On March 20, 2020, the U.S. Department of Labor issued updated guidance for employers concerning the March 18, 2020 Families First Coronavirus Response Act (“the FFCRA”) passed in response to the COVID-19 outbreak.
Among other things, the Act requires employers with fewer than 500 employees to provide paid leave to qualifying employees impacted by COVID-19. Employers will receive a dollar for dollar tax credit equivalent to payments made to qualifying employees.
The Act provides for two different forms of paid leave: (1) Emergency Family and Medical Leave and (2) Emergency Sick Leave.
Emergency Family and Medical Leave
The FFCRA temporarily expands the Family and Medical Leave Act to provide up to 12 weeks paid family leave for employees who have been employed for at least 30 calendar days and are unable to work or telework because they need to care for their children whose school or daycare has closed. The first 10 days of leave are unpaid, but employees may choose to substitute any accrued vacation, personal, or sick days for the unpaid leave days during this period.
After the initial 10 days of leave, employees are entitled to paid leave in the amount of two-thirds of their regular rate of pay for the number of hours that the employee would have been normally scheduled to work. The amount of paid leave for each employee is capped at $200 per day and $10,000 in the aggregate.
The FFCRA empowers the Secretary of Labor to issue regulations to exempt small business with fewer than 50 employees from its requirements when these requirements would jeopardize the viability of the business. The Department of Labor is expected to promulgate regulations that will address the process for requesting an exemption.
Restoration of Position on Return from Leave
Employers with fewer than 25 employees are not required to restore employees to the same or equivalent position on return from family leave if the employee’s position no longer exists due to economic conditions or operating changes caused by ongoing public health emergency and the employer makes reasonable efforts to restore the employee at that time and over a one-year period.
Emergency Paid Sick Leave
The FFCRA also provides employees with paid sick leave due to the ongoing public health emergency. Employers must provide full-time employees with 80 hours of paid sick leave at the greater of their regular rate of pay, minimum wage under the Fair Labor Standards Act (FLSA), or the state or local minimum wage if the employee is unable to work because:
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 to self-quarantine by a health care provider due to concerns related to COVID-19; or
3. The employee is experiencing symptoms of COVID-19 and is seeking a medical diagnosis.
Compensation for the foregoing reasons cannot exceed $511 a day and $5,110 in aggregate. Part-time employees are entitled to as many sick leave hours as the employee would normally work over a two-week period.
Furthermore, employees must be paid at the greater of two-thirds the regular rate of pay, two-thirds the FLSA minimum wage, or two-thirds the state or local minimum wage, if the employee is unable to work or telework for the following reasons:
4. The employee is caring for an individual who is subject to an order under (1) above or been advised under (2) above.
5. The employee is caring for his/her son or daughter if the school or place of care of the child has been closed or the child care provider 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 Treasury and the Secretary of Labor.
Compensation for the reasons 4, 5, and 6 cannot exceed $200 a day and $2,000 in aggregate. Paid sick leave under the Act does not carry over into 2021.
Under both the FMLA Expansion Act and the Emergency Paid Sick Leave Act, employees must provide reasonable notice as is practicably foreseeable.
Employer Requirements and Prohibitions
Each employer must post a notice, to be prepared or approved by the Secretary of Labor, of the requirements described in this Act. The Secretary of Labor will have a model notice publicly available no later than March 25, 2020.
Employers may not discharge, discipline, or otherwise discriminate against any employee who takes paid sick leave under the FFCRA and files a complaint or institutes a proceeding under or related to the FFCRA. Further, an employer cannot require the employee to find a replacement worker as a condition of receiving paid sick time. An employer also may not require an employee to use other paid leave provided by the employer before the employee uses the paid sick time available under this Act.
The Department of Labor has indicated that it will be issuing a temporary non-enforcement policy that provides a period of time for employers to come into compliance with the FFCRA. Under this policy, Department of Labor will not bring an enforcement action against any employer for violations of the act so long as the employer has acted reasonably and in good faith to comply with the act. The Department of Labor stated it will instead focus on compliance assistance during the 30-day period.
Tax Credits for Payments to Employees
Under Department of Labor guidance expected to be released during the week of March 23, 2020, eligible employers who pay qualifying sick or child-care leave will be able to retain an amount of payroll taxes normally collected equal to the amount of qualifying sick and child-care leave that they paid, rather than deposit them with the IRS.
And, if there are not sufficient payroll taxes to cover the cost of qualified sick and child care leave paid, it is expected that employers will be able file a request for an accelerated payment from the IRS (which the IRS estimates will be processed within two weeks or less). The details of this new, expedited procedure is expected to be announced this week.