The “Families First Coronavirus Response Act” has been passed by the Senate and signed by President Trump

March 21, 2020

Kristen A. Campbell

As people everywhere struggle with the uncertainty and rapid changes caused by the COVID-19 outbreak, the financial impact on businesses and employees is and will remain a primary concern.  To address the severe impact of COVID-19, on March 18, 2020, President Trump signed into the law the sweeping COVID-19 relief titled the Families First Coronavirus Relief Act, H.R. 6201 (the Act).  Congress passed the Act—which includes significant, immediate employment law implications—with nearly unanimous bipartisan support. The Act includes several components including free COVID 19 testing for all Americans, expanded unemployment insurance and meal offerings for vulnerable populations, but this summary focuses on the employment related aspects. 

Employers and Employees Covered:

·  The Act temporarily amends the Family Medical Leave Act (FMLA). The most important amendment is that this affects all companies with fewer than 500 employees--it doesn't have the 50-employee floor that FMLA has. Both the paid FMLA and paid sick leave provisions apply to private employers with fewer than 500 employees and certain public employers.  However, the Department of Labor has authority “to exempt small businesses with fewer than 50 employees…when the imposition of such requirements would jeopardize the viability of the business as a going concern.”

·  Both FMLA and sick leave provisions allow an employer of an employee who is a healthcare provider or an emergency responder to elect to exclude the employee from the application of these two provisions.

FMLA Expansion for COVID-19:

·  Effective Thursday, April 2nd, the Act will temporarily expand coverage and eligibility under the federal FMLA for reasons relating to the COVID-19 pandemic until December 31, 2020.

·  The Act amends the FMLA to allow an employee who is unable to work (or telework) to take leave due to a need to care for the employee’s son or daughter (under 18 years of age) if the child’s elementary or secondary school or place of care has been closed, or the childcare provider is unavailable, due to a “public health emergency.” A public health emergency means an emergency with respect to COVID-19 declared by a federal, state, or local authority.

Emergency Paid Sick Leave for COVID-19:

·  Employers with fewer than 500 employees must immediately make available 80 hours of paid sick leave for full-time employees (or the equivalent of the average number of hours over two weeks for part time employees) for the following reasons:

o   Subject to a Federal, State, or local quarantine or isolation order related to COVID-19 or are caring for an individual subject to such an order;

o   Advised by a health care provider to self-quarantine due to concerns related to COVID-19 or are caring for an individual who has been so advised;

o   Experiencing symptoms of COVID-19 and seeking a medical diagnosis;

o   Caring for a “son or daughter” if (i) the son or daughter’s school or place of care has been closed due to COVID-19 precautions, or (ii) the son or daughter’s childcare provider is unavailable due to COVID-19 precautions; or

o   Experiencing any other “substantially similar condition” specified by the Secretary of HHS in consultation with the Secretary of the Treasury and the Secretary of Labor.

Amount of Pay

As it relates to paid family medical leave:

· The Act provides 12 weeks of job-protected paid FMLA leave for employees.

·  The first ten days will be unpaid. Once the first ten days have be completed, employees will be paid 2/3 of their regular rate, capping at $200/day and $10,000/aggregated.  These pay requirements apply to only the coronavirus-related leave reasons listed above.

·  Companies will be unable to require employees to use other paid leave, but employees may elect to use other leave such as vacation, personal leave, or sick/medical leave for the first ten (10) days and/or the additional 1/3 rate of pay.

·  The Act does not enlarge the total FMLA leave time available to employees. 

As it relates to paid sick leave:

· Employers are required to provide full time employees 2 weeks (80 hours) of paid sick leave for specific circumstances related to coronavirus.

· Part-time employees are entitled to the number of hours of paid sick time equal to the number of hours they work, on average, over a 2-week period.

· Employers must compensate employees for any paid sick time taken at regular rates of pay.

· In addition, the maximum paid sick time compensation for employees who take leave to care for themselves or are personally subject to a quarantine or isolation order is $511 per day and $5,110 in the aggregate, while for employees who take leave to care for others, it is $200 per day and $2,000 in the aggregate.

· The paid sick leave provisions of the Act do not preempt state paid sick leave laws such as Oregon’s Paid Sick Leave Law.   

How is the government assisting employers, including the self-employed?

The Act provides for refundable tax credits for paid sick leave and family and medical leave. Specifically, the Act provides for:

·  A refundable tax credit equal to 100% of qualified family leave wages that are paid by an employer. The amount of qualified family leave wages taken into account for each employee is capped at $200 per day and $10,000 for all calendar quarters.

· A refundable tax credit equal to 100% of qualified paid sick leave wages that are paid by an employer.

· The tax credit will be applied towards the employer’s quarterly social security taxes. Overpayment refunds are available in the event that the amount paid to employees under the PSLA and the expanded FMLA exceeds the amount of social security taxes owed in a given calendar quarter.

· The same credits apply to eligible self-employed individuals as well. An eligible self-employed individual is anyone who “regularly carries on any trade or business…and would be entitled to receive paid leave…pursuant to the Emergency Paid Sick Leave Act.”

Is leave job protected?

Yes, the Act offers job protection. However, the FMLA’s requirement that an employee be restored to the same or equivalent position after leave does not apply to an employer with fewer than 25 employees if the employee’s position no longer exists due to economic conditions or other changes in the employer’s operations that affect employment and are caused by the public health crisis during the period of leave.

CLIENT TIP:

Stay tuned. Regulatory authorities will be drafting regulations to carry out the law.  Also, earlier this week, the Treasury Department announced the possibility of advancing funding to employers or freeing up money that businesses have already deposited with the Internal Revenue System for funding these new leave requirements.  Congress is working on an even larger aid package that may contain measures to help businesses afford paying for employee leave during this pandemic. As this evolves it's important for employers and employees to keep abreast of the requirements and we will continue to update our clients