On Wednesday, March 18, 2020, the Senate passed, without change, the Families First Coronavirus Response Act which was adopted by the U.S. House of Representatives a few days ago. President Trump has indicated that he is going to sign the Bill in the very near future.
This article only deals with the portions of Families First Coronavirus Response Act that relate to private employers. Those portions are found in Division C (“The Emergency Family and Medical Leave Expansion Act”), Division E (“The Emergency Paid Sick Leave Act “) and Division G (“Tax Credits for Paid Sick and Paid Family and Medical Leave”). For ease of reference, these Divisions will be referred to collectively as the “Small Business Provisions.” We also address the non-applicability of these Small Business Provisions to employees being laid off due to business closures.
The Small Business Provisions apply to any employer with fewer than 500 employees.
They will come into effect fifteen (15) days after the date of enactment and will sunset on December 31, 2020.
As with similar employment laws:
- Employers are required to post appropriate notices.
- There are severe penalties for interfering with an employee’s rights or for retaliatory actions.
The Emergency Paid Sick Leave Act:
Covered employers must provide employees with paid sick leave (in addition to any paid leave that the employees are already entitled to under the employer’s current policies). Full-time employees are entitled to eighty (80) hours of leave, and part-time employees are entitled to the typical number of hours that they work in a typical two (2) week period.
The following indicates the circumstances in which an employee is entitled to such sick leave, and the amount of compensation payable to the employee as the result of each circumstance:
- If the employee is unable to work because the employee is isolated or quarantined due to COVID-19, or is experiencing symptoms of COVID-19 and seeking a medical diagnosis, the employee is entitled to compensation at the employee’s regular rate of pay, subject to a $511 per day and a $5,110 aggregate limit.
- If the employee is unable to work because the employee is caring for an individual who is quarantined, or as the result of having to be home because of school or daycare closures, the employee’s required compensation will be at two-thirds of the employee’s regular rate of pay, subject to a maximum of $200 per day and a $2,000 aggregate limit.
Please note that the employee is not considered “unable to work” if that employee can “telework”.
The Emergency Family and Medical Leave Expansion Act:
Under this Act, FMLA leave is expanded to give employees that have been on the employer’s payroll for more than thirty (30) days the right to take up to twelve (12) weeks of leave to care for a child of the employee who is under the age of 18, if that child’s school or daycare has been closed due to COVID-19.
The first ten (10) days of leave may be unpaid (an employee may choose to substitute accrued vacation leave, personal leave, or other medical or sick leave during this period, but an employer may not require an employee to do so). After the ten (10) days of unpaid leave, employers must continue paid FMLA leave at a rate of no less than two-thirds of the employee’s usual rate of pay, subject to a maximum amount of $200 per day and a $10,000 aggregate limit.
The Secretary of Labor has the authority to issue regulations to exempt employers with fewer than fifty (50) employees where the imposition of these requirements would jeopardize the viability of the business as a going concern. At the present time, there is no way to know if such regulations will be adopted or what they might provide.
As with traditional FMLA leave, this leave is “job protected”, which generally means the employer must return the employee to the same or equivalent position upon the employee’s return to work. There are certain exceptions to this requirement for employers with fewer than 25 employees.
Tax Credits for Paid Sick and Paid Family and Medical Leave:
Any tax credits allowed under Division G are applied against Social Security taxes. Any credits that exceed the tax due for a particular quarter are to be treated as a refundable excess payment.
- Credits for Emergency Sick Leave – With respect to tax credits for amounts paid by an employer under The Emergency Sick Leave Act, they only cover compensation paid by the employer for up to ten (10) days. This credit would be capped at $511 per day in cases were the employee is being quarantined or seeking a diagnosis or preventive care for COVID-19, or up to $200 per day if the sick leave is to care for a family member or child following the child’s school closing, etc. There also is a credit for the employer’s qualified health plan expenses relating to such sick leave pay.
- Credits for Extended FMLA Leave – With respect to tax credits for amounts paid by an employer under The Emergency Family and Medical Leave Expansion Act, this credit would be capped at $200 per employee per day (with a maximum per employee credit of $10,000). There also is a credit for the employer’s qualified health plan expenses relating to such FMLA compensation.
Please note that there are corresponding credits for self-employed individuals under the Bill.
Do the Small Business Provisions affect employer mandated benefits to employees that are laid off because of lack of work (i.e., their employer shutting down because of COVID-19)? In other words, is paid sick or paid FMLA leave available if employees are unable to work solely because of closures?
Based on a literal or plain reading of the Bill, the answer is “no.” If an employer prohibits employees from reporting to work because of COVID-19 concerns, or if a business is closed due to actions taken by a public authority, it appears employees would not be eligible for benefits under the Bill.
Please note that under Governor DeWine’s emergency orders, such employees will be entitled to unemployment compensation. Additionally, employees that are laid off due to “loss of production caused by the coronavirus”, appear to be covered by this emergency order. Here is the link to some Q & A’s on the Ohio Department of Job & Family Services website: http://jfs.ohio.gov/ouio/CoronavirusAndUI.stm. Charges to employers that relate to the COVID-19 emergency will be mutualized, to be spread out amongst all Ohio employers.
This article contains an initial summary of the Small Business Provisions of the Families First Coronavirus Response Act. Before making any decisions regarding HR issues, we urge all employers to consult with their expert advisors. We at Isaac Wiles stand ready to help in these unusual times.