Last Updated: April 2, 2020
The Families First Coronavirus Response Act (the “FFCR”) was signed into law on March 18, 2020 and takes effect today.[1] Among the many provisions in the FFCR — which is aimed at responding to the novel coronavirus (“COVID-19”) pandemic — are two new categories of mandated employer-paid leave:
- an expansion of the Family Medical Leave Act (“FMLA”) that allows job-protection and paid leave for up to 12 weeks for employees caring for minor children whose schools or regular care providers are closed or otherwise unavailable due to COVID-19; and
- up to two weeks of paid sick leave for employees who are unable to work because they are:
- subject to various conditions arising out of COVID-19, or
- are caring for an individual or child whose school or care provider is closed or unavailable.
While affected employers will shoulder the initial financial burden of these expanded benefits, employers may be able to recoup some or all of the costs through refundable tax credits created by the FFCR. Accordingly, the FFCR may benefit employers (as well as employees) by offering them financial assistance in retaining valued employees who may be unable to report to work for extended periods of time for reasons relating to COVID-19. That said, preliminary guidance from the Department of Labor indicates that employees will be ineligible for FFCR benefits if:
- they are furloughed or had hours reduced for lack of business or due to statewide stay-home/shelter in place orders;
- their employer has closed for lack of business or due to statewide orders; or
- they are unable to report to work due to a statewide order. However, with the exception of school closures, the employee or a person in the employee’s care must be directly impacted by COVID-19 (e.g., diagnosis, exposure, etc.).
This summary is provided for informational purposes only and does not constitute legal advice. Please contact a member of Reicker Pfau’s Employment Department with specific legal questions relating to the FFCR or other employment-related matters arising from COVID-19. Tax questions should be directed to your CPA or other tax professional.
FAMILY MEDICAL LEAVE ACT EXPANSION
Which Employers Must Offer E-FMLA Leave?
Employers with fewer than 500 employees must offer emergency paid family leave (“E-FMLA”) to employees who otherwise meet the eligibility requirements discussed below.
Employers with fewer than 50 employees for whom compliance would jeopardize the viability of the business may have an opportunity to obtain an exemption from offering E-FMLA to employees. However, the Secretary of Labor (the “Secretary”) must first exercise his authority to promulgate regulations providing for such an exemption. While the Secretary has yet to do so, the Department of Labor (“DOL”) has issued several “FAQs” relating to the FFCR, those of which currently indicate that certain businesses may be able to claim an exemption from providing benefits under the E-FMLA. Current details about that exemption and how to claim it are discussed below.
Employers with 500 or more employees need not provide E-FMLA, but such employers must still comply with existing FMLA laws which allow for unpaid, job-protected leave for certain family and medical reasons that include: (1) a serious health condition that renders employees unable to perform their essential job functions, or (2) because the employee must care for an immediate family member who has a serious health condition.
In other words, the FMLA may entitle employees of companies with more than 500 employees to take unpaid leave while maintaining their job and other benefits if they or an immediate family member contracts COVID-19, but such employees will not be entitled to E-FMLA leave or any other FMLA-related job protection for the sole reason that they need to care for a well-child whose regular care provider is unavailable.
Which Employees Are Eligible for E-FMLA Leave?
Employees who have worked for FMLA-covered employers for at least 30 calendar days may take E-FMLA leave. Both part-time employees and full-time employees are eligible. Employers may elect to exclude a wide range of health care providers and emergency responders from coverage.
What Are Qualifying Reasons for E-FMLA Leave?
Employees who are unable to work — whether in person or remotely — because they need to care for a minor child whose school, daycare, or childcare provider is closed or unavailable because of COVID-19 (or other public health emergency) may qualify for E-FMLA leave. The child need not be sick. Indeed, suspected or actual illness is not itself a permissible basis for taking E-FMLA leave.
When and for How Long Can Employees Take E-FMLA Leave?
From now until December 31, 2020, employees may take up to 12 weeks of E-FMLA leave. The first 10 days in which the employee is absent are unpaid, but employees may be able to receive benefits under other applicable government programs and/or draw upon their employer-provided PTO/sick/vacation leave. The E-Sick Leave benefits discussed below may be used during this time. Employers cannot force employees to use other benefits during this 10-day period. Preliminary DOL guidance indicates E-FMLA Leave can be taken incrementally and that employers and employees have broad latitude to negotiate mutually-agreeable schedules and arrangements, even taking leave in increments of less than one day.
How Much of Their Salary Will Employees Receive While on E-FMLA Leave?
Following the 10-day period of unpaid leave, employees are entitled to the lesser of 2/3 of their regular rate of pay or $200 per day. For employees with varying schedules, payment will be based on the average number of hours that the employee was scheduled per day over the 6-month period preceding the commencement of leave. Individual employee entitlement to E-FMLA leave is capped at $10,000.
Can an Employee be Terminated While on E-FMLA Leave?
Employees cannot be terminated because they take, have taken, or may take E-FMLA leave. But employees on E-FMLA leave are not immune from termination unrelated to their leave. In other words, employers can conduct lay-offs and other reduction in force measures that include employees on E-FMLA leave.
For example, if the employer operates a bar or restaurant and can no longer stay open or staff as many employees because of government orders to close or limit its business, the employer may terminate employees to reduce staff without offering E-FMLA (indeed, recent DOL guidance indicates E-FMLA would not be available in such circumstances). But in other situations, depending on the circumstances, terminating employees on or eligible for E-FMLA leave can appear discriminatory and open an employer to liability. For that reason, employers should consult with an employment attorney before terminating employees who have taken (or if it is reasonably foreseeable that they may take) E-FMLA leave.
EMERGENCY PAID SICK LEAVE ACT
Which Employers Must Offer E-Sick Leave?
The employers subject to the Emergency Paid Sick Leave Act (“E-Sick Leave”) are the same as those required to offer E-FMLA leave. Specifically, E-Sick Leave applies to companies with fewer than 500 employees. Current DOL guidance indicates that certain employers with fewer than 50 employees may claim an exemption with regard to E-Sick Leave to care for a child whose school is closed or care provider is unavailable due to COVID-19. The specifics of that guidance are discussed below.
Which Employees Are Eligible for E-Sick Leave?
All full-time employees are eligible for 80 hours of E-Sick Leave. Part-time employees are entitled to the amount of hours they work in an average 2-week period. Employees need not have worked for their employers for any set amount of time prior to taking E-Sick Leave. Health care providers and emergency responders may not be eligible for E-Sick Leave if their employer elects to exclude them from coverage. Employers may not require employees to find a replacement to carry out their duties during their E-Sick Leave period.
What Are Qualifying Reasons for E-Sick Leave?
Employees who are unable to work – whether in person or remotely – because:
- The employee is subject to a federal, state, or local quarantine or isolation order related to COVID-19;
- The employee has been advised by a healthcare provider to self-quarantine due to concerns related to COVID-19;
- The employee is experiencing symptoms of COVID-19 and seeking a medical diagnosis;
- The employee is caring for an individual who is subject to a quarantine or isolation order or who has been advised by a healthcare provider to self-quarantine due to COVID-19 concerns;
- The employee is caring for a child whose school or place of care is closed or childcare provider unavailable due to COVID-19 related reasons; or
- The employee is experiencing another “substantially similar condition” as the Secretary of Health and Human Services may specify.
While many believed E-Sick Leave would be available to employees unable to work due to government shutdown orders (e.g., California’s stay-home order), preliminary DOL guidance suggests otherwise. Rather, the employee or an individual in the employee’s care must be subject to a specific governmental quarantine or isolation order (e.g., the employee has COVID-19 symptoms and has been instructed by their doctor to self-isolate). Under this guidance — which is subject to change — the only broad-reaching orders or closures that would create eligibility of E-Sick Leave are those affecting schools and childcare (See E-Sick Leave Qualifying Reason No. 5, above).
When and for How Long Can Employees Take E-Sick Leave?
E-Sick Leave is available from now until December 31, 2020. Employees may take up to 80 hours of E-Sick Leave, all of which are paid. Such benefits are in addition to other sick leave and disability benefits to which the employee may already be entitled. Employers cannot force employees to use or exhaust other benefits before drawing on their E-Sick Leave. Unused E-Sick Leave hours do not accrue and are not paid out at termination.
How Much of Their Salary Will Employees Receive While on E-Sick Leave?
Employees are entitled to their regular rate of pay up to a cap of $511 per day ($5,110 total pay) if they themselves:
- are subject to a government isolation order related to COVID-19;
- have been advised by a healthcare provider to self-quarantine due to concerns related to COVID-19; or
- are experiencing COVID-19 symptoms and seeking a medical diagnosis (e., Nos. 1-3, enumerated above).
When the employee must be absent from work to care for another in relation to COVID-19 (see E-Sick Leave Qualifying Reason Nos. 4-6, enumerated above), their benefits are capped at 2/3 the regular rate of pay up to $200 per day or $2,000 total pay.
Other Requirements.
Employers must conspicuously post a notice advising employees of their right to E-Sick Leave. The Department of Labor has created a model notice advising employees of their rights under this section that is available on its website and is appended hereto. In the case of employees working remotely, employers may satisfy the posting requirement by:
- emailing or direct mailing the notice to each employee; or
- posting the notice on an employee information internal or external website.
Employers may not discriminate or retaliate against an employee for taking E-Sick Leave or filing a complaint against the employer for failure to comply.
TAX CREDITS FOR E-FMLA AND E-SICK LEAVE
Employers are entitled to recoup up to 100% of the E-FMLA and E-Sick Leave benefits they pay out in the form of refundable tax credits. E-FMLA and E-Sick Leave benefits are exempt from Social Security tax. Medicare tax is chargeable against such benefits but refundable. Companies who pay or anticipate paying benefits under the FFCA should consult with their CPA or other tax advisors to understand the tax implications and plan accordingly. While preliminary DOL guidance indicates that employers have the option to supplement FFCR benefits up to the employee’s actual salary, they will not be eligible for a refund beyond the caps set forth in the FFCR.
SMALL BUSINESS EXEMPTION
The FFCR authorizes the Secretary to create an exemption for small businesses (fewer than 50 employees), for whom compliance would jeopardize the viability of that business as a going concern. While the Secretary has yet to promulgate regulations establishing such an exemption, early DOL guidance indicates that such an exemption will be available to qualifying employers in the case of leave requests arising out of lack of childcare options. In other words, the small business exemption may excuse qualifying businesses from providing E-FMLA leave and E-Sick Leave Qualifying Reason No. 5 (school or childcare unavailable), but not for other qualifying reasons for E-Sick Leave.
The FAQs are non-binding and subject to change, so there is some risk in taking the exemption now. But employers who must do so, should adhere to the following DOL guidance. An authorized officer of the business must determine at least one of the following:
- That the provision of paid sick leave or expanded family and medical leave would result in the small business’s expenses and financial obligations exceeding available business revenues and cause the small business to cease operating at a minimal capacity;
- That the absence of the employee or employees requesting paid sick leave or expanded family and medical leave would entail a substantial risk to the financial health or operational capabilities of the small business because of their specialized skills, knowledge of the business; or responsibilities; or
- That there are not sufficient workers who are able, willing, and qualified, and who will be available at the time and place needed, to perform the labor or services provided by the employee or employees requesting paid sick leave or expanded family and medical leave, and these labor or services are needed for the small business to operate at a minimal capacity.
The business should create and maintain documentary support for the above determinations. Presently, there is no mechanism for businesses to “apply” for an exemption. Rather, they make the above determination internally and maintain documentation supporting that determination.
HOW EMPLOYERS SHOULD PREPARE FOR E-FMLA AND E-SICK LEAVE
Given the large number of employees likely to take advantage of one or both of these programs, employers should work closely with their legal and tax advisors to understand the ramifications and prepare for implementation. Such preparation includes updating employee handbooks and leave policies and complying with posting requirements.
Please contact a member of Reicker Pfau’s Employment Department at (805) 966-2440 for assistance or with any specific questions. We remain fully operational and available to our clients during the COVID-19 crisis.
[1] The FFCR was originally anticipated to take effect on April 2, 2020 but the Department of Labor advanced the date one day to April 1, 2020.