On March 18, 2020, President Trump signed the Families First Coronavirus Response Act (the “Act”), a new law aimed at providing relief to workers and their families during the COVID-19 outbreak. The Act includes a number of provisions directly impacting employers, and the enacted version contains a number of changes from the bill first passed by the House of Representatives on March 14, 2020. What follows is a discussion of provisions of the Act, which affect employee leave and information regarding tax credits employers may utilize when providing emergency paid leave.
The Emergency Family and Medical Leave Expansion Act
The Emergency Family and Medical Leave Expansion Act (the “EFMLEA”) amends the Family and Medical Leave Act (the “FMLA”) to include up to 12 weeks of paid Public Health Emergency Leave (“Family Leave”).
When does the EFMLEA take effect?
Not later than 15 days after the date of enactment of the Act, or April 2, 2020.
When does the EFMLEA expire?
December 31, 2020.
Who is a covered employer?
Employers who employ 500 or fewer employees are deemed covered by the EFMLEA.
What employers may be excluded from Family Leave requirements?
The DOL has the discretion to (1) exclude certain health care providers and emergency responders from the definition of eligible employee, and (2) exempt small businesses with fewer than 50 employees when the imposition of the EFMLEA would jeopardize the viability of the business.
Who is an eligible employee?
An eligible employee means an employee who has been employed for at least 30 calendar days by the employer with respect to whom Family Leave is requested.
What is a qualifying need related to a public health emergency?
A qualifying need for Family Leave, will occur when an employee is unable to work or telework due to a need for leave to care for a child, under the age of 18, if the school or place of care has been closed, or the child care provider of such child is unavailable, due to a public health emergency.
What portion of the 12 weeks are paid?
The first 10 days for which leave under EFMLEA is taken, may consist of unpaid leave, although an employee may substitute accrued vacation leave or other forms of leave to cover the first 10 days of leave under EFMLEA. After the first 10 days, an employer is to provide an employee paid leave.
How is paid leave calculated by an employer?
Paid leave is to be calculated based on an amount not less than two-thirds of an employee’s regular rate of pay for the number of hours the employee would otherwise be normally scheduled to work.
What about employees with a varying work schedule?
Paid leave for employees who have a varying work schedule, such that an employer is unable to determine with certainty the number of hours the employee would have worked if the employee had not taken Family Leave, is calculated by determining a number equal to the average number of hours that the employee was scheduled per day over the 6-month period ending on the date on which the employee takes such leave, including hours for which the employee took leave of any type. Alternatively, if the employee did not work over such period, the reasonable expectation of the employee, at the time of hiring, of the average number of hours per day that the employee would normally be scheduled to work.
What type of notice is required from employees seeking leave under the amended provision of the FMLA?
If the need is foreseeable, an employee is to give as much notice as is practicable.
Is there a cap on the amount of paid leave to be provided employees?
Yes. The EFMLEA provides that in no event shall Family Leave exceed $200 per day and $10,000 in the aggregate.
What is an employers’ responsibility to restore employees to their jobs when they return from leave?
Employers, as a general matter, must restore an employee, who took Family Leave, to the same or substantially similar position as the employee held prior to taking Family Leave. However, employers with fewer than 25 employees may not be obligated to provide job restoration, if certain economic conditions are met.
The Emergency Paid Sick Leave Act
The Emergency Paid Sick Leave Act (“EPLSA”) requires certain employers to provide emergency sick leave to employees who have a qualifying need.
When doe the EPLSA take effect?
Fifteen days after the date of enactment of the Act, or April 2, 2020.
When does the EPLSA expire?
December 31, 2020.
Who is a covered employer?
Most private entities who employ fewer than 500 employees and public agencies that employ any employees. An individual is employed by a public agency if the individual is employed by the U.S. Government, the U.S. Postal Service, any State, political subdivision of a State, or interstate governmental agency, with certain exceptions.
Who are eligible employees?
All employees are eligible regardless of the length of time employed. Provided that, the DOL has the discretion to issue regulations that would exclude certain health care providers and emergency responders.
What may paid sick time be used for?
Employers are to provide each employee paid sick time to the extent that an employee is unable to work or telework, due to a need for leave because:
1. The employee is subject to a Federal, State, or local quarantine or isolation order related to COVID–19.
2. The employee has been advised by a health care provider to self-quarantine due to concerns related to COVID– 19.
3. The employee is experiencing symptoms of COVID– 19 and seeking a medical diagnosis.
4. The employee is caring for an individual that is subject to an order by a governmental authority or has been advised to self-quarantine as described in paragraphs 1 and 2.
5. The employee is caring for a son or daughter of such employee if the school or place of care of the son or daughter has been closed, or the child care provider of such son or daughter is unavailable, due to COVID–19 precautions.
6. The employee is experiencing any other substantially similar condition specified by the Secretary of Health and Human Services in consultation with the Secretary of the Treasury and the Secretary of Labor.
What employers may be excluded from paid sick time requirements?
As previously noted, the DOL has the discretion to exclude health care providers and emergency responders from the definition of employee and the DOL also has the discretion to exempt small businesses with fewer than 50 employees from the requirements of the EPSLA. It remains to be seen what types of employers the DOL may exempt.
What is the rate of pay for sick time?
An employee must be paid the employee’s regular rate of pay during paid sick time, unless the employee’s leave is to care for someone else subject to a quarantine or to care for a child whose school or care provider is closed due to COVID-19 precautions, in such case the employee is to be paid two thirds of the employee’s regular rate of sick time.
Is there any cap on the amount paid for sick time?
Yes. The amount paid for sick leave is not to exceed $511 per day and $5,110 in the aggregate for full-rate sick time and $200 per day and $2,000 in the aggregate for two thirds rate sick time.
Will employers be required to carry over unused paid sick time provided under the EPSLA?
No.
Can employers require employees to use other paid leave before the emergency paid leave is used?
No. An employer may not require an employee to use other paid leave offered by the employer before the employee uses the emergency paid sick leave.
Can employers require an employee to find a replacement during paid sick leave?
No.
Are employers required to provide employees notice of paid sick leave?
Yes. Employers must post notices in conspicuous places on the premises of the employer where notices are customarily posted. The DOL is to issue a model notice within 7 days of the enactment of the Act.
Tax Credits
Employers may be entitled to tax credits for both paid sick leave and Family Leave, to offset the cost of the paid leave. The tax credits will be allowed against the employer’s portion of Social Security taxes, which includes taxes imposed by 26 U.S.C. §§ 3111(a) or 3221(a).
What tax credits are available to employers?
Employers may claim a payroll tax credit on a quarterly basis for both paid sick leave and Family Leave, in an amount equal to 100% of the qualified paid leave under either the EFMLEA or the EPSLA.
Is there any cap on the amount of credit available?
Yes. Under the EFMLEA, the amount of qualified Family Leave wages paid is capped at $200 per day for each individual up to $10,000 per calendar quarter. Such credit is limited to the Social Security taxes paid by the employer for the employment of all employees of the employer. Under the EPSLA, the amount of qualified sick leave wages paid is capped at $511 per day or $200 per day if the leave is for caring for a child or family member for up to 10 days per employee each calendar quarter. As with the EFMLEA, the credit is limited to Social Security taxes paid by the employer for the employment of all employees of the employer. Under both the EFMLEA and the EPSLA, the credit is refundable if it exceeds the amount the employer owes in payroll tax.
Remaining Questions
Some employers still remain uncertain whether they will be exempted. For certain industries, the likelihood of exemption seems low, while others with concerted industry lobby seem more probable. For example, the American Dental Association is working hard to get dentists employing fewer than 50 employees exempted, on the basis that failure to exempt would jeopardize the viability of the business.
Additionally, the DOL is required to issue a model notice and additional guidance regarding certain elements of the Act. Carson will provide updates as additional guidance is provided. In the meantime, employers, who as a default matter are subject to the act, should prepare as they deem most prudent.
For further information, please contact a Carson LLP attorney.
Liesl Muehlhauser