On Wednesday, March 18, 2020, President Trump signed into law the Families First Coronavirus Response Act (“Act”). The Act goes into effect on April 2, 2020.
The Act imposes different leave and paid leave obligations on employers with fewer than 500 employees, and is comprised of two components: the Emergency Paid Sick Leave Act and the Emergency Family and Medical Leave Expansion Act. The Secretary of Labor may exempt employers with fewer than 50 employees from the requirements of either component of the Act if compliance would jeopardize the business’s viability as a going concern, and may also exclude certain health care providers and emergency responders from coverage.
Here is a summary of the key provisions.
Emergency Family and Medical Leave Expansion Act
Covered employers must provide 12 weeks of job-protected, partially paid Family and Medical Leave Act (“FMLA”) leave to certain employees unable to work due to COVID-19 reasons.
- Employees are eligible if they have been employed for at least 30 calendar days (not the 12 months typically required under FMLA).
- Employers must provide 12 weeks of FMLA leave if an employee is unable to work (or telework) due to the need to care for their minor child because of the closure of the child’s school or care facility, or due to the unavailability of the child’s care provider, because of a declared Federal, State, or local COVID-19 emergency.
- Employers are not required to provide paid leave during the first 10 days of leave under this section of the Act. However, pay for the first 10 days could be available under the Emergency Paid Sick Leave Act.
- After the first 10 days of FMLA leave, employers must pay an employee no less than 2/3 of the employee’s regular rate of pay for the number of hours the employee would have normally been scheduled to work, up to $200 per day and $10,000 in the aggregate.
- Employees must provide the employer with notice of leave as soon as is practicable.
- At the end of the leave period, employers must generally reinstate employees to the same or a reasonably equivalent position consistent with FMLA requirements. Employers with fewer than 25 employees are not required to reinstate employees under certain conditions.
Emergency Paid Sick Leave Act
Covered employers must provide employees with two weeks of paid sick leave for certain COVID-19-related reasons, in addition to any sick leave the employer already provides.
- Employers must provide paid sick leave to an employee who is unable to work (or telework) if the employee:
- Is subject to or is caring for an individual who is subject to a Federal, State, or local quarantine or isolation order related to COVID-19.
- Has been advised by a health care provider to self-quarantine due to concerns related to COVID-19 or is caring for an individual who has been so advised.
- Is experiencing symptoms of COVID-19 and is seeking a medical diagnosis.
- Is caring for their child due to the closure of their child’s school or place of care, or the unavailability of the child’s care provider, due to COVID-19 precautions.
- 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.
- Employees are entitled to the following amounts of paid sick leave:
- Full-time Employees: 80 hours
- Part-time Employees: hours equal to the number of hours that such employee works, on average, over 2 weeks
- For employees on leave due to being placed in isolation or experiencing COVID-19 symptoms, paid sick leave is paid at their full regular rate, capped at $511 per day and $5,110 in the aggregate.
- For employees on leave due to the other qualifying reasons, paid sick leave is paid at 2/3 the employee’s regular rate, capped at $200 per day and $2,000 in the aggregate.
- After the first day an employee receives paid sick leave, an employer may require the employee to follow reasonable procedures to continue receiving paid sick leave.
- Employers are prohibited from discharging, disciplining, or discriminating against an employee who takes leave under this Act or institutes a related complaint.
- Employers may not require employees:
- To find a replacement for shifts as a condition of receiving sick leave.
- To use employer-provided paid time off before using sick leave under the Act.
- Employers shall post and keep posted in a common area a notice to be prepared by the Secretary of Labor. This notice will be provided no later than Wednesday, March 25, 2020.
- Employers violating this Act will be considered to have violated the Fair Labor Standards Act (“FLSA”) and will be subject to the penalties under the FLSA.
Employer Tax Credits
In order to offset costs, the Act provides a 100% payroll tax credit to employers for wages required to be paid under the Emergency Paid Sick Leave Act and the Emergency Family and Medical Leave Expansion Act, subject to the caps provided in each section listed above.
- Employers may claim a credit against Social Security tax liability for each calendar quarter.
- If the credit exceeds an employer’s social security taxes for a calendar quarter, the excess is generally refundable.
Employers with fewer than 500 employees should be cognizant of their employees’ new rights under the Act. Failure to adequately follow the guidelines listed above could result in liability for your business.
The Act will go into effect no later than April 2, 2020.