Updated: March 27, 2020
As
previously reported, the
Families First Coronavirus Response Act
(FFCRA) passed Congress on March 18, 2020, and was signed into law by
President Trump that same evening, to take effect “not later than 15 days
after the date of enactment.” Among other things, FFCRA requires each
private employer with fewer than 500 employees to provide special paid
emergency family and medical leave and paid sick leave in certain
COVID-19-related circumstances, to be offset by refundable payroll tax
credits. The following is a summary of the essential elements of the act.
Emergency Paid Family and Medical Leave
-
Employer coverage:
Every private employer with fewer than 500 employees, and all
governmental employers regardless of size.
-
Although the final regulations may provide otherwise, whether
separate entities will be deemed a single employer to determine
employer coverage likely will be determined by the “joint employer”
or “integrated employer” tests described in the Family and Medical
Leave Act (FMLA) and/or Fair Labor Standards Act (FLSA).
-
Employer coverage exception:
Per FFCRA, the Secretary of Labor has authority to issue regulations
that exclude small businesses with fewer than 50 employees each if the
act’s requirements would jeopardize the viability of the business as a
going concern.
-
Employee coverage:
Full-time and part-time employees who have been employed with a covered
employer for 30 calendar days or more.
- This is unlike the regular FMLA, which requires a minimum of 12
months of prior employment, 1,250 hours of work in the prior 12-month
period, and working in a location where there are 50 or more employee
within a 75-mile radius.
- Employee coverage exception: Per FFCRA, the Secretary of Labor has authority to issue regulations
that exclude certain healthcare providers and emergency responders from
the definition of an eligible employee. Further, employers of
healthcare providers and emergency responders may elect to exclude such
employees from coverage.
- Leave use:
- When an “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, or the child care provider of
such son or daughter is unavailable,” because of COVID-19.
- Note: “Child care provider” is defined as a provider who receives
compensation for providing child care services on a regular basis.
- Leave allowance:
Employers are required to provide up to 12 weeks of job-protected paid FMLA leave for COVID-19 (albeit the first 10 days may be
unpaid).
- Pay rate:
The first 10 days can be unpaid. (See below for an explanation
of optional use of paid leave during the first 10 days.) The remaining
time must be paid at not less than two-thirds of the
employee’s regular rate of pay (as defined by the FLSA) for the number
of hours the employee would otherwise be normally scheduled to work.
There are special rules for calculating the hours for those employees
that have variable weekly schedules.
- Pay amount/cap: Up to $200 per day and $10,000 in the aggregate (per employee).
- Optional use of other paid leave during the first 10 days:
During the first 10 unpaid days of FMLA leave for COVID-19, employees
may use accrued personal, vacation or medical or sick leave.
However, employees may not be required to do so.
- Paid leave after the first 10 days:
After the first 10 days, employers must compensate employees in an
amount that is not less than two-thirds of the employee’s regular rate
of pay for the remainder of the 12-week period.
- Tax Credit:
There is a tax credit for employers for amounts required to be paid as
family and medical leave under FFCRA. The amount of the credit is equal
to 100 percent of the “qualified family leave wages” that the employer
is required to pay for the applicable quarter. The dollar-for-dollar
credit results in $200 per employee for any day (or portion thereof)
for which the employer pays the employee qualified family leave wages,
up to a maximum aggregate amount for all calendar quarters of $10,000
per employee. The credit is taken on the employer’s quarterly Social
Security tax remittance and is refundable where the credit exceeds
employment taxes owed.
- Job restoration: Protection similar to regular FMLA leave (i.e., employees generally
must be returned to the same or an equivalent position upon return to
work).
- Job restoration exception: For employers of fewer than 25 employees, in the event the position has
been eliminated due to the pandemic and the employer (1) makes
“reasonable efforts” to restore the employee to an equivalent position
with equivalent pay, benefits, etc.; and (2) if such efforts fail,
notifies the affected employee if an equivalent position later becomes
available during the defined “contact period.”
The “contact period” is defined as “the 1-year period beginning on the
earlier of (A) the date on which the qualifying need related to a public
health emergency concludes; or (B) the date that is 12 weeks after the date
on which the employee’s leave ... commences.’’
- Effective date: Will become effective on April 1,
2020 and expire in December 31, 2020.
Emergency Paid Sick Leave
-
Employer coverage:
Every private employer with fewer than 500 employees, and all
governmental employers regardless of size.
-
Employer coverage exception:
Per FFCRA, the Secretary of Labor has authority to issue regulations
that exclude small businesses with fewer than 50 employees each if the
act’s requirements would jeopardize the viability of the business as a
going concern.
-
Employee coverage:
All current part-time and full-time employees of a covered employer
(i.e., no matter how long employed).
-
Employee coverage exception:
Employers of healthcare providers and emergency responders may elect to
exclude such employees from coverage.
-
Leave use:
- Quarantine – to comply with a federal, state or local quarantine or
isolation order related to COVID-19.
- Self-Quarantine – to self-quarantine, if the employee has been advised
to do so by a local healthcare provider.
- Diagnosis – to obtain a medical diagnosis if the employee is
experiencing symptoms of COVID-19.
- Care for a Quarantined Individual – to care for an individual required
to be quarantined or advised to be quarantined.
- Child Care – to care for an employee’s son or daughter if the school or
place of care has been closed, or the child care provider of such son or
daughter is unavailable,” because of COVID-19 precautions.
Note: “Child care provider” is not defined in the act.
- Substantially Similar Care – to care for an employee’s substantially
similar condition, as specified by the Secretary of Health and Human
Services.
-
Full-time employee leave allowance:
Employers are required to provide 80 hours of paid sick leave for
full-time employees.
-
Part-time employee leave allowance:
Employers are required to provide a total number of hours of paid sick
time equal to the number of hours the part-time employee works, on
average, over a two-week period. Or, put another way, the equivalent of
two weeks of hours for part-time employees.
-
Carryover:
Not allowed from year to year.
- Unused Leave Cash-out:
Not required upon separation.
-
Leave sequencing:
Employees may use the paid FFCRA sick leave first, before the use of
other available leave. Also, an employer cannot require an
employee to use other accrued, unused paid leave before the use of
FFCRA paid sick leave.
-
Pay rate:
Paid at the employee’s regular rate of pay (as defined by the FLSA) or the applicable federal FLSA minimum wage or state or local
minimum wage, whichever is greater.
-
Pay amount/cap:
-
For Items 1, 2 and 3 above – full pay at the rate described above,
up to $511 per day and $5,110 in the aggregate (per employee).
-
For Items 4, 5 and 6 above – two-thirds pay at the rate described
above, up to $200 per day and $2,000 in the aggregate (per
employee).
-
Tax Credit:
There is a tax credit for employers for “qualified sick leave wages”
that the employer is required to pay for a given quarter. This amount,
in turn, varies depending upon the reason for the leave and is
consistent with the amounts listed in the bullet above.
-
For Items 1, 2 and 3 – the amount of qualified sick leave wages
taken into account for the tax credit is capped at $511 per
employee per day, $5,110 (10 days) in the aggregate.
-
For Items 4, 5 and 6 – the amount of qualified sick leave wages
taken into account for the tax credit is capped at $200 per
employee per day, $2,000 (10 days) in the aggregate.
The credit is taken on the employer’s quarterly Social Security tax
remittance and is refundable where the credit exceeds employment taxes
owed.
-
Notice:
Employers will be required to post a notice informing employees of
their right to leave. A model notice will be provided by the Department
of Labor.
-
State law:
Does not pre-empt existing state or local paid sick leave entitlements.
-
Effective date:
“Not later than 15 days after the date of enactment” (i.e., effective
beginning April 2, 2020), expiring Dec. 31, 2020.
An important point for employers is that paid leave as outlined above is not
available if employees are unable to work solely due to
business decisions and/or operational closures. Rather, employees are
eligible for paid leave only if they meet the specific criteria
outlined above. This, however, is likely to be a heavily litigated
issue, depending on the particular factual circumstances at issue.
For answers to questions or additional guidance on how this new legislation
may impact your business, employers can contact the authors, any of the
McGuireWoods COVID-19 Response Team members or your McGuireWoods labor and
employment contact.