[co-author: Tanya Warnke]
On March 18, 2020, the U.S. Senate approved H.R. 6201, the House of Representative’s Families First Coronavirus Response Act (“Families First Act”), an economic stimulus plan to help alleviate the social, economic, and societal impacts of the COVID-19 crisis. The legislation includes a variety of public health measures, as well as several provisions that significantly impact private employers. Ultimately, the legislation provides temporary benefits to mitigate financial fallout and help people and businesses reduce the spread of COVID-19.
The Families First Act includes several provisions that directly impact employers. This alert addresses the following key employment provisions: Emergency Family and Medical Leave Expansion Act; Emergency Paid Sick Leave Act; and Emergency Unemployment Insurance Stabilization and Access Act.
It is important to note that while this bill has passed and the President has signed it, comments from members of the Senate and House suggest that employers are likely to see amendments to this law in the next phase of COVID-19 relief legislation.
The Emergency Family and Medical Leave Expansion Act significantly expands the Family and Medical Leave Act (FMLA) and provides additional benefits to those affected by the COVID-19 crisis. These benefits expand who will be eligible for leave, expand the reasons for which leave will be available, and provide pay to employees at a reduced level after 10 days of leave.
The FMLA amendments are temporary only, going into effect 15 days after enactment and remaining in place until the end of 2020. Nonetheless, many employers who have never dealt with the FMLA will now be required to do so. The more significant provisions of the new law are addressed below.
Who is eligible? Any individual employed by the employer for at least 30 calendar days before leave is to begin will be eligible. The current FMLA employee eligibility requirements – that the employee must be employed for one year, have worked for 1250 hours, and have worked in a location where there are 50 employees within 75 miles – will not apply.
Amount and reasons for leave. The legislation requires covered employers (those with fewer than 500 employees) to provide 12 weeks of job-protected leave when an employee is unable to work (or telework) due to a need to care for a child under 18 years of age when the child’s school or place of care has been closed, or the child care provider is unavailable, due to a “public health emergency” (i.e. “an emergency with respect to COVID-19”).
Paid leave. Under this legislation, the first 10 days of leave may be unpaid. During that time, an employee may elect to substitute any accrued vacation, personal or sick leave in order to receive pay, but the employer may not require this substitution. After the completion of the initial 10 day period, the employee must be paid an amount not less than two-thirds of an employee’s regular rate of pay for the schedule of hours the employee would normally work. Employees who work a part-time or irregular schedule are entitled to be paid based on the average number of hours the employee worked for the 6 months prior to taking leave. Employees who have worked for less than 6 months prior to leave are entitled to the average number of hours the employee would normally be scheduled to work. Paid leave may not exceed $200 per day and $10,000 in total.
Job Protections. The new law changes the job restoration protections of the FMLA for small employers. Employers do not need to restore an employee to the same or similar position if the employer employs 25 or fewer employees and the following conditions are met:
Small business and other exemptions. The new law gives the Secretary of Labor the authority to issue regulations to exempt some small businesses with fewer than 50 employees when it would jeopardize the viability of the business as a going concern, and to exclude certain health care providers and emergency responders from the definition of eligible employees.
Are employers with more than 500 employees covered by the law? Under the Emergency Family and Medical Leave Expansion Act, employers with more than 500 employees are not covered by the FMLA amendments. These employers still have obligations, however, including complying with all state and local paid sick leave or paid family and medical leave laws as well as all sick, paid time off, and paid leave company policies.
In conjunction with the requirements set forth in the expanded FMLA, the Emergency Paid Sick Leave Act requires employers with fewer than 500 employees to provide “covered employees” with paid sick leave, to be calculated based on their regular rate. Some of the key provisions are addressed below.
Reasons for Paid Sick Leave. A “covered employer” must provide paid sick leave to an employee who is unable to work (or telework) because:
Coverage for full-time and part-time employees; notice required. This new law provides paid leave to full-time and part-time employees, as well as employees who work under a multiemployer collective agreement. Notably, an employer may elect to exclude an employee who is a health care provider or an emergency responder.
In calculating paid leave, full-time employees would be entitled to be paid for up to 80 hours of work while part-time employees would be entitled to be paid up to the average number of hours they typically work over a two-week period. Employers must post a notice advising all employees of their rights under this law.
Eligibility; Benefits available in addition to existing paid sick leave policies. Under the Emergency Paid Sick Leave Act, all covered employees are immediately eligible for paid sick leave, regardless of how long they have been employed by the employer. This paid sick leave is available in addition to any existing paid sick leave policies or collective bargaining agreements. Therefore, an employer may not change its current paid sick leave policy to avoid additional obligations under the Emergency Paid Sick Leave Act. Paid sick leave under this legislation does not carry over to the following year and this law does not preempt existing state or local paid sick leave laws.
The Emergency Paid Sick Leave Act takes effect 15 days after enactment and will remain in place until the end of 2020.
The COVID-19 crisis has caused a severe disruption of business operations around the world and in the United States. In anticipation of a significant increase in the number of unemployment insurance claims, the Emergency Unemployment Insurance Stabilization and Access Act appropriates $1 billion for emergency grants in 2020 to states to be used for processing claims and paying unemployment benefits under certain conditions.
Half of the resources will be allocated to provide immediate funding to all states for administrative costs provided the states meet basic requirements, such as:
The remaining funds are reserved for emergency grants to states which experience an increase in unemployment compensation claims of at least 10% in comparison to the same quarter in the prior calendar year. Similar to the first half of the funds, states are eligible to receive the grant assistance if they meet additional requirements, including:
Tax Credits for Family and Medical Leave and Emergency Paid Sick Leave
Private employers with fewer than 500 employees and self-employed individuals are eligible for payroll tax credits to help cover the cost of the paid emergency family and medical leave and emergency sick leave. Specifically, employers are entitled to a tax credit equal to 100% of the qualified paid sick leave wages and the paid family and medical leave wages for each calendar quarter. Similarly, self-employed individuals caring for a family member or child are entitled to a tax credit equal to 67% and, in some cases, 100%, of a qualified sick leave equivalent amount and 100% of a qualified family leave equivalent amount. Notably, the amount of qualified family leave wages is capped for employers and self-employed individuals.
As U.S. legislators continue to consider further relief measures in response to the COVID-19 crisis, employers will need to keep a close eye on possible amendments to this law while preparing for significant disruption to their businesses and increased employee absences. At the same time, many states are passing their own relief measures. These matters are difficult and the laws are rapidly changing.