On March 18, 2020, the President signed into law the Families First Coronavirus Response Act (the “Act”). While the Act addresses the COVID-19 pandemic on a larger scale, this Client Alert summarizes the key provisions that directly impact employers.
PUBLIC HEALTH EMERGENCY LEAVE
The Act expands the existing Family and Medical Leave Act (FMLA) to provide certain employees with the right to take up to 12 weeks of job-protected leave. Specifically, eligible employees may take leave if the employee is unable to work (or telework) because they must care for a child (under 18 years of age) whose school or care provider is closed or unavailable due to a COVID-19 emergency as declared by a Federal, State, or local authority.
Covered Employees and Employers: Eligible employees include those who work for employers with fewer than 500 employees and government employers who have been on the job for at least 30 days.
First 10 Days of Leave: The first 10 days in which an employee takes emergency leave are generally unpaid. An employee may elect to substitute any accrued paid vacation leave, personal leave, or medical or sick leave for unpaid leave, but the employer cannot require employees to do so. If an employee also qualifies for Emergency Paid Sick Leave (see below), the employee may use the Emergency Paid Sick Leave at the same time as the first 10 days of emergency leave that would otherwise be unpaid.
Paid Leave Rate for Subsequent Days: After 10 days of unpaid leave, an employer is required to provide paid leave at an amount not less than two-thirds of an employee’s regular rate of pay up to $200 per day or $10,000 in the aggregate.
Job Restoration: Eligible employees who take emergency paid leave are generally entitled to be restored to the position they held when the leave commenced or to obtain an equivalent position with their employer. The Act limits this rule for employers with fewer than 25 employees. In such circumstances, if an employee takes emergency leave, then the employer does not need to return the employee to their position if:
(1) The position does not exist due to changes in the employer’s economic or operating condition that affect employment and were caused by the COVID-19 emergency;
(2) The employer makes “reasonable efforts” to restore the employee to an equivalent position; and
(3) If these efforts fail, the employer makes an additional reasonable effort to contact the employee if an equivalent position becomes available. The “contact period” is the one-year window beginning on the earlier of (a) the date on which the employee no longer needs to take leave to care for the child or (b) 12 weeks after the employee’s paid leave commences.
EMERGENCY PAID SICK LEAVE
The Act requires certain employers to provide employees with up to two weeks of paid sick time if the employee is unable to work (or telework) for the following COVID-19-related 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 is seeking a medical diagnosis;
(4) The employee is caring for an individual who is subject to a quarantine or isolation order or advised to self-quarantine by a health care provider;
(5) The employee is caring for a child whose school or care provider is closed or unavailable due to COVID-19 precautions; and
(6) The employee is experiencing any other substantially similar condition, as specified by the U.S. Department of Health and Human Services (HHS).
Covered Employees and Employers: Private employers with fewer than 500 employees, government employers, and all other non-private entity employers with more than one employee are required to provide their employees with paid sick leave. The Act entitles employees of covered employers to paid sick leave regardless of how long the employee has worked for the employer.
Paid Sick Time: Full-time employees are entitled to up to 80 hours of paid sick leave. Part-time employees are entitled to the number of hours that the employee works, on average, over a two-week period.
Paid Leave Rate: Employees who take paid sick leave because they are subject to a quarantine or isolation order, have been advised by a health care provider to self-quarantine, or are experiencing COVID-19 symptoms and seeking medical diagnosis are entitled to be paid at their regular pay rate. The paid sick leave rate may not exceed $511 per day or $5,110 in aggregate.
Employees who take paid sick leave to care for another individual or child or because they are experiencing another substantially similar condition are entitled to be paid at two-thirds their regular rate. In these circumstances, the paid sick leave rate may not exceed $200 per day, or $2,000 in aggregate.
Effect on Existing Paid Leave Agreements: An employer may not require an employee to use other paid leave provided by the employer before using the paid sick time provided under the Act.
Effective Date and Expiration: The paid leave provisions of the Act goes into effect on April 2, 2020 and will remain in place until December 31, 2020. The COVID-19 testing provisions are effective immediately.
Exception for Health Care Providers and Emergency Responders. Employers who are health care providers or emergency responders may elect to exclude their employees from the Act’s emergency leave and paid sick leave provisions.
Potential Small Business Exemption: The Act gives the Secretary of Labor the authority to exempt small businesses with fewer than 50 employees from the Act’s emergency leave and paid sick leave requirements if those requirements would jeopardize the viability of the business.
Taxes and Tax Credits: Neither expanded FMLA leave nor emergency paid sick leave are considered wages for purposes of the employer portion of Social Security taxes. In addition, employers required to provide expanded paid FMLA leave and emergency paid sick leave are entitled to a tax credit against the employer portion of Social Security taxes due on other wages paid. If the credits exceed the taxes owed, employers will be reimbursed for the excess leave payments. There is an additional credit available related to qualified health plan expenses allocated to the paid leave, with further details on how to calculate those expenses forthcoming.
COVID-19 Testing: The Act also requires all private health plans (including self-insured health plans) to provide COVID-19 diagnostic testing and related services without cost-sharing (copays, coinsurance or deductibles) to employees and their covered dependents. This provision takes effect immediately and continues through the end of the national emergency period. Related services include healthcare provider services (including telemedicine) and office, urgent care and ER visits that result in an order for or administration of COVID-19 diagnostic testing. No prior authorization requirements may be applied.
Employer Notices: Employers will be required to a post a notice describing the new leave provisions. A model notice provided by the Secretary of Labor should be available within 7 days.
The full text of the Act can be found at https://www.congress.gov/bill/116th-congress/house-bill/6201/text. Please contact John Ashby, Cydni Waldner or another a Hawley Troxell employment lawyer with any questions. We are here to help (even if some of us are teleworking).