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Families First Coronavirus Response Act

Krugliak, Wilkins, Griffiths & Dougherty Co., L.P.A.

On March 18, 2020 the U.S. Senate passed the Families First Coronavirus Response Act, President Trump signed the legislation on the evening of March 18.  There are two provisions providing paid leave to employees forced to miss work because of the COVID-19 outbreak:  the Emergency Paid Sick Leave Act (“EPSLA”) and Emergency Family and Medical Leave Expansion Act (“EFMLEA”).  Both laws become effective on April 2, 2020; 15 days after President Trump signed it into law and will remain in place until December 31, 2020.

Emergency Paid Sick Leave Act

Eligibility
All employers having fewer than 500 employees are covered. However, the Department of Labor has broad authority to exempt employers with fewer than 50 employees if the requirement to provide leave would jeopardize the viability of the business as a going concern.  Please note, all full-time and part-time employees are immediately eligible with no minimum period of employment.

Reasons for the Paid Sick Leave
An eligible employee to take paid sick leave when the employee cannot work or telework because:

  • The employee is subject to a federal, state, or local quarantine or isolation order;
  • The employee has been advised by a health care provider to self-quarantine;
  • The employee is experiencing symptoms of coronavirus and is seeking a medical diagnosis;
  • The employee is caring for a person subject to a federal, state, or local quarantine or isolation order or who has been advised by a health care provider to self-quarantine;
  • The employee is caring for a son or daughter of the employee whose school or day care is closed; or
  • The employee is experiencing any other substantially similar condition specified by the Secretary of Health and Human Services, the Secretary of the Treasury, and/or the Secretary of Labor.

The law does not comment on required documentation from employees.  Until more guidance is provided on this issue, employers should have the employee provide his or her own written statement about the reason for the leave.

Other paid leave already offered by the employer
Employees are still entitled to take whatever paid leave was available to them before the passage of this Act, and employers cannot change their leave polices after the passage of this Act to provide less leave than has already been promised.  For example, if an employer already permitted employees to use paid leave before the passage of this Act, once the Act takes effect on April 2, 2020, the employee is likely entitled to an additional 10 days of EPSLA leave.  Employers cannot require that employees take leave under existing policies first. In fact, employees have the option to take EPSLA leave before any other leave provided by the employer if they prefer. 

Interplay between the EPSLA and the EFMLEA
If an employee qualifies for both EFMLEA and Emergency Paid Sick Leave, the employee may use EPSLA leave at the same time as the first 10 days of the EFMLEA leave that would normally be unpaid.

Calculating the rate of pay
Full-time employees are entitled to 80 hours of paid leave. Part-time employees are entitled to be paid for the number of hours per day they worked on average over the prior two-week period.  Employees who work a part-time or irregular schedule are entitled to be paid based on the average number of hours the employee worked for the six months prior to taking paid sick leave. Employees who have worked for less than six months prior to leave are entitled to the average number of hours the employee would normally be scheduled to work over a two-week period.

Limits on paid sick leave wages
Leave taken for the following reasons will be paid at the employee’s regular rate of pay subject to a limit of $511 per day and $5,110 total:

  • The employee is subject to a federal, state, or local quarantine or isolation order;
  • The employee has been advised by a health care provider to self-quarantine; or
  • The employee is experiencing symptoms of coronavirus and is seeking a medical diagnosis.

Leave taken for the following reasons will be paid at two-thirds of the employee’s regular rate of pay subject to a limit of $200 per day and $2,000 total:

  • The employee is caring for a person who is subject to a federal, state, or local quarantine or isolation order or who has been advised by a health care provider to self-quarantine;
  • The employee is caring for a son or daughter of the employee whose school or day care is closed; or
  • The employee is experiencing any other substantially similar condition specified by the Secretary of Health and Human Services, the Secretary of the Treasury, and/or the Secretary of Labor.

Carry Over
Paid sick leave under this law will not carry over to the following year.

Notification requirements
The Department of Labor will publish a poster in the coming weeks that employers must post in the workplace. In the meantime, employers should also issue a policy to employees notifying them of the availability of this leave.

Penalties
Failing to allow employees to take paid sick leave under the Act will be deemed to be a violation of the Fair Labor Standards Act.  If an employer willfully discriminates against or retaliates against an employee in violation of the Act, the employer will be deemed to have violated Section 15(a)(3) of the FLSA. Under the Act, the employer will be subject to the penalties for lost wages, an equal amount in liquidated damages, attorneys’ fees, and costs.

Emergency Family and Medical Leave Expansion Act

Expanded coverage
The EFMLEA provides expanded coverage under the FMLA for situations related to the coronavirus.  The definition of a “covered employer” is significantly expanded on a temporary basis under the new legislation.  Under this new provision, all employers with fewer than 500 employees must comply. 

Eligibility
Employees are eligible for relief under the EFMLEA after working for the employer for at least 30 calendar days. This amendment is a substantial departure from the typical employee eligibility requirements set forth in the FMLA where leave is only available to employees who have worked for 12 months and 1,250 hours in the immediate preceding 12 months prior to taking leave.  However, the Secretary of Labor can issue regulations for good cause to exempt small businesses with fewer than 50 employees when compliance with the EFMLEA would jeopardize the viability of the business.

Reason for the leave
Under the EFMLEA, the employee may take up to 12 weeks of job-protected leave when the employee is unable to work or telework due to the need to care for a son or daughter under the age of 18 or when the child’s school or day care is closed due to the coronavirus. This is the only qualifying need for EFMLEA.  The EFMLEA does not comment on required documentation from employees.  Until more guidance is provided on this issue, employers should have the employee provide his or her own written statement about the reason for leave.

Paid leave
Under the EFMLEA, the initial 10 days of EFMLEA leave may be unpaid. After 10 days, the remainder of the leave is paid.  During the unpaid 10-day period, an employee may elect to substitute any accrued paid leave (like vacation, PTO, or sick leave) to cover some or all of the 10-day unpaid period, but the employer cannot require this.  If an employee qualifies for both EFMLEA and Emergency Paid Sick Leave, the employee may use the Emergency Paid Sick Leave at the same time as the first 10 days of EFMLEA leave that would normally be unpaid.  After the 10-day unpaid leave period expires, the employee will be paid two-thirds of his or her regular rate under the Fair Labor Standards Act, multiplied by the number of hours the employee would normally work.  Employees who work a part-time or irregular schedule are entitled to be paid based on the average number of hours the employee worked for the six months prior to taking EFMLEA. Employees who have worked for less than six months prior to leave are entitled to the employee’s reasonable expectation at hiring of the average number of hours the employee would normally be scheduled to work.  The law limits this pay to $200 per day and $10,000 in total for each employee.

Job Restoration
Similar to regular FMLA leave, the employer will be required to return the employee to the same or equivalent position upon the return to work at the end of the EFMLEA leave. However, employers with fewer than 25 employees are generally excluded from this requirement if the employee’s position no longer exists following the EFMLEA leave due to an economic downtown or other circumstances caused by a public health emergency during the period of EFMLEA.  This exclusion requires the employer to make reasonable attempts to return the employee to an equivalent position and requires an employer to make efforts to return the employee to work for up to a year following the employee’s leave.

Notification requirements
The Department of Labor will publish a poster in the coming weeks that employers must post in the workplace. In the meantime, employers should also issue a policy to employees notifying them of the availability of this leave. 

Payroll Credit for Required Paid Sick Leave
The Act allows employers to receive a refundable tax credit equal to 100% of qualified paid sick leave wages paid by the employer for each calendar quarter. Additionally, the credit may be increased by certain qualified health plan expenses that are allocable to the wages paid under the Act.  The amount of the credit depends on the reason for the sick leave. For qualified sick leave wages paid to employees who (i) are subject to a federal, state, or local quarantine order related to COVID-19, (ii) have been advised by a health care provider to self-quarantine due to concerns related to COVID-19, or (iii) experience symptoms of COVID-19 and seek diagnosis, the maximum amount of wages considered is capped at $511 per day. The cap is $200 for amounts paid to employees to care for a family member or a child whose school or place of care has been closed. If the total credit amount exceeds an employer’s liability for Social Security taxes, then the excess credit is refundable to the employer. 

Credit for Sick Leave for Self-Employed Individuals
Self-employed individuals who care for a family member or for a child whose school or place of care has been closed due to coronavirus are eligible for a refundable tax credit equal to 67% of a qualified sick leave equivalent amount.

This credit is used to offset self-employment tax and is refundable. An individual is eligible for the credit if they would be entitled to receive paid sick leave under the EPSLA if the individual was an employee of an employer (other than himself or herself). For eligible self-employed individuals who (i) are subject to a federal, state, or local quarantine order related to COVID-19, (ii) have been advised by a health care provider to self-quarantine due to concerns related to COVID-19, or (iii) experience symptoms of COVID-19 and seek diagnosis, the qualified sick leave equivalent is capped at the lesser of $511 per day or 67% of the average daily self-employment income for the taxable year per day. If the eligible self-employed individual who is caring for a family member or child whose school or place of care has been closed due to coronavirus, the qualified sick leave amount is capped at the lesser of $200 per day of the average daily self-employment income for the taxable year per day.

Payroll Credit for Required Paid Family Leave
The Act provides a separate refundable tax credit equal to 100% of qualified family leave wages by an employer for each calendar quarter. This credit may also be increased by certain qualified health plan expenses allocable to the wages paid under the EFMLEA.  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. Employers will receive a refund for credits exceeding their liability for Social Security taxes. 

Credit for Family Leave for Self-Employed Individuals
The Act provides for a refundable tax credit equal to 100% of a qualified family leave equivalent amount for eligible self-employed individuals. Eligible self-employed individuals are those who would be entitled to receive paid family leave under the EFMLEA if the individual was an employee of an employer (other than himself or herself). The equivalent amount is capped at the lesser of $200 per day or 67% of the average daily self-employment income for the taxable year per day, including only those days that the individual would be entitled to receive paid leave under the EFMLEA.

If you have any questions please contact any of the KWGD Labor & Employment Attorneys at 330.497.0700.
Karen Soehnlen McQueen:  kmcqueen@kwgd.com
Leslie Iams Kuntz:  likuntz@kwgd.com
Scott M. Zurakowski:  szurakowski@kwgd.com
Michael J. Bogdan: mbogdan@kwgd.com
Marcus L. Wainwright: mwainwright@kwgd.com
Amanda M. Connelly:  aconnelly@kwgd.com 

NOTE: This general summary of the law should not be used to solve individual problems since slight changes in the fact situation may require a material variance in the applicable legal advice.

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