Congress Passes New Leave Laws for COVID-19
Congress today passed the Families First Coronavirus Response Act (the “Act”), which provides substantial changes to employment laws affecting employee paid leave, among other things. The Act will have a substantial impact on small businesses. Moments ago the President signed the bill into law.
In this client alert, we provide an overview of the legislation and analysis of what it will mean for businesses going forward. Here are the essentials:
- The Act includes the Emergency Family and Medical Leave Expansion Act, which amends the Family Medical Leave Act (“FMLA”) to provide an FMLA leave entitlement for employees who cannot work or telework due to the need to care for a son or daughter whose school or place of care has been closed because of COVID-19. This new expanded FMLA leave benefit is referred to as Public Health Emergency Leave, and it applies to employers with fewer than 500 employees. Employers are required to pay employees on this leave, after the first two weeks of unpaid leave, at two-thirds of their regular compensation, up to $200 per day and $10,000 in the aggregate.
- The Act also includes the Emergency Paid Sick Leave Act, which mandates the grant of up to 80 hours of paid sick leave for employees who are absent due to COVID-19 related reasons. The amount of pay is capped at $511 for each day of emergency paid sick leave and $5,110 in the aggregate for personal leave. If leave is taken to care for a family member, the pay is capped at $200 per day or $2,000 in the aggregate.
- The Act applies to employers with fewer than 500 employees.
- Employees are eligible for Emergency Paid Sick Leave immediately upon hire, and employees are eligible for Public Health Emergency Leave after 30 days of employment.
- Employers are able to take a credit against the employer-portion of certain taxes to offset the amount they are required to pay out under the Act.
- The new legal requirements are scheduled to end on December 31, 2020.
- Employers will have access to payroll tax credits to help mitigate the effect of these new paid leave benefits.
We will update this alert after the President takes action on the legislation.
1. Public Health Emergency FMLA Leave for Employers with Fewer than 500 Employees
The Emergency Family and Medical Leave Expansion Act amends the FMLA by expanding the scope of the FMLA to include a new entitlement to Public Health Emergency Leave. This new leave entitlement has several components, and many are substantially different than the regular requirements of FMLA that employers are familiar with. We detail these components below.
Employees are eligible for this leave only 30 days after commencing employment. Normally, FMLA leave is available only to eligible employees, which are those who have worked for an employer for 12 months, worked at least 1,250 hours during that 12-month period, and work at a worksite with 50 employees within a 75-mile radius. In contrast, Public Health Emergency Leave is available to any full or part-time employee who has been employed for at least 30 days by an employer that employs fewer than 500 employees, regardless of how many hours worked or how many employees are at the worksite.
The entitlement requires a declaration of a public health emergency. A Federal, State, or local authority must have declared a public health emergency with respect to COVID-19. At this point, the President’s declaration of a national disaster is sufficient, and as of March 17, 2020, forty-eight states had declared public health emergencies.
The leave can be used for reasons other than just a serious health condition. Standard FMLA leave is premised generally on a serious health condition. The Emergency Family and Medical Leave Expansion Act provides an additional qualifying need for leave for the care for a child under 18 whose school has closed or daycare is unavailable due to the COVID-19 public health emergency. Specifically, Public Health Emergency Leave is available if the employee is unable to work (or telework) because the employee must care for their son or daughter, who is under the age of 18, if the school 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. School is defined as an elementary or secondary school, and child care provider means a provider who receives compensation for providing child care services on a regular basis.
Public Health Emergency Leave can be paid if it extends beyond 10 days. For the first 10 days of Public Health Emergency Leave, the leave may be unpaid, but employees can elect to use their accrued vacation, sick or other paid time off benefits to cover the leave. After 10 days of Public Health Emergency Leave, employers must pay two-thirds of the employee’s regular rate of pay, but not to exceed $200 per day or $10,000 in the aggregate.
Different rights to job restoration and recall. The FMLA’s rights to job restoration upon return from leave will not apply to Public Health Emergency Leave for employers that employ fewer than 25 employees where the position held by the employee before taking the leave no longer exists due to economic conditions or other changes in the operating conditions that affect employment and are caused by the public health crisis during the period of leave. Nevertheless, the employer must still make reasonable efforts to restore the employee to a position equivalent to the position the employee held when the leave commenced, with equivalent employment benefits, pay, and other terms and conditions of employment.
If the reasonable efforts to restore an employee to their position or find alternate employment fail, the employer must contact the employee if an equivalent position becomes available within a 1-year period beginning on the earlier of either the date on which the qualifying need related to the public emergency concludes or the date that is 12 weeks after the employee’s Public Health Emergency Leave commences.
2. Emergency Paid Sick Leave for Employers with Fewer than 500 Employees
The Emergency Paid Sick Leave Act requires private employers with fewer than 500 employees to provide employees who cannot work (or telework) with paid sick time for any of the following uses:
- The employee is subject to a Federal, State, or local quarantine or isolation order related to COVID–19.
- The employee has been advised by a health care provider to self-quarantine due to concerns related to COVID–19.
- The employee is experiencing symptoms of COVID–19 and seeking a medical diagnosis.
- The employee is caring for an individual who is subject to an order as described in subparagraph (1) or has been advised as described in paragraph (2).
- The employee is caring for a son or daughter of such employee if the school or place of care of the son or daughter has been closed, or the child care provider of such son or daughter is unavailable, due to COVID–19 precautions.
- 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.
Employers must provide full-time employees with 80 hours of paid sick leave and, for part-time employees, the number of hours that such part-time employee works, on average, over a 2-week period. Unused emergency paid sick leave under the Act shall not carry over from one year to the next. The amount of pay is capped at $511 for each day of emergency paid sick leave and $5,110 in the aggregate for personal leave. If leave is taken to care for a family member, the pay is capped at $200 per day or $2000 in the aggregate.
Finally, Emergency Paid Sick Leave differs from many of the sick leave policies many employers have already. First, there is no waiting period before a new employee can use the emergency paid sick leave. Rather, emergency paid sick leave is immediately available to all employees, regardless of how long the employee has worked for the employer. Second, employers are prohibited from requiring employees to search for a replacement employee to cover their absence. Third, employers are prohibited from requiring employees to use other paid leave, such as vacation or personal time, before using the paid sick leave provided for under the Act.
3. Payroll Tax Credits
Recognizing that the new leave requirements will impose additional financial burdens on employers, Congress included payroll tax credits to assist employers in making leave payments required by the Act. Generally, the legislation provides quarterly tax credits in an amount equal to the amount spent on paid sick leave, but not to exceed the $200 and $511 per person limits described above. The tax credits are to be used against taxes imposed by Sections 3111(a) or 3221(a) of the Internal Revenue Code, but the total value of the tax credits cannot exceed the amount owed under Sections 3111(a) or 3221(a). The Treasury Department will promulgate regulations administering the new tax credits.
Frequently Asked Questions
What do I do now?
You must notify your employees of their new entitlements by posting notices in conspicuous places on the premises where notices are customarily posted. The Department of Labor has 7 days to prepare and make available a model notice.
I have a small business, and I can’t possibly provide paid leave to all of these employees. Is there anything I can do?
Yes. The legislation allows employers with fewer than 50 employees to request good cause waivers from the United States Department of Labor. The good cause waivers are limited to small businesses for situations when the imposition of the Emergency Family Medical Leave Act’s requirements would “jeopardize the viability of the business as a going concern.” If this applies to you and your small business, we recommend that you contact a member of Honigman’s Labor and Employment Department to immediately begin preparing the request for a good cause waiver.
Will these new laws preempt the leave I provide my employees already?
No, the new laws do not preempt your existing policies. These are additional leave benefits. This is an important point that cannot be understated – the new Emergency Paid Sick Leave is in addition to your existing sick leave, and employers cannot require employees to use their accrued paid time off under your existing leave policies before using their new statutory entitlement to Emergency Paid Sick Leave.
Will these new laws preempt state and local leave laws and ordinances?
The new laws do not preempt leave laws that States or municipalities have in place that provide more generous leave benefits to employees. As in other areas of employment law, the employees get the benefit of the more favorable laws.
Is the Emergency FMLA Leave paid or unpaid?
For the first 10 days of Public Health Emergency Leave, the leave may be unpaid, but employees can elect to use their accrued vacation, sick or other paid time off benefits to cover the leave. After 10 days of Public Health Emergency Leave, employers must pay 2/3 of the employee’s regular rate of pay, up to $200 per day and $10,000 in the aggregate.
My hourly employee has a variable schedule. How do I calculate the number of hours they would have worked?
If the employee had a variable schedule that changed from week to week, such as in the restaurant industry, and the employer is unable to determine with certainty the number of hours the employee would have worked, the Act provides that the number of hours should be equal to the average number of hours that the employee was scheduled per day over the 6 month period ending on the date which the employee takes Public Health Emergency Leave, including hours for which the employee took leave of any type. And if the employee did not work over such a period, then the number of hours should be the reasonable expectation of the employee at the time of hiring for the average number of hours per day that the employee would normally be scheduled to work. Job postings and job descriptions will provide helpful guides to assess the reasonable expectations of employees in this latter circumstance.
My business is a signatory to a multi-employer collective bargaining agreement. What are my obligations?
An employer signatory to a multi-employer collective bargaining agreement may, consistent with its bargaining obligations and its collective bargaining agreement, fulfill its obligations under the Emergency Paid Sick Leave Act by making contributions to a multiemployer fund, plan, or program based on the hours of paid sick time each of its employees is entitled to under the Emergency Paid Sick Leave Act while working under the multiemployer collective bargaining agreement, provided that the fund, plan, or program enables employees to secure pay from such fund, plan, or program based on hours they have worked under the multiemployer collective bargaining agreement and to care for the child under 18 of such employee if the school or place of care has closed, or the child care provider of such child is unavailable, due to COVID-19.
How much do I have to pay my employee for Emergency Paid Sick Leave?
The Act provides that the hourly increment of paid sick time must be the greater of the employee’s regular rate under the FLSA, the minimum wage rate under the FLSA, or the minimum wage rate in effect for such employee in the applicable State or locality in which the employee is employed.
My employee is abusing this new leave. Can I fire him?
Such decisions are highly fact-dependent and require careful analysis. As with any statutory employee entitlement, it is subject to potential abuse. Be careful before discharging the employee or imposing discipline. Congress made retaliation for an employee’s use, or attempted use, of the new leave entitlements a violation of the Act. We recommend you contact counsel before proceeding.
I have more questions not listed here. Who should I ask?
For more guidance, contact either your relationship attorney at Honigman or a member of Honigman’s Labor and Employment Department.