On March 18, 2020, President Trump signed The Families First Coronavirus Response Act, H.R., 6201 (“Act”). The bill becomes law on April 2, 2020, and is aimed at addressing the economic impacts of the COVID-19 pandemic. This is the second of what is expected to be a series of bills that aim to stimulate economic growth and ensure proper medical treatment and nutrition for those affected by COVID-19. The impact on businesses and employees covered by this new law is significant. The new law provides paid sick leave for certain employees through December 31, 2020 for leave related to COVID-19, requires insurers and governmental payors cover all costs of COVID-19 testing and expands food assistance and unemployment benefits. The following summarizes a few of the key elements, and is not intended as an all-inclusive list of the provisions included in the Act.
1) Emergency Family Medical Leave Act
The Act significantly expands the application of the 1993 Family Medical Leave Act (FLMA). Pursuant to the Act, eligible employees are entitled to The Act is applicable to any employer with fewer than 500 employees. For those employers, any employee who has been employed for 30 days or more is entitled to take 12 weeks leave for a “qualifying need related to the public health emergency.” A “qualified need related to a public health emergency means the employee is unable to work or telework due to a need for leave to care for a child under 18 years of age if the child’s school is closed or unavailable due to a public health emergency with respect to COVID-19. An employee is eligible only if they have been employed for at least 30 days. The Act provides that the first ten (10) days can be unpaid unless the employee chooses to use his/her paid time off. After the first ten days, the employee receives two-thirds of their regular rate, capped at $200 per day and $ 10,000 in the aggregate per employee. Part-time employees will be entitled to two-thirds of their paid sick leave in the amount equal to the average amount of hours they work for the six months prior to taking Emergency FMLA, capped at $200 per day. The FMLA expansion generally requires that the employee be restored to their position upon return from FMLA leave; however the restoration obligation will not apply to any employer with fewer than 25 employees if certain conditions are met, which are set forth in the Act.
The Secretary of Labor may exempt small businesses with fewer than 50 employees if the imposition of such requirements would jeopardize the viability of the business.
2) Emergency Paid Sick Leave Act
The Act also includes a provision that requires the employer to pay sick leave. To the extent an employee is unable to work or telework for a series of reasons identified in the Act, an employer with fewer than 500 employees must provide that employee with paid sick time. An eligible employee must be unable to work or telework due to one of the following reasons:
- the employee is subject to a federal, state, or local quarantine/isolation order related to COVID-19;
- the employee has been advised by a health care provider to self-quarantine due to COVID-19 concerns;
- the employee is experiencing COVID-19 symptoms and seeking a medical diagnosis;
- the employee is caring for an individual who is under a governmental quarantine or healthcare provider isolation order;
- the employee is caring for a child if school or childcare is unavailable due to COVID-19 precautions; or
- the employee is experiencing any other substantially similar conditions specified by the Secretary of Health and Human Services and other governmental officials.
Full-time employees shall be entitled to 80 hours of paid sick leave, while part-time employees will be entitled to paid sick leave based upon their average two-week work expectancy. This paid sick leave shall not carry over to any other years. Importantly, the employer may not require an employee to use other paid leave before the employee uses this paid sick leave. The paid sick time shall not exceed $511 per day as long as the employee is subject to quarantine, isolation, or is seeking medical treatment for COVID-19. In the event the employee is caring for an individual under such an order or caring for a child whose childcare is unavailable, the paid sick time shall not exceed $200 per day (or $2,000 in the aggregate).
Additionally, the Department of Labor has the authority to exempt small businesses with fewer than 50 employees from the COVID-19 leave requirements when those requirements would jeopardize the viability of the business as a going concern.
3) Employer Tax Credits for Paid Family Leave & Sick Leave
In an effort to assist the employer, an employer is allowed a payroll tax credit for paid family leave or paid sick leave in an attempt to reimburse the employer for the newly mandated paid leave. Employers will be able to recover some costs associated with the paid emergency family and medical leave and emergency sick leave through tax credits; however, these credits will not provide the immediate relief that many employers may need during these cash crunch weeks and months ahead.
This summary is not an exclusive list of relevant provisions contained in the Act, and we recommend you discuss with an Employment lawyer, CPA and/or Tax Specialist how these provisions may apply to your business as well as any other provision that may affect your business.
COVID-19 Response Resource Team: