Yesterday, Congress passed the Family First Coronavirus Act (the “Act”), a bipartisan economic stimulus plan addressing the impact of COVID-19 on the United States across various fronts – from the expense of COVID-19 testing to food insecurity to lost wages. President Trump signed the bill shortly thereafter, and it becomes effective on April 2, 2020.
This alert addresses key questions relating to the Act’s provisions of most interest to employers: the Emergency Family and Medical Leave Expansion (“COVID FMLA”) and Emergency Paid Sick Leave (“COVID Paid Sick Leave”) Acts.
Who is covered?
- The Act significantly expands existing Family and Medical Leave Act (“FMLA”) requirements and extends paid sick leave coverage across the country through the end of this year.
- COVID FMLA and COVID Paid Sick Leave both apply to all private employers with less than 500 employees (with some small business exceptions explained below); COVID Paid Sick Leave also applies to certain public employers.
- COVID FMLA applies to all employees who have been employed by a covered employer for at least 30 calendar days.
- COVID Paid Sick Leave applies to all employees regardless of length of employment.
- Employers may elect to exclude employees who are health care providers or emergency responders from coverage; similar exclusions may be permitted by regulation of the Secretary of Labor following enactment of the Act.
What type of leave is eligible and how much pay will employees receive?
COVID FMLA coverage is limited to only one type of leave.
In order to qualify for COVID FMLA, an employee must be unable to work (or telework) due to a need to care for a son or daughter under 18 years of age if the child’s school or place of care has been closed or the child care provider is unavailable due to a COVID-19 public health emergency
Employees with a qualifying need would be entitled to up to 12 weeks of COVID FMLA leave within a 12 month period as follows:
- The first 10 days would be unpaid unless the employee otherwise receives COVID Paid Sick Leave (as discussed below) or elects to substitute any accrued vacation, personal, or medical/sick leave. Employers may not require employees to use accrued leave for this unpaid period.
- The remainder of leave (up to 10 weeks) would be payable at not less than two-thirds of the employee’s regular rate of pay at the number of hours employee would otherwise be normally scheduled to work up to a maximum of $200 per day ($10,000 in aggregate). Employees who work a part-time or irregular schedule are entitled to pay for the average number of hours they were scheduled to work in the six months prior to the leave. Employees must provide the employer with notice of their need for leave “as is practicable.”
COVID Paid Sick Leave
COVID Paid Sick Leave more broadly applies when an employee is unable to work (or telework) and
- is subject to Federal, State or local quarantine or isolation order related to COVID-19;
- is advised by a healthcare provider to self-quarantine due to concerns related to COVID-19;
- is experiencing COVID-19 symptoms and seeking a medical diagnosis;
- is caring for an individual subject to (1) or (2);
- is caring for a son or daughter whose school or place of care has been closed or whose child care provider is unavailable due to COVID-19; or
- is experiencing any other “substantially similar condition” as defined by the Secretary of Health and Human Services in consultation with the Secretaries of Treasury and Labor.
The pay to employees under this Act works as follows:
- Full-time employees with a qualifying need as listed above would be entitled to COVID Paid Sick Leave in the amount of 80 hours. Part-time employees are entitled to a prorated amount based on the average number of hours worked over a two-week period.
- The Act requires the Secretary of Labor to issue guidelines to assist employers in calculating the payment for COVID Paid Sick leave, but, in general, the employer must determine the greater of:
- The employee’s regular rate of pay;
- The applicable federal minimum wage; or
- The applicable State or local minimum wage, whichever is greater.
- Importantly, the wages are capped at $511 per day ($5,110 aggregate) when taken for enumerated reasons 1-3 above (caring for self). For leave used for reasons 4-6 (caring for others and “substantially similar condition”), the wage paid would be two-thirds of the calculated rate, up to $200 per day ($2,000 aggregate).
- Employers are not required to pay employees for unused COVID Paid Sick Leave at the end of employment and it will not carryover from one year to the next. Employers also are not permitted to require employees to find replacement coverage for the missed time, but they may require employees to follow reasonable notice procedures in order to continue receiving payment. Employers are expressly prohibited from retaliating against employees who take or raise claims related to COVID Paid Sick Leave.
- Employers may not require employees to use other paid leave before the employee uses the paid sick leave provided under this new provision.
Must employees who return from COVID leave be restored to their original positions?
In most cases, employees who take COVID Paid Sick Leave or COVID FMLA must be restored to their original positions upon their return. Employers with less than 25 employees are not required to reinstate an employee following COVID FMLA leave where:
- the position held no longer exists due to economic changes or operating conditions that affect employment and are caused by public health emergency during the period of leave,
- the employer makes reasonable efforts to restore the employee to an equivalent position (with equivalent benefits, pay, and other terms and conditions of employment), and
- if reinstatement efforts fail, the employer makes reasonable efforts to contact the employee if an equivalent position opens within one year of the earlier of:
- the time the qualifying need concludes or
- 12 weeks after the leave commences.
Are there any other exceptions for small businesses?
The legislation authorizes the Secretary of Labor to issue regulations exempting small businesses with fewer than 50 employees from the COVID FMLA and Paid Sick Leave provisions
when the requirements would jeopardize the viability of their businesses
. In addition, businesses that do not meet the regular FMLA definition of employer (
50 or more employees in each working day during 20 or more calendar workweeks) will not be subject to civil action for violations of COVID FMLA requirements.
Is there any tax or other relief for employers?
Employers who are required to provide COVID Paid Sick Leave and/or COVID FMLA will be entitled to refundable credit for the employer’s portion of the Social Security payroll tax equal to the
full value of the qualified sick or family leave wages paid
. The IRS will determine the applicable starting date and is expected to provide additional guidance on exactly how the tax credits will be applied.
What are the states doing to help employers pay for these COVID payments?
Other states and localities have put in place or are considering additional relief measures for payroll costs related to COVID-19. For example, on March 8, New York City announced the “New York City Grant Retention Program”
to provide financial assistance for small businesses impacted by COVID-19. Under this program, New York City is offering employers with 5 or fewer employees a grant to cover 40% of payroll costs for 2 months to help retain employees. Those businesses with fewer than 100 employees will be eligible for 0% interest loans for up to $75,000 to mitigate losses in profit. More information can be found at the following link:
In addition, the Federal Small Business Administration has declared disasters in localities in a number of states, including New York, California, Washington, Connecticut, Massachusetts and others – which triggers the availability of small business loan assistance. Speak to an NFC attorney for guidance in navigating these programs.
Are there notice requirements for employers?
Employers are required to post notice of the COVID Sick Leave provisions. A model notice is expected to be published within 7 days of enactment of the Act.