On March 14, 2020, the United States House of Representatives passed the Families First Coronavirus Response Act (H.R. 6201) (the Act). On March 16, 2020, the House amended the Act, and on March 18, 2020, the United States Senate and President Trump signed the Act into law. The Act becomes effective on April 2, 2020, and expires on December 31, 2020.
The Act provides two different ways to provide paid benefits to employees affected by COVID-19. First, the Act involves amendments to the existing Family and Medical Leave Act (FMLA). Second, the Act provides new emergency paid sick leave. Both apply to public and private-sector employers with fewer than 500 employees.
Emergency Family and Medical Leave Act
Pursuant to the Act, employees who have been on the job for at least thirty days have the right to take up to twelve (12) weeks of job-protected leave for a “Public Health Emergency.” A Public Health Emergency is limited to circumstances where an employee is unable to work or telework in order to care for a minor child if the child’s school or childcare facility has been closed or is unavailable due to an emergency with respect to COVID-19 declared by a Federal, State, or local authority. However, employers of health care providers or emergency responders may elect to exclude their employees from the amended FMLA provisions.
The leave is unpaid for the first ten (10) days. Employers must allow, but cannot require, the employee to substitute paid time off. Following the ten-day period, employees are eligible for paid leave of at least two-thirds of their normal pay rate. This benefit is capped at $200 per day and $10,000 in the aggregate.
Notably, the Act expressly applies to private employers with less than fifty (50) employees. However, the Act:
- Excuses such employers from civil FMLA damages in an FMLA lawsuit, thereby shielding small employers from being liable for back pay or liquidated damages. The smaller employer, however, may still be subject to a complaint to the Secretary of Labor, but there will not be monetary liability; and
- Authorizes the Secretary of Labor to issue regulations that exempts small businesses of less than fifty (50) employees from the leave requirements if the requirements jeopardize the viability of the business as a going concern.
Please note that if an employer puts its employees on leave because of a decision to temporarily close or slow down operations, the leave would not be considered a Public Health Emergency, thus not requiring paid leave. The Act also contains anti-retaliation provisions.
Emergency Paid Sick Leave
Public and private-sector employers with less than five hundred (500) employees must provide emergency paid sick leave to employees that cannot work or telework. These employers must provide up to eighty (80) hours of emergency paid sick leave to full-time employees and the average number of hours the employee works over a two-week period to part-time employees. This benefit is available for immediate use, regardless of how long the employee has been employed.
This leave must be paid to all employees for the following COVID-19-related reasons:
- Federal, State, or local quarantine or isolation order;
- Self-quarantine at the advice of a health care provider;
- Obtaining a medical diagnosis if experiencing symptoms;
- Caring for a sick individual subject to Federal, State, or local quarantine or is self-quarantined at the advice of a health care provider;
- Caring for a child whose school or childcare facility has been closed or whose childcare provider is unavailable; and
- Experiencing any other substantially similar condition specified by the Secretary of Health and Human Services.
However, employers of health care providers or emergency responders may elect to exclude those employees from the emergency sick leave provisions.
Employees taking leave for themselves will have to be paid at least their normal wage or the applicable Federal, State, or local minimum wage, whichever is greater. Employees taking time off to care for family members must be paid at two-thirds of the foregoing rate. Sick leave is capped at $511 per day and $5,110 in the aggregate for leave taken in the first three bulleted points listed above, and capped at $200 per day and $2,000 in the aggregate for leave taken in the last three bulleted points listed. Additionally, wages required to be paid under the emergency paid sick leave provisions will not be subject to the 6.2 percent social security payroll tax typically paid by employers on employees’ wages.
For those employers with existing paid sick leave policies, they will be required to provide employees with the sick leave provided under the Act. Employers cannot require employees to use any other available paid sick time before using this emergency paid sick leave. Employers are also prohibited from the following:
- Requiring employees to find replacements to cover hours during time off; and
- Discharging or discriminating against employees for requesting paid sick leave or filing a complaint against the employer related to such.
Employers will have to post a notice containing information regarding the emergency paid sick leave provisions and the Department of Labor will create a model of this notice no later than seven days after the Act is enacted.
Tax Credits for Employers
Employers will be able to recover some costs associated with Act through tax credits, specifically:
- Sick Leave Credit. The credit for each employee will be for wages (including qualified health plan expenses) of up to $511 per day while the employee is receiving paid sick leave to care for himself or herself, or $200 if caring for a family member or child whose school has closed. The credit will be limited to ten days per employee per quarter;
- Family Leave Credit. The credit for each employee will be for wages (including qualified health plan expenses) of as much as $200 per employee per day, and $10,000 in the aggregate for all calendar quarters; and
- Railroad Retirement Tax Act (RRTA) Credit. These employment taxes are also eligible for the credit, in a manner parallel to the regular social security taxes.
To prevent a double benefit, employers must include the amount of credits received in their gross income. Employers may also elect not to take the credit for a given quarter.
Please contact Dvorak Law Group, LLC to discuss specific questions and recommendations regarding your business.