The Families First Coronavirus Response Act Imposes New Obligations on Employers
On March 18, 2020, the U.S. government enacted the Families First Coronavirus Response Act (the “Act”). Along with the allocation of money to various medical, health, and nutrition programs, the Act expands employers’ obligations to provide family and medical leave and paid sick leave to their employees. In summary, the Act will become effective on April 1, 2020, and (subject to some limitations noted in this memorandum) accomplishes three basic things from the perspective of most employers:
- All employers of fewer than 500 employees must provide 80 hours of paid sick leave for employees to use in response to six types of absences stemming from the COVID-19 epidemic.
- All employers of fewer than 500 employees must provide Family and Medical Leave Act leave to any employee who has worked at least 30 days with the employer whenever the employee is unable to work (or telework) due to a need for leave to care for the son or daughter under eighteen (18) and the school or place of care has been closed, or the child care provider is unavailable, due to a public health emergency. After the first two weeks of this leave, which are unpaid, the leave becomes a paid leave at 2/3 of employee’s base salary.
- The employer shall able to take a credit for paying the sick leave and FMLA salary continuation against the employer’s quarterly payroll taxes.
Below is a more detailed analysis of the Act.
Division C – Emergency Family and Medical Leave Expansion Act
Division C, Section 3101, et seq. of the Act amends certain sections of the Family and Medical Leave Act of 1993, 29 U.S.C. § 2601, et seq. (the “FMLA”). Section 3102 of the Act expands FMLA Section 102(a)(1) (codified as 29 U.S.C. § 2612(a)(1)) to include new subsection (F), permitting eligible employees to take up to 12 workweeks of leave starting from the day the Act takes effect through the end of the year due to a “qualifying need related to a public health emergency”. Additionally, the Act restricts the amount of unpaid leave and modifies the FMLA’s restoration provisions.
The Act modifies existing definitions under the FMLA for leave taken pursuant to a public health emergency. The Act broadens the term “eligible employee” to include an employee who has been employed for at least 30 calendar days, as opposed to the 12 months of employment/1250 hours of work required for other leave taken under the FMLA. Furthermore, the Act expands the term “employer” to include businesses with fewer than 500 employees.
The amendments permit employees to take leave if they are unable to work as a result of having to care for a son or daughter under 18 years of age following the closing of the child’s school or place of care or the unavailability of the employee’s child care provider due to a public health emergency. The term “public health emergency” means an emergency with respect to COVID-19 declared by a Federal, State, or local authority. The Act further grants the Secretary of Labor the authority to exclude certain health care providers and emergency responders from the definition of “eligible employee” as well as to exempt small business with fewer than 50 employees from the new requirements if the imposition of the Act’s requirements would jeopardize the viability of the business.
The first 10 days of leave taken under new subsection (F) may consist of unpaid leave; however, an employee may elect to substitute any accrued vacation leave, personal leave, or medical or sick leave for such unpaid leave. Employers must provide paid leave for any time after the initial 10 days. The rate of pay must be equal to at least two-thirds of the employee’s regular rate of pay and based on the number of hours the employee would otherwise normally be scheduled to work; however, the paid leave shall not exceed $200 per day and $10,000 in the aggregate. The Act also provides a manner of calculation for employees with varying schedules.
Section 104 of the FMLA (codified as 29 U.S.C. § 2614) requires employers to restore employees to the same or equivalent position they held prior to taking leave. The Act exempts employers who employ fewer than 25 employees from complying with that provision if: (1) the position held by the employee no longer exists due to economic conditions or other changes in operating conditions, (2) the employer makes reasonable efforts to restore the employee to an equivalent position; and (3) if such reasonable efforts are unsuccessful, the employer makes reasonable efforts to contact the employee during the “contact period” if an equivalent position becomes available. The “contact period” means the 1-year period from when the qualifying need related to a public health emergency concludes or 12 weeks after the date on which the employee’s leave commences, whichever comes first.
These changes to the FMLA will remain in place only through December 31, 2020.
Division E – Emergency Paid Sick Leave Act
Division E, Section 5101, et seq. of the Act creates the Emergency Paid Sick Leave Act, imposing mandatory paid sick leave obligations on employers whose employees are impacted by COVID-19.
An employer is required to provide each employee with paid sick leave to the extent the employee is unable to work or telework because:
(1) The employee is subject to a Federal, State, or local quarantine or isolation order;
(2) The employee has been advised by a health care provider to self-quarantine;
(3) The employee is experiencing symptoms of COVID-19 and seeking a medical diagnosis;
(4) The employee is caring for an individual subject to a quarantine or isolation order or who has been advised by healthcare provider to self-quarantine;
(5) The employee is caring for a son or daughter as a result of school closures or unavailability of a childcare provider due to COVID-19 precautions; or
(6) The employee is experiencing any other substantially similar condition as specified by the Secretary of Health and Human Services.
Full-time employees are entitled to 80 hours of paid sick time and part-time employees are entitled to paid sick time equal to the number of hours that the employees work, on average, over a 2-week period. The paid sick time does not carry over from year to year. The amount of pay must be equal to the employee’s normal rate of compensation, unless the employee is caring for a family member affected by COVID-19, in which case the amount of pay must be equal to two-thirds of the employee’s normal rate of compensation. The Act also provides a manner of calculation for employees with varying schedules.
Employers may not require employees to search for or find a replacement employee to cover their shifts as a condition to providing the sick time required under the Act. The paid sick time must be immediately available, regardless of how long the employee has been employed, and employers cannot require employees to use other paid leave before using their paid sick time. Additionally, employers may not discharge, discipline, or otherwise discriminate against employees who take leave in accordance with the Act or who file a complaint for violations of the Act. An employer who violates the Act may be subject to fines and/or penalties.
Employers must conspicuously post a notice of these requirements on the business premises in a place where such notices are customarily posted. The Secretary of Labor will post a model notice for use by employers within 7 days of the enactment of the Act.
The Secretary of Labor has the authority to issue regulations to exclude certain health care providers and emergency responders from the definition of “employee” and to exempt small businesses with fewer than 50 employees when the imposition of these requirements would jeopardize the viability of the business as a going concern.
Division G of the Act also provides a payroll tax credit to employers required to provide FMLA coverage and paid sick leave. An employer will receive a payroll tax credit against tax imposed by Section 3111(a) of 3221(a) of the Internal Revenue Code of 1986 for each calendar quarter in an amount equal to 100% of the qualified sick leave wages paid by such employer with respect to such calendar quarter; however, there are caps on the amount of daily sick leave wages and the number of days taken into consideration for the credit. In certain instances, credit will also be available to self-employed individuals.
The Act takes effect on April 1, 2020, giving employers limited time to understand and ensure compliance with these new obligations. If you have questions about the impact of the Families First Coronavirus Response Act on your business, please contact Sue DeWalt, Jorie Bagnato, Joe Kane, or your SGK attorney.