Employment Law Update: Families First Coronavirus Response Act and Emergency Paid Sick Leave Act

March 25, 2020

As the situation regarding COVID-19 continues to evolve, Spengler Nathanson’s attorneys are monitoring new developments and legal issues, including in the area of employment law. We provide the following update regarding the recently-passed Families First Coronavirus Response Act and Emergency Paid Sick Leave Act:

Families First Coronavirus Response Act

Passed March 13, 2020 by House of Representatives

Approved March 18, 2020 by Senate (90-8)

Signed into Law by President March 18, 2020

Free Coronavirus Testing

Enhanced Protections for Health Care Workers and Employees Responsible for Cleaning

Additional Funding for Nutritional Programs and Medicaid

AMENDMENTS TO THE FAMILY AND MEDICAL LEAVE ACT

Emergency Family and Medical Leave Expansion Act

Effective Date: Based on the language of the Bill, the effective date has been widely believed to be April 2, 2020 (15 days following enactment of the Bill). But the Department of Labor, charged with drafting regulations to implement the Families First Coronavirus Response Act, issued guidance on March 24, 2020 indicating a possible effective date of April 1, 2020.

No enforcement actions for first 30 days if employer makes good faith effort to comply

Covered Employer: An employer with fewer than 500 employees. The Department of Labor will provide emergency guidance and rulemaking, and consider requests for exemption for employers with fewer than 50 employees, for reasons of financial hardship that would jeopardize business viability. The requirement of 50 employees within a 75-mile radius is not applicable to these emergency amendments.

Covered Employee: Any employee that has been on the employer’s payroll for 30 calendar days. The Department of Labor can issue regulations to exclude some health care providers and emergency responders from eligibility. Same definition of employer/employee re: part-time, seasonal, temporary etc.

Amount of Leave: Up to 12 weeks.

Reasons for Leave: A covered employee who is unable to work, or telework, can take leave to care for a child of an employee if the child’s school or place of care has been closed, or the childcare provider is unavailable, due to coronavirus. No documentation specified, document employee’s statement regarding need for such leave.

Compensation During Leave: The first 10 days of leave may be unpaid, but an employee may choose to substitute accrued vacation leave, personal leave, or other medical or sick leave during the leave. The employer cannot force an employee to use their accrued paid leave. If employee also qualifies for the employee’s own Emergency Paid Sick Leave (below), the employee may use the Paid Sick Leave concurrently with the first 10 days of the EFMLA that would otherwise be unpaid.

After 10 days of unpaid leave, employees must be paid at no less than two-thirds the employee’s regular rate of pay for the number of hours the employee would have been normally scheduled. If this amount cannot be ascertained, then an average from hours worked over the prior six months should be used.

Maximum compensation: Daily maximum of $200 and total of $10,000 for duration of the leave. The remainder of the 12-week leave is then unpaid.

Restoration Rights: Employee must be returned to the same or similar position after leave. Employers with fewer than 25 employees may be exempt from the reinstatement requirement if a position needs to be eliminated due to economic downturn from COVID 19, subject to some conditions. The employer must make reasonable efforts to provide an equivalent position in terms of pay, benefits and terms and conditions of employment, for a one-year period. This requires employers to contact an employee if an equivalent position becomes available over the one-year period.

Tax Credits for Employer: Employers will receive quarterly tax credits for 100% of qualified family leave wages required to be paid, up to $200/day, against the employer’s portion of Social Security taxes. If that total credit amount exceeds the employer’s total Social Security tax liability, the difference will be paid to the employer by the IRS on an expedited basis, as a refund. Tax credits may also be available for costs associated with maintaining group health plan coverage during employees’ leaves.

EMERGENCY PAID SICK LEAVE ACT

Effective Date: April 2020 (see above note regarding Department of Labor guidance)

Covered Employer: An employer with fewer than 500 employees. No exemption exists for the paid sick leave provisions.

Covered Employee: Any employee, full or part-time. Immediately eligible upon effective date of the Act. Self-employed workers and gig economy workers will be eligible for tax credits.

Amount of Leave: Up to 80 Hours for f-t employees, up to two weeks of leave for average hours worked by p-t employees in the two weeks preceding leave.

Reasons for Leave: A covered employee can take leave if:

– the employee is subject to a federal, state or local quarantine or isolation order related to COVID-19 (this will include Ohio employees under the Stay At Home Executive Order 2020-01-D, effective March 24, 2020 who are employed in Non-essential Businesses as designated in that Order, if they remain employed on the effective date even if furloughed or laid off);

– the employee is diagnosed with COVID-19 or advised by a health care provider to self-quarantine due to concerns related to COVID-19;

– the employee is seeking a medical diagnosis or care if the employee is experiencing the symptoms of COVID-19;

– the employee is caring for an individual who is self-quarantined because the individual has been diagnosed with or is experiencing symptoms of COVID-19 and/or needs to obtain medical diagnosis or care and/or has been advised by a health care provider to self-quarantine; or

– the employee is caring for the employee’s child if the child’s school or childcare provider has been closed or is unavailable due to COVID-19 precautions or concerns.

These reasons will include substantially similar conditions. Again, no specific documentation requirements are specified, employers should obtain whatever documentation is available from employee. Require reasonable notice procedures.

Compensation During Leave: Full-time employees are paid at the greater of their regular rate of pay or minimum wage for the employee’s own leave (set forth in reasons 1-3 above). However, when the employee is absent to care for a family member or other individual, leave is paid at two-thirds the employee’s regular rate. Part-time employees are paid the number of hours that the employee works, on average, over a 2-week period. Cap of $511 per day and $5,110 total for self-care; and cap of $200 per day and $2000 total when the employee is caring for someone else.

Existing Paid Leave Policy: Any paid leave provided before the law is enacted cannot be credited against the employee’s paid leave entitlement under the Act, nor can employers require employees to use accrued, available, paid time off. Employees may take leave under the Act first, or may use leave that they are already entitled to under their employer’s policies. Employers may not change leave policies to provide less leave than previously promised or accrued. Emergency Leave Act hours cannot be carried over after December 31, 2020.

Tax Credits for Employer: Employers will receive quarterly tax credits for 100% of qualified family leave wages required to be paid, up to $200/day, against the employer’s portion of Social Security taxes. If that total credit amount exceeds the employer’s total Social Security tax liability, the difference will be paid to the employer by the IRS on an expedited basis, as a refund. Tax credits may also be available for costs associated with maintaining group health plan coverage during employees’ leaves.

Tax Credit Procedure: The tax credits are intended to make expenses due to the EFMLA and the Emergency Paid Sick Leave Act revenue neutral. Employers can take the quarterly tax credit first, which provides an immediate dollar for dollar offset against payroll taxes.

Ordinarily, employers withhold federal income taxes and the employees’ share of Social Security and Medicare taxes. They deposit these taxes with the IRS and file quarterly payroll tax returns (Form 941) with the IRS. Employers who pay qualifying Paid Sick Leave or paid FMLA under the FFCRA will be able to immediately retain the amount of the federal payroll taxes equal to the amount of leave paid, rather than send it to the IRS.

If the amount paid in qualifying leave exceeds the amount of federal payroll taxes that can be offset, then the employer will be able to request a payment from the IRS for the difference. The expectation is that the IRS will process these refund requests through an expedited process that takes two weeks or less (details to be announced this week).

In addition to the payroll tax credit, employers may also be eligible to claim an immediate tax credit for the employers’ cost of continuing their employees ‘health insurance during the time that employees are on paid FMLA or Paid Sick Leave. This credit will be available to employers who participate in a group health plan as defined by Internal Revenue Code §5000(b)(1).

Posters

Posters will be available from the DOL. For now, let employees know their rights.

Employer’s Time Off and Attendance Policies

All employers should review applicable state and local paid leave requirements, as well as their current policies, which were developed prior to the emergency. In light of these unique circumstances, some revision or temporary adjustment may be needed. Be flexible, and don’t require medical or RTW certifications in every situation.

All matters related to COVID-19 continue to be rapidly-evolving. Spengler Nathanson’s employment lawyers are closely tracking these updates and developments. If you have questions about this article or other employment law matters, we welcome you to contact our attorneys. This article is meant to provide a summary of potentially applicable issues and updates, and is not legal advice.