March 22, 2020 Emergency Coronavirus Legislation – Key Questions And Answers
On Wednesday, President Trump signed into law emergency legislation requiring employers with fewer than 500 employees to provide paid sick leave and paid family leave benefits to millions of U.S. workers impacted by the COVID-19 pandemic. Many questions remain regarding how this new law, known as the “Families First Coronavirus Response Act” (FFCRA), must be implemented, and how it will be interpreted by the Department of Labor (DOL), and, someday, the courts. However, here’s what we do know and what we believe will be the most likely application of the law.
1. What must employers provide?
The law requires that covered employers provide two types of benefits to employees: (a) 80 hours of Emergency Paid Sick Leave for full-time employees (prorated for part-time employees); and (b) up to 10 weeks of paid Emergency Family and Medical Leave. Different rules apply to each type of leave, as discussed below.
2. When does the FFCRA go into effect?
The law states that it goes into effect “no later than” April 2, 2020. Importantly, the DOL is required to provide guidance by the same date to answer many of the questions left unanswered by the FFCRA’s text. Accordingly, to the extent possible, employers may want to avoid making commitments to employees until they receive this DOL guidance. We will provide another E-Update after the DOL guidance is released.
3. Which employers are covered by the new law?
The FFCRA only applies to employers with fewer than 500 employees. The law does not specifically address how the number of employees will be counted, nor does it specify at what point in time the count is to be made. The FFCRA uses definitions contained in the FMLA, which has been interpreted liberally to count even temporary employees in order to maximize the FMLA’s coverage when employers with less than 50 employees were excluded. Now, the incentive is reversed, so it is unclear whether the DOL will suggest a different standard for counting employees to determine the 500 employee cutoff.
4. Is there any exception for struggling, small employers?
Yes. The law provides that employers with fewer than 50 employees may seek an exemption from the DOL for both the paid sick leave and paid FMLA leave obligations if complying would “jeopardize the viability of the business.” The DOL has not yet issued guidance on how small employers may apply for this exemption or how that review process might be managed.
5. Are there eligibility requirements for employees, such as length of service?
All employees are eligible for the new paid FMLA benefits if they have a qualifying need. Only employees with at least 30 days of service are eligible for the new paid sick leave benefit.
6. How long must employers provide these new benefits to eligible employees?
Currently, these benefits are only available until December 31, 2020. Of course, Congress may extend this period by passing additional legislation.
7. Are employers required to notify employees of these new benefits?
The law requires employers to post a DOL-provided or similar notice in a conspicuous place in the workplace. The DOL will issue a model notice by this coming Wednesday, March 25.
8. How much and what kind of notice must the employee provide of their need for paid sick leave or paid FMLA leave?
Employees are only required to provide reasonable notice of their need for paid sick leave or FMLA leave. The type of notice is not specified, but we expect that the DOL will provide guidance on this prior to the law taking effect.
Paid Sick Leave Benefits – Specific Rules
1. When can an employee use paid sick leave?
Employees will qualify for the new paid sick leave benefit when they are unable to work (on premise or remotely) for any of the following six reasons:
- They are subject to a federal, state, or local quarantine or isolation order related to the coronavirus;
- They have been advised by a healthcare provider to self-quarantine due to coronavirus-related concerns;
- They have symptoms of coronavirus and are seeking a medical diagnosis;
- They are caring for an individual who is subject to a quarantine order described in (i) or (ii) above;
- They are caring for a son or daughter whose school or place of care has been closed, or whose childcare provider is unavailable, due to coronavirus precautions; or
- They are experiencing any “other substantially similar condition” specified by the Secretary of Health and Human Services in consultation with the Secretaries of the Treasury and Labor.
In light of Governor Newsom’s March 19, 2020 “stay-at-home” order, it appears that all California employees of a covered employer who are unable to work (on premise or remotely) may be eligible for the sick leave benefit.
Notably, employers may exempt healthcare providers and first responders from using the sick leave benefits.
2. How much paid sick time are employees entitled to receive?
Full-time employees may use up to 80 hours (i.e., two weeks) of paid sick time benefits. Part-time employees may use an amount equal to the average hours they typically work over the course of two weeks.
The law provides specific dollar caps for these benefits. If an employee uses sick leave for reasons (i), (ii), or (iii) above, they are entitled to their “regular rate of pay,” up to a maximum of $511 per day. If the employee uses sick leave for reasons (iv), (v) or (vi) above, they are entitled to 2/3 of their regular rate of pay, up to a maximum of $200 per day.
3. Is the 80 hour paid sick leave benefit in addition to paid sick leave employers already give employees under state and local law or company policies?
This issue is not specifically addressed in the FFCRA. However, the law states that an employer may not require an employee to use other paid leave provided by the employer before the employee uses the paid sick leave provided by the FFCRA. In addition, the law states that it does not diminish employees’ rights to sick leave under existing law or policy. Given these provisions, we expect the DOL’s guidance will likely require that the new sick leave is in addition to any other current sick leave obligations to employees.
4. Will an employer be reimbursed for the cost of this paid sick leave?
Yes. The FFCRA provides that the paid leave benefits are 100% reimbursable to the employer through a payroll tax credit. (See below for more on the tax credit.)
5. What if an employer already voluntarily provided additional coronavirus-related paid time off to its employees? Can the employer credit that against the mandatory 80 hours?
The FFCRA does not address this, but the DOL’s guidance may.
6. If an employer laid off or temporarily furloughed an employee before they requested paid sick (or FMLA) benefits under the new law, would the employee nevertheless be able to claim such benefits?
Likely not, but this remains an open question. If an employee is laid off or furloughed due to a lack of work, a fair reading of the law is that they would not be absent for one of the qualifying reasons. However, terminating or furloughing an employee for the purpose of avoiding paying the required benefits (as opposed to a lack of work) could result in a claim for interference with protected rights. Again, the DOL may address this issue in its guidance.
Paid FMLA Benefits – Specific Rules
The FFCRA also contains a Division entitled the “Emergency Family and Medical Leave Expansion Act,” which amends the FMLA to provide paid leave benefits to employees in specified circumstances.
1. What are the FMLA benefits available to employees under the new law?
The FFCRA requires employers to provide paid leave to eligible employees who take FMLA leave when they cannot work (on premise or remotely) because they need to care for a child whose school or childcare provider is closed or unavailable due to the coronavirus public health emergency. The new law does not grant additional leave time for employees beyond the 12 weeks already provided under existing provisions of the FMLA, but simply provides a new basis for leave entitlement and requires that employees be paid for 10 weeks of this leave time.
The first 10 days (i.e., two weeks) of any such leave may be unpaid. However, an employee may choose (but cannot be required) to use any other accrued vacation, PTO or paid sick time. The remaining 10 weeks of leave must be paid at no less than 2/3 the employee’s “regular rate of pay” (for their regularly scheduled work hours), up to a maximum of $200 per day.
2. What reinstatement rights do employees have after the paid FMLA leave?
The FMLA has always protected an employee’s right to be reinstated to the same or “substantially similar” position at the end of their leave, and employees returning from the new paid FMLA leave would have these same reinstatement rights. However, the FMLA regulations and court decisions have recognized that there is no obligation to continue FMLA benefits or to reinstate an employee to a job that was eliminated for reasons unrelated to the leave of absence – for example if a shift were eliminated or a layoff had occurred. Importantly, the employer has the burden to prove that the job elimination would have occurred regardless of the leave of absence. The FFCRA does not expressly change this rule, but contains what appears to be stricter rule regarding reinstatement for small employers (25 or fewer employees). It provides that small employers may only decline to reinstate an employee who takes the new paid FMLA leave if the employer makes specified efforts to restore the employee to an equivalent position. The law does not address when larger employers might decline to reinstate an employee returning from paid FMLA leave or provide that it is changing existing law on this issue. This creates some ambiguity that we anticipate will also be addressed in the DOL guidance.
Tax Credits Available to Reimburse Employers
The FFCRA provides that employers may take a 100% tax credit for all paid sick leave and paid FMLA leave provided to employees in compliance with its requirements. Employers may not claim a tax credit for benefits paid above the law’s minimum requirements. The tax credit is applied against the employer’s portion of Social Security taxes. As a result, employers will want to separately track the benefits provided to employees under the FFCRA in order to claim those credits, and should consider creating new payroll codes for the new paid sick leave and paid family leave benefits to ensure the ability to do so.
What This Means
The rapidly evolving COVID-19 situation resulted in hasty legislation that leaves many questions unanswered. Covered employers should prepare to comply based on what is presently known but, to the extent possible, should retain flexibility to adjust as more guidance becomes available. These new requirements also raise a myriad of employer-specific issues and questions that each employer should analyze for its specific situation.
This E-Update was authored by Denise Brucker, Mike Sullivan, Fred Plevin, and Joe Connaughton. For more information about this or any other issue impacting your business, please contact any of the above attorneys, or or any other Paul, Plevin attorney, by calling (619) 237-5200.
PPSC has issued this E-Update to provide information on new legislation as a courtesy. It contains general information and does not constitute legal advice, nor does it create an attorney-client relationship. Application of any law is always fact-specific, so you should consult with legal counsel before taking any actions based on the new law.
Our team at PPSC is here to help in any way we can. Although many of our lawyers are working remotely, we have a dedicated coronavirus response team, and we remain fully operational and dedicated to assisting our clients during this challenging time. Please feel free to reach out to your PPSC lawyer, or any of the lawyers listed below, for questions related to the FFCRA or any other needs you may have.