On March 18, 2020, President Trump signed the Families First Coronavirus Response Act (“FFCRA”) into law. The FFCRA is a sweeping legislative initiative seeking to reduce the economic impact of the COVID-19 outbreak on American workers and their families. In addition to other emergency measures, the new law provides workers with emergency paid leave benefits under two provisions. This new law becomes effective on April 1, 2020, and the requirement to provide paid leave benefits to workers applies to private employers with fewer than 500 employees as well as public employers. This Alert summarizes the two main paid leave provisions of the new law which impact employers: an emergency amendment to the Family Medical Leave Act (“FMLA”) and a new Emergency Paid Sick Leave Act.
Emergency Paid Sick Leave Act
In summary, this new statute, which applies to all public employers and private employers with fewer than 500 employees, requires employers to provide all of their covered employees with up to 80 hours (2 weeks) of paid sick leave for qualifying COVID-19 related absences. This law will take effect on April 1, 2020, and will extend through December 31, 2020. The leave will be available for immediate use and may be used by any employee regardless of how long they have been employed.
The reasons for using emergency paid sick leave are as follows, and fall into two categories:
Employee’s Own Illness
Necessary Care for Others
Importantly, this new Act requires that the employee requesting the leave is not able to telework.
The leave will not carry over nor can it be “banked” for use beyond the expiration date of December 31, 2020.
Employers cannot require employees to use other paid time off (vacation, sick, personal, comp, etc.) prior to the emergency sick leave provided by this Act. This paid leave is in addition to all other forms of paid leave offered by an employer by policy, collective bargaining agreement (“CBA”) or both.
Employers can require employees to comply with “reasonable notice procedures” following the first day that an employee takes leave in order to continue receiving benefits. However, employers may not require that an employee find a replacement for him or her before allowing them to use the leave. Employers are required to post a notice prepared by the Secretary of Labor advising employees of their rights under this new Act.
Employees who use this leave must return to work as soon as the need for the leave resolves (employee tests negative for the virus, school is back in session, etc.).
Retaliation and Discrimination Prohibited
Retaliation and discrimination for using this leave are prohibited and violations will be penalized. The penalties will be considered minimum wage violations under the FLSA and shall include lost wages, liquidated damages and attorney’s fees and costs. If the violation is intentional, a $10,000 fine may be assessed and repeat offenders may be sentenced to up to 6 months in prison (federal prison we presume) after a prior conviction.
Notably, health care or emergency responder employers and employers with fewer than 50 employees can request an exemption from the Secretary of Labor “when the imposition of such requirements would jeopardize the viability of the business as a going concern.”
In summary, this is broad legislation intended to provide pay for COVID-19 related work absences relating to the employee’s illness, the need to care for a family member, government-ordered quarantines/lockdown and COVID-19 related childcare issues.
Expansion of the FMLA
The new law also amends the FMLA to provide up to 12 weeks of job-protected family leave to eligible employees based on a qualifying need due to a public health emergency and child care coverage.
Covered Employers and Eligibility Requirements for Employees
Although the FMLA normally applies to employers with 50 or more employees, this new provision covers all private employers with fewer than 500 employees and all public employers. Additionally, in contrast to the normal minimum hour requirement for employee eligibility under the FMLA, the new provision applies to all full-time, part-time and temporary employees who have been on the job for at least 30 days. The new law allows an employer of a health care provider or emergency responders (police and fire) to exclude such employees from the leave. Additionally, the new law provides that the Secretary of Labor has the authority to issue regulations to exempt employers with fewer than 50 employees “when the imposition of such requirements would jeopardize the viability of the business as a going concern.”
Qualifying Reason for Leave
The new law provides for public health emergency leave for employees who are unable to work because they must care for a child under 18 because their school or place of care closed or because their childcare provider is unavailable due to a public health emergency and the employees cannot work onsite at the employer’s place of business or through telework.
Amount of Pay During Leave
The first 10 days of this leave are unpaid, but the Emergency Paid Sick Leave Act may be used during this first 10 day period as well as any other form of paid time off at the employee’s discretion. The employer cannot force the employee to use emergency paid sick leave or other paid benefit time if they choose not to do so. After the first 10 days of “unpaid” leave (if the employee does not substitute paid leave), employees must be paid 2/3 their regular rate of pay using the same formulas set forth above for emergency paid sick leave. This paid leave is capped at $200 per day and $10,000 in total.
Employers with 25 or more employees must reinstate the employee to the same or a substantially similar position following the leave using existing FMLA rules. Employers with less than 25 employees may not have to return employees to work, but conditions apply and all conditions must be met to deny the reinstatement. The conditions are summarized below:
To be clear, if reinstatement is denied, all of the elements above must be satisfied.
As with the Emergency Paid Sick Leave Act, wages under the FMLA expansion for COVID-19 are not subject to Social Security taxes, and as with the FMLA, discrimination and retaliation are prohibited. Violations of the FMLA as expanded shall be handled the same as violations of the FMLA.
The new statute provides for refundable tax credits to private employers who are required to provide the emergency paid leave described above. The tax credit is equal to 100% of the qualified leave paid by employers. The tax credit is applied against the employer portion of Social Security taxes for each calendar quarter and is refundable to the extent the credit exceeds the total Social Security taxes owed by the employer. Therefore, employers are reimbursed if their costs for qualified paid emergency leave wages exceed the taxes they would owe. Unlike private employers, governmental employers are not entitled to the tax credits.
We recommend that employers immediately evaluate which provisions of the new law will apply to your business and ensure compliance. We also recommend that employers assess their current leave policies and consider revising them consistent with this new Act. We will continue to keep you informed of these rapid developments impacting employers in response to the COVID-19 outbreak. If you have any questions regarding this new Act, please do not hesitate to contact Wiedner & McAuliffe Ltd.’s labor and employment group leaders: J. Jason Coggins (firstname.lastname@example.org) or Darcy L. Proctor (email@example.com).
Be well and stay safe.
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