Enactment of the Families First Coronavirus Response Act
On March 18, 2020, the President of the United States signed into law the Families First Coronavirus Response Act (“FFCRA”). Three key portions of the FFCRA, which take effect by April 2, 2020, will impact many private and public sector employers:
- Division C: Emergency Family and Medical Leave Expansion Act
- Division E: Emergency Paid Sick Leave Act
- Division G: Tax Credits for Paid Sick and Paid Family Medical Leave
Division C: Emergency Family and Medical Leave Expansion Act (“EFMLEA”)
The EFMLEA amends the federal Family and Medical Leave Act (“FMLA”) from its effective date through December 31, 2020 by adding a “qualifying need related to a public health emergency” basis for job-protected leave. This leave applies if the employee is unable to work (or telework) because the employee needs to care for his or her minor child whose school or place of care has been closed, or the child care provider of the employee’s minor child is unavailable, due to a COVID-19 declared emergency. In addition, unlike other forms of FMLA leave, all employees of a covered employer are eligible for leave under the EFMLEA as long as they have been employed for at least 30 calendar days.
The EFMLEA applies to private employers with fewer than 50 employees (which are thus not otherwise subject to the FMLA), as well as public sector employers, but not to employers with 500 or more employees (which are otherwise subject to the FMLA). All employers who meet the EFMLEA coverage requirements will be required to provide notice of this new category of leave to their employees.
Significantly, the EFMLEA includes paid leave provisions inapplicable to other types of FMLA leave. Specifically, while the first 10 days of leave under the EFMLEA may be unpaid, the employee can elect to substitute any unused paid leave the employee has accrued already, such as paid time off, vacation or sick time. Additional leave after the initial 10 days is paid by the employer as follows:
- The amount must be based on:
- (i) at least 2/3 the employee’s regular rate of pay and
- (ii) the number of hours the employee would normally be scheduled to work.
- Paid leave need not exceed $200 per day and $10,000 in the aggregate.
Though the EFMLEA expands FMLA coverage to smaller businesses not otherwise covered by the FMLA, it does include special restoration rules for employers with fewer than 25 employees. New regulations on the EFMLEA could be forthcoming and may provide limited exclusions including for small businesses with fewer than 50 employees where these requirements would jeopardize that business’s viability. Healthcare providers and emergency responders may be excluded from the EFMLEA.
Division E: Emergency Paid Sick Leave Act (“EPSLA”)
The EPSLA, like the EFMLEA, will remain in effect until December 31, 2020. The EPLSA applies to public employers and employers engaged in commerce or any industry affecting commerce that employ fewer than 500 employees (in the case of private employers) or employ one or more employees (in the case of public employers). The EPSLA mandates that employers immediately provide paid sick time to employees, regardless of length of employment, who cannot work (or telework) because the employee:
- is subject to a COVID-19 quarantine or isolation order;
- has been advised by a health care provider to self-quarantine due to COVID-19;
- is experiencing COVID-19 symptoms and seeking a medical diagnosis;
- is caring for an individual subject to (1) or (2) above;
- is caring for the employee’s child because the child’s school or place of care has been closed, or the child’s care provider is unavailable, due to COVID-19 precautions; and/or
- is experiencing any substantially similar condition specified by the Secretary of the Health and Human Services.
However, healthcare providers and emergency responders may be excluded from the EPSLA’s paid sick leave requirements.
The EPSLA requires employers provide eligible employees with paid sick time in the following duration and values:
- For full-time employees: 80 hours
- For part-time employees: Average hours worked over a two-week period
- For employees with varying schedules, employers should calculate an average number of hours worked per day over a 6-month period.
- For uses (1), (2), and (3) listed above, paid sick time shall be no less than the greater of:
- (i) the employee’s regular rate of pay;
- (ii) minimum wage rate under the FLSA; or
- (iii) minimum wage rate in the state or locality where the employee is employed.
- For uses (4), (5), and (6) listed above, paid sick time shall be no less than 2/3 of the greater of:
- (i) the employee’s regular rate of pay;
- (ii) minimum wage rate under the FLSA; or
- (iii) minimum wage rate in the state or locality where the employee is employed.
- Paid sick time, however, in no event shall exceed:
- $511 per day and $5,110 in the aggregate for uses (1), (2), or (3) listed above; and
- $200 per day and $2,000 in the aggregate for uses (4), (5), or (6) listed above.
The EPSLA allows employers to request that its employees follow reasonable notice procedures after day one of sick time to continue receiving such paid sick time. There is no carryover of emergency paid sick time to another year, and the law does not require such leave, if unused, to be paid out upon separation from employment.
Notably, the EPSLA prohibits employers from requiring that employees use other paid leave before using the paid sick time. Nor can employers condition the payment of paid sick time on the employee finding a replacement to cover his or her missed hours of work. The EPSLA also contains an anti-retaliation provision.
If an employer violates the EPSLA, it is considered to have failed to provide minimum wages and will be subject to penalties under the FLSA, which can include back pay, an equal amount of liquidated damages, plus attorneys’ fees. In addition, as under the FLSA, the expansive definition of employer under the EPSLA creates the potential of individual liability for certain business owners and managers.
Employers will be required to post (and keep posted) in the workplace notice about paid sick leave under the EPSLA. The Secretary of Labor will be promulgating a model notice for employers’ use within seven days of the EPSLA’s enactment. The Secretary of Labor will also be issuing guidelines to assist employers with EPSLA requirements within 15 days after the EPSLA’s enactment.
Division G: Tax Credits for Paid Sick and Paid Family Medical Leave
While the EPSLA and EFMLEA are in effect, employers are entitled to a credit (unless they elect otherwise by opting out) against the employer-portion of social security taxes imposed each quarter as follows:
- For EPSLA, the credit is equal to 100% of the wages required to be paid under the EPSLA (“qualified sick leave wages”) for that quarter, capped for each individual at $200 per day (or $511 per day for individuals in government related quarantine, self-quarantine advised by a health care provider, or with symptoms of COVID-19 and seeking diagnosis) for a total of 10 days for all quarters.
- For EFMLEA, the credit is equal to 100% of the wages required to be paid under the EFMLEA (“qualified family leave wages”) for that quarter, capped for each individual at $200 per day and $10,000 total for all quarters.
- The credits for any quarter cannot exceed the employer-portion of social security taxes owed by such employer for the quarter on the wages paid to all employees; however, any excess credits will be treated as an overpayment and refunded.
- The credits may be increased by the employer’s qualified health plan expenses allocable to, and by the employer-portion of Medicare taxes imposed on, qualified sick leave wages and qualified family leave wages.
There are also special rules for taxes on employers, where eligible employers do not have to pay the employer portion of social security taxes on qualified sick leave wages and qualified family leave wages.
Eric J. Holshouser
Samuel J. Horovitz
Robert G. Riegel, Jr.
Michael J. Lufkin
Kathryn K. Rudderman
