On March 14, 2020, the U.S. House of Representatives passed the Families First Coronavirus Response Act (“FFCRA”). While the bill has not yet been passed by the Senate, the White House has indicated that it supports and intends to sign the bill into law once the Senate has an opportunity to address its provisions, which will likely be sometime early this week.
The bill addresses a number of public health issues triggered by the global coronavirus pandemic, including provisions for diagnostic testing, school and senior food programs, and increases in Medicaid match rates and allotments to ease the burden on state medical systems. Most importantly for employers, the bill imposes a number of requirements related to employees who are being impacted by the global coronavirus pandemic, either because of illness, self-quarantine, or additional child-care obligations triggered by widespread school cancellations. While the final version of the bill may vary from the text passed by the House (indeed, Secretary Mnuchin already has indicated that there are some technical corrections that will be made), the general requirements of the bill on employers are likely to be in line with the existing bill. The key provisions of the bill include: (1) two weeks of paid sick leave, which applies to any employers with fewer than 500 employees; and (2) up to 12 weeks of paid FMLA leave for eligible employees. The following will provide a summary of the FFCRA’s key provisions for employers.
Paid Sick Leave
The current draft of the FFCRA requires all public and private employers with fewer than 500 employees to provide two weeks of paid sick leave—regardless of how long the employee has worked for them. Under the FFCRA, “two weeks leave” means 80 hours for full-time employees and the typical number of hours over two weeks for part-time employees. Any FFCRA paid sick leave is in addition to any sick leave already offered by the employer.
Paid sick leave would be available to any employee absent for:
- Self-isolation because they have coronavirus;
- Obtaining a diagnosis because they are exhibiting symptoms of COVID-19;
- Complying with an order from a health-care provider requiring them to stay away from work;
- Caring for a family member who is facing any of the above; or
- Caring for children if schools are closed or because a caregiver is unavailable because of the ongoing public health emergency.
Employees receiving paid sick leave required by the FFCRA are paid at the higher of their regular rate, the federal minimum wage, or the state minimum wage if they are taking the leave for any reason other than to care for a sick family member or to care for a child unable to attend school. For absences related to need to care for a family member or a child who cannot attend school, the paid sick leave is paid out at two-thirds of the rate they would otherwise receive.
Employers who pay employees under the FFCRA’s sick leave provisions are entitled to a refundable tax credit equal to 100 percent of the “qualified sick leave wages” paid. “Qualified sick leave wages” for purposes of the tax credit are capped at $511 per day (or $200 per day if the paid sick leave was to care for a family member) for 10 days, and are applied against the employer’s Social Security taxes.
Paid Family and Medical Leave
In addition to the Paid Sick Leave hours required by the FFCRA, the bill extends and amends the Family and Medical Leave Act to obligate most employers with 500 or fewer employees to provide employees with up to 12 weeks of paid family and medical leave.
To be eligible, an employee must have been employed for at least 30 days at the time they begin the paid family medical leave (rather than the one year of employment required to become eligible for protection under the FMLA). Once they have been employed for 30 days, they can take a paid family medical leave to:
- Comply with a requirement or recommendation of quarantine because of exposure to or symptoms of coronavirus;
- To care for a family member who has to comply with such a requirement; or
- To care for children or if schools are closed or daycare is unavailable because of a declaration of emergency.
- For the first 14 days, there is no compensation required under this portion of the bill (though an employee can take other paid leaves, including paid sick time, to receive compensation).
- Once those 14 days are exhausted, the employee is compensated at two-thirds of their regular rate for the duration of the leave.
While this portion of the bill amends the federal Family and Medical Leave Act, unlike that Act there is no blanket exemption for employers of less than 50 employees. Instead, the Secretary of Labor is empowered to exempt health care providers, emergency responders, and small businesses with fewer than 50 employees if the leave requirement would jeopardize the business as an ongoing concern. Furthermore, in some cases, an employer with fewer than 25 employees would be exempted from restoring an employee to their pre-leave position if the position no longer exists because of the health emergency. Finally, employers with less than 50 employees would not be subject to a civil action from an employee for an alleged violation of this portion of the Act.
Employers would receive some relief from the government for the cost of providing paid family and medical leave under this bill as well. That relief takes the form of a tax credit against the employer’s Social Security tax obligation equal to 100 percent of the qualified paid family leave wages paid by the employer—capped at $200 per day and $10,000 overall per employee.
Finally, the FFCRA allows state governments to reduce waiting periods for eligibility for unemployment compensation, and to interpret the “able, available, and actively looking” for work language of unemployment statutes more liberally in order to allow additional employees access to unemployment benefits. This is not a substitute for sick leave, but is instead a recognition that many employees will become unemployed because of the massive shifts in the economy being caused by quarantine and social distancing orders. It also injects $1 billion into state unemployment programs.
If signed into law, the current bill would make all of the above requirements effective not later than 15 days after enactment of the bill, and all of these obligations would end on December 31, 2020 (unless extended by additional Congressional action).
As noted above, the bill has additional provisions related to testing, nutrition, and health services that are not being reviewed here, as they do not directly impact employer obligations towards employees.
Dykema will continue to monitor the progress of the bill and will provide further analysis and recommendations if it is signed into law. Once this is passed, we will be scheduling a webinar immediately to discuss the implications. For further information, please contact James Hermon (313-568-6540 or [email protected]) or a member of Dykema’s Labor and Employment group.
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