Yesterday evening, President Trump signed into law the Families First Coronavirus Response Act, which will go into effect on April 2, 2020 and remain in effect until December 31, 2020. The law amends the Family and Medical Leave Act (FMLA) for all employers with less than 500 employees and provides for paid leave to employees forced to miss work because of the coronavirus pandemic.
Below is a summary of the new law. We will be supplementing this as new information is obtained and related regulations are issued.
Temporary Emergency Family and Medical Leave Expansion Act (“E-FMLA”)
- Employers with fewer than 500 employees must provide up to 12 weeks of job-protected leave, ten weeks of which would be paid.
- Leave would be for “qualifying need related to a public health emergency.”
- Qualifying need is defined as to mean “the employee is unable to work (or telework) due to a need for leave to care for the son or daughter under 18 years of age of such employee if the school [meaning a primary or secondary school only] or place of care has been closed, or the child care provider of such son or daughter is unavailable, due to a public health emergency.”
- Note that this is the only qualifying need for paid E-FMLA leave. Under the original House bill, several other coronavirus-related reasons existed for E-FMLA. However, only the above, single qualifying need was signed into law.
- A “public health emergency” is defined to mean “an emergency with respect to COVID-19 declared by a Federal, State, or local authority.”
- The leave applies to employees who have been employed for at least 30 calendar days, rather than the 12-month period under the current FMLA.
- The Secretary of Labor has the regulatory authority to exempt employers with fewer than 50 employees if the provision of paid FMLA leave “would jeopardize the viability of the business as a going concern.”
- Employers with 25 or more employees would be required to reinstate employees after their FMLA leave period ends.
- Employers with fewer than 25 employers do not have to reinstate an employee if they are experiencing significant economic hardship.
- The first 10 days of the E-FMLA may be unpaid. The employee can choose to substitute any accrued vacation, personal or sick leave (including in certain instances the emergency paid “sick” leave described below). However, employers cannot force or require employees to first use accrued paid leave. It is the choice of the employee.
- Note that if an employee requests the 80 hours of Emergency Sick Pay Leave, discussed below, the employer must pay that amount for the first 10 days of E-FMLA.
- After the initial 10 days, the employer would be required to provide paid leave based on an amount that is not less than two-thirds of an employee’s regular rate of pay and the number of hours the employee would otherwise be normally scheduled to work.
- The bill caps the amount of the paid leave, per employee, to no more than $200 per day or $10,000 in the aggregate.
Emergency Sick Pay Leave
- Employers are required to provide full-time employees with 80 hours of certain emergency paid “sick” leave related to the coronavirus (with special rules for part-time employees).
- The paid sick leave could be used in any of the following circumstances:
- Subject to a federal, state or local quarantine or isolation order related to COVID-19;
- Advised by a health care provider to self-quarantine due to COVID-19 concerns;
- Experiencing COVID-19 symptoms and seeking medical diagnosis;
- Caring for an individual subject to a federal, state or local quarantine or isolation order or advised by a health care provider to self-quarantine due to COVID-19 concerns;
- Caring for the employee’s child if the child’s school or place of care is closed or the child’s care provider is unavailable due to public health emergency; or
- 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.
- Note that caring for another who is subject to an isolation order or advised to self-quarantine as described above is not limited to just family members.
- Full-time employees would be entitled to 80 hours of paid leave.
- Part-time employees are entitled to “a number of hours equal to the number of hours that such employee works, on average, over a 2-week period.”
- Employees who work a part-time or irregular schedule are entitled to be paid based on the average number of hours the employee worked for the six months prior to taking paid sick leave.
- Employees who have worked for less than six months prior to leave are entitled to the average number of hours the employee would normally be scheduled to work over a two-week period.
- The required paid leave ends with the employee’s next scheduled work shift following the end of the qualifying need.
- The required sick pay is calculated based on the employee’s regular rate of pay or, if higher, the applicable minimum wage rate.
- Note that in the case of leaves to care for a family member or child, the required sick pay is based on 2/3rds of the regular rate of pay.
- The maximum amount of required sick pay per employee is $511 per day and $5,110 in the aggregate.
- In the case of leaves to care for a family member of child, however, the maximum amount of required sick pay per employee is $200 per day and $2,000 in the aggregate.
- The bill imposes notice requirements and prohibits employers from discharging, disciplining or discriminating against employees who take paid sick leave.
- The Secretary of Labor is instructed to provide a model notice within seven days after enactment.
- An employer is also prohibited from requiring employees to look for or find replacement employees to cover the hours during which the employee is using the paid sick time.
- Violations are punishable under the FLSA.
Refundable Tax Credits to Pay for Leave
- The new law provides a series of tax credits to those employers subject to expanded FMLA and emergency paid “sick” leave requirements.
- The employer-related credits, which are refundable, would be applied against the employer portion of Social Security taxes for each quarter equal to the “qualifying” paid leave wages paid by the employer.
- The tax credits would apply with respect to both the FMLA-expanded paid leave as well as the emergency paid “sick” leave.
- The amount of the tax credits varies based on the type of leave.
Tax Credit for E-FMLA Leave
- Employers are provided a refundable tax credit equal to 100 percent of the “qualified family leave wages” that the employer is required to pay for a given quarter under the Expanded FMLA Leave.
- The amount of the qualified family leave wages that would be taken into account for purposes of the credit per employee is $200 for any day for which the employer pays the employee qualified family leave wages, up to a maximum amount for all calendar quarters of $10,000 per employee.
Tax Credit for Emergency Paid “Sick” Leave
- Employers are provided a refundable tax credit equal to 100 percent of “qualified sick leave wages” that the employer is required to pay for a given quarter under the Emergency Paid Sick Leave Act.
- The amount of qualified sick leave wages for purposes of the credit would vary depending upon the reason for the leave.
- For employees who must self-isolate, obtain a coronavirus diagnosis or comply with a self-isolation recommendation from a public official or health care provider, the amount of qualified sick leave wages taken into account is capped at $511 per day.
- The bill also allows for an increase in the amount of the tax credit equal to the amount “of the employer’s qualified health plan expenses as are properly allocable to the qualified family [or sick] leave wages for which such credit is allowed.”
- The tax credit would apply to wages the employer pays between (1) a date that the Secretary of the Treasury must specify within 15 days after the date of enactment and (2) December 31, 2020.