Mandatory Paid Sick Leave Expected as U.S. Senate Takes Up COVID-19 Legislation
Early in the morning on Saturday, March 14, 2020, the U.S. House of Representatives passed the “Families First Coronavirus Response Act” (H.R. 6201), which contains several provisions that will impact private employers with 500 or less employees as they navigate the sweeping effects of the coronavirus. The bill now heads to the U.S. Senate for consideration this week. While final legislative action has not been taken and any law enacted may vary from this summary, the situation is rapidly evolving and employers should be aware that these and additional responsive measures may be implemented in the very near future. If passed by the Senate, these provisions would go into effect 15 days after enactment.
Emergency Paid Sick Leave Act:
The bill requires private employers with fewer than 500 employees to provide paid sick leave to all full- and part-time employees, regardless of tenure. Such paid sick leave is available to employees who are (1) in self-isolation because of a coronavirus diagnosis; (2) obtaining a medical diagnosis or care, if experiencing symptoms of coronavirus; (3) complying with the recommendation or order of a public official or doctor because the employee has been exposed to coronavirus or is exhibiting symptoms thereof; (4) caring for a family member who is self-isolating because of a coronavirus diagnosis, or is experiencing symptoms, or has been exposed; or (5) caring for a child if the child’s school or place of care has been closed, or the child care provider of such child is unavailable, due to coronavirus.
Full-time employees are entitled to two weeks (80 hours) of paid sick leave, and part-time employees are entitled to a number of hours equal to the number of hours they work, on average, over a two-week period. The leave is to be paid at the employee’s regular rate if the employee is in self-isolation because of a diagnosis, obtaining a medical diagnosis or care, or complying with a recommendation or order of a public health official or doctor due to coronavirus exposure or symptoms. If, however, the leave is to care for a family member who is sick or self-isolating or for a child whose school or childcare is closed or unavailable, the leave is to be paid at two-thirds of the employee’s regular rate.
This paid sick time is in addition to any paid leave already available to the employees under current employer policies. Employers may not change their existing policies to avoid these additional obligations. Further, an employer may not require an employee to use other paid leave before using paid sick time under this provision.
Emergency Family and Medical Leave Expansion Act:
In addition to paid sick leave, this bill also temporarily expands Family and Medical Leave Act (FMLA) eligibility to employees who have worked for qualified employers (private employers with 500 or less employees and public agency employers) for at least 30 calendar days for a “public-health emergency,” which is defined as a coronavirus-related emergency as declared by federal, state or local authorities. Eligible employees may take up to 12 weeks of job-protected FMLA leave, including for a qualifying need related to a “public-health emergency.” A “qualifying need related to a public health emergency” means the employee has need for leave to (1) comply with public health officials’ or doctors’ opinions that the employee’s physical presence on the job would jeopardize the health of others because of the employee’s exposure to the coronavirus, or exhibition of symptoms of the coronavirus; and the employee is unable to perform both the functions of his position and comply with such recommendation or order; (2) care for a family member with respect to whom a public official or doctor determines has been exposed to the coronavirus or is exhibiting symptoms thereof; or (3) care for a son or daughter under 18 years of age, if the school or place of care has been closed, or the child care provider of such son or daughter is unavailable, due to a public health emergency.
Under this FMLA coronavirus-related expansion, the first 14 days for which an employee takes this leave may consist of unpaid leave. While an employee may elect to substitute any accrued paid vacation leave, personal leave, or medical or sick leave for this 14-day unpaid leave, an employer cannot require the employee to do so. After the first 14 days, this leave is to be paid at an amount that is not less than two-thirds of the employee’s regular rate of pay for the number of hours the employee would otherwise normally be scheduled to work for the remainder of this FMLA (up to 10 additional weeks).
Tax Credit for Leave:
For the 14 days of emergency sick leave that an employee takes, the employer can receive a refundable tax credit equal to 100% of the qualified paid sick leave wages paid by the employer (subject to the limits below).
The legislation places the following caps on the credits:
If the employee is diagnosed with coronavirus, or quarantined in order to prevent its spread, the cap is $511 per day (this may change in the final bill); and
If the employee is caring for someone diagnosed with coronavirus or quarantined or caring for a child who is home because school or childcare services are closed, the cap is $200 a day (this may change in the final bill).
Tax credits for emergency FMLA are the same as above but the amount of qualified wages is capped at $200 per day (and $10,000 for all quarters) for all employees covered by the legislation.
Employers must provide these paid leaves and then apply for any applicable tax credit quarterly.
Employer Next Steps:
It is important to remember that this bill is not yet law. However, qualifying employers (private employers with fewer than 500 employees (and public agencies)) will want to prepare by considering how to implement these temporary changes to their existing leave and FMLA policies. While the bill allows the Secretary of Labor to issue regulations exempting small businesses with less than 50 employees when the requirements would jeopardize the viability of the business as a going concern, it is not entirely clear whether and how this will be implemented. For larger employers, it is not yet clear what this will mean and whether to expect additional or different requirements to provide leave to their employees.
The legislation also provides other benefits including requiring private health plans to cover COVID-19 diagnostic testing at no additional cost to employee (and dependent) participants and $1 billion in additional unemployment insurance funding to all states.