Ice Miller LLP: Insights

UPDATE: The Families First Coronavirus Response Act Is Signed Into Law

On Wednesday, March 18, 2020, the President signed into law H.R. 6201, titled the Families First Coronavirus Response Act. The law should be effective 15 days after it was signed, or presumably April 2, 2020.

Note: The Department of Labor issued a Q&A document on March 24, 2020 that states the leave provisions are effective April 1, 2010. We will watch for the regulations to confirm this effective date and provide further updates.

The Act (among other things) requires that private employers with fewer than 500 employees and almost all public employers provide essentially two weeks of emergency paid sick leave and that they provide Family and Medical Leave Act (FMLA) leave for certain absences related to COVID-19. The FMLA leave is unpaid for the first 10 days and paid at a rate of 2/3 of the employee's wages after that period. Covered employers will have access to tax credits related to this additional paid leave.

A summary of these provisions is provided below. At a minimum, employers will need to prepare for the Act's effective date by updating their current FMLA and/or medical leave policies, considering how the Act will affect their financial status, and creating a method of tracking any payments made under the Act to best take advantage of the available tax credits.

Amendments to the Family and Medical Leave Act

The Act adds "public health emergency leave" to the list of qualifying leaves under the FMLA. The amendment, unless extended, will sunset on December 31, 2020.

The Act covers all employers with fewer than 500 employees, although small businesses with fewer than 50 employees will be exempt from providing the leave if it would jeopardize the viability of the business as a going concern. The Department of Labor (DOL) will issue regulations to better define when a small business is exempt. In the interim, small employers will need to analyze whether they fall within this description based on their specific financial situation.

For purposes of public health emergency leave, the Act defines an eligible employee to include an individual who has been employed for at least 30 days by the employer. The employee does not need to have worked a specific number of hours to be eligible and does not need to work at a work site at which there are 50 employees within a 75 mile radius (which are requirements under the FMLA generally). Employers who employ health care providers or emergency responders may exclude such employees from this form of leave.

An employee will qualify for public health emergency leave under this amendment to the FMLA if the 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, due to a public health emergency with respect to COVID-19. For this purpose, a "child care provider" means a provider who receives compensation for providing child care services on a regular basis. The term "school" means an elementary or secondary school.

The Act requires that:

Employers provide employees unpaid leave during the first 10 days of the leave, although employees may substitute available paid leave during this period (employers may not force substitution).
After the first 10 days of leave, employers provide leave paid at a rate of no less than 2/3 of the employee's regular rate of pay (as that term is defined under the Fair Labor Standards Act) for the remainder of the 12 week FMLA period (or whatever period of time the employee has remaining under the employer's current FMLA policy). The pay must be at the employee's regular rate, capped at $200 per day, for the hours the employee would have otherwise worked.
The maximum total pay an employee may receive under this provision is an aggregate of $10,000. If the employee's hours are variable, employers must average the hours worked (or during which the employee took leave) for the past 6 months. Employers who are signatory to a multiemployer collective bargaining agreement that provides paid sick leave may fulfill the paid leave obligations through its contributions to a plan that provides for the paid leave.
An employee must provide notice to the employer as soon as practicable for leaves that are foreseeable.

Under the Act, an employee must be restored to his or her position (or an equivalent position) unless the employer employs fewer than 25 employees and the position held by the employee who takes a public health emergency leave no longer exists due to economic conditions or other changes in operating conditions that affect employment and are caused by a public health crisis during the leave. To apply this exception to the restoration requirement, the employer must:

Make reasonable efforts to restore the employee to an equivalent position; and
If the reasonable efforts fail, make reasonable efforts for one year (beginning either on the date on the need due to the public health emergency ends or the date that is 12 weeks after the employee's leave commenced, whichever is earlier) to contact the employee if an equivalent position becomes available.

There are a few aspects of this new form of FMLA leave that are not addressed in the Act. For example:

Can employees take this leave intermittently or on a reduced schedule? It is not addressed in the Act, so we can only assume that intermittent or reduced schedule leave is permitted.
Can an employee be required to provide a certification or other proof that the school or child care provider is closed or unavailable? As with other forms of non-medical FMLA leave, we expect the DOL's position will be that the employer must accept a statement from the employee and/or other basic evidence that the school or child care provider closed (e.g., an e-mail announcing the closure, a news article, etc.).
Does time off taken prior to the effective date of the law for the reasons listed above count towards the required FMLA leave? We anticipate that the answer is no. Employers may always choose to provide leave beyond that which is required by law. We expect that the DOL will treat leave provided before the effective date as gratuitous leave.

The Act does not explicitly extend an employee's FMLA entitlement. Accordingly, an employee who has exhausted their 12 weeks of FMLA will not be entitled to additional leave. However, if the employer is not currently covered under the FMLA, but previously gave an employee a lengthy leave equivalent to FMLA, it appears that, unless the Act is modified, the employer will be required to provide an entire 12 weeks of leave under this amendment.

We hope that these questions and others will be cleared up either though an amendment to the Act or future regulation. Notably, an employee cannot bring a civil action against an employer with less than 50 employees for its failure to provide the leave, but the DOL may still investigate and bring an action against the employer.

This FMLA amendment will require employers who are currently subject to the FMLA to issue a temporary amendment to their policies and employers who are not currently subject to the FMLA to issue a policy addressing this new leave.

EMERGENCY PAID SICK LEAVE ACT

Under this provision of the Act, private employers with fewer than 500 employees (that engage in commerce or be in an industry that affects commerce) and almost all public employers will be required to provide emergency paid sick leave related to COVID-19.

As with the FMLA amendments, this form of leave will be required through December 31, 2020. Here is a summary of the requirements:

Employers will be required to provide full-time employees 80 hours of emergency paid sick leave, and provide part-time employees with emergency paid sick leave in an amount that the employee works, on average, in a two week period. This obligation can be fulfilled through a collectively-bargained multiemployer plan. Employers of employees who are health care providers or emergency responders may elect to exempt such employees.
The emergency paid sick time must be available for use immediately, regardless of how long the individual has been employed, for one of the purposes described below.
The employer cannot require that the employee find a replacement to cover the hours during which the employee is using paid sick time.
An employee may first use this emergency paid sick time before the employee uses other accrued paid sick time, and an employer cannot force the employee to use other paid sick time first.
After the first day of emergency paid sick leave, the employer can require that the employee follow the employer's reasonable notice requirements.
Employers will need to post a model notice, which is being prepared by the DOL.
The unused amount of emergency paid sick leave will not carry over from one year to the next and does not need to be paid out at the end of an individual's employment.
The DOL can exclude certain health care providers and emergency responders or exempt small businesses with fewer than 50 employees when the imposition of the requirement would jeopardize the viability of the business as an ongoing concern.

Emergency paid sick leave can be used for any of the following:

An absence because the employee is experiencing the symptoms of COVID-19 and seeking a medical diagnosis.
An absence because the employee is subject to a Federal, State or local quarantine or isolation order related to COVID-19
An absence because a health care provider has advised the employee to self-quarantine due to concerns related to COVID-19
An absence for the purpose of caring for an individual who is subject to a Federal, State or local quarantine or isolation order related to COVID-19 or has been advised by a health care provider to self-quarantine due to concerns related to COVID-19
An absence for the purpose of caring for a child if the child's school or place of care has been closed or is unavailable due to COVID-19 precautions.
An absence because 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

When the leave is needed for the employee's own condition or circumstances (the first 3 reasons above), the pay must equate to what the employee would otherwise be paid, capped at $511 per day and $5,110 in the aggregate. When leave is needed to care for a child or other individual (or when the leave is taken because the employee is experiencing a "substantially similar condition"), the required pay is 2/3 of the employee's pay capped at $200 per day and $2000 in the aggregate. If the employee has a variable schedule, employers will need to use the same 6 month averaging as is used in the FMLA amendment. An employee's entitled to paid sick time will end on the employee’s next scheduled work shift after the need for leave ends. The DOL will issue guidelines on calculating the payments.

It is not clear whether an employer can require an employee to use this emergency paid sick leave during the first 10 days of unpaid leave available under the FMLA amendments summarized above. In addition, emergency paid sick leave does not appear to apply to a situation in which an employee is caring for an individual who is experiencing symptoms of COVID-19, but who has not been advised by a health care provider to self-quarantine or ordered by the government to quarantine or self-isolate. This is likely an unintended gap, but, given the pressures on the health care system during the pandemic, it is a gap that may need to be corrected to ensure that employers can take tax credits (described below) for the payments made to employees in such situations.

Employers may not interfere with an employee's right to use emergency paid sick leave, may not discriminate against an employee who requests or uses emergency paid sick leave, and may not retaliate against an employee for using or requesting to use emergency paid sick leave. Employers who violate this portion of the Act will be in violation of the Fair Labor Standards Act, meaning that they may be liable to the employee for the emergency sick time that should have been provided, interest, an amount equal to the emergency paid sick time that should have been provided (i.e., liquidated damages), equitable relief (such as reinstatement), fees and costs.

TAX CREDITS FOR EMERGENCY PAID SICK AND PAID FAMILY AND MEDICAL LEAVE

To help defray the cost to employers of providing the required paid leave, covered private employers will be allowed to take a credit against the employer portion of social security taxes (i.e. 6.2%) or the hospital insurance taxes it paid on employees’ wages each calendar quarter (through the end of 2020). The credit is an amount equal to the qualified emergency paid sick leave wages paid by the employer that quarter under the above Emergency Paid Sick Leave Act or the paid leave provided under the above amendments to the FMLA, in addition to any qualified health plan expenses related to the paid leave provided. For wages paid under the Emergency Paid Sick Leave Act, the credit will be capped at $511 per day for days on which full pay is required and $200 per day for days on which 2/3 pay is required. For wages paid under the amendments to the FMLA, the credit cannot exceed $200 per day with an aggregate cap of $10,000 in a calendar quarters. A similar tax credit will be allowed for certain self-employed individuals.

The maximum number of days for which an employer may take credit for emergency paid leave, in a successive quarter, is 10 days more than the aggregate number of days for which the employer took credit in the prior quarters. The credit for either emergency paid leave or paid FMLA leave cannot exceed the social security and hospital insurance tax imposed on the employer for wages paid in that quarter; however, any excess will be treated as an overpayment that can be refunded to the employer. Employers may elect not to use this tax credit. If an employer does choose to take the credit, the employer's gross income will be increased by the amount of the credit taken. The Secretary of Treasury will issue regulations related to these tax credits.

We will continue to monitor regulations and other guidance related to this Act. We will also monitor other legislation being considered in Congress related to the COVID-19 pandemic and other matters affecting employers in this unusual time period. If you have questions on employment-related matters, please contact Tami A. Earnhart or any other member of our Labor, Employment & Immigration Group. For matters outside of employment, please refer to our COVID-19 Resource Center and contact a member of our COVID-19 Task Force.

This publication is intended for general information purposes only and does not and is not intended to constitute legal advice. The reader should consult with legal counsel to determine how laws or decisions discussed herein apply to the reader’s specific circumstances.