The number of confirmed cases of COVID-19 continues to increase in the United States. On Wednesday, March 18, 2020, to reduce the impact of this illness on individuals and businesses alike, President Trump signed the Families First Coronavirus Response Act into law. The Act will become effective on April 1, 2020.
The Act is an emergency spending bill that provides paid employment leave for employees affected by COVID-19, amends the Family & Medical Leave Act to provide coverage for absences related to an employee caring for a child whose school or daycare has closed, allocates additional funding for emergency unemployment insurance, and requires free coronavirus screening tests. The Act applies to all public employers regardless of size and to private employers with less than 500 employees.
The paid leave required by the Act is separate and above any existing sick leave entitlements. The Act requires that covered employers must provide all employees who are affected by COVID-19 up to 80 hours of paid sick time. Paid sick leave is available under the following circumstances: (1) if 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 order or who has been advised by a health care provider to self-quarantine; (5) To care for the child of such employee if the school or place of care has been closed, or the child care provider of such child is unavailable, due to COVID-19 precautions; and (6) if 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. Health care providers and emergency responder may elect to exclude certain health care providers from the application of the paid leave.
For absences related to the employee’s own exposure to coronavirus, employers must pay the paid sick time at 100% of the employee’s regular wages up to $511 dollars per day. For absences related to the employee’s family member or school and/or childcare closings, employers must pay the paid sick time at two-thirds the employee’s regular wages up to $200 per day. Full-time employees are entitled to up to 80 hours of leave. Part-time employees are entitled to the number of paid sick time hours equal to the average number of hours they work, over a 2-week period. The right to sick leave ceases beginning with the employee’s next scheduled work shift immediately following the need for paid sick time.
Employers also are required to post notices explaining an employee’s right to paid sick leave. The Secretary of Labor will be drafting a model notice that employers may utilize. Additionally, employers cannot require employees find a replacement to cover time taken pursuant to the Act. Further, the Act contains certain employment protections for employees who take paid leave. Employers shall not take any disciplinary action or discriminate in any manner against employees who take leave under the Act. Small employers with less than 50 employees may seek an exemption from the paid sick leave requirement. The right to paid sick leave related to COVID-19 expires December 31 2020.
Family & Medical Leave Act
Typically, employees are not eligible for FMLA leave until they have worked for an employer for at least 12 months and 1,250 hours. For absences related to school and daycare closures related to this public health crisis, employees must only be employed for 30 consecutive days, and there are no hours worked requirement. Expanded FMLA leave is available for employees who need to be absent from work to take care of children whose schools or daycares have closed. Employees are entitled to 12 weeks of job-protected leave for absences related to COVID-19. The first 10 days are unpaid; however, employees would be able to utilize the paid sick leave discussed above. After the first 10 days, employees are eligible for paid leave at 2/3 their regular pay rate of pay up to $200 per day. Employees may choose to use previously available sick leave, vacation leave, or paid time off; however, employers cannot require employees to utilize such leave. The Act exempts certain health care providers from the expanded coverage, and the right to expanded FMLA leave related to COVID-19 expires December 31, 2020. Small businesses with less than 50 employees may seek an exemption from the expanded FMLA leave requirements.
Tax credits for the leave
Certain tax credits are available to help off-set the cost of the paid leave requirements. While caps and limits do apply, employers can file for a refundable tax credit for paid sick or family leave. Employers can seek a credit of up to $511 per day for an employee’s own sickness or self-isolation and a credit of up to $200 per day when employees have taken time off work to care for a child after a school/daycare closure or an ill family member.
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. In either instance, the employer will be subject to the penalties for lost wages, an equal amount in liquidated damages, attorneys’ fees, and costs.
The bottom line
Best practices for employers involving this fluid situation will continue to evolve as more information about the impact of COVID-19 comes to light. Employers have until April 1, 2020, to achieve full compliance with the paid leave obligations. McAfee & Taft continues to monitor the rapidly changing situation and is prepared to assist clients with revising policies and implementing these extensive leave requirements.