Employment Law Blog

The Families First Coronavirus Response Act Becomes Law - What Employers Need to Know

On Wednesday, March 18, President Trump signed H.R. 6201, the “Families First Coronavirus Response Act,” into law. It becomes effective on April 1st, which is a short period for taking compliance steps and budgeting for the changes. Among the provisions of the coronavirus relief bill are items relating to paid sick time and family leave, which we have summarized below, as they will have an enormous impact on employers.

EMERGENCY PAID SICK LEAVE ACT (DIVISION E)

This section of the bill provides roughly two weeks of paid sick leave to employees who need leave for a qualifying reason.

• The amount of time of paid sick leave is 80 hours for full-time employees. For part-time employees, the number of hours is equal to the average hours that employee works over a two-week period. The paid leave ends at the beginning of the employee’s next scheduled shift immediately after the need for the leave ends.
• Eligible employers are either private employers with fewer than 500 employees or all public employers. An employer with less than 50 employees may apply to the Department of Labor to be relieved from this Act if it would jeopardize the viability of the business. There is no current guidance on what is meant by “jeopardize the viability of the business” or how lenient the administration will be in accepting the application.
• Eligible employees are those defined by the Fair Labor Standards Act, which has very few, very limited exceptions.
• Qualifying reasons and compensation limits are:
  • The employee is subject to a Federal, State, or local quarantine or isolation order related to COVID-19. (Full rate of pay, but capped at $511 per day and $5,110 in the aggregate.)
  • The employee has been advised by a health care provider to self-quarantine due to concerns related to COVID-19. (Full rate of pay, but capped at $511 per day and $5,110 in the aggregate.)
  • The employee is experiencing symptoms of COVID-19 and seeking a medical diagnosis. (Full rate of pay, but capped at $511 per day and $5,110 in the aggregate.)
  • 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). (2/3 of full pay, Capped at $200 per day and $2,000 in the aggregate.)
  • 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 child care provider of such son or daughter is unavailable, due to COVID-19 precautions. (2/3 of full pay, capped at $200 per day and $2,000 in the aggregate.)
  • 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. (2/3 of full pay, capped at $200 per day and $2,000 in the aggregate.)
• Compensation for paid sick leave calculated on the greater of: the employee’s regular rate of pay, federal minimum wage, or minimum wage applicable in the state or locality.
• Employers MAY NOT require employees to use other paid leave provided by the employer before the emergency paid sick leave is used. There is no delay – employees may use this paid leave immediately and before using any other form of leave, so long as they meet the qualifying reasons for the leave.
• Notice must be posted for employees, and the Secretary of Labor is tasked with releasing model notice within a week of passage of the law. (We will post a link here as soon as it is available.)
• Employers may not retaliate against employees for taking this leave. We cannot stress this enough – employers should tread lightly with adverse employment actions for the duration of the paid leave and for a significant time period after to avoid the appearance of retaliation. All adverse employment actions taken should be well-documented.
• After the first day an employee is sick, the employer may require her/him to follow reasonable notice procedures to continue receiving paid sick time.
• The duration of the paid sick leave requirement is temporary – it expires December 31, 2020.

BOTTOM LINE FOR EMPLOYERS: Full-time employees are to receive 80 hours of paid sick leave and part-time employees are to receive the equivalent of two weeks of work hours in paid sick leave, so long as the leave is related to COVID-19 in one of the specified ways. These paid sick leave amounts are subject to caps depending on the reason for the leave, however. Employers must also post conspicuous notice of these requirements.

EMERGENCY FAMILY AND MEDICAL LEAVE EXPANSION ACT (DIVISION C)

This section of the bill provides twelve weeks of leave and job protection for employees under the Family and Medical Leave Act (FMLA) who meet certain criteria relating to the COVID-19 crisis. These employees would need the leave to care for their child if the child’s school or other place of care were closed.

• Eligible employees are those who have been employed with a private employer at least 30 calendar days before the leave is requested and all government employees, which is a far broader net than regular FMLA leave, although the Secretary of Labor has the authority to exempt certain healthcare providers and first responders.
• Eligible employers are any employer with fewer than 500 employees, which also expands the definition, and government employers. An employer with less than 50 employees may apply to the Department of Labor to be relieved from this Act if it would jeopardize the viability of the business. There is no current guidance on what is meant by “jeopardize the viability of the business” or how lenient the administration will be in accepting the application.
• The first ten days of leave are unpaid - employees can substitute paid time off for the first two weeks, but the employer cannot force them to do so.
• Employers must pay for the remaining ten weeks of leave at a rate of 2/3 of the employee’s regular rate of pay for the number of hours the employee would normally be scheduled to work, not more than $200 per day and $10,000 in the aggregate.
• The duration of the FMLA expansion is temporary – it expires December 31, 2020.

BOTTOM LINE FOR EMPLOYERS: The first two weeks may be unpaid, but employers must pay the next TEN WEEKS OF LEAVE at a rate of 2/3 of the affected employee’s average wages. This leave is capped at $10,000 per employee for the duration of the leave. This appears so far to only apply to FMLA leave taken to care for a child who is at home because of school and care center closures.

TAX CREDITS FOR PAID SICK AND PAID FAMILY MEDICAL LEAVE (DIVISION G) – THE GOOD NEWS

The good news for employers is that they will be eligible for tax credits against Social Security taxes for the full amount of qualified sick leave and emergency FMLA leave. Even self-employed individuals will be allowed to take a credit against self-employment tax. These credits are fully refundable as well – if the amount of paid leave exceeds the amount of payroll taxes paid, the payor will receive a refund for the excess. Employers are also entitled a credit for amounts paid or incurred to maintain health insurance coverage during this leave.There’s no indication of when the application process will begin, but the Secretary of the Treasury has indicated that it will be up and running “ASAP.”

If you’re concerned about how these new leave requirements will affect your business, please contact a McBrayer employment attorney. These are difficult times, but we’re committed to getting you and your business through.

Cynthia L. Effinger, Member with McBrayer, is located in the firm’s Louisville office. Ms. Effinger’s practice is concentrated in the areas of employment law and commercial litigation. Her employment law practice is focused on drafting employment manuals and policies, social media, wage and hour, non-compete agreements and workplace discrimination. Ms. Effinger can be reached at ceffinger@mcbrayerfirm.com or (502) 327-5400, ext. 2316.

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This article does not constitute legal advice.