Emergency legislation: Families First Coronavirus Response Act (Updated March 26, 2020)
On Wednesday, March 18, 2020, the U.S. Senate passed and U.S. President Donald Trump signed into law a revised version of H.R. 6201, the emergency Families First Coronavirus Response Act (FFCRA) that was passed by the U.S. House of Representatives earlier in the week.
The FFCRA implements many changes to increase public health measures. The FFCRA temporarily requires most U.S. private employers to provide paid leave to employees for certain COVID-19-related reasons and expands the Family and Medical Leave Act (FMLA) to provide employees paid leave under the FMLA to care for a child as a result of school or child care closings due to a public health emergency. While employers are responsible for funding the paid leave, employers will be able to take tax credits for the paid leave provided to employees under the FFCRA.
According to the U.S. Department of Labor (DOL), the paid leave provisions of the FFCRA will take effect on April 1, 2020, and expire as of Dec. 31, 2020.
The FFCRA applies to most private employers with less than 500 employees and public employers with at least one employee. Per guidance from the DOL, employers should calculate the coverage count at the time an employee requests the leave. This means that employees with a workforce that fluctuates around the 500-employee mark may fluctuate in and out of coverage. For purposes of the employer coverage calculation, the DOL advises that the employers should count all active employees, full- and part-time, as well as employees on leave, temporary employees who are jointly employed with another employer, and day laborers supplied by a temporary agency. Independent contractors should not be included in the employer coverage calculation.
Whether or not related entities should aggregate their employment populations, for purposes of the employer coverage calculation differs, under the Emergency Paid Sick Leave Act (PSLA) and Emergency Family and Medical Leave Expansion Act (EFMLA). The EFMLA uses the “integrated employer” test provided for in the FMLA. The DOL guidance, however, suggests that the integrated employer test is not applicable to determining whether employees of affiliated companies should be counted together for purposes of determining the applicability of the PSLA. Instead, employers are directed to count those workers which they may jointly employ with another entity. In some cases, employees of one affiliate may be jointly employed by another affiliate and can be counted for purposes of determining the applicability of the PSLA. However, the joint employment test is very specific and differs from the integrated employer test. Consider consulting with legal counsel regarding the application of these tests and the related implication of aggregating workforces.
Emergency Paid Sick Leave Act
Employee coverage and uses
Employees who work for covered employers are eligible for leave regardless of their tenure with the organization or full- or part-time status.
The Emergency Paid Sick Leave Act (PSLA) requires covered employers to provide two weeks of paid sick leave if an employee is unable to work (or telework) due to a need for leave because the employee:
Is subject to a federal, state or local quarantine or isolation order related to COVID-19
Has been advised by a health care provider* to self-quarantine due to concerns related to COVID-19
Is experiencing symptoms of COVID-19 and seeking a medical diagnosis
Is caring for an individual who is subject to an order as described in bullet point one or has been advised to self-quarantine as described in bullet point two
Is caring for his or her son or daughter because the school or place of care has been closed, or the child care provider is unavailable due to COVID-19 precautions
Is experiencing any other substantially similar condition as specified by the Secretary of Health and Human Services in consultation with the Secretary of the Treasury and the Secretary of Labor
Full-time employees are entitled to up to 80 hours of paid leave for the reasons listed above. Part-time employees are entitled to paid leave up to the average number of hours they would work in a two-week period for the reasons listed above. Once the 80-hour entitlement is exhausted, no additional leave under the PSLA is available, even if the employee experiences another qualifying event.
Rate of pay
The rate of pay for sick leave is the employee’s regular rate of pay**, the minimum wage under the Fair Labor Standards Act (FLSA), or the state or local minimum wage, whichever is greater.
If an employee is taking paid sick leave for a use described in bullet points four, five or six above, the employee’s pay entitlement is reduced to two-thirds of the rate of pay.
Importantly, the PSLA limits the amount an employer is required to pay to an employee each day, consistent with the tax credits permitted under the FFCRA, as follows:
$511 per day ($5,110 in aggregate) for a use described in bullet points one, two or three above
$200 per day ($2,000 in aggregate) for a use described in bullet points four, five or six above
The PSLA ensures employees who work under a multi-employer collective bargaining agreement and whose employers pay into a multi-employer plan are similarly provided with leave.
Employers may not retaliate against or terminate an employee for taking leave under the PSLA.
Existing paid leave policies
Employers may not require employees to exhaust their current sick leave before using leave under the PSLA. Further, the PSLA states that it does not diminish the rights or benefits an employee is entitled to under any other federal, state or local law, collective bargaining agreement or existing employer policy. This means that the paid leave provided under the PSLA must be provided in addition to any other paid leave the employer is already obligated to provide the employee by law and agreement.
The DOL has also made clear that any paid leave provided by an employer prior to the April 1, 2020, effective date, will not count towards the PSLA leave entitlement and will not be eligible for the tax credit, summarized below.
Employers are required to post an employee rights notice under FFCRA and keep it posted where such notices are customarily posted for employees.
Emergency Family and Medical Leave Expansion Act
Employee coverage and uses
The EFMLA expands leave under the FMLA to provide leave for employees who need to care for their child due to the closure of schools and childcare facilities as a result of the COVID-19 public health emergency (referred to as a Qualifying Need Related to a Public Health Emergency).
Under the EFMLA, both full-time and part-time employees who have worked for the employer for at least 30 calendar days will be entitled to take up to 12 weeks of job-protected leave for a Qualifying Need Related to Public Health Emergency. For purposes of determining employee coverage, the DOL has advised that the 30-days of employment calculation is made as of the day leave would commence. As a result, employees hired during 2020 will become eligible for leave after 30 calendar days of employment.
Under the EFMLA, the first two weeks of such FMLA may be unpaid. During this 10-day period, an employee may choose to substitute accrued vacation leave, personal leave or other medical or sick leave, but an employer may not require an employee to do so.
After the two weeks of unpaid leave, employers must provide up to 10 weeks of paid FMLA leave at a rate of no less than two-thirds of the employee’s regular rate of pay**. The EFMLA caps the paid leave entitlement at $200 per day ($10,000 in aggregate).
As with traditional FMLA leave, this leave is job-protected, meaning an employer must return the employee to the same or equivalent position upon their return to work. The EFMLA contemplates an exception to this requirement for employers with fewer than 25 employees if the employee’s position does not exist after FMLA leave due to an economic downturn or other operating conditions that affect employment caused by a public health emergency during the period of leave. This is subject to certain conditions, including reasonable attempts to return the employee to an equivalent position, and required efforts to contact a displaced employee for up to one year after they are displaced.
Notice and certification
An employee seeking foreseeable leave must provide employers with notice of the need for leave as soon as practicable. The EFMLA does not allow employers to condition approval of leave on any form of certification.
Provisions of the FFCRA allow employers of emergency responders and health care providers to exclude such employees from the paid leave provisions under the EFMLA and PSLA.
Tax credits for paid leave
The FFCRA provides tax credits for private employers’ portion of payroll taxes for wages paid to employees taking either paid sick leave or FMLA pursuant to the FFCRA. The sick leave credit for each employee would be for wages as much as $511 per day while the employee is receiving paid sick leave to care for themselves, or $200 per day if the sick leave is to care for a family member or child if the child’s school is closed, subject to the aggregate limits noted above. The amount of tax credit for qualified family leave wages for each employee is $200 per day or $10,000 in aggregate. Tax credits are also available for certain qualified health plan expenses related to the leave provided under the FFCRA.
Additional guidance coming
The FFCRA has provided the Secretary of Labor the authority to exempt small businesses with fewer than 50 employees from the requirements when the imposition of such requirements would jeopardize the viability of the business as a going concern. The recent guidance from the DOL indicates that the parameters of such exemptions are forthcoming in April. Notably, it does not appear that simply having an employment population of less than 50 employees will relieve an employer of the obligations under the FFCRA.
*The PSLA defers to the definition of Health Care Provider under the FMLA which includes (i) a doctor of medicine or osteopathy who is authorized to practice medicine or surgery (as appropriate) by the State in which the doctor practices; or (ii) any other person determined by the Secretary to be capable of providing health care services.
**For purposes of all leave under the FFCRA, the regular rate of pay is calculated pursuant to the requirements of the FLSA, which, in general requires adding all compensation received by the employee (including commissions, tips, etc.) during a workweek and dividing the sum by all hours actually worked in the same period.