On March 18, 2020, the President signed into law the Families First Coronavirus Response Act (Act), which includes both the Emergency Family and Medical Leave Expansion Act (EFMLEA) and the Emergency Paid Sick Leave Act (EPSLA), both applicable to employers with fewer than 500 employees (even if the employer is not otherwise subject to the FMLA).
Both the EFMLEA and the EPSLA are effective April 1, 2020, and sunset December 31, 2020. They give the Department of Labor the authority to issue regulations (1) exempting employers with fewer than 50 employees if compliance with the new provisions would jeopardize the viability of the business and (2) exempting employers with respect to employees who are health care providers or first responders.1 The new law also includes tax credits for employers to offset the additional cost to employers of emergency paid sick leave and family and medical leave required under the Act.
THE EMERGENCY FAMILY AND MEDICAL LEAVE EXPANSION ACT (EFMLEA)
The EFMLEA amends the Family and Medical Leave Act (FMLA) to provide for emergency paid and unpaid leave for employee absences related to COVID-19. Employees are eligible for this emergency leave if they have been employed for at least 30 days and request leave because they are unable to work (including telework) because they need to care for their minor child due to (1) closure of their child’s school or child care center, or (2) their child care provider’s unavailability, in either case due to an emergency declaration by federal, state, or local authorities related to COVID-19.
Eligible employees will be able to receive unpaid leave for the first 10 days, although employees can elect to use any other accrued paid leave, including personal, vacation, or sick leave (including emergency paid sick leave described below). After 10 days the emergency leave becomes paid leave. The total leave can extend for up to twelve weeks. Employees are required to be paid at a rate equal to at least 2/3 their regular rate of pay as determined under the Fair Labor Standards Act (FLSA), multiplied by the number of hours in their average work week, not to exceed $200 per day or $10,000 total.
Employees who take emergency leave are entitled to the job restoration rights generally applicable under the FMLA, unless the employer has fewer than 25 employees. In that case, the employer can meet its obligations regarding job restoration if the previous position no longer exists due to economic conditions or changes caused by the emergency declaration and the employer makes reasonable efforts to return the employee to an equivalent position, including benefits, pay, and other terms of employment, over a one-year period beginning from the earlier of the date the employee’s leave ends or the date twelve weeks after the employee’s leave begins.
EMERGENCY PAID SICK LEAVE ACT (EPSLA)
The EPSLA provides that full-time employees are entitled to 80 hours of paid sick leave and part-time employees are entitled to paid sick leave equal to the amount of their average work hours over a two-week period. The EPSLA identifies six different situations in which an employee may use the paid leave (listed below). Employees are immediately eligible, and employers cannot offset this emergency sick leave with other sick leave already provided by the employer or under state law. The employer also cannot require that the employee search for a replacement worker to cover the hours for which the employee is receiving emergency paid sick leave, or require that the employee use other paid sick leave prior to using emergency paid sick leave. The emergency paid sick leave cannot be carried over to subsequent years. The amount of pay the employee is entitled to depends on the reason for the leave:
- If the employee is (1) subject to a federal, state, or local quarantine or isolation order related to COVID-19, (2) advised by their health care provider to self-quarantine due to COVID-19 concerns, or (3) experiencing symptoms of COVID-19 and seeking a medical diagnosis, the employee is entitled to pay at their regular rate of pay under the FLSA (capped at $511/day and $5,110 in the aggregate).
- If the employee is (4) caring for another individual who is either subject to a quarantine or isolation order due to COVID-19 or who has been advised by a health care provider to self-quarantine due to COVID-19 concerns, (5) caring for a child because school is closed or a child care provider is not available due to COVID-19 concerns, or (6) subject to another substantially similar condition specified by the regulatory agencies, the employee is entitled to pay at 2/3 their regular rate under the FLSA (capped at $200/day and $2,000 in aggregate).
The Department of Labor is required to issue guidance by April 1, 2020, describing how to calculate the amount of paid sick leave, and will also provide employers with the required notice to post.
EMPLOYER TAX CREDITS
The Act provides refundable tax credits that are intended to offset 100% of the wages paid under the new emergency sick leave and family and medical leave payments discussed above. Importantly, the tax credit only applies to those wages that are required to be paid under the Act, although the tax credit will be increased by the amount employers pay for an employee’s health care plan coverage while they are on leave as contemplated in the Act.
Employers are, of course, free to offer more paid leave or leave with different criteria, but only the wages paid that are required under the Act are eligible for the credit. Stated differently, the credit will be limited for each employee to $200/day (or $10,000 total) for paid family and medical leave, and $511/day ($5,110 in total) or $200/day ($2,000 in total) for paid sick leave, depending on the reason an employee is eligible for paid sick leave.
The credit is applied to the employer portion of Social Security taxes (i.e. old age, survivors, and disability insurance, commonly known as OASDI) paid each calendar quarter. If the credit exceeds an employer’s total liability for OASDI, the excess credit is refundable but no deduction will be allowed for the amount of the credit (to prevent a double benefit to employers).
Self-employed individuals are eligible to claim a similar benefit, with the same daily and total caps as discussed above. The biggest differences include (1) the credit allowed per day is either the lesser of the amounts described above (for employees of an eligible employer) or an average daily self-employment income amount (determined by a statutory formula), and (2) the credit is allowed against income taxes.
The Family First Coronavirus Response Act is intended to help alleviate the financial burdens on increasing numbers of employees who are required to take time off from work to isolate and care for themselves, family members, and others who are infected with COVID-19, without adding to the increasing financial burdens of employers.
The Department of Labor is expected to issue additional regulations, which we hope will provide clarity on some unanswered questions. We will provide updated information as it becomes available.
If you have questions about the Emergency Family and Medical Leave Expansion Act or the Emergency Paid Sick Leave Act, please feel free to contact one of the attorneys listed below.
Employers of health care providers and first responders may also elect to exclude such employees from the emergency leave provisions under the EFMLEA and the EPSLA.
 Employers of health care providers and first responders may also elect to exclude such employees from the emergency leave provisions under the EFMLEA and the EPSLA.