EMPLOYER ALERT
On March 18, 2020, the United States Senate passed H.R. 6201, the Families First Coronavirus Response Act (the “Response Act”) and President Trump signed it into law. The Response Act creates significant and new obligations for both public and private sector employers under the accompanying Emergency Paid Sick Leave Act and the Emergency Family and Medical Leave Expansion Act. For purposes of interpreting this Act, employers should know that President Trump has declared the coronavirus to be a national emergency as of March 13, 2020.
THE EMERGENCY PAID SICK LEAVE ACT
The Response Act creates the Emergency Paid Sick Leave Act, which will require employers to grant paid sick leave in certain situations related to the coronavirus (COVID-19). Under the Emergency Paid Sick Leave Act (the “EPSLA”), all public sector employers and private sector employers with fewer than 500 employees will be required to provide employees with paid sick leave in certain circumstances related to COVID-19 where the employee cannot work at the workplace or perform telework. An employee is entitled to paid leave under the Response Act regardless of how long they have worked for the employer. The EPSLA will be effective on April 1, 2020, and apply to leave taken between April 1, 2020, and December 31, 2020. The circumstances which trigger mandatory paid sick leave are:
- a federal, state, or local quarantine or isolation order related to COVID-19 has limited the employee’s ability to travel; or,
- a health-care provider advised the employee to self-quarantine because of concerns regarding COVID-19; or,
- the employee is experiencing symptoms associated with COVID-19 and is in the process of determining whether he or she has contracted the virus; or,
- the employee is caring for someone who is subject to a governmental quarantine or isolation order for COVID-19 or whose health-care provider advised that person to self-quarantine because of COVID-19; or,
- the employee needs to care for his or her child because of the closure of the child’s school or child-care facility, or the unavailability of a child-care provider, because of COVID-19 considerations; or,
- the employee is experiencing a situation that was specified by the Department of Health and Human Services as substantially similar to any of the five aforementioned situations.
Under the first three circumstances in the preceding list (1-3), an employer must pay that employee the greatest wage amount between the employee’s regular hourly rate of pay under the Fair Labor Standards Act (the “FLSA”), the federal hourly minimum wage of $7.25, or the applicable hourly minimum wage of the state or locality where the employee is considered to be employed. This amount is limited to $511.00 per day and is limited to a total of $5,110.00 in the aggregate.
Under the fourth, fifth, and sixth circumstances in the preceding list (4-6), an employee must pay the employee no less than two-thirds of the greatest wage amount between the employee’s regular hourly rate of pay under the FLSA, the federal hourly minimum wage of $7.25, or the applicable hourly minimum wage of the state or locality where the employee is considered to be employed. This amount is limited to $200 per day and is limited to a total of $2,000 in the aggregate. Full-time employees will be entitled to eighty (80) hours of paid sick leave under the EPSLA.
As it relates to part-time employees with fluctuating schedules and hours, an employer must use an average number of hours to calculate a daily number of compensable hours for paid sick leave under the Response Act. To calculate the average number of hours for a part time employee, an employer must calculate the average number of hours per day that the employee was scheduled to work. This number must include hours for which the employee took any type of leave in the six-month period immediately preceding the start date for the period in which the employee uses paid sick leave related to COVID-19. Part-time employees will be entitled to paid sick leave under the EPSLA based on the average number of hours worked in a two (2) week period.
Employers who are parties to a multiemployer collective bargaining agreement may use obligations under the collective bargaining agreement to fulfill requirements under the EPSLA. Employers may make contributions to a multiemployer fund, plan, or program based on the paid leave to which each of its employees is entitled under the collective bargaining agreement, so long as the fund, plan, or program enables employees to secure pay from such fund, plan, or program based on hours they have worked. Employees may use that multiemployer fund, plan, or program for paid sick leave taken under the EPSLA.
Prohibitions and Consequences under the Emergency Paid Sick Leave Act
An employer cannot require an employee using paid sick leave under the EPSLA to find a replacement employee to cover the hours for which the employee will be using paid sick leave as a condition of granting paid sick leave to the employee.
An employer cannot require an employee to use other paid leave provided by the employer before using paid sick leave under the EPSLA
An employer cannot discharge, discipline, or otherwise discriminate against an employee who:
1. Takes paid sick leave under the EPSLA; or,
2. has filed any complaint or instituted or caused to be instituted any proceeding under or related to the EPSLA (including a proceeding that seeks enforcement of the EPSLA), or who has testified or is about to testify in any such proceeding.
If an employer unlawfully terminates an employee because acted pursuant to 1 and 2 above. and will be subject to penalties described in the FLSA.
If an employer fails to provide paid sick leave pursuant to the EPSLA, that employer shall be considered to have failed to pay minimum wages in violation of the FLSA and will be subject to the penalties described in sections 16 and 17 of the FLSA with respect to such violation(s).
Notice Requirements
Employers must provide employees with notice of the availability of leave under the EPSLA in a conspicuous place on the employer’s premises. The Labor Department is to create a model notice for paid sick leave under the EPSLA within seven (7) days of its enactment.
Employers should consider providing notice electronically (in addition to the required posted notice) if it is practicable.
THE EMERGENCY FAMILY AND MEDICAL LEAVE EXPANSION ACT
The Emergency Family and Medical Leave Expansion Act (the “EFMLEA”) under the Families First Coronavirus Response Act (the “Response Act”) will provide for limited expansions to the existing Family Medical Leave Act (“FMLA”) for employees who are caring for children under the age of eighteen (18) whose school or child-care facility is closed because of the virus or whose child-care provider is unavailable because of the outbreak. Employees may take leave under the EFMLEA when it becomes effective on April 1, 2020. The EFMLEA will expire on December 31, 2020.
Public Health Emergency Leave (Under the EFMLEA)
The EFMLEA extends the FMLA provisions of twelve (12) weeks of job-protected leave to a new category of leave: Public Health Emergency Leave. Public Health Emergency Leave applies to employees of employers with 500 or fewer employees who have been employed by the employer for at least thirty (30) days preceding the request for leave. Public Health Emergency Leave may only be claimed when a federal, state, or local government has declared an emergency due to COVID-19.
Employees who have worked for an employer covered by the EFMLEA (500 or fewer employees) for the preceding 30 days or longer will be eligible to take Public Health Emergency Leave if one of two “qualifying needs” occur:
1. the employee is unable to work (or telework) due to a need for leave to care for the son or daughter under 18 years of age of such employee if the school or place of care has been closed [due to a public health emergency]; or,
2. the childcare provider of such son or daughter is unavailable, due to a public health emergency.
The employee generally must show that they are unable to sufficiently work in-person or telework because they need to care for their children because of coronavirus-related loss of access to educational or childcare services.
Employees must provide as much notice as is practicable to employers when requesting leave under the EFMLEA (although the Act does not define “practicable” for this purpose).
The first ten (10) days of leave may be unpaid (employees may elect to use any accrued personal, sick, medical or sick days during this period). However, employers must pay employees at a rate of no less than two-thirds (2/3) of their regular wages (multiplied by hours which they would have normally been scheduled to work).
If an employee is part-time and has a fluctuating schedule and hours, an employer must use the same formula as designated for part-time employee leave under the EPSLA. To calculate the average number of hours for a part time employee, an employer must calculate the average number of hours per day that the employee was scheduled to work. This number must include hours for which the employee took any type of leave in the six-month period immediately preceding the start date for the period in which the employee uses paid sick leave related to COVID-19.
Regardless of the calculated amount of wages, paid leave under the EFMLEA shall not exceed $200 per day and is limited to a total of $10,000 in the aggregatee.
Exceptions to Requirements within the EFMLEA
The EFMLEA allows The Department of Labor to create regulations which would provide exemptions from EFMLEA leave requirements for “certain health care providers and emergency responders” and employers with fifty (50) or fewer employees when the imposition of such requirements would jeopardize the viability of the business as a going concern.
Because these regulations grant significant deference to the Department of Labor, employers in the health care sector and/or employers who employ fifty (50) or fewer employees should closely monitor the subsequent regulations by the Department of Labor in relation to the EFMLEA.
The EFMLEA also provides an exemption from job restoration if an employer employs fewer than twenty-five (25) employees and additional conditions are met:
• the employee has taken leave under the EFMLEA; and,
• the position held by the employee before taking leave under the EFMLEA does not exist due to economic conditions or other changes in operating conditions of the employer that affect employment; and, are caused by a public health emergency (related to coronavirus, as defined in the Act) during the period of leave.
The employer must make reasonable efforts to restore the employee to a position equivalent to the position the employee held at the time of taking leave. An equivalent position must have equivalent employment benefits, pay, and other terms and conditions of employment. If the employer makes reasonable efforts of restoration and fails, the employer must make reasonable efforts to contact the employee should an equivalent position become available.
The time period during which an employer must continue to contact the employee about an equivalent position shall be the earlier of one year after either 1) the date in which the qualifying need for leave concludes; or 2) the date that is 12 weeks after the date on which the employee’s leave commences. This exception does not exempt small employers from leave requirements of the EFMLEA—it only exempts such employers from providing job restoration to employees after taking leave pursuant to the EFMLEA, so long as all of the required conditions are met.
Finally, employers who are parties to a multiemployer collective bargaining agreement may use obligations under the collective bargaining agreement to fulfill requirements under the EFMLEA. Employers may make contributions to a multiemployer fund, plan, or program based on the paid leave to which each of its employees is entitled under the collective bargaining agreement, so long as the fund, plan, or program enables employees to secure pay from such fund, plan, or program based on hours they have worked. Employees may use that multiemployer fund, plan, or program for paid leave taken under the EFMLEA.
Because the EFMLEA serves as an expansion to the existing FMLA, it is likely that portions of the FMLA, such as the prohibition on retaliation for use of leave, will apply to leave taken under the EFMLEA.
PAYROLL TAX CREDITS FOR EMPLOYERS
Private sector employers may receive tax credits in relation to paid leave provided pursuant to both the EPSLA and EFMLEA. Tax credits will only apply wages paid with respect to the period beginning on a date selected by the Secretary of the Treasury (during 15-day period beginning on the date that the Response Act is enacted) and ending on December 31, 2020.
The employer portion of Social Security tax due under Section 3111(a) of the Internal Revenue Code will be able to be reduced by the amount of paid sick leave under the EPSLA provided to employees and the amount of paid leave provided to employees under the EFMLEA. The Response Act does not allow for a reduction of the employer portion of Medicare tax due under Section 3111(b) of the Internal Revenue Code.
EPSLA Tax Credit
The amount of the credit per quarter with respect to paid sick leave provided to an employee under the EPSLA is limited to the amount of payments to that employee for 10 days of the paid leave, subtracted by the payments for the number of days of such paid leave taken in previous quarters. If the amount of the credit based on payments of paid sick leave to all employees for a quarter would exceed the amount of the employer’s portion of Social Security tax due for the quarter, the amount in excess will be treated in the same manner as a refund due to over payment.
EFLMEA Tax Credit
The amount of the credit with respect to paid leave under the EFLMEA (public health emergency leave) is limited to the per-employee payment limitations of up to $200 per day and $10,000 in the aggregate. If the amount of the credit based on payments of paid public health emergency leave under the EFLMEA for a quarter would exceed the amount of the employer’s portion of Social Security tax due for the quarter, the amount in excess will be treated in the same manner as a refund due to over payment.
EPSLA and EFLMEA Tax Credit Information
Although payments for paid leave under the EPSLA and EFLMEA cannot be credited against Medicare tax, the amount of the credit of Social Security tax for payments for either paid sick leave under the EPSLA or paid public health emergency leave under the EFLMEA can be increased by the amount of the employer portion of Medicare tax due on payments of paid leave pursuant to the EPSLA and/or the EFLMEA.
The amounts of these credits also can be increased by the amount of the employer’s qualified health plan expenses for employees receiving paid leave under the EPSLA or the EFLMEA.
Payments for paid sick leave under the EPSLA and paid public health emergency leave under the EFLMEA are themselves not subject to the employer portion of Social Security tax.April