On Wednesday, March 18, 2020, the U.S. Senate voted to approve a coronavirus relief bill (the Act) that was passed by the U.S. House of Representatives over the weekend. The president signed the legislation on the evening of March 18, which means the leave provisions will go into effect on April 2 and will stay in effect until Dec. 31, 2020. Though this law has been passed, there is still much that will need to be addressed by the regulatory agencies in charge of enforcing it. We expect that to be coming out before the effective date.
The Act requires employers to provide paid leave for some employees related to the coronavirus (COVID-19) pandemic, among other measures.
Paid Leave Provisions
The Emergency Paid Sick Leave Act requires private employers who employ fewer than 500 employees, including government employers (note, however, employers of health care providers or emergency responders may elect not to provide this leave to those employees) to provide paid sick time to employees who are unable to work or telework because the employee is:
- Subject to a federal, state or local quarantine or isolation order related to COVID-19;
- Advised by a health care provider to self-quarantine due to concerns related to COVID-19;
- Experiencing symptoms of COVID-19 and is seeking a medical diagnosis;
- Caring for an individual who is subject to a quarantine or isolation order or has been advised by a health care provider to self-quarantine;
- Caring for a son or daughter because the child’s school or place of care has been closed or the child’s childcare is unavailable due to COVID-19 precautions; or
- Experiencing any other substantially similar condition specified by the Secretary of the HHS in consultation with the Secretary of the Treasury and the Secretary of Labor.
Employers may require employees to follow reasonable notice procedures to continue to receive paid sick leave after the first workday (or portion thereof) an employee receives paid sick time.
How Much Paid Leave Can Employees Take?
Full-time employees – regardless of length of employment – are entitled to 80 hours of paid sick leave, while paid sick leave for part-timers is equal to the average number of hours the employee works over a two-week period. There's no carryover from year to year for this paid sick time, and once the employee returns to work the employer isn't required to provide any further paid sick leave as required by the Act.
How Much Must We Pay Employees During Leave?
If time off is taken for care of the employee his/herself, that employee must be compensated at the higher of:
- The employee’s regular rate of pay;
- Federal minimum wage; or
- The local minimum wage.
Employers of tipped employees should take note of numbers two and three above.
If time off is taken to care for a sick family member or a child who's not in school, employees must be compensated at two-thirds of their regular rate of pay.
Is there a Limit on Paid Sick Leave Wages?
The Act places limits on paid sick leave. These caps differ depending on whether the employee is receiving full wages for self-care or two-thirds wages for care of another. The cap is $511 per day with an aggregate limit of $5,110 for those receiving full wages (categories one, two and three above), and a $200 cap per day with a $2,000 aggregate limit for categories four, five and six (where the employee would be paid at a two-thirds rate).
Are There Any Required Notices?
Employers will be required to post an approved notice regarding the Act once the Secretary of Labor makes it available.
Are There Additional Employee Protections?
The Act prohibits employers from discriminating against an employee who takes this emergency paid sick leave. Employers who fail to provide this paid sick time or who terminate an employee for discriminatory reasons will be considered in violation of the FLSA and subject to the FLSA’s penalties, including payment of back pay, liquidated damages and attorneys’ fees.
Expansion of FMLA Leave
In addition to the Emergency Paid Sick Time Act, the Families First Coronavirus Response Act also contains an Emergency Family and Medical Leave Expansion Act (the EFMLEA). The EFMLEA expands the protections of the Family and Medical Leave Act to add Public Health Emergency Leave. These amendments are for employers who employ fewer than 500 employees and are effective through Dec. 31, 2020 (however, the Secretary of Labor has the authority to exempt certain employers, including health care providers, emergency responders and businesses with under 50 employees).
An employee is eligible for EFMLEA if the employee has been employed for at least 30 calendar days and as with the paid leave provisions, employers of health care provider or emergency responder employees may exempt those employees from coverage.
What are the Qualifying Reasons for Medical Leave?
EFMLEA leave is available under these amendments if an employee is unable to work (or telework) due to a need for leave to care for the employee’s son or daughter who is under 18 because the child’s school or place of care has been closed or his or her childcare provider is unavailable due to a public health emergency. This is a significant change from the prior version of this bill that would have also permitted leave where the employee received a recommendation to quarantine or where the employee needed to care for a family member recommended to quarantine.
Must We Pay Employees During Medical Leave?
The Act provides for a combination of unpaid and paid leave under EMFLEA. The first 10 days of EFMLEA may be unpaid, but an employee may elect (and an employer may require an employee) to substitute any accrued vacation, personal leave or medical or sick leave for unpaid leave. This leave can coincide and run concurrently with the Paid Sick Time provisions. Therefore, many employees’ unpaid 10-day leave period will end up being paid.
After the 10-day period, the employer generally must pay full-time employees at two-thirds the employee’s regular rate for the number of hours the employee would otherwise be normally scheduled. The Act limits this pay to $200 per day and $10,000 in the aggregate per employee.
Restoration of Position Upon Returning from EFMLEA
FMLA’s standard job restoration requirements will apply to employers with 25 or more employees. Employers with fewer than 25 employees are generally excluded from this requirement if the employee’s position no longer exists following the Emergency FMLA leave due to an economic downturn or other circumstances caused by a public health emergency during the period of Emergency FMLA. This exclusion is subject to the employer making reasonable attempts to return the employee to an equivalent position and requires an employer to make efforts to return the employee to work for up to a year following the employee’s leave.
Tax Credits Pertaining to Both Provisions
Employers may claim a limited refundable employment tax credit equal to payments made to employees for EFMLEA and Paid Sick Leave. These tax credits are drawn against the employer’s portion of Social Security taxes. While this limits application of the tax credit, employers will be reimbursed if their costs for qualified sick leave or qualified family leave wages exceed the taxes they would owe.
Specifically, employers are entitled to a refundable tax credit equal to 100 percent of the qualified sick leave wages paid by employers for each calendar quarter in adherence with the Emergency Paid Sick Leave Act. The qualified sick leave wages are capped at $511 per day ($200 per day if the leave is for caring for a family member or child) for up to 10 days per employee in each calendar quarter.
Similarly, employers are entitled to a refundable tax credit equal to 100 percent of the qualified family leave wages paid by employers for each calendar quarter in accordance with the Emergency Family and Medical Leave Expansion Act. The qualified family leave wages are capped at $200 per day for each individual up to $10,000 total per calendar quarter. Only those employers who are required to offer Emergency FMLA and Emergency Paid Sick Leave may receive these credits.
Other Provisions and Upcoming Legislation
The Act provides funding for economic assistance and requires health plans to cover COVID-19 testing at no charge. Specifically, the provisions provide for up to $1 billion in 2020 for emergency grants to states for activities related to unemployment insurance benefit processing and payment, under certain conditions. In addition, the U.S. Treasury is expected to use its authority to advance funds to some small businesses to cover the cost of providing paid sick leave.
This is considered “Phase Two” of the government’s coronavirus response. Phase Three, which will include broader economic stimuli designed to deliver cash to individuals to help them weather the downturn as well as industry-specific relief, is currently being crafted. It's believed that the Phase Three package will be multiple times larger than both Phases One and Two combined. We will continue to bring you updates as they occur.