MARCH 19, 2020
On March 18, 2020, the Families First Coronavirus Response Act was enacted into law. And went into effect on April 1, 2020. It is important to note that most employers will be impacted by the Emergency Sick Leave Act and Emergency FMLA provisions put into place by the federal government in response to the COVID-19 pandemic.
I. Emergency Paid Sick Leave Act
The law applies to all private employers with 500 employers or less and all public entities. In addition to any existing sick leave provided by an employer, the new law requires employers to offer emergency paid sick time (EPST) for up to 10 days, provided that the employee meets one of the following conditions:
1. The employee is subject to a Federal, State, or local quarantine or isolation order related to COVID-19.
2. The employee has been advised by a health care provider to self-quarantine due to concerns related to COVID-19.
3. The employee is experiencing symptoms of COVID-19 and seeking a medical diagnosis.
4. The employee is caring for an individual who is subject to an order as described in subparagraph (1) or has been advised as described in paragraph (2).
5. The employee is caring for a son or daughter of such employee if the school or place of care of the son or daughter has been closed, or the childcare provider of such son or daughter is unavailable, due to COVID-19 precautions.
6. 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.
Full time employees are entitled to 80 hours of EPST. Part-time employees must receive EPST an amount equal to the number of hours the employee works on average over a two-week period.
If the employee meets the criteria of sections 1-3 above, EPST must be paid at the employee’s regular rate (unless Federal/State/Local Minimum wage rates are higher) up to a maximum of $511 per day (and $5,110 in the aggregate).
If the employee meets the criteria of sections 4-6 above, EPST must be paid at 2/3 of their regular rate, to a maximum of $200 per day (and $2,000 in the aggregate).
Note: It is important to note that an employee who meets the criteria under Section 4 above (An employee who is caring for an individual who is subject to Section 1 and 2), will likely also be subject to those same quarantine / isolation provisions and will therefore meet the criteria under Section 1 or 2 to be paid at the higher rate.
- There is no minimum employment period for the employee to accrue EPST and is available for immediate use, if an employee meets one of the qualifying conditions above.
- EPST does not carry over from one calendar year to the next.
- Employers are not required to pay out unused EPST at an employee’s termination.
- After the first workday taking EPST, employers may require employees to use reasonable notice procedures to continue using EPST.
- Employers are prohibited from discharging, disciplining, or otherwise discriminating against anyone who takes EPST, or takes action to enforce rights under the Act or who cooperates with any proceeding to enforce such rights.
- Employers must conspicuously post a notice of employee rights in a form to be prepared by Dept. of Labor and Dept. of Labor must make a model notice available by next week.
- The Act does not diminish employees’ rights under any otherwise applicable federal, state, or local law; collective bargaining agreement; or existing employer policy.
- The Act also empowers the Secretary of Labor to issue regulations to exclude certain employees employed by health care providers or emergency responders from entitlement to paid sick leave and to exempt small businesses with fewer than 50 employees.
NOTE: If the Secretary of Labor does not issue regulations to exempt small business with fewer than 50 employees by April 2, 2020 (effective date), employers should consider compliance vs. potential sanctions under the Fair Labor Standards Act.
- EPST provisions take effect 15 days after enactment (April 2, 2020) and lasts until December 31, 2020.
Specific guidance for Employers who are a party to Multi-Employer CBAs
Employers who are party to multiemployer collective bargaining agreements may meet their obligations by contributing to a multiemployer fund, plan, or program based on the hours its employees are entitled to under the Act while working under the collective bargaining agreement—as long as employees may secure pay from the fund, plan, or program for qualifying uses under the Act.
Paid sick time is calculated based on the number of hours an employee would otherwise normally be scheduled to work. For part-time employees with variable schedules where employers cannot determine with certainty the number of hours the employee would have worked, employers may use the average number of hours scheduled per day over the preceding six-month period (including leaves) or, if the employee did not work during that period, the reasonable expectation at hiring of the average number of hours the employee would have normally been scheduled per day.
II. Emergency Family and Medical Leave Act
The law extends coverage for this component to all public employers and all private employers with fewer than 500 employees (even those with fewer than 50 employees).
The Emergency FMLA (EFMLA) coverage provides up to 12 weeks of job-protected leave to employees who are unable to work (or telework) due to need to care for a minor child whose school or place of care has been closed or if the child’s care provider is unavailable or due to an emergency with respect to COVID-19 declared by a federal, state or local authority.
NOTE: EFMAL is only applicable to employees who are unable to work / telework due to childcare issues related to COVID-19. It is important to remember that an individual who is infected or quarantined due to exposure would be eligible for regular unpaid FMLA coverage.
Under the expansion, employees need only be employed for 30 calendar days to access this leave, with no threshold for minimum hours.
NOTE: While the first ten days of EFMLA are technically unpaid, Employees may use EPST coverage as discussed above or any other paid leave already accrued (vacation, regular sick time, personal, etc.)
After the initial ten day period, employees utilizing EFMLA are paid at a rate of at least two-thirds of the employee’s regular pay rate according to the number of hours the employee is otherwise scheduled to work, up to a maximum of $200 per day ($10,000 in the aggregate).
Where need to use this leave is foreseeable, employees must provide employers with notice of the need to use leave as practicable.
Generally, the FMLA requires that employees who take qualifying leave be restored to the same or an equivalent position upon returning from leave. However, employers of fewer than 25 employees are not required to provide restoration rights for EFMLA leave if:
1. The position the employee held at the beginning of leave does not exist due to conditions that affect employment and are caused by a public health emergency during the leave period
2. The employer makes reasonable efforts to restore the employee to an equivalent position,
3. Those reasonable efforts fail, and the employer makes reasonable efforts to contact the employee if an equivalent position becomes available for one year after the earlier of 12 weeks after the employee’s leave commences or the date on which the qualifying need to use leave concludes.
The Secretary of Labor is empowered to issue regulations to exclude certain health care providers and emergency responders from the expanded EFMLA requirement.
The Secretary of Labor also is tasked with issuing regulations to exempt small businesses (employers with fewer than 50 employees) where the provision of leave would jeopardize the viability of the business as a going concern.
This emergency EFMLA expansion takes effect 15 days after enactment (April 2, 2020) and lasts until December 31, 2020.
III. Tax Credits for Employers
In order to lessen the financial burden of EPST, the Act provides for a refundable payroll tax credit equal to 100 percent of qualified sick leave paid by an employer for each calendar quarter. The tax credit is allowed against the employer portion of Social Security and Medicare taxes.
The amount of the EPST credit for employees who must self-isolate, obtain a diagnosis, or comply with a self-isolation recommendation is capped at $511 per day. For amounts paid to employees caring for a family member or for a child whose school or place of care has been closed, the amount of the credit is capped at $200 per day.
The aggregate number of days considered per employee may not exceed the excess of 10 over the aggregate number of days considered for all preceding calendar quarters.
Self-employed individuals also are entitled to a refundable income tax credit if the taxpayer must self-isolate, obtain a diagnosis, or comply with a self-isolation, recommendation with respect to coronavirus. For eligible self-employed individuals caring for a family member or for a child whose school or place of care has been closed due to coronavirus, the refundable income tax credit also is capped. For self-employed individuals caring for a family member or for a child whose school or place of care has been closed due to coronavirus, the income tax credit also is capped.
The tax credits are in place starting with a date to be set by the U.S. Treasury Department and ending on December 31, 2020.
The Act also provides for a refundable payroll tax credit equal to 100 percent of qualified EFMLA paid by an employer for each calendar quarter. The tax credit is allowed against the employer portion of Social Security taxes. The amount of qualified EFMLA wages considered for each employee is capped at $200 per day and $10,000 for all calendar quarters.
Self-employed individuals also are entitled to a refundable income tax credit.
These tax credits also are in place starting with a date to be set by the U.S. Treasury Department and ending on December 31, 2020.
If you have any questions about the application of this law, we would look forward to assisting you.
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