On March 18, 2020, President Trump signed the Families First Coronavirus Response Act, which provides two significant benefits for employees and a corresponding tax credit for employers.
The law will go into effect April 1, 2020, and will remain in place until December 31, 2020. Both bills cover all employers having fewer than 500 employees.
Emergency Paid Sick Leave
All full-time and part-time employees are immediately eligible for up to two weeks of emergency paid sick leave (pro-rated for part-time employees). The sick leave is applicable when the employee cannot work or telework because of one of the following:
- The employee is subject to a government quarantine or isolation order;
- The employee has been advised by a health care provider to self-quarantine;
- The employee is experiencing medical symptoms of coronavirus and is seeking a medical diagnosis;
- The employee is caring for a person subject to the government quarantine or isolation order or who has been advised a health care provider to self-quarantine;
- The employee is caring for a child of the employee whose school or daycare is closed due to coronavirus;
- The employee is experiencing any other substantially similar condition specified by a federal government agency as qualifying for emergency paid sick leave.
The law prioritizes emergency paid sick leave over any other sick leave or paid time off benefit provided by an employer. An employer cannot require employees to take any other existing leave first.
Leave is provided at full pay (capped at $511.00 per day) if it is taken due to the employee’s own coronavirus-related sickness, the employee’s own government-required quarantine, or the employee’s own health care provider-advised quarantine. Leave taken to care for someone who is subject to quarantine or isolation order or to care for a child whose school is closed is paid at 2/3 of the employee’s regular rate, subject to a limitation of $200.00 per day.
The new legislation is silent on how paid sick leave is required to be documented. More guidance is expected, but for now, we would advise employers to have the employee document his or her own reasons for the leave. Employers are permitted to require the employee to follow reasonable notification procedures throughout the paid sick leave.
Emergency Family Medical Leave
The Emergency Family Medical Leave makes all employees eligible as long as they have worked at least 30 calendar days for the employer. This is in contrast to the standard FMLA requirement where leave is available only if an employee has worked 12 months and 1,250 hours in the immediately preceding 12 months.
Emergency FMLA is available for an employee who is unable to work or telework due to the need to care for a son or daughter under the age of 18 who is ill with coronavirus-related symptoms or when the child’s school or daycare is closed due to coronavirus.
The first 10 days of Emergency FMLA are unpaid. If the employee is also eligible for paid sick leave under the new legislation, the employee may use the sick leave during this 10-day period. After the 10-day unpaid leave expires, the employee is eligible for paid leave at the rate of two-thirds or his or her regular pay rate. If the regular pay rate fluctuates, the employer should review the prior 6-month period to determine the average number of hours worked per week and base the leave pay on that amount of hours.
This paid leave is capped at a maximum of $200.00 per day and $10,000.00 for the duration of the leave. After the $10,000.00 maximum is reached, the remainder of the Emergency FMLA, which can be up to 12 weeks as needed, is unpaid.
An employee generally will have the right to be reinstated to work at the end of the Emergency FMLA. An exception applies for employers with fewer than 25 employees if (a) the employee’s position no longer exists because of economic and operating conditions caused by the public health emergency; and (b) the employer makes reasonable efforts to restore the employee to an equivalent position in terms of pay, benefits and terms of conditions, for a one-year period following leave. This would include an obligation to contact the employee when an equivalent position becomes available during this one-year period.
The Department of Labor is required to promptly publish a model poster that can be used in the workplace to notify employees.
Paying for the Leave
Employers must pay up front for the leave, but are entitled to a credit on payroll taxes (federal income tax and FICA) equal to 100% of the qualified paid sick leave and FMLA wages and related health benefit expenses. The credit is taken immediately by reducing the amount normally paid to the IRS each payroll, to cover the qualified wage and insurance expense. If the total qualified expenses exceed the employer’s tax withholding obligation for the pay period, then the excess amount is available as a refund to the employer through the filing of a new IRS Form 7200. Employers must keep careful records supporting all calculations.
Employers with 50 or fewer employees may be exempted from one aspect of the law – the requirement to provide paid leave for caring for a child whose school or daycare is closed – if the requirement to provide paid leave would jeopardize the viability of the business as a going concern. This is a narrow exemption, and employers should study the specific findings they are required to make if they want to utilize the exemption.