The Families First Coronavirus Response Act (“FFCRA”) takes effect on April 1, 2020 and will remain in effect until December 31, 2020. The FFCRA enacts the Emergency Paid Sick Leave Act (“Paid Leave Act”), and expands the Family Medical Leave Act (“FMLA”) through the Medical Leave Expansion Act (“the FMLA Expansion Act”) (collectively the “Acts”). Businesses will be able to take advantage of new tax credits to offset costs associated with paid leave benefits implemented under the Acts. The Acts are applicable to all employers with fewer than 500 employees, although the Secretary of Labor has the authority to exempt small businesses with fewer than 50 employees when the imposition of such requirements would jeopardize the viability of the business. The Acts’ main provisions are discussed below.
PAID LEAVE ACT
Under the Paid Leave Act, an employee may take 80 hours of paid leave if the employee is full time. Part-time employees may take the equivalent of the number of hours they would work, on average, during a two-week period. The Paid Leave Act applies if the employee is not able to work for the following reasons:
- The employee is subject to a federal, state, or local quarantine or isolation due to COVID-19;
- A health care provider advised the employee to self-quarantine due to concerns related to COVID-19 (self-imposed quarantine does not qualify);
- The employee is experiencing symptoms of COVID-19 and seeking a medical diagnosis;
- The employee is caring for an individual (not limited to family members) who is either subject to a federal, state, or local quarantine or isolation due to COVID-19, or has been advised by a health care provider to self-quarantine due to concerns related to COVID-19;
- The employee is caring for the employee’s child whose school has been closed or place of care is unavailable due to COVID-19 precautions; or
- The employee is experiencing any other substantially similar condition specified by the Secretary of Health and Human Services in consultation with the Secretaries of Treasury and Labor (to be clarified by the Secretary of Health and Human Services).
For reasons 1, 2, and 3 above, eligible employees shall receive paid leave at their regular rate, not to exceed $511 per day, and $5,110 in total. For reasons 4, 5, and 6 above, employees shall receive paid leave at ⅔ of their regular rate, not to exceed $200 per day, and $2,000 total.
An employer may not require an employee to use other paid leave provided by the employer before using the paid sick time provided under the Paid Leave Act. Therefore, until clear guidance is published, it might be safe to assume that it is the employees’ prerogative to decide whether to use paid leave under the Paid Leave Act, before or after any other leave they may be entitled to, including FMLA leave.
The paid leave under the Paid Leave Act cannot be carried over from one year to the next and an employer is not required to pay unused leave under the Paid Leave Act if an employee resigns from employment.
The Paid Leave Act is independent from FMLA. Therefore, leave taken under the Paid Leave Act will likely not count against an employee’s regular FMLA leave.
The Paid Leave Act allows employers to require that employees follow reasonable notice procedures in order to continue receiving the paid sick leave after the first workday that an employee receives paid sick leave.
The Paid Leave Act requires that employers post and keep posted a notice to employees regarding their rights under the Act. The Secretary of Labor must release a model notice no later than March 25, 2020.
Under the Paid Leave Act, employers can take tax credits for 100 percent of wages paid by the employer, with a cap of $200 or $511 per day, per employee, depending on the reason for the employee’s taking paid leave as described above. Because the amounts are capped, employers will likely not receive tax credits for any amount it chooses to pay over the daily caps.
FMLA EXPANSION ACT
The FMLA Expansion Act expands FMLA provisions by adding the new leave entitlement. The new provision expands FMLA leave entitlement for “eligible” employees whose child’s school or place of care has closed due to COVID-19. FMLA leave taken for this circumstance entitles employees to pay during part of the leave.
The term “eligible employee” means an employee who has been employed for at least 30 calendar days by the employer.
The Secretary of Labor shall have the authority to issue regulations for good cause to exclude certain health care providers, and emergency responders from the definition of eligible employees.
The initial 10 days of leave are unpaid, but employees may elect to use accrued paid sick leave and/or accrued vacation time during this time. Thereafter, an employee is entitled to receive ⅔ of their regular rate/wages for the number of hours the employee would be regularly scheduled to work, not to exceed $200 per day, and $10,000 in total.
To the extent than an employer cannot determine the exact number of hours the employee would have worked (for example for hourly employees whose schedules vary), the rate should equal the average number of hours that the employee was scheduled per day over the six-month period prior to the leave. If the employee did not work in the preceding six-month period, the paid leave rate should equal the reasonable expectation of the employee at the time of hiring with respect to the average number of hours per day that the employee would be scheduled to work.
The FMLA Expansion Act does not create emergency leave independent of FMLA, therefore FMLA (and its 12-week limit on leave) remains intact with the exception of the new childcare-related circumstances for leave as explained above. Thus, leave taken under the FMLA Expansion Act will likely count against an employee’s regular 12-week FMLA entitlement.
Employers should continue to follow their regular FMLA process including posting requirements, notice of eligibility and rights and responsibilities, and designation notice processes.
The FMLA Expansion Act allows employers to take tax credits for 100 percent of wages paid by the employer, with a cap of $200 per day, per employee, and $10,000 total. Because the amounts are capped, employers will likely not receive tax credits for any amount it chooses to pay over the daily caps.