On March 18, 2020, the President signed the Families First Coronavirus Response Act (“Act”). This new legislation affects employers in the wake of the COVID-19 pandemic. The following provisions are effective April 2, 2020, and continue through December 31, 2020.
The first component is an expansion of the Family Medical Leave Act (“FMLA”). If an employer engages more than 50 employees, the employees are covered under the FMLA, which provides up to 12 weeks of unpaid leave for qualified family needs. The expansion now provides the following:
- Expanded Coverage: FMLA has now been expanded on a temporary basis. Whereas the FMLA previously only applied to employers with more than 50 employees, now, all employers with fewer than 500 employees are covered by FMLA through the end of 2020. However, only a previously covered employer (with more than 50 employees) is subject to penalties if an employee sues for violation of the Act under the new qualifying reason. This means that thousands of employers who were not previously obligated to provide FMLA leave are now required to give leave specifically for COVID-19 related claims.
- Expanded Eligibility: The expansion decreases the eligibility requirement for an employee for claims related to COVID-19. Under standard FMLA rules, an employee must be employed for at least a year before they have the ability to utilize FMLA leave. For the expanded coverage claims, however, an employee must only be employed for 30 days to qualify for the leave. The Act does provide for the potential exemption of a small business with fewer than 50 employees if the leave requested would jeopardize the business’s viability.
- Basis for Emergency Leave: The expanded coverage and eligibility applies specifically to the new qualifying need related to a public health emergency. The new coverage allows a qualified employee to take up to 12 weeks of job-protected leave, assuming they are unable to work on site or remotely (telework), to care for the employee’s child (under 18 years old) if the child’s school or childcare facility is closed or unavailable due to a public health emergency. This is the only qualifying need for the Emergency FMLA.
- Paid Leave: Under “standard” FMLA leave, the first 14 days of leave are unpaid and an employee can elect to use any other paid time off available thorugh their employer. Under the Emergency FMLA, only the first 10 days are unpaid. During this 10 day period, an employee may still use any available paid time off from their employer. After the 10 day period, the employer must pay full-time employees at least 2/3 of the employee’s regular rate of pay for the number of hours the employee would have worked but for the emergency qualifying need. The compensation is capped at $200 / day or $10,000 aggregate per employee. For employees working on a part-time or irregular schedule, the employer is required to pay based on the average number of hours the employee worked for the 6 months prior to taking leave for the qualifying emergency. If a subject employee has been employed less than 6 months, the compensation is based on the reasonable expectation when hired of the average number of hours they would be expected to work.
- Job Restoration: If a business has more than 25 employees, the employer has the same obligations to return an employee to their regular position and rate of pay as is required under “standard” FMLA leave. If an employer has fewer than 25 employees, they are generally excluded from the obligation to restore the employee’s job if the position no longer exists when the leave is concluded due to an economic downturn or other circumstances caused by a public health emergency during the period the Emergency FMLA is in effect. This exclusion is only available if the employer has made a reasonable effort to return the employee to an equivalent position.
The second component to the Act is the Emergency Paid Sick Leave Act. This new act allows an eligible employee to take sick leave based specifically on COVID-19 related issues. An employee is eligible if the company employs fewer than 500 total employees. There is no minimum period of employment prior to eligibility. Eligible full-time employees may now receive 80 hours of paid sick leave and part-time employees are eligible for paid sick time in an amount equal to the average number of hours worked over a 2 week period. An employee may take paid sick leave for the following reasons:
- The employee is subject to a federal, state or local quarantine or isolation order related to COVID-19;
- The employee has been advised by a health care provider to self-quarantine due to COVID-19 concerns;
- The employee is experiencing COVID-19 symptoms and seeking medical diagnosis;
- The employee is caring for an individual subject to a federal, state or local quarantine or isolation order or advised by a health care provider to self-quarantine due to COVID-19 concerns;
- The employee is caring for the employee’s child if the child’s school or place of care is closed or the child’s care provider is unavailable due to public health emergency; or
- The employee is experiencing any other substantially similar condition specified by the Secretary of Health and Human Services in consultation with the Secretary of the Treasury and the Secretary of Labor.
* It is important to note that business closures or shutdowns are not a covered reason for paid leave.
Compensation is at the regular rate of pay for time off as a result of items 1-3 above up to $511/day and $5,110 in total. If sick time is requested for items 4-6, the employee’s compensation at 2/3 of the regular rate of pay up to $200/day or $2,000.00 total. This sick leave does not carryover after December 31, 2020, and may be in addition to any other paid sick leave offered by an employer. If an employer offers other sick leave, an employer may not require that the other sick leave be exhausted before the sick leave available under the Act takes effect.
A third component of the Act is Tax Credits. This section of the Act provides a series of refundable tax credits for employers who are required to provide the Emergency Paid Sick Leave and Emergency Paid Family and Medical Leave described above. You are encouraged to discuss these options with your CPA to insure your business maximizes any available recovery.
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