3/30 UPDATE: FAMILIES FIRST CORONAVIRUS RESPONSE ACT:
IMPACT ON EMPLOYEE SICK LEAVE AND PAY
March 23, 2020
Congress has passed and the President signed into law the Families First Coronavirus Response Act ("FFCRA"). Employers’ obligations become effective April 1, 2020, and automatically expire December 31, 2020.
March 30, 2020 Update
The Department of Labor has now released guidelines for the exemption from paid leave requirements for employers with less than fifty (50) employees:
- When does the small business exemption apply to exclude a small business from the provisions of the Emergency Paid Sick Leave Act and Emergency Family and Medical Leave Expansion Act?
An employer, including a religious or nonprofit organization, with fewer than 50 employees (small business) is exempt from providing (a) paid sick leave due to school or place of care closures or child care provider unavailability for COVID-19 related reasons and (b) expanded family and medical leave due to school or place of care closures or child care provider unavailability for COVID-19 related reasons when doing so would jeopardize the viability of the small business as a going concern. A small business may claim this exemption if an authorized officer of the business has determined that:
- The provision of paid sick leave or expanded family and medical leave would result in the small business’s expenses and financial obligations exceeding available business revenues and cause the small business to cease operating at a minimal capacity;
- The absence of the employee or employees requesting paid sick leave or expanded family and medical leave would entail a substantial risk to the financial health or operational capabilities of the small business because of their specialized skills, knowledge of the business, or responsibilities; or
- There are not sufficient workers who are able, willing, and qualified, and who will be available at the time and place needed, to perform the labor or services provided by the employee or employees requesting paid sick leave or expanded family and medical leave, and these labor or services are needed for the small business to operate at a minimal capacity.
- If I am a small business with fewer than 50 employees, am I exempt from the requirements to provide paid sick leave or expanded family and medical leave?
A small business is exempt from certain paid sick leave and expanded family and medical leave requirements if providing an employee such leave would jeopardize the viability of the business as a going concern. This means a small business is exempt from mandated paid sick leave or expanded family and medical leave requirements only if the:
- employer employs fewer than 50 employees;
- leave is requested because the child’s school or place of care is closed, or child care provider is unavailable, due to COVID-19 related reasons; and
- an authorized officer of the business has determined that at least one of the three conditions described in the previous question is satisfied.
March 25, 2020 Update
The Department of Labor has issued additional guidance to employers regarding the leave provisions discussed below, including an employer fact sheet. This fact sheet has additional guidance regarding a number of questions left open by the legislation, including examples of calculations of paid leave, for example. A series of Questions and Answers was also released, which sets the effective date of April 1, 2020 and describes how to calculate “fewer than 500 employees,” among other guidance. Additional details regarding the small employer exemption were notably missing. Additionally, employers are required to post this form notice for employees prior to April 1.
March 23, 2020: FFCRA Legislative Summarization
The key provisions of the Families First Coronavirus Response Act contain the following six primary relief measures of importance to employers:
• Employers must provide up to two weeks of paid leave to all employees for certain COVID-19 related matters;
• Family and Medical Leave Act ("FMLA") expansion requiring employers to provide partially paid leave to employees that take leave in order to care for his or her child if the child’s school or other place of care has been closed, or the child care provider is unavailable, due to a COVID-19 related emergency as declared by the Federal, State, or local government;
• Employers must provide similar leave for employees of employers who are parties to a multi-employer collective bargaining agreement and who contribute to a multi-employer benefit plan;
• Tax credits are available for employers equal to 100% of the FFCRA-mandated paid leave wages paid by an employer each calendar quarter subject to certain caps (the tax credits are not available for government employers), the Medicare taxes owed on those wages, and the expenses associated with maintaining group health plan coverage associated with those wages (please note that these are refundable tax credits);
• Greater access to unemployment insurance for employees who are off work for certain reasons related to COVID-19; and
• Coverage of COVID-19 testing at no cost under health plans.
There are some notable exemptions from the FFCRA:
1.) employees of the federal government who are covered by Title II of the FMLA (exempt from expanded FMLA only, not Paid Sick Leave Act);
2.) employees defined as "health care providers" (based upon FMLA definition and DOL guidance); and
3.) employers with less than fifty (50) employees if the viability of the business as a going concern is jeopardized. **Importantly, the DOL has not provided further guidance yet on this exemption, but has stated it intends to in April, 2020.
Emergency Paid Sick Leave Act
• Full-time Employees
The FFCRA require employers with fewer than 500 employees to provide full-time employees (regardless of how long the employee had been employed prior to the leave) with 80 hours of paid sick leave.
Eligibility for expanded sick leave benefit
These leave benefits are available only to employees who are absent from work for reasons related to COVID-19. Specifically, to qualify for the paid-leave benefits under this Act, an employee’s absence from work must be for one of the following purposes:
1. The employee is subject to a government quarantine/isolation order related to COVID-19;
2. The employee has been advised by a health care provider to quarantine for COVID-19 concerns;
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 an order as described above or has been advised by a health care provider as described above;
5. The employee is caring for a son or daughter because the child’s school or place of care has been closed or the child’s child care 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 Act does not address employers’ right to request certification or documentation from employees in need of leave. However, the Department of Labor regulations may address this issue at a later time. Also note that these benefits are not intended to address reduction in force issues. Eligibility for these benefits is strictly conditioned on the enumerated circumstance above – essentially limited to illness related to the COVID-19 virus and child care.
Limits on the expanded sick leave benefit
Employees who take leave to care for themselves (pursuant to nos. 1, 2 and 3 above) are entitled to their regular full rate of pay for the number of hours they would work per day. However, employers are allowed to cap this amount of paid benefits at $511.00 per day ($5,110.00 aggregate) per employee.
Employees who need leave to care for others, including children home from school or without child care, are entitled to only two-thirds of their regular rate of pay (or the applicable minimum wage, if greater). The amount of paid benefits for this leave is capped at $200.00 per day ($2,000.00 aggregate) per employee.
Significantly, employers must provide these benefits in addition to any existing paid leave benefits. In other words, employees are entitled to exhaust all available emergency paid leave provided by this Act before they are required to use any otherwise available leave benefits that their employer may offer.
• Part-time employees
If a part-time employee falls under one of the six categories noted above, he or she may also be eligible for the sick leave benefit. Covered part-time employees are entitled to receive the average number of hours of work they normally work over a two-week period. If the part-time employee’s schedule varies, the employee receives the average number of hours scheduled per day over the prior six-month period, including hours for which the employee took any type of leave. If neither is calculable, the part-time employee receives sick leave benefits based off the amount of time the employee was expected to work when hired. The benefits to part-time employees are subject to the same limits applied to full-time employees noted above.
Expansion of FMLA for Child Care Purposes
The FFCRA also contains an emergency expansion of the FMLA to provide for leave needed for child care purposes. This FMLA expansion covers all employers with fewer than 500 employees, not just employers of 50 or more employees in the existing FMLA. The exemption discussed above that may apply to employers with fewer than 50 employees (but has not been expanded upon by DOL as of 3/25/2020) may include the benefits under the expanded FMLA. It also lowers the eligibility threshold to employees who have worked for only 30 days (or more). Specifically, this emergency FMLA leave is available to eligible employees to care for the employee’s child (under 18 years old) if the child’s school or place of care is closed or if the child’s child care provider is unavailable due to a public health emergency.
Employers may provide the first 10 days of this leave without pay. While employees can elect to substitute or use otherwise accrued paid leave during these initial 10 days, employers may not require employees to do so, no matter how their policies may read. Employees could also elect to use their paid sick leave provided by the Emergency Paid Sick Leave Act discussed above for this time to be paid. After this initial 10-day period, employers must provide additional paid leave to their employees for the remaining 10 weeks, but only at two-thirds of the employee’s regular rate of pay for the number of hours the employee would normally be scheduled to work. The amount of pay during these 10 weeks is capped at $200.00 per day ($10,000.00 aggregate) per employee.
Employees are required to give their employers as much notice as practicable when this type of leave is foreseeable. Like the Emergency Paid Sick Leave Act, the FMLA Expansion does not include any reference to an employer’s right to request certification or documentation of an employee’s need for leave, though Department of Labor regulations may subsequently address this issue.
Regular FMLA benefits continue to apply to employers that employ 50 or more employees, which usually consists of up to 12 weeks of unpaid leave.
Employer Tax Credits
The FFCRA provides a refundable tax credit to employers for 100% of the qualified sick leave wages paid to their employees (described above). These tax credits would be provided on a quarterly basis and are allowed to be set off against the employer’s Social Security taxes.
What Does This Mean for Employers?
For employers with fewer than 500 employees, the FFCRA imposes new paid-leave requirements for certain employees and, to the limited extent provided in the Act, it may bring employers with fewer than 50 employees under the FMLA. Both the Emergency Paid Sick Leave portion of the Act and the expansion of FMLA are likely to have significant impacts on small employers (those under 500 employees and those under 50 employees). The Emergency Paid Sick Leave portion of the Act is likely to have an immediate impact when it becomes effective April 1, 2020, particularly as we deal with closed schools in Alabama. As noted above, the paid sick leave provided under the Act can count toward the initial 10 days of leave before the expanded FMLA coverage becomes effective. It will be critically important for employers to track the amount of employee compensation that is paid out under the Act so that the employer can report that on its quarterly payroll tax returns (Form 941) and claim the appropriate tax credit (remember that this is reported to be a refundable tax credit).
Also, it is important to note that penalties for employers violating the Act could be severe – treble damages for willful violations of the Act plus an award of attorney’s fees and costs to a prevailing party. Please be very careful when evaluating how the Act applies to your business and your employees.
This is obviously a rapidly developing situation and it is important that you keep up with direct sources of information. Some important links for you to use are provided below.
Alabama Department of Labor
US Department of Labor
West Alabama Chamber of Commerce
Alabama Department of Public Health
US Department of Public Health
Centers for Disease Control and Prevention
Internal Revenue Service
Alabama Department of Revenue