Employer Obligations Under the Families First Coronavirus Response Act

The Families First Coronavirus Response Act (H.R. 6201), which goes into effect April 2, 2020, requires employers with fewer than 500 employees to temporarily provide two new paid leave benefits to their employees as a result of COVID-19. It is important for all covered employers to understand their obligations under the law in order to properly administer these benefits and take advantage of available tax credits.

Division C – Emergency Family and Medical Leave Expansion Act

New Protected Leave Entitlement

This section of the Act will expand the federal Family and Medical Leave Act for a temporary period (through December 31, 2020) to require private employers with fewer than 500 employees and government employers to provide employees who have been employed for at least 30 calendar days the right to take up to 12 weeks of job-protected leave under the FMLA if the employee is unable to work (or telework) due to a need for leave to care for the employee’s son or daughter under the age of 18 if the child’s school or place of care has been closed, or if the child’s child care provider is unavailable, due to a public health emergency.

“Public health emergency” means an emergency with respect to Covid-19 declared by a Federal, State or local authority. “Child Care Provider” means a provider who receives compensation for providing child care services on a regular basis. “School” includes both elementary and secondary schools.

Paid Emergency FMLA Leave Provided By Employers

The first 10 business days of the Emergency FMLA leave will be unpaid. An employee, at their option, may substitute any paid sick leave, vacation or other paid time off. (Note that employers with fewer than 500 employees will also be required to provide two weeks of emergency paid sick leave, which could be used by the employee during this otherwise unpaid period of leave. See the new emergency paid sick leave provisions below.) After those first 10 business days, the employer will have to provide paid leave for each day of protected leave taken by the employee (up to another 10 weeks of leave). The paid Emergency FMLA leave will be calculated at not less than two-thirds of the employee’s regular rate of pay, based on the hours the employee would otherwise have been scheduled to work, but in no event shall the paid leave provided by the employer exceed $200 per day, and $10,000 in the aggregate for all Emergency FMLA leave taken by the employee.

Job Restoration

The FMLA’s job restoration provisions will apply, except that a small employer with fewer than 25 employees will not need to restore an employee to their job if, at the time the leave ends, the job position no longer exists due to economic conditions or other changes in the employer’s operating conditions caused by a public health emergency during the leave period. However, the small employer will still have to make reasonable efforts to restore the employee to an equivalent position, and if those efforts fail, would have to contact the employee if an equivalent position becomes available within a 1-year period.

Exemptions

Note that although this expanded leave protection will apply to all private employers with fewer than 500 employees, the Secretary of Labor will have the authority to issue regulations to exempt certain health care providers and emergency responders from the definition of “eligible employee,” and to exempt small businesses with fewer than 50 employees from the new leave requirements when the imposition of such requirements would “jeopardize the viability of the business as a going concern.”

Division E – Emergency Paid Sick Leave Act

Private employers with fewer than 500 employees and government employers will be required to provide employees with two weeks of paid sick leave (for immediate use once the Act goes into effect), when an employee cannot report to work or telework 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 who is subject to an order as described in (1) above or has been advised as described in (2) above.
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.

Exclusions

An employer of an employee who is a health care provider or an emergency responder may elect to exclude such employee from these paid sick leave entitlements. In addition, the Secretary of Labor will have the authority to issue regulations for good cause excluding certain health care providers and emergency responders from the definition of employee, including by allowing such employers to opt out of the paid sick leave requirements, and to exempt small businesses with fewer than 50 employees from the requirement to provide sick leave for reason (5) above, when the imposition of such requirement would jeopardize the viability of the business as a going concern.

Calculation of Paid Sick Leave

Full-time employees will be entitled to receive up to 80 hours of sick leave, and part-time employees will be entitled to the number of hours of sick leave that they work, on average, over a two-week period. Sick leave is calculated based on the employee’s regular rate of pay for leave taken for reasons (1), (2) or (3) above. However, paid sick time provided to an employee will not exceed $511 per day ($5,110 in the aggregate) when taken for any of these reasons.

For sick leave taken for reasons (4), (5) or (6) above, the employee’s required compensation will be two-thirds of their regular rate of pay. However, paid sick time provided to an employee for any of these reasons will not exceed $200 per day ($2,000 in the aggregate).

No Obligation to Find Replacement

An employer may not require, as a condition or providing emergency paid sick time, that the employee using the sick leave search for or find a replacement employee to cover the hours during which the employee is using paid sick time.

Sequencing

Employees may use emergency paid sick leave first, before using other forms of paid leave, for any of the reasons listed above. An employer may not require its employees to use other forms of paid leave provided by the employer before they use emergency paid sick leave.

Notice

Employers will be required to post a notice to be prepared or approved by the Secretary of Labor of the requirements in the Emergency Paid Sick Leave Act. A model notice will be made available within 7 days after the date of enactment of the Act.

Additional Benefit

This emergency paid sick leave will be in addition to any paid leave employers currently provide. The Act may not be construed to diminish the rights or benefits an employee is entitled to receive under any existing employer policy.

No Payout Upon Termination

Unused emergency paid sick leave need not be paid out to employees upon termination of employment.

Expiration of Benefit

The requirements under the Emergency Paid Sick Leave Act will expire on December 31, 2020, and any unused paid sick leave will not carry over to the next calendar year.

Division G – Tax Credits For Emergency Paid Sick Leave and Paid Family and Medical Leave

Employers required to provide emergency paid sick leave would be allowed to take a tax credit for the amount paid by the employer for emergency sick leave wages, up to $511 per day if the employee needs to use sick leave for reasons (1), (2) or (3) above. The tax credit cap would be $200 per day for sick leave paid to employees taking leave for reasons (4), (5), or (6) above. The amount of the credit allowed for emergency paid sick leave will be 100% of qualified sick leave wages paid by the employer, subject to the tax credit caps and certain quarterly limits. Employers required to provide paid Emergency Family and Medical Leave as described above will also be allowed to take a tax credit for the qualified Emergency FMLA wages paid, up to $200 per day, and $10,000 per employee in the aggregate.

The tax credit will be taken against the employer portion of Social Security taxes and will be increased by the amount of the employer’s qualified health plan expenses that are allocable to the qualified Emergency FMLA paid leave and emergency sick leave wages paid as described above. “Qualified health plan expenses” means amounts paid or incurred by the employer to provide and maintain a group health plan (as defined in section 5000(b)(1) of the Internal Revenue Code of 1986), but only to the extent that such amounts are excluded from the gross income of employees by reason of section 106(a) of the Internal Revenue Code.

Please note that this summary is not intended to constitute legal advice.

Daijogo & Pedersen, LLP specializes in employment law counseling and strategic advice for employers. If you have questions regarding compliance the Families First Coronavirus Response Act or other employment laws, please feel free to contact Kristin Pedersen, Maki Daijogo or Julie Cobb Martel through our website,www.dpemploymentlaw.com, or by calling us at 415.924.9400.