On Wednesday evening, March 18, President Trump signed into law the Families First Coronavirus Response Act (the “Act”) to provide emergency assistance for those affected by the coronavirus/COVID-19 pandemic. The U.S. House of Representatives initially approved a version of the Act on Saturday, March 14 and passed by unanimous consent an amended version on Monday evening, March 16. The Senate overwhelmingly passed the revised legislation by a 90-8 vote on Wednesday, March 18 before sending it to President Trump to enact with his signature. Among the provisions impacting employers are the expansion of Family and Medical Leave Act (FMLA) coverage and the creation of emergency paid sick leave to employees who cannot work because of coronavirus or the public health emergency surrounding
it. To help offset the cost of paid leave, tax credits against quarterly payroll taxes are provided to employers. The leave provisions go into effect no later than 15 days after the date the Act is enacted and will sunset on December 31, 2020.
Expansion of FMLA Coverage
The Act expands FMLA coverage to provide for up to 12 weeks of job-protected leave for employees who are unable to work or telework due to the employee’s need to care for his or her son or daughter (under 18 years of age) whose school or place of care has closed, or whose childcare provider is unavailable, due to a “public health emergency,” defined as an emergency with respect to COVID-19
declared by a federal, state or local authority (“Public Health Emergency Leave”). Notably, this version of the Act differs from the original version initially approved by the House, which also provided for expanded FMLA coverage to address multiple scenarios related to an employee’s own illness or the illness of others due to the coronavirus. However, existing unpaid FMLA protections may still apply in the event an employee needs leave because of his or her own serious health condition or to care for an immediate family member with a serious health condition.
Unlike the eligibility requirements for other types of FMLA leave, which require an employee to
have been employed by an employer with at least 50 employees for at least 12 months and have worked 1,250 hours during that period, the Act expands eligibility for Public Health Emergency Leave. Specifically, employees of employers with less than 500 employees and employees of governmental employers, who have been employed by the employer for at least 30 calendar days, are eligible for Public Health Emergency Leave. The Act gives the Secretary of Labor authority to issue regulations that would exclude certain healthcare providers and emergency responders from eligibility for Public Health Emergency Leave and that would exempt certain small businesses with less than 50 employees from the FMLA public health emergency leave requirements “when the imposition of such requirements would jeopardize the viability of the business as a going concern.” However, until such regulations are
issued, the Act itself does not exclude healthcare providers and emergency responders or exempt small businesses at this time.
Paid Leave Requirement
Unlike regular FMLA leave, Public Health Emergency Leave lasting longer than 10 days (i.e., two workweeks) must be paid at two-thirds an employee’s regular rate of pay. Specifically, the first 10 days of leave taken by an employee may consist of unpaid leave. During this initial 10-day period, an employee may elect, but cannot be required, to substitute any accrued vacation leave, personal leave, or medical or sick leave for unpaid Public Health Emergency Leave.
Then, after the initial 10 days of Public Health Emergency Leave have been taken, the employer must provide paid leave in an amount not less than two-thirds of an employee’s regular rate of pay for the number of hours the employee would otherwise be normally scheduled to work during the leave time, but the amount of pay that an employer must provide to an employee is capped at $200 per day and $10,000 in the aggregate. Paid leave must continue until the qualifying condition no longer exists or the employee’s 12-week FMLA entitlement has been exhausted.
All employers with between 25 and 500 employees
will remain obligated to restore employees returning from Public Health Emergency Leave to the same position or an equivalent position if the employee’s position is no longer available. Employers with less than 25 employees will not be required to return the employee to work if:
- The position held by the employee when the leave began does not exist due to economic conditions or other changes in the operating conditions of the employer that are caused by a public health emergency during the period of leave;
- The employer makes reasonable efforts to restore the employee to a position equivalent to the position previously, with equivalent benefits, pay, and other terms and conditions of employment; and
- If such efforts fail, the employer makes reasonable efforts to contact the employee, throughout the one-year period beginning on the earlier of (1) the date on which the qualifying need due to the public health emergency concludes or (2) the date that is 12 weeks after the start of the employee’s leave, if an equivalent position becomes available.
Emergency Paid Sick Leave
The Act also mandates employers with less than 500 employees and governmental employers to provide employees up to two weeks of emergency paid sick leave at the employee’s regular rate of pay, capped at $511 per day and $5,110 in the aggregate, if the employee is unable to work or telework because of the following reasons:
- The employee is subject to a federal, state, or local quarantine or isolation order related to COVID-19;
- The employee has been advised by a healthcare provider to self-quarantine due to concerns related to COVID-19; or
- The employee is experiencing symptoms of COVID-19 and seeking a medical diagnosis.
It should be noted that the language regarding federal, state, or local quarantine orders “related to COVID-19” and regarding self-quarantine advised by a healthcare provider “due to concerns related to COVID-19” appears to be broader than the original version, which applied to recommendations or orders by a public official or healthcare provider to quarantine due to an employee’s “exposure” to or “symptoms” of coronavirus, although exactly how much broader is unclear without further guidance or regulations from the Secretary of Labor.
In addition, this emergency paid sick leave entitlement must be available to employees at two-thirds the employee’s regular rate of pay,
capped at $200 per day and $2,000 in the aggregate, if the employee is unable to work or telework because of the following reasons:
- The employee is caring for an individual (not just a “family member” in the original version) who is subject to a quarantine or isolation order related to COVID-19 or has been advised by a healthcare provider to self-quarantine due to concerns related to COVID-19;
- The employee is caring for his or her son or daughter (under 18 years of age) whose school or place of care has been closed, or whose childcare provider is unavailable, due to COVID-19 precautions; or
- The employee is experiencing any other substantially similar condition specified by the Secretary of Health and Human Services in consultation with the Secretary of Treasury and the Secretary of Labor.
Employees are eligible for emergency paid sick leave and are entitled to immediately use the full allotment of their emergency paid sick time, regardless of how long the employee has been employed by the employer. However, the Act gives employers of healthcare providers or emergency responders the option of electing to exclude such employees from eligibility for emergency paid sick time. Similar to Public Health Emergency Leave, the Act also gives the Secretary of Labor authority to issue regulations that would exclude certain healthcare providers and emergency responders from eligibility for emergency paid sick time, including by allowing employers of such employees to
opt out, and that would exempt certain small businesses with less than 50 employees from the FMLA public health emergency leave requirements “when the imposition of such requirements would jeopardize the viability of the business as a going concern.”
Paid Sick Leave Allotment
Each full-time employee will be entitled to 80 hours of paid emergency sick leave. Each part-time employee will be entitled to paid emergency sick leave equal to the number of hours that the employee works, on average, over a two-week period.
Reasonable Notice Procedures
After the first workday on which emergency paid sick time is used, employers may require employees to follow reasonable notice procedures in order to continue receiving emergency paid sick time.
Employer Prohibitions and Other Paid Leaves
An employer may not require an employee to use other paid leaves (e.g., vacation or PTO) provided by the employer or to find a replacement to cover for the employee before the employee uses the emergency paid sick time provided by the Act. Notably, the amended version of the Act removes language from the original version that explicitly stated that emergency paid sick leave under the
Act was in addition to an employer’s existing paid sick leave policy and prohibited employers from changing their existing paid leave policies on or after the enactment of the Act to avoid the additional requirements, so whether and to what extent the Act limits an employer’s ability to modify their paid leave policies in light of the new requirements (e.g., to incorporate this new mandate into existing sick leave policies) is unclear.
No Carryover and No Payout at Termination
Emergency paid sick leave under the Act will not carry over from one year to the next. Also, employers do not need to payout any unused emergency paid sick time under the Act upon the employee’s
termination, resignation, retirement, or other separation from employment.
Notice to Employees
Employers must post in conspicuous places on the employer’s premises a notice to be prepared and approved by the Secretary of Labor, advising employees of their rights to emergency paid sick leave under the Act. The Secretary is to make the model notice publicly available within seven days after enactment of the Act.
Employer Tax Credits for Paid Leave
To help employers
offset the cost of emergency paid sick leave and paid FMLA Public Health Emergency Leave, the Act provides for a refundable tax credit applied against quarterly payroll taxes imposed on the employer in an amount equal to 100% of the qualified FMLA and paid sick leave wages paid by the employer with respect to such calendar quarter.
Essentially, for employers with less than 500 employees, any employee who is unable to work or telework because he or she is sick, quarantined, seeking diagnosis, caring for an individual who is sick or quarantined, or caring for a child because of school or childcare closure due to coronavirus precautions will be entitled to up to two weeks
of emergency paid sick leave. However, only employees who need to care for a child due to a school/childcare closure will be entitled to the additional 10 weeks of paid FMLA leave.
As the COVID-19 situation and the proposed legislation to address it are rapidly changing, we will continue to monitor closely and provide updates as they become available.