid initiatives, the Act mandates paid sick leave as well as amends the Family and Medical Leave Act (FMLA) to provide job-protected leave for employees impacted by COVID-19. Outlined below are key provisions.
Paid Sick Leave
What are the reasons an employee can use paid sick leave under the new law?
An employee is eligible for paid sick leave when the employee cannot work (including the inability to work remotely) because the employee:
1. is subject to a federal, state, or local quarantine or isolation order related to COVID-19;
2. has been advised by a health care provider to self-quarantine due to concerns related to COVID-19;
3. has symptoms of COVID-19 and is seeking a medical diagnosis;
4. is caring for an individual who is subject to an order as described in (1) above or has been advised as described in (2) above;
5. is caring for their child if the child’s school or other place of care has been closed, or the child care provider of such child is unavailable, due to COVID-19 precautions (for the purposes of the new law, a “child” is a son or daughter as defined by the FMLA); or
6. 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.
Does this apply to your business?
Yes, if you have under 500 employees. However, employers of health care providers and emergency responders, as well as employers with fewer than 50 employees, may request an exemption from the Department of Labor (DOL) for the paid sick leave portion of this law.
How much paid sick leave are you obligated to provide for the purposes listed above?
- For Full-time Employees: 80 hours at the greater of the employee’s regular rate or the minimum wage (or 2/3 of the applicable rate to care for qualifying reasons 4, 5, or 6 above).
- For Part-Time Employees: The average number of hours the employee works over a two-week period at the greater of the employee’s regular rate or the minimum wage (or 2/3 of the applicable rate to care for qualifying reasons 4, 5, or 6 above).
How is paid sick leave compensated under this law?
- Each employee must be paid for sick leave at the greater of: (1) the employee’s regular rate; or (2) the minimum wage (or 2/3 of the applicable rate when leave is taken for qualifying reasons 4, 5, or 6 above), up to a cap of:
- $511 per day, up to $5,110 total per employee when sick leave is used for their own use (reasons 1, 2, or 3 above), and o $200 per day, up to $2,000 total when sick leave is used to care for others (reasons 4, 5, or 6 above)
- Employers will be reimbursed for paid leave through tax credits, including credits for health insurance contributions made for affected employees. Individuals who are self-employed, but who would have been eligible for sick leave if employed by a covered employer, are also eligible for a tax credit. See “Tax Credits,” below.
Can you require employees to use existing Paid Time Off (PTO)?
No, an employer may not require its employees to use other available PTO before they use this paid sick leave. The new law’s provisions are in addition to the employer’s existing PTO policy. Presumably, an employee can ask for PTO in addition to this paid sick leave or may choose to use it after this paid sick leave period runs out.
When does the new law take effect?
The law will become effective on April 2, 2020, at which point leave will be available to employees immediately regardless of how long the employee has been employed.
How long will the new law be in effect?
The law will be in effect until December 31, 2020. As it is currently written, unused benefits do NOT carry over and are not paid out unless used.
Are there notice requirements?
Employees must follow “reasonable notice procedures” after the first workday of leave to continue receiving benefits.
Employers must post a notice, to be prepared by the Secretary of Labor, regarding employees’ rights to paid sick leave under this law.
Emergency Family and Medical Leave Expansion (modifies the FMLA)
Does this part of the law apply to your business?
Yes, if you have 1-499 employees. Notably, employers who are otherwise not covered by the FMLA due to size will now find themselves needing to pay attention for the purposes of this law.
Which employees are eligible?
All employees who have been employed for 30 days or more are eligible.
What do eligible employees receive?
Eligible employees will receive up to 12 weeks of FMLA leave if they are caring for a child whose school or other place of care has closed, or whose childcare provider is unavailable due to a public health emergency related to COVID-19.
What portion of the leave is paid?
Days 1-10 can be UNPAID, but an employee can substitute accrued sick, vacation and PTO.
How much are you obligated to pay?
- Full-time employees (we believe this refers to employees who work 40 hours per week, including meal and break periods): You must pay at least two-thirds of the employee’s “regular rate of pay” for the number of hours the employee would otherwise be normally scheduled.
- Part-Time Employees (we believe this refers to employees who are scheduled to work under 40 hours per week including meal and break periods): You must pay these employees based on the average number of hours they worked (excluding meal and break periods) over the last six months before the leave began (or their projected average hours if employed less than six months). Employees who have worked less than six months prior to leave are entitled to their reasonable expectation at hiring of the average number of hours the employee would normally be scheduled to work.
- NOTE: The amount paid cannot fall below the federal or state minimum wage, whichever is higher. In New York City, you must pay at least $1,125 per week to exempt employees and $15.00 per hour for non-exempt employees. On Long Island and in Westchester, the amount is $975 per week for exempt employees, $13 per hour for those who are non-exempt.
• Limits on Paid Leave: Paid leave is capped at $200 per day and $10,000 in the aggregate.
What are your obligations regarding job protection?
- Employers with 25 or more employees have the same obligations as they do under the FMLA.
- Employers with fewer than 25 employees: Job protection may not apply if the employee’s position no longer exists. The employer, however, must still make a “reasonable attempt” to return the employee to a comparable position for up to a year after the leave began.
It now appears you can take a 100% tax credit against your portion of the social security tax. Stay tuned and confirm this with your tax advisor.