This article was updated to reflect the final version of the bill signed into law on 3/18/2020.
On March 18, 2020, the Senate passed an emergency relief package to address the extensive effects of the coronavirus (COVID-19). The legislation, titled the Families First Coronavirus Response Act (the “Act”), was quickly signed into law by President Trump. The new legislation includes a series of wide-ranging measures designed to address the impacts of COVID-19 on families and workers – in particular, a new requirement that employers must provide employees with two different types of emergency paid leave. These new leave requirements are discussed below.
Emergency Family and Medical Leave Expansion Act
The Emergency Family and Medical Leave Expansion Act within the new Act drastically expands the FMLA by requiring employers with fewer than 500 employees to provide up to 12 weeks of emergency paid leave for eligible employees that are unable to work (or telework) due to a need for leave to care for a child whose school or place of care has closed due to COVID-19.
An eligible employee is any employee who has been employed for at least 30 days. Notably, that 500-employee cutoff exempts many large companies from having to provide the expanded benefits under the Act. Further, it is important to note that all public agencies and governmental entities that are normally subject to the FMLA are also covered employers under this expansion, regardless of the number of employees they employ.
During this period of leave, employers are required to pay eligible employees at least two-thirds of the employee’s regular rate of pay for the number of hours the employee would otherwise be normally scheduled to work, capped at $200 a day and $10,000 in the aggregate for any individual. The first 10 days of this emergency family leave may be unpaid, but after the first 10 days, employers must continue to pay the employee at the minimum two-thirds rate for the duration of the 12-week leave period. In addition, an employee may choose to substitute accrued vacation leave, personal leave, or other sick leave for any part of the 12-week period of leave (including during the first 10 days).
As with traditional FMLA leave, employers must return the employee to the same or equivalent position upon their return to work; however, there is an exception to this requirement for employers with fewer than 25 employees, subject to certain conditions.
Emergency Paid Sick Leave Act
Separately from the FMLA expansion, the new Act also requires employers to provide emergency paid sick leave related to COVID-19. Under the Emergency Paid Sick Leave Act, private employers with fewer than 500 employees are required to provide all employees with two weeks of paid sick leave if the employee is unable to work (or telework) because:
- The employee is subject to a federal, state, or local quarantine or isolation order related to COVID-19, or the employee is caring for an individual who is subject to such an order.
- The employee has been advised by a health care provider to self-quarantine due to concerns related to COVID-19, or the employee is caring for an individual who has been similarly advised.
- The employee is experiencing symptoms of COVID-19 and seeking a medical diagnosis.
- The employee is caring for a child of such employee if the school or place of care of the child has been closed, or the child care provider of such child 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 in consultation with the Secretary of the Treasury and the Secretary of Labor.
In addition to private employers with fewer than 500 employees, all public agencies that employ at least one employee and all governmental entities are also subject to requirements of the Emergency Paid Sick Leave Act.
Under the Act, full-time employees are entitled to 80 hours of paid sick time, and part-time employees are entitled to paid sick time for the number of hours that such employee works, on average, over a two-week period.
The amount of emergency sick wages an employer is required to pay for any employee depends on the reason for such employee’s sick leave. Employers are required to pay emergency sick time at an employee’s regular rate of pay, capped at $511 per day and $5,110 in the aggregate, if the employee is taking leave because the employee is subject to a quarantine or isolation order, advised by a healthcare provider to self-quarantine due to COVID-19 concerns, or experiencing symptoms of COVID-19 and seeking a medical diagnosis. Employers are required to pay emergency sick time at two-thirds of an employee’s regular rate of pay, capped at $200 per day and $2,000 in the aggregate, if the employee is taking leave to care for another individual who is subject to an isolation or quarantine order or who has been advised by a healthcare provider to quarantine, to care for the employee’s child if the child’s school or place of care has closed, or because the employee is experiencing any other substantially similar condition specified by the Secretary of Health and Human Services.
This emergency paid sick time terminates with the employee’s next scheduled work shift immediately following the end of the need for paid sick time, and it does not carry over to the following year. In addition, employers are not required to pay or reimburse an employee for any emergency paid sick time provided under the Act that has not been used upon the employee’s termination, resignation, retirement, or other separation from employment.
Importantly, health care providers and emergency responders are not guaranteed the emergency paid sick and family leave provided by the Act. Under the Act, an employer may elect to exclude employees who are health care providers and emergency responders from the list of those employees eligible for leave. In addition, the Secretary of Labor has the authority to exclude such employees from the definition of eligible employee, and to exempt small businesses with fewer than 50 employees if the imposition of the Act’s paid leave requirements would jeopardize the viability of the business as a going concern.
In terms of how companies will pay for the qualified family and sick leave wages described above, the Act allows employers a credit against payroll taxes equal to 100% of the qualified leave wages paid by such employer. Under the Act, the Secretary of Treasury is authorized to issue regulations and additional guidance concerning how exactly the tax credits will operate. According to recent statements made by the Secretary of Treasury, the U.S. Treasury will use its regulatory authority to advance funds to employers in order to protect businesses concerned about cash flow, and employers will be able to use cash deposited with the IRS to pay sick leave wages.
Now that the Families First Coronavirus Response Act has been signed into law, the emergency paid leave laws discussed above will go into effect within the next 15 days and are applicable through December 31, 2020. An employer’s failure to comply with these emergency paid leave obligations could result in significant liability under the FMLA and the Fair Labor Standards Act (FLSA). In the coming weeks, employers should pay close attention to all regulations and guidance issued by the Secretary of Labor and the Secretary of Treasury regarding these paid leave provisions to avoid any potential liability.
For assistance navigating these new laws, or for more information about how these new laws might affect your business, please reach out to the MMM Employment Team.