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Michelle Ferguson and Josephine Reid breakdown the Families First Coronavirus Response Act

In a rare bipartisan effort to provide relief to Americans, Congress passed, and President Trump signed into law the Families First Coronavirus Response Act (“Act”) on March 18, 2020. The Act addresses many important issues related to the COVID-19 pandemic. Important to employers, the Act creates two new emergency leave benefits for families impacted by COVID-19. Specifically, it expands the Family and Medical Leave Act of 1993 (“FMLA”) and requires emergency paid sick leave. Further, to help offset the financial burdens of these changes, the Act provides tax credits for the cost of providing such benefits. The Act generally applies to private employers with fewer than 500 employees and public employers with one or more employees. This article provides a brief summary of the important points every employer should be aware of going forward in this uncertain time.

Emergency Family and Medical Leave Expansion Act

Effective April 1, 2020 through December 31, 2020, the Emergency Family and Medical Leave Expansion Act (“Expansion”) amends the FMLA to add a public health emergency as a basis for FMLA leave for up to 12 weeks. Accordingly, an employee may take leave because of a “qualifying need related to a public health emergency.” A “qualifying need related to a public health emergency” means 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 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. “Public health emergency” is defined as an emergency with respect to COVID-19 declared by a federal, state, or local authority.

Unlike the rest of the FMLA, the Expansion applies to any employee who has been employed for at least 30 calendar days by the employer. Importantly, an employer of an employee who is a health care provider or an emergency responder may elect to exclude such employee from the amendments to the FMLA creating public health emergency leave. Additionally, unlike the FMLA, the Expansion applies to employers with fewer than 500 employees, so even those employers typically not covered under the FMLA because they have 50 or fewer employees, will need to comply with the provisions of the Expansion FMLA. The Secretary of Labor has the authority to issue regulations to exempt small businesses with fewer than 50 employees when imposition of paid public health emergency leave would jeopardize the viability of the business as a going concern. As of yet, the Secretary has not issued any such exemptions.

The first 10 days of Emergency Family Medical Leave is unpaid unless an employee elects to substitute any accrued paid leave benefits during this period, such as PTO, vacation leave, personal leave, or sick leave. However, an employer may not require an employee to substitute such leave during this time. For Emergency FMLA after 10 days, employers must pay at least two-thirds of an employee’s regular rate for the hours the employee would otherwise normally be scheduled to work up to $200 per day or $10,000 in the aggregate per employee.

Finally, the requirement under the FMLA that an eligible employee who takes FMLA leave shall be entitled to either be restored by the employer to the position of employment held by the employee when the leave commenced or to an equivalent position, does not apply to an employee of an employer who employs fewer than 25 employees if the following conditions are met:

  • an employee takes public health emergency leave;
  • the position held by the employee when leave commenced does not exist due to economic conditions or other changes in operating condition of the employer that affect employment and are caused by a public health emergency during the leave;
  • the employer makes reasonable efforts to restore the employee to a position equivalent to the position the employee held when the leave commenced, with equivalent benefits, pay, and other terms and conditions of employment; and
  • if the reasonable efforts of the employer to restore the employee to an equivalent position fail, the employer makes reasonable efforts to contact the employee if an equivalent position becomes available during the one-year period beginning the earlier of either the date on which the qualifying need related to a public health emergency concludes or the date that is 12 weeks after the date on which the employee’s public health emergency leave commences.

For employers with bargaining unit employees, employers should apply the Emergency FMLA consistent with the collective bargaining agreement.

Emergency Paid Sick Leave Act

Also, effective April 1, 2020 through December 31, 2020, the Emergency Paid Sick Leave (“EPSL”) Act requires employers to provide employees with paid sick leave if the employee is unable to work (or telework) due to a need for leave for one of the following six reasons:

1. The employee is subject to a federal, state, or local quarantine or isolation order related to COVID-19;

2. The employee has been advised by a health care provider to self-quarantine due to concerns related to COVID-19;

3. The employee is experiencing symptoms of COVID-19 and seeking a medical diagnosis;

4. The employee is caring for an individual who is subject to a federal, state, or local quarantine or isolation order related to COVID-19;

5. The employee is caring for a son or daughter of such employee if the school or place of care has been closed, or the childcare provider is unavailable, due to COVID-19 precautions; or

6. 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.

The amount of compensation an employee receives for paid sick leave varies depending upon which reason the employee is taking leave. For reasons 1 through 3, an employee is entitled to the employee’s regular rate of pay for the hours the employee would otherwise normally be scheduled to work or the local minimum wage, whichever is higher. EPSL is capped at $511 per day and $5,110 in the aggregate per person. For reasons 4 through 6, an employee is entitled to two-thirds of the employee’s regular rate of pay for the hours the employee would otherwise normally be scheduled to work. However, EPSL is capped at $200 per day or $2,000 in the aggregate.

EPSL is limited. Full-time employees are entitled up to 80 hours of paid sick leave. Part-time employees are entitled up to the average hours the employee normally works over a two-week period.

Paid sick leave under this Act does not carry over from one year to the next and emergency paid sick leave provided under this Act is not payable upon an employee’s separation from employment. The EPSL benefit terminates upon the next scheduled work shift after the qualifying reason for the leave ceases.

An employer may not require an employee to use other paid sick leave prior to the use of the paid sick time under this Act, nor may an employer require an employee to find a replacement to cover scheduled shifts as a condition to using this paid sick time.

Paid sick time is available for immediate use by any employee regardless of how long the employee has been employed by the employer. The Secretary of Labor has the authority to issue regulations to exempt small businesses with fewer than 50 employees when imposition of paid public health emergency leave would jeopardize the viability of the business as a going concern. Additionally, an employer of an employee who is a health care provider or an emergency responder may elect to exclude such employee from the amendments to the FMLA creating public health emergency leave.

Finally, employers must post a notice prepared by the Secretary of Labor stating of the requirements of this Emergency Paid Sick Leave Act in conspicuous places on the employer’s premises where such notices are customarily posted. The Secretary of Labor will make such notice publicly available by April 9, 2020.

Employers who fail to comply with the EPSL Act provisions will be subject to the same damages available for claims under the Fair Labor Standards Act.

Tax Credits for Paid Sick and Paid Family and Medical Leave

Employers subject to the above requirements are entitled to a refundable tax credit equal to the actual amount of the qualified paid sick leave employer paid out each quarter. These tax credits are applied against the employer’s Social Security taxes. If an employer’s costs for qualified leaves exceeds the taxes owed, the employer will receive a reimbursement.

There is some discussion of changes to these requirements relief bill, particularly to address the cash flow issues that many employers may face in light of these requirements. Also, we expect clarification of the Act to be provided in subsequent regulations issued by the Secretary of Labor.

Finally, it is important to note that the requirements for paid leave under this law are in addition to any requirements under Colorado state law, including the Colorado HELP Rule enacted on March 11, 2020.

What is written here is intended as general information and is not to be construed as legal advice. If legal advice is needed, you should consult an attorney.

For more information contact employment law attorney Michelle B. Ferguson at 303-628-3658 or employment law attorney Josephine B. Reid at 303-628-3674.