CLIENT ALERT: Heads Up for Employers – New Families First Coronavirus Response Act
In the midst of the COVID-19 pandemic, many employees have been and will continue to be required to stay home from work due to exposure, illness, school closures, or to care for a sick family member. The Families First Coronavirus Response Act (the “Act”), signed into law on March 18, 2020, addresses these extraordinary circumstances. The Act will take effect “no later than” 15 days after its enactment, and the IRS and Department of Labor (“DOL”) likely will issue implementing guidance soon.
The Act mandates that, through the end of 2020, all employees will be entitled to emergency paid sick leave, and most employees will be entitled to emergency paid family and medical leave, for certain leaves related to the COVID-19 pandemic. The Act also increases testing availability and strengthens federal food and healthcare assistance and unemployment benefits.
The paid leave provisions of the Act apply to all government employers and private employers with fewer than 500 employees. These provisions also require that an employee meets one of several enumerated reasons for leave. Notably absent from the list for either type of paid leave is leave required due to an employer’s decision to cease all operations during the COVID-19 emergency. In that case, employees would not be eligible for paid leave under the Act, although other federal and state laws (in particular, the WARN Act) may apply.
An employee who takes leave pursuant to the Act generally must be provided the same position upon their return from leave, just as with FMLA leave. However, employers with fewer than 25 employees are not required to return the employee to the same position, to the extent the employee’s position has been eliminated or changed for reasons related to the COVID-19 crisis. Such employers must only make reasonable efforts to return the employee to a comparable position. If no such position is available, then employers must notify the employee if a position becomes available for a period of one year.
Emergency Paid Sick Leave
The paid sick leave provisions apply to all employees. Full-time employees who need leave for a qualifying reason receive up to 80 hours of paid sick leave, while part-time employees receive up to the equivalent of their average number of hours worked in two weeks. Failure to pay emergency paid sick leave is a violation of the Fair Labor Standards Act (“FLSA”).
Emergency paid sick leave is in addition to the employer’s existing paid sick leave policies, and it must be paid before the employee is required to use paid sick leave under the employer’s policy. Employers are prohibited from changing their existing sick leave programs. Given the intent of the statute, it is unlikely that this rule would be enforced against an employer changing their sick leave policy to be more generous.
Employees are entitled to emergency paid sick leave only for one of the reasons below:
- Self-isolation due to COVID-19 diagnosis or to comply with the recommendation of a public health agency or healthcare provider that the employee’s presence at work could create an exposure risk to others (due to the employee’s COVID-19 diagnosis or symptoms);
- To seek medical care for symptoms of COVID-19;
- To care for a sick family member whose healthcare provider or a public health agency has recommended self-isolation for COVID-19 related reasons; or
- To care for a child due to school or daycare closure.
Emergency paid sick leave is paid at the employee’s regular rate (capped at $511 per day and $5,100 in the aggregate), except that leave required by the latter two reasons (caring for a sick family member or a child whose school is closed) can be paid at 2/3 the employee’s regular rate (capped at $200 per day and $2,000 in the aggregate).
Employers cannot require employees to find someone to “cover” their shift. The Act prohibits discrimination and/or retaliation relating to the exercise of rights to emergency paid sick leave.
The Department of Labor will provide a model notice of these rights, which must be posted where other employee notices are posted, such as in a breakroom.
Emergency Paid Family and Medical Leave
Unlike traditional FMLA, the emergency paid family and medical leave provisions apply to employees who have been employed for 30 days or more. Those employees are entitled to up to 12 weeks of protected leave for the following reasons:
- Self-isolation recommended by a healthcare provider or the public health authority to avoid risk of exposing others to COVID-19 (based on symptoms or the employee’s own exposure), and the employee is unable to work without violating that recommendation;
- To care for a family member who must be isolated per the recommendation of the public health authority or a healthcare provider due to exposure to COVID-19 or symptoms; and
- To care for a child due to school or daycare closure.
The first two weeks may be unpaid, but the employee may use other benefits to cover the first two weeks. Thereafter, the employer must pay the employee at least 2/3 the employee’s regular rate, capped at $200 per day, or $10,000 in the aggregate.
Regulations implementing the Act are likely to exclude certain healthcare employees and first responders from the definition of “employee” for the purpose of emergency paid family and medical leave. In addition, the DOL may implement procedures for businesses with fewer than 50 employees to request an exemption if compliance would jeopardize the viability of the business.
Tax Credits Available
Employers who pay emergency paid sick leave and/or emergency paid family and medical leave will be entitled to a refundable credit against FICA taxes (i.e., social security / Medicare taxes). The refundable nature of the credit means that the credit should be available not only to offset taxes owed, but also as a refund. The Act contemplates that credits would be capped at $200 per employee, per day for paid emergency family and medical leave and $511 per employee, per day for paid sick leave.
The Labor & Employment team at Potter Anderson & Corroon LLP will continue to monitor the situation for the latest developments and will keep you updated as the landscape changes.