21 Apr Legal Alert #1 – Employee Leave
As we continue to navigate this new and challenging working environment, we seek to provide you guidance to ensure the safety and well-being of your clientele, employees, and families. Many discussions will arise with your company, its leadership, and its employees as a result of the spread of COVID-19 (the “Coronavirus”). It is important to communicate your expectations to your employees regarding their work at home options, their attendance at work, and work space standards to assure that they are aligned with the latest regulations established by the various regulatory agencies.
On Wednesday evening, the President signed into law HR6201, Families First Coronavirus Response Act (the “Act”) (effective April 2, 2020 – December 31, 2020) which provides among other provisions:
1) enhanced/emergency Family Medical Leave;
2) Sick Pay Requirements; and
3) a refundable credit against payroll taxes.
Family Medical Leave –
The Act significantly amends and expands FMLA on a temporary basis. The current employee threshold for FMLA coverage would change from only covering employers with 50 or more employees to instead covering those employers with fewer than 500 employees. It also lowers the eligibility requirement such that any employee who has worked for the employer for at least 30 days prior to the designated leave may be eligible to receive paid family and medical leave. As a result, your company may now be subject to the FMLA and may be required to provide job-protected paid leave to employees for a COVID-19 coronavirus-designated reasons as discussed below. The Act does include language allowing the Secretary of Labor to exclude healthcare providers and emergency responders from the definition of employees who are allowed to take such leave, and to exempt small businesses with fewer than 50 employees if the required leave would jeopardize the viability of their business. We wait for further guidance from the Secretary of Labor regarding waivers for the small business with fewer than 50 employees.
An individual employed by the employer for at least 30 days (before the first day of leave) may take up to 12 weeks of job-protected leave to allow an employee, who is unable to work or telework, to care for the employee’s child (under 18 years of age) if the child’s school or place of care is closed or the childcare provider is unavailable due to a public health emergency. This is now the only qualifying need for Emergency FMLA and a significant change from the prior version of the bill passed by the House over the weekend, which contained several other COVID-19-related reasons to provide Emergency FMLA.
Please also note, that if your company was previously required to provide FMLA unpaid leave, you are still subject to the FLMA. In addition, we recommend that you follow your paid time office policies.
Another big change from the prior version passed from the House is the reduction of the unpaid period of Emergency FMLA. Now, the first 10 days (rather than 14 days) of Emergency FMLA may be unpaid (but will likely be paid under the Paid Sick Day Policy as described below). During this 10-day period, an employee may elect to substitute any accrued paid leave (like vacation or sick leave) to cover some or all of the 10-day unpaid period. After the 10-day period, the employer generally must pay full-time employees at two-thirds the employee’s regular rate for the number of hours the employee would otherwise be normally scheduled. The Act limits this pay entitlement to $200 per day and $10,000 in the aggregate per employee.
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 Emergency FMLA. 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.
Employers with 25 or more employees will have the same obligation as under traditional FMLA to return any employee who has taken Emergency FMLA to the same or equivalent position upon the return to work. However, employers with fewer than 25 employees are generally excluded from this requirement if the employee’s position no longer exists following the Emergency FMLA leave due to an economic downtown or other circumstances caused by a public health emergency during the period of Emergency FMLA. This exclusion is subject to the employer making 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.
Paid Sick Leave –
This portion of the new Act also significantly changed since the House passed its prior version. This Act now allows an eligible employee to take paid sick leave because the employee is:
1. subject to a federal, state or local quarantine or isolation order related to COVID-19;
2. advised by a health care provider to self-quarantine due to COVID-19 concerns;
3. experiencing COVID-19 symptoms and seeking medical diagnosis;
4. caring for an individual subject to a federal, state or local quarantine or isolation order or advised by a health care provider to self-quarantine due to COVID-19 concerns;
5. caring for the employee’s child if the child’s school or place of care is closed or the child’s care provider is unavailable due to public health emergency; or
6. 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.
Of note, caring for another who is subject to an isolation order or advised to self-quarantine as described above is no longer limited to just family members.
This provision requires employers with fewer than 500 employees to provide full-time employees (regardless of the employee’s duration of employment prior to leave) with 80 hours of paid sick leave at the employee’s regular rate (or two-thirds the employee’s regular rate to care for qualifying reasons 4, 5, or 6 listed above). An important change to this section provides an exception for employers who are healthcare providers or emergency responders at their election.
Another significant change to this Act places limits on paid sick leave. Specifically, paid sick leave wages are limited to $511 per day up to $5,110 total per employee for their own care (items 1-3 above) and to $200 per day up to $2,000 total to care for others and any other substantially similar condition (items 3-6 above).
This paid sick leave will not carry over to the following year and may be in addition to any paid sick leave currently provided by employers.
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. A business employing fewer than 500 employees is required, at the request of the employee, to pay a full-time employee for 80 hours of mandated emergency paid sick leave instead of the initial 10 days of unpaid leave permitted by the Emergency Family and Medical Leave Expansion Act (summarized above).
Lastly the DOL will provide the appropriate notice for posting prior to the April 2, 2020 effective date.
Refundable Tax Credits –
HR6201 provides a series of refundable tax credits for employers who are required to provide the Emergency Paid Sick Leave and Emergency Paid Family and Medical Leave described above. These tax credits are allowed against the employer portion of Social Security taxes. While this limits application of the tax credit, employers will be reimbursed if their costs for qualified sick leave or qualified family leave wages exceed the taxes they would owe.
Specifically, employers are entitled to a refundable tax credit equal to 100% of the qualified sick leave wages paid by employers for each calendar quarter in adherence with the Emergency Paid Sick Leave Act. The qualified sick leave wages are capped at $511 per day ($200 per day if the leave is for caring for a family member or child) for up to 10 days per employee in each calendar quarter.
Similarly, employers are entitled to a refundable tax credit equal to 100% of the qualified family leave wages paid by employers for each calendar quarter in accordance with the Emergency Family and Medical Leave Expansion Act. The qualified family leave wages are capped at $200 per day for each individual up to $10,000 total per calendar quarter. Only those employers who are required to offer Emergency FMLA and Emergency Paid Sick Leave may receive these credits.
Employee Handbook Review –
In addition, you should review your employee handbook and consider adding a communicable disease policy to the handbook. Contact Eagle & Fein for assistance in drafting such an addition.
We have been through difficult times before; in time, this too will pass.
I have also attached an article The Scary Times Success Manual; written by the Founder of Strategic Coach, Dan Sullivan. I believe that you and your employees will find it helpful.
All of us at Eagle & Fein continue to be available to provide you guidance and support. We are well connect electronically and are available for VMs – Virtual Meetings. Please reach out with any follow up questions by e-mail or phone.
The best always to stay safe and healthy.