What Employers Need to Know: The Families First Coronavirus Response Act
The Families First Coronavirus Response Act (the “Act”) passed the Senate and was signed by President Trump yesterday. The new law will take effect no later than 15 days after enactment. The Act automatically expires on December 31, 2020.
The law contains two parts. One is known as the Emergency Family and Medical Leave Expansion Act (“EFMLEA”). It allows employees to use part or all of the 12 weeks of Family and Medical Leave Act (“FMLA”) leave for coronavirus-related illness or care. The other part is known as the Emergency Paid Sick Leave Act (“EPSLA”). It requires employers to provide 80 hours of paid sick time to full time employees (and less to part time employees) if the employee is unable to work, or telework, due to reasons related to coronavirus related illness or care. Please note that this Act only provides benefits through December 31, 2020.
The Act applies to employers with one or more, but fewer than 500 employees, during each of 20 or more calendar workweeks in the current or preceding calendar year. The Act gives the Department of Labor the power to exempt employers with less than 50 employees by regulation if there is good cause to find the Act would “jeopardize the viability of their business as a going concern;” we should know whether employers with 50 or less employees will be subject to this Act within 15 days of the effective date of the Act.
1. The Emergency Family and Medical Leave Expansion Act
The EFMLEA requires employers to offer FMLA leave (i.e., up to 12 weeks off work followed by job restoration) and requires the provision of certain paid sick time for qualifying employees.
a. How does EFMLEA leave work?
The EFMLEA provides leave and paid sick time to employees whose tenure is 30 days or longer and who:
- Cannot work or telework; and
- Have a child under 18 years of age whose school or place of care has been closed or the child provider of such is unavailable due to the COVID-19 public health emergency.
Employees are required to provide notice of the need for such leave to the extent such notice is foreseeable and practical. Like under the FMLA, most employers are required to return the employee to their prior position after leave. However, the EFMLEA does except small employers from this requirement, which is defined as those with fewer than 25 employees as long as the employer can prove that:
- The employee’s position does not exist at the time of the employee’s return;
- The position’s nonexistence is due to economic conditions or other changes in operating conditions of the employer caused by the COVID-19 issue during leave;
- The employer made reasonable attempts to restore the employee to an equivalent position
- And, if the efforts to attempt job restoration fail, the employer contacted the employee if an equivalent position became available during the one year period beginning on the earlier of (a) the date on which the qualifying need related to COVID-19 concluded or (b) the date that is 12 weeks after the date the employee’s leave concluded.
b. What pay is required by the EFMLEA?
While standard FMLA leave is entirely unpaid, EFMLEA leave is only unpaid during the first ten days. During this ten-day period, employees have the option (but may not be required) to substitute their accrued paid time off or EPSLA time.
After the ten-day period, the employer must provide paid time off for each day of EFMLEA leave. The pay is calculated at two-thirds the employee’s regular rate of pay for the number of hours the employee would normally be scheduled to work. The pay, however, is capped at $200 per day, or $10,000 in the aggregate.
2. The Emergency Paid Sick Leave Act
The EPSLA provides 80 hours of paid time off under the EPSLA for immediate use by any employee, regardless of their tenure. An employee may use paid sick leave under the EPSLA before using other accrued PTO.
a. How is paid sick leave under the EPSLA structured?
The EPSLA provides 80 hours of paid sick leave for full-time employees (or pro-rata for part-time employees, based on a two week average) for coronavirus-related illness and self-quarantine. More specifically, employers must provide paid sick leave under EPSLA if the employee is unable to work or telework because the employee:
- Is subject to federal, state or local quarantine or isolation order;
- Has been advised by a healthcare provider to self-quarantine due to concerns relating to COVID-19;
- Is experiencing symptoms of COVID-19 and seeking a medical diagnosis;
- Is caring for an individual who is described in bullet points one or two above;
- Is caring for a minor child whose school or place of care has been closed due to COVID-19 or whose childcare provider is unavailable due to COVID-19; or
- Is experiencing any other substantially similar condition related to COVID-19.
b. What is the rate of pay under the EPSLA?
If the employee is taking leave for their own care (as noted in first three bullet points above), then the paid sick time is compensated at the employee’s regular rate (but not less than the applicable federal, state, or local minimum wage) although the total pay capped at $511 per day, or $5,110 in the aggregate. An employee’s regular rate is determined by using the FLSA’s definition.
If the employee is taking leave to care for someone else or for a related condition specified by the Secretary of Health and Human Services (the last three bullet points above), then the paid sick time is paid at two-thirds the employee’s regular rate, which is capped at $200 per day, or $2,000 in the aggregate.
3. Tax credits for paid sick and paid family and medical leave
To help employers with the costs of the EFMLEA and the EPSLA, the Act includes certain tax credit provisions equal to 100% of the qualifying wages paid under the two programs, subject to the noted applicable caps above. The credit is available quarterly and is taken against payroll taxes owed. The credit is refundable if the credit exceeds the amount the employer owes in payroll tax. Notably, wages paid under the Act are exempt from the employer portion of the Social Security tax and an additional payroll tax credit is allowed for the amount of Medicare tax paid on those wages. Please consult your tax professional for further details regarding these tax credits.
4. Implementing Regulations
The Act also provides that the Department of Labor must publish implementing regulations within 15 days of the date this Act becomes effective to help employer navigate this new law. We are continuing to monitor the legislation and implementing regulations and will continue to provide updates as soon as they become available.
This article is for informational purposes only and should not be considered legal advice. Please consult with your legal counsel regarding any specific situation, particularly given that this is a new statute without implementing regulations at this time.
Written by Christie Newkirk and Shelby Taylor, Labor & Employment with Diamond McCarthy, LLP