On Sunday, March 15, 2020, we provided a comprehensive summary of the paid leave and other employment-related provisions of the Families First Coronavirus Response Act, passed overwhelmingly by the U.S. House of Representatives on March 13. This bill makes sweeping changes to an employer’s legal obligations: (1) imposing a paid sick and safe leave (“PSL”) mandate for COVID-19-related reasons on most employers with fewer than 500 employees; (2) temporarily and vastly expanding coverage and imposing a paid leave requirement on these same employers under the Family and Medical Leave Act (“FMLA”) for school and child care closures associated with COVID-19; (3) making unemployment benefits available for reasons associated with COVID-19; and (4) giving a tax credit for paid sick and paid family and medical leave.
On March 16, in advance of moving the bill to the Senate, the House amended the PSL and FMLA portions of the bill to limit significantly the employer obligations to provide paid leave.
In order to provide a comprehensive summary of the bill, as amended, we are updating our E-lert by using red text to explain the amendments to the bill. Employers of healthcare providers and emergency responders will note that they now may choose to exclude such workers from both leave mandates.
Please note that there may be further changes to the bill by the Senate. We will issue another update if and when the bill passes the Senate.
- “Emergency Paid Sick Leave Act”
This section of the Coronavirus Response Act requires employers with fewer than 500 employees to provide 10 days of paid sick leave (“PSL”) to employees to use for themselves and to care for their family members during this COVID-19 emergency. The Act sunsets at the end of the year. Notably, this Act may go beyond the requirements of similar state and local paid sick and safe leave laws.
The amendments revised the bill to clarify that “two weeks” of leave was intended to be two workweeks (i.e. now specified to be “10 days”).
Purpose of Leave: The employee may use PSL:
Under the amended bill, leave is available where employees are unable to work or to telework for any of the following the reasons:
- Employee is subject to federal, state, or local quarantine or isolation order.
- Employee has been advised by a healthcare provider to self-quarantine due to COVID-related concerns.
- Employee has symptoms and is seeking diagnosis.
- Employee is caring for an individual who is under a quarantine order or is self-isolating on the advice of a healthcare provider.
- The employee is caring for a child whose school or place of care is closed or childcare provider is unavailable.
- Leave is needed due to other substantially similar conditions specified by the Secretary of the Department of Health and Human Services in consultation with the Secretaries of Labor and Treasury.
While largely the same, the amendments eliminated paid leave to care for family members while obtaining a diagnosis and add a new catchall provision. The amendments also expanded caregiver leave to apply to care of any individual, not just specific family members. In addition, the bill clarified that being unable to work must include telework for purposes of the right to paid leave.
Who Is Covered By the Act: Private (along with certain governmental) employers with fewer than 500 employees are covered by this Act, which applies to all of their employees, both full-time and part-time.
The amendments have added new exemptions. The Act now provides that the Secretary of Labor may issue regulations to exclude certain health care providers and emergency responders from the definition of employee, and to allow employers of such workers to opt out of the paid leave requirement. The Secretary may also exempt small businesses with fewer than 50 employees if the sick leave mandate “would jeopardize the viability of the business as a going concern.” These exemptions align with those already contained within the expanded FMLA provisions of the Act.
Amount of PSL: Full-time employees receive 80 hours of PSL. Part-time employees receive a prorated amount of PSL based on the number of hours that they work on average during a two-week period. If the part-time employee works a varying schedule, the hours are calculated by determining the average number of hours that employee was scheduled to work over the prior 6-month period, including any leave. If the employee has not worked over that period, then the hours are calculated based on the reasonable expectation at hire of the average number of hours per day that the employee would normally be scheduled to work. The Secretary of Labor must issue guidelines to assist in the calculation of the amount of PSL within 15 days of enactment.
There is no carryover of unused PSL. In addition, this appears to be a one-time use of leave; once an employee has returned from leave, no further PSL is required. Unused PSL does not need to be paid out upon termination.
PSL is compensated at the employee’s regular rate (as calculated under the Fair Labor Standards Act). Notably, if the PSL is used to care for a family member or because of a school closure or lack of childcare, or for the “other reason” determined by the Secretary of the HHS, the rate of compensation is 2/3 of the foregoing rate.
Although employers may choose to provide more, the amendments now cap PSL payments to $511 per day or $5,110 total for leave for employee’s own use and $200 per day or $2,000 total for leave to care for others or under the catchall. This serves to align the employer’s payment obligations with the tax credits that will be available.
Multi-Employer Bargaining Agreements. The Act contains a provision specific to employers that are part of multiemployer collective bargaining agreements. Such employers comply with the Act by contributing to a multiemployer fund, plan or program at the required statutory accrual rate, as long as employees can receive pay for the specified reasons from this arrangement.
Notice and Use of Leave. PSL is available for immediate use. The employer cannot require the employee to look for or find a replacement worker. If other paid leave is available, the employee may choose to use PSL first, and the employer cannot require the employee to use other paid leave before PSL.
After the first workday on which PSL is used, the employer can require the employee to follow reasonable notice procedures for the use of any additional PSL.
Employer’s Notice and Recordkeeping Requirements. The Secretary of Labor will prepare a notice within 7 days of enactment that must be posted in conspicuous places where the employer normally posts other such employment notices.
Employers must retain records for three years.
Prohibited Actions and Enforcement. Employers may not discharge, discipline or discriminate in any other way against an employee for taking leave under the Act or who has filed a complaint, instituted a proceeding or testified in such proceeding.
A failure to provide sick leave or retaliation for exercising rights under the Act will be subject to the penalties under the FLSA. This includes a fine of not more than $10,000 and/or imprisonment of not more than 6 months. Either the Secretary of Labor or the employee may also bring a lawsuit for the unpaid leave, an equal amount as liquidated damages, equitable relief, attorneys’ fees and costs, and for injunctive relief.
Lawsuits may be brought for up to two years after the alleged violation, unless the violation was willful, in which case the period is extended to three years.
An Employer’s Existing Policy. The original bill provided that employers with policies that provide paid leave already must still provide this additional allotment of paid sick time and that employers may not change their policies to try to avoid granting the PSL. The amendments delete this requirement, and now there is no discussion of the interaction of this new paid sick leave mandate with existing policies. As a result, we believe that current sick leave policies may possibly be used to cover this new mandate, absent any further change by the Senate.
What the Act Does Not Do. The Act currently does not contain any provisions that allow the employer to obtain certification of the need for leave, to verify the reasons for the leave if fraudulent use is suspected, or to discipline employees if fraudulent use is confirmed. This is not necessarily to say that employers may not do this but simply to note that the bill is silent on these normally proscribed matters.
The Act also does not preempt state and local paid sick and safe leave laws. Thus, employers subject to such laws will need to ensure that they are still complying with all applicable laws.
In addition, while the Act provides that it does not diminish the rights and benefits under any collective bargaining agreement, it contains no other provision regarding the interaction of the Act with an existing CBA. Because employers must comply with the Act almost immediately upon enactment, this may require unionized employers to provide notice to and an opportunity to bargain with unions over any required changes to CBA provisions or administration.
Effective Date. If signed into law, this section takes effect not later than 15 days after enactment of the Coronavirus Response Act. As noted previously, however, it expires at the end of 2020.
- “Emergency Family and Medical Leave Expansion Act”
Another section of the Coronavirus Response Act temporarily (until December 31, 2020) and expands the scope of the Family and Medical Leave Act (“FMLA”) with regard to a public health emergency declared by a federal, state, or local authority.
The FMLA as It Currently Exists. The FMLA requires employers with 50 or more employees to provide eligible employees with up to 12 weeks of unpaid leave for certain qualifying conditions:
- For incapacity due to pregnancy, prenatal medical care or childbirth;
- To care for the employee’s child after birth or placement for adoption or foster care;
- To care for the employee’s parent, spouse, or child who has a qualifying serious health condition;
- For a qualifying serious health condition that makes the employee unable to perform his/her job.
- For certain qualifying exigencies resulting from a military servicemember’s deployment to a foreign country.
In addition, employees may take up to 26 weeks to care for a servicemember who was injured or became ill as a result of their military service.
To be eligible for existing FMLA leave, an employee must have worked for the employer for 12 months, have worked at least 1,250 hours during the 12 month period immediately preceding the date the leave is to begin, and be employed at a worksite where 50 or more employees are employed by the employer within 75 miles of that worksite.
Expansions to the FMLA. Until the end of the year, the FMLA will include a new section pertaining to public health emergency leave. This new section significantly changes some of the above-referenced and other provisions specifically in the context of leave because of a public health emergency:
- An employee will be eligible if they have been employed for at least 30 days (rather than 12 months).
- This section will apply to an employer with fewer than 500 employees (rather than 50 or more). Thus, it will cover small employers who are not subject to FMLA otherwise (subject to the exemption discussed below) and will not apply to large employers.
- Under the amendments to the bill, an employee will be entitled to take this expanded leave, including paid FMLA leave, only if “the employee is unable to work (or telework) due to a need for leave to care for the son or daughter under 18 year 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, due to a public health emergency.”
This amendment is substantial for several reasons. It eliminates the use of this expanded FMLA benefit for quarantine-related situations. And it eliminates paid FMLA for absences due to an employee’s own COVID-related issues or caring for a family member with such issues. Notably, FMLA leave still may be available if the underlying reason qualifies for leave under existing FMLA provisions, but no pay for the leave will be required (other than the employee’s right or employer’s mandate that available paid leave be substituted).
- Where the need for leave is foreseeable, the employee must provide as much notice as is practicable (as opposed to 30 days for regular FMLA).
- While the regular FMLA requires job reinstatement (with limited exceptions), the new section provides that employers with fewer than 25 employees are not required to reinstate employees where (1) the employee’s job position no longer exists because of economic conditions or other changes in operating conditions caused by the public health emergency, (2) the employer makes reasonable efforts to restore the employee to an equivalent position, and (3) if no such position is then available but becomes available within one year and the employer makes reasonable efforts to contact the employee. The one-year period begins on the earlier of the date on which the leave concludes or the date that is 12 weeks after the commencement of the leave.
New Paid Leave Mandate. The Act provides that the first 10 days for which an employee takes this public health emergency FMLA leave is unpaid, although the employee may choose to substitute any paid leave (such as PSL if applicable). Unlike with regard to regular FMLA leave, the employer may not require the substitution of paid leave. Note that the amendment clarified that it is two workweeks (i.e. 10 days) not 14 days as was previously stated.
Of significant import, after the first 10 days has passed, the Act requires that any additional leave, up to the 12-week entitlement under FMLA, be paid. The amount of pay must be at least 2/3 of the employee’s regular rate of pay (as determined in accordance with the Fair Labor Standards Act) for the number of hours that the employee would otherwise normally be scheduled to work. If the employee works a varying schedule of hours, then the entitlement is calculated by using the average number of hours that the employee was scheduled over the prior 6-month period, including any leave. If the employee did not work over this period, then the calculation is based on the reasonable expectation at the time of hire of the average number of hours that the employee would normally be scheduled to work.
Although employers may choose to provide more paid leave, the amendments now cap the paid FMLA at $200 per day or $10,000 total. This serves to align the employer’s payments with the tax credits that will be available.
Multi-Employer Bargaining Agreements. The Act contains a provision specific to employers that are part of a multiemployer collective bargaining agreement. Such employers comply with this section of the Act by contributing to a multiemployer fund, plan or program at the required statutory accrual rate, as long as employees can receive pay from the fund, plan or program for the paid leave portion of the new public health emergency FMLA entitlement.
Exemptions from the Expanded Requirements. Notably, the Secretary of Labor may issue regulations to exempt certain health care providers and emergency responders from the definition of an eligible employee. In addition, the Act now contains a separate new provision that permits employers of these employees to exclude them from the application of the FMLA expansion.
The bill does not define “emergency responders.” The existing FMLA regulations define the term “healthcare provider” as the following: doctors, podiatrists, dentists, clinical psychologists, optometrists, chiropractors, nurse practitioners, nurse-midwives, clinical social workers, physician assistants, Christian Science Practitioners, and any health care provider accepted by the employer’s group health (or equivalent) plan. It does not include registered nurses, GNAs, CNAs, medical technicians, and the like.
By regulation, the Secretary may also exempt from coverage small businesses with fewer than 50 employees if the new requirements “would jeopardize the viability of the business as a going concern.”
In addition, unlike with regard to other FMLA violations, the Act provides that an employer with fewer than 50 employees cannot be sued by an employee for violations of the right to leave related to public health emergencies. The employer may be subject to administrative enforcement or suit by the Secretary of Labor, however.
Effective Date. If signed into law, this section takes effect not later than 15 days after enactment of the Coronavirus Response Act. As noted previously, however, it expires at the end of 2020.
- Unemployment Insurance Benefits for COVID-19 Illnesses and Quarantines
The Act provides emergency administration grants to states to assist with processing and paying unemployment insurance benefits, if the state “demonstrate steps it has taken or will take to ease eligibility requirements and access to unemployment compensation for claimants, including waiving work search requirements and the waiting week, and non-charging employers directly impacted by COVID-19 due to an illness in the workplace or direction from a public health official to isolate or quarantine workers.” By doing so, states would allow employees to obtain UI benefits if they are ill or ordered into quarantine due to exposure to COVID-19 – a matter that is currently left to each state’s interpretive discretion.
- Tax Credits for Paid Sick Time and Paid Family and Medical Leave
The Act provides a payroll tax credit equal to 100% of the required PSL, up to $511 per day for leave taken because of the employee’s own personal needs and up to $200 for leave taken to care for a family member or because of a school closure or loss of child care, subject to other limitations and conditions.
In addition, the Act provides a payroll credit equal to 100% of the required paid FMLA, up to $200 per day or an annual aggregate of $10,000. Again, there are other limitations and conditions.
Employers should consult with their accountant or tax counsel for further guidance on the proposed tax credit.
Next Steps for Employers
Employers that have concerns about the bill would be wise to contact their Senators to provide input before the bill is enacted. Although it is clear that some measure will pass, the bill is still subject to change. If enacted in its current form, we anticipate the following.
Given the already existing school closures in many jurisdictions, as well as the expanding numbers of individuals who are subject to governmental or employer-required quarantines, employers must take action to prepare for the likely and almost immediate enactment of this Act.
As for PSL, employers will need to comply with this new leave mandate. Typically sick leave is compensated at an employee’s regular rate; if the employer wishes to take advantage of the 2/3 rate for leave taken to care for a family member or because of school closures, it will need to make the necessary logistical arrangements for the calculation of such leave and account for the caps. In addition, employers must ensure that they obtain and post the Secretary of Labor’s soon-forthcoming notice.
With regard to paid FMLA, covered employers (those with fewer than 500 employees) will also need to prepare to provide this new paid leave benefit, which may be compensated at the 2/3 rate. The notice and designation requirements of regular FMLA will apply, and employers need to ensure compliance. Those with fewer than 50 employees may wish to see if the Secretary of Labor will grant the referenced hardship exemption (although it is not yet clear how exemptions will be determined). Similarly, those employing certain healthcare personnel or emergency responders may also be exempted by the Secretary.
Employers should also be aware that employees without paid leave rights may be entitled to unemployment insurance benefits.