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Updated Analysis: The Families First Coronavirus Response Act

*Please note that this article was updated on March 19, 2020.

 

New Employer Obligations and Employee Rights

On Friday, March 13, 2020, the United States House of Representatives passed H.R. 6201, entitled the Families First Coronavirus Response Act (the “Act”), in response to the coronavirus outbreak in the United States.  The Act passed the Senate and was signed into law by the President on March 18, 2020. 

In addition to providing for several immediate public health matters, the Act also significantly changes the rights of employees and responsibilities of employers regarding family medical leave and paid sick leave. 

Below is a summary of the Act regarding amendments to the Family and Medical Leave Act (“FMLA”) via enactment of the Emergency Family and Medical Leave Expansion Act (“EFMLA”), enactment of the Emergency Paid Sick Leave Act (“EPSLA”), and the tax credit provisions to reimburse employers for paid sick leave under the EPSLA and paid FMLA leave.  This is a general summary of some of the most relevant provisions to our clients.  It does not cover every provision of the Act, nor every provision of the discussed sections of the Act. 

Please contact a MacDonald Illig attorney to discuss the Act in more detail and how it impacts your specific factual situation.

Paid Emergency Family and Medical Leave

The Act extends the FMLA to provide EFMLA leave to eligible employees that cannot work or telework because the employee has to care for the employee’s minor (under 18) child whose school or place of care has been closed, or whose child care provider is unavailable due to an emergency declared by a Federal, State, or local authority regarding COVID-19.  Any employee that has been employed for at least 30 calendar days is an eligible employee for EFMLA leave, considerably shorter than the 12-month employment requirement for normal FMLA leave.  The Act applies to all Public Agencies, elementary schools, and secondary schools, all under the existing provisions of the FMLA; and private employers of less than 500 employees.  The Act provides that the Department of Labor has the authority to issue regulations to exempt small businesses with fewer than 50 employees from the emergency FMLA provisions if the requirements of emergency FMLA would jeopardize the viability of the business as a going concern.  Additionally, the Act provides that an employer can exclude its health care provider or emergency responder employees from coverage, according to regulations to be promulgated by the Department of Labor.

If an eligible employee has a qualified need related to a public health emergency, the employee is entitled to  up to 12 weeks of leave.  The first ten days are unpaid, unless the employee elects to substitute any accrued paid leave.  Thereafter, the remaining leave must be paid in an amount not less than 2/3 of the employee’s regular rate, or 2/3 of the average rate for part-time employees, but in no event to exceed $200 per day or $10,000 in the aggregate. 

For businesses that employ 25 or fewer people, the job restoration provisions of the FMLA are relaxed by the Act.  Under the Act, such an employer is not required to restore the employee to the same position if the employee’s former position no longer exists due to economic conditions or other changes in operations of the employer that affect employment and are caused by a public health emergency during the period of leave.  However, the employer must make reasonable effort to restore the employee to an equivalent position. 

The EFMLA takes effect within 15 days after enactment, and expires on December 31, 2020. 

The Act only provides leave for employees on leave to care for children whose school or place of care is closed.  Neither the closure of a school, nor the closure of a childcare, fits within the normal structure of FMLA leave, whereby an employee is required to obtain a certification that the employee or family member has a serious medical condition.  The Act provides that an employee should provide notice of foreseeable leave as soon as practicable, but there are no other procedures for proof of the need to leave with respect to EFMLA leave under the Act.

Notably excluded from the EFMLA, are employees with symptoms of coronavirus, that are diagnosed with coronavirus, that are seeking diagnosis or treatment for coronavirus, that are isolated from work pursuant to a government order, or out of work to care for a family member impacted by the coronavirus.  Each of the forgoing reasons was deleted from the revised version of the Act.  If an employee seeks leave because the employee or the employee’s family member that needs care has coronavirus, the normal FMLA procedures apply.  Therefore, an employer can request a physician’s certification of a serious medical condition before granting FMLA leave, and the leave is unpaid, unless the employer’s policy provides otherwise, i.e. accrued PTO runs concurrently with FMLA until used up.

Emergency Paid Sick Leave Act

The Act creates Emergency Paid Sick Leave for all employees who cannot work or telework due to a qualifying reason, regardless of how long the employee has been employed.  However, the EPSLA provides that employers of health care provider employees or of emergency responder employees, may elect to exclude such employee from EPSLA coverage.  For full-time employees, the Act provides for up to 80 hours of paid sick leave.  While part-time employees are entitled to the sick leave equivalent to the average number of hours the employee works in a 2-week period.  The EPSLA applies to private employers that employ less than 500 employees, and all other employers regardless of size. 

Qualifying emergency sick leave includes leave for the following reasons:

  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 healthcare provider to self-quarantine due to concerns related to coronavirus;
  3. The employee is experiencing symptoms of coronavirus and seeking medical diagnosis;
  4. To care for an individual who is in quarantine or isolation pursuant to a Federal State, or local order related to COVID-19, or pursuant to advice of a healthcare provider due to concerns related to coronavirus;
  5. To care for the employee’s child if the child’s school or place of care has been closed, or the child care provider of the child is unavailable due to COVID-19 precautions; or
  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.

For qualifying EPSLA leave under items 1, 2, and 3, above, an employee is entitled to leave at the greater of his/her regular rate of pay or applicable Federal or State minimum wage, subject to a cap of $511 per day and $5,110 in the aggregate.  For qualifying emergency sick leave under items 4, 5, and 6, above, the employee is entitled to paid leave at 2/3 of the greater of his/her average regular rate or applicable Federal or State minimum wage, subject to a cap of $200 per day and $2,000 in the aggregate. 

An employer can require an employee to follow reasonable notice procedures to continue receiving paid sick leave after the first workday of leave.  An employee’s paid sick time ceases beginning with the employee’s first scheduled shift immediately following termination of the need for leave. 

The EPSLA mirrors the regulatory provisions in the EFMLA, namely, that the Department of Labor is authorized to promulgate regulations to exempt small businesses with fewer than 50 employees if the requirements of the EPSLA would jeopardize the viability of the business as a going concern, and regulations for employers to exclude its health care provider or emergency responder employees from coverage.

An employer cannot require that an employee find a replacement to cover that employee’s time off as a condition of providing paid sick leave.  Furthermore, it is unlawful for an employer to discriminate against an employee for taking leave under the EPSLA, or being a party to or testifying in litigation related to enforcement of the EPSLA. 

Emergency paid sick leave is in addition to, and not a replacement for, any paid leave the employee is otherwise entitled to from the employer.  An employee may use emergency paid sick leave before employer provided PTO, and an employer cannot require an employee to use paid leave provided by the employer before emergency paid sick leave.  Unused emergency paid leave does not carry over year to year, and cannot be cashed out by an employee. 

The EPSLA takes effect within 15 days after enactment, and expires on December 31, 2020. 

Tax Credits for Paid Sick and Paid Family and Medical Leave

The Act provides for refundable tax credits to employers that are required to provide emergency paid sick leave or emergency FMLA under the Act.  The Act also provides a credit for qualified health plan expenses allocable to qualified sick leave wages and emergency FMLA, subject to caps provided in the Act.  Qualified health plan expenses are the amounts paid or incurred by an employer to provide and maintain a group health plan.  The Act also contains tax credit provisions, mirroring those allowed for employers, for self-employed individuals, also against Social Security taxes. 

The tax credits are allowed against the employer’s portions of Social Security payroll taxes.  An employer can count up to 100% of qualified emergency sick leave, and up to 100% of qualified EFMLA, subject to the relevant daily and aggregate benefit caps in the EPSLA and EFMLA.  However, the payroll tax credits for emergency FMLA and emergency paid sick leave are increased by tax imposed by IRC §3111(b) [Health Insurance Taxes] paid on qualified emergency sick leave wages or qualified emergency family leave wages.  Furthermore, wages paid under the EPSLA and EFMLA are not considered wages for purposes of IRC §3111(a) [Old Age, Survivors, and Disability Insurance] or compensation for purposes of IRC §3221(a) [Railroad Retirement Taxes].  The tax credit provisions do not apply to any Federal, State, or local government, or agency or instrumentality of any of the foregoing.

If you have any legal questions about the Families First Coronavirus Response Act, please call our office.