Posted on March 21, 2020, by Jonathan Lewis
On March 18, 2020, the President signed the Families First Coronavirus Response Act. The act contains a broad range of measures aimed at combating the economic fallout from the current pandemic, but employers will be most affected by emergency provisions for paid sick leave and an expansion of the Family Medical Leave Act (FMLA). The new measures are set to take effect on April 2, 2020, leaving a narrow window of time for the Department of Labor to issue regulations detailing how the act will function, and for employers to prepare for compliance. For now, this is what we know:
Who is Covered
While employers with fewer than 50 employees are automatically exempt from the FMLA, they are NOT exempt from the emergency provisions of the new law. The law applies to all private employers with fewer than 500 employees. Businesses with fewer than 50 employees may be granted an exemption by the Department of Labor if compliance would threaten their continued viability. The criteria for this, and the process for seeking exemption are not yet defined by the law, which directs the Department of Labor to issue rules for implementing the exemptions before the act takes effect. The act does not apply at all to those employers with more than 500 employees.
FMLA Expansion for COVID-19-Related Childcare
The FMLA Expansion Act applies to employees of covered businesses who have been employed for more than 30 calendar days. The act gives these employees the right to take up to 12 weeks of job-protected FMLA leave if the employee is unable to work or telework because they need to provide care for a child under the age of 18 whose school has been closed due to COVID-19, or whose regular child-care provider is unavailable due to a declared COVID-19 Emergency. The right to take this expanded FMLA leave expires on December 31, 2020.
If the need to take leave is foreseeable, the employee must provide as much leave as practically possible, but with existing school closures throughout the State of Florida, employers should expect not to receive much advance notice. The initial 10 days of leave taken under this section will be unpaid. After 10 days, employees taking this type of leave must be paid 2/3 their regular rate of pay for the number of hours the employee would regularly be scheduled for. Each employee is capped at $200/day and $10,000.00 of leave in the aggregate. Employees who have accrued paid leave may opt to use their PTO during the initial ten-day period and must be paid accordingly.
Like the FMLA, the FMLA Expansion Act also provides that employees returning from leave must be restored to the same or an equivalent position. This requirement is relaxed for businesses with fewer than 25 employees, who are not required to restore a returning employee if (1) the employee’s position has been eliminated as a result of economic or operating conditions created by the coronavirus emergency, and (2) the employer makes reasonable efforts to restore the employee to an equivalent position over the course of a one-year period commencing from the end of the emergency situation – a date which will presumably be further defined by the Department of Labor in the future.
For businesses with fewer than 50 employees, violations of the FMLA Expansion Act will not be subject to private lawsuits, but will be subject to enforcement actions by the Department of Labor. The FMLA’s provisions imposing individual liability on business owners and successor liability will also continue to apply.
Paid Sick Leave
The Emergency Paid Sick Leave Act provides for paid leave to employees who must miss work for reasons related to the coronavirus emergency. Employees are eligible for this benefit immediately, regardless of how long they have been employed. There are two sets of eligibility for this paid leave. Under the first set, employees must be paid for up to 80 hours of sick leave at their full rate of pay, capped at $511 per day and $5,110.00 per employee in the aggregate. Criteria for fully paid leave are:
1. The employee is subject to a State, federal or local government order of isolation or quarantine related to COVID-19
2. The employee has been advised to self-quarantine by a health care provider due to concerns related to COVID-19
3. The employee is experiencing symptoms of COVID-19 and is seeking a medical diagnosis.
Under the second set of eligibility, employees must be paid for up to 80 hours of sick leave at 2/3 of their normal rate of pay, capped at $200/day and $2,000.00 in the aggregate
4. The employee is providing care for an individual subject to an order or advisement described in categories 1, or 2, above.
5. The employee is caring for a son or daughter whose school is closed due to COVID-19 precautions, and
6. The employee is experiencing a similar situation which may be further defined in the forthcoming Department of Labor regulations.
Employees will be paid according to the number of hours they would normally be scheduled to work. For employees with a variable schedule, the law provides a series of schedules to determine the appropriate amount of pay the employee will be entitled to in a given week.
Violations of the Emergency Paid Sick Leave Act will be subject to enforcement provisions of the FMLA, including violations related to retaliatory actions against an employee who requests paid sick leave or exercises other rights afforded by the act. These significant penalties include 2x damages for unpaid leave, attorneys fees and costs and injunctive relief, and reinstatement of terminated employees.
Tax Credits for Employers and the Self-Employed
The government’s intention is that the cost to employers of the emergency provisions outlined above will be offset by tax credits. Employers will receive a dollar for dollar tax credit for all sick leave and FMLA expansion leave paid, up to the caps specified above (employers who chose to pay more will not receive greater tax credits). Tax credits will also be capped at a total of $10,000.00 per employee for all quarters.
The credit will be applied to an employer’s total quarterly Social Security tax due for all employees. Employers will be refunded for any earned credits in excess of their social security payroll tax liability. Self-employed individuals will also be entitled to a tax credit if for period of time in which they were unable to work which would for reasons which would have qualified them for either paid sick leave or leave under the FMLA expansion. The qualified sick leave and qualified family leave equivalent amounts under the statute provide tax credits roughly equivalent to the benefits which will be received by employees under the act.
Please contact us for a telephonic consultation if you have questions about how the act’s emergency provisions for paid sick leave and an expansion of the Family Medical Leave Act impact your business.
The above is intended to inform firm clients and friends about recent developments in the law, including analysis of statutes and new case decisions. This update should not be construed as legal advice or a legal opinion, and readers should not act upon the information contained herein without seeking the advice of legal counsel.
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