On March 18, 2020, President Trump signed the Families First Coronavirus Response Act, a sweeping new law to respond to COVID-19.  This client alert will focus on two aspects of the law – emergency paid sick leave and expanded Family and Medical Leave Act (FMLA) requirements.

EMERGENCY PAID SICK LEAVE ACT

Date applicable:  April 1, 2020 to December 31, 2020

Employers who are required to comply:  Private companies and non-profit agencies with fewer than 500 employees, and all public agencies (all local, state, and federal government employers).

Employees who are covered:  Full and part-time employees, regardless of how long they have worked for the employer.   However, an employer of an employee who is a health care provider or an emergency responder may elect to exclude a health care provider or emergency responder.

Paid leave required:   Covered employers shall provide 80 hours of sick leave to each employee to the extent that the employee is unable to work (or telework) due to a need for leave because:

• The employee is subject to a Federal, State, or local quarantine or isolation order related to COVID-19.
• The employee has been advised by a health care provider to self-quarantine due to concerns related to COVID-19.
• The employee is experiencing symptoms of COVID-19 and seeking a medical diagnosis.
• The employee is caring for an individual who is subject to a Federal, State, or local quarantine or isolation order related to COVID-19 or has been advised by a health care provider to self-quarantine due to concerns related to COVID-19.
• The employee is caring for a son or daughter of such employee if the school or place of care of the son or daughter has been closed, or the child care provider of such son or daughter is unavailable, due to COVID-19 precautions.
• 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.

Amount of sick leave paid:

Employers are required to pay Employees at their regular rate of pay during such sick leave for the following:

• The employee is subject to a Federal, State, or local quarantine or isolation order related to COVID-19.
• The employee has been advised by a health care provider to self-quarantine due to concerns related to COVID-19.
• The employee is experiencing symptoms of COVID-19 and seeking a medical diagnosis.

Employers are required to pay Employees at least two-thirds of the regular pay for the following:

• The employee is caring for an individual who is subject to a Federal, State, or local quarantine or isolation order related to COVID-19 or has been advised by a health care provider to self-quarantine due to concerns related to COVID-19.
• The employee is caring for a son or daughter of such employee if the school or place of care of the son or daughter has been closed, or the child care provider of such son or daughter is unavailable, due to COVID-19 precautions.
• 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. 

Caps on sick leave:  Payments are not required to exceed $511 per day and $5,110 in the aggregate for paid sick leave associated with the following:

• The employee is subject to a Federal, State, or local quarantine or isolation order related to COVID-19.
• The employee has been advised by a health care provider to self-quarantine due to concerns related to COVID-19.
• The employee is experiencing symptoms of COVID-19 and seeking a medical diagnosis.

Payments are not required to exceed $200 per day and $2,000 in the aggregate for paid sick leave associated with the following:

• The employee is caring for an individual who is subject to a Federal, State, or local quarantine or isolation order related to COVID-19 or has been advised by a health care provider to self-quarantine due to concerns related to COVID-19.
• The employee is caring for a son or daughter of such employee if the school or place of care of the son or daughter has been closed, or the child care provider of such son or daughter is unavailable, due to COVID-19 precautions.
• 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.

No carryover:  Paid sick time under this law shall not carry over from one year to the next.

Relation to employer’s current sick pay policies:  The paid sick leave required by this new law is likely in addition to whatever sick leave is already offered by employers.  An employer may not require an employee to use other paid leave provided by the employer to the employee before the employee uses the paid sick time under the Act.

No coverage requirements:  An employer may not require, as a condition of providing paid sick time under this Act, that the employee involved search for or find a replacement employee to cover the hours during which the employee is using paid sick time.

Immediate availability of this sick leave:  An employer may not require an employee to use other paid leave provided by the employer to the employee before the employee uses the paid sick time under the new law.

Posting requirements:  Each employer must post a notice of this Act.  The Department of Labor will have a model notice available by March 25, 2020.

No retaliation:  Employers cannot retaliate against employees for use of this leave.

EMERGENCY FAMILY AND MEDICAL LEAVE EXPANSION ACT

Date applicable:  April 2, 2020 to December 31, 2020

Which employers must comply:  Private companies and non-profits with less than 500 employees and all government employers (all local, state, and federal government employers).

Which employees are eligible:  Full and part-time employees who have been employed at least 30 days.  But an employer of an employee who is a health care provider or an emergency responder may exclude those employees.  The Department of Labor can also issue regulations to exclude employees who are health care providers and emergency responders.  The Department of Labor can also issue regulations to exempt small businesses with fewer than 50 employees if providing the leave would jeopardize the viability of the business. 

Law requires 12 weeks of job-protected leave, as follows:  If an employee is unable to work (or telework) due to a need for leave to care for the son or daughter under 18 years of age of such employee if the school or place of care has been closed, or the child care provider of such son or daughter is unavailable, due to a public health emergency.

• Unpaid leave for the initial 10 days.  The law does not require an employer to provide paid leave for the initial 10 days of such Family and Medical Leave Expansion Act leave. An Employee may choose to use paid vacation leave, personal leave, or sick leave during this period.
• The remainder of such Family and Medical Leave Expansion Act leave is required to be paid leave and paid at two-thirds of the employee’s regular rate of pay (not to exceed $200 per day and $10,000 in aggregate).

Restoration to Position:  With companies of 25 or more employees, employees must be restored  to their position after the Family and Medical Leave Expansion Act leave, unless that position does not exist due to economic conditions or other changes in the operating conditions of the employer. 

TAX CREDITS FOR PAID SICK AND PAID FAMILY AND MEDICAL LEAVE

The Families First Coronavirus Response Act also provides for certain employer tax credits to offset the costs associated with the expanded emergency family and medical leave and sick leave required for employees under the Act.

Who is eligible:  Private companies who employ under 500 employees who are required to provide these benefits are eligible for certain tax credits.  These credits do not apply to federal, state and local government employers.

Payroll tax credits:  Subject to certain limitations, the Act provides a refundable tax credit worth 100 percent of qualified emergency family and medical leave wages and qualified paid sick leave wages paid by an employer through the end of 2020. These tax credits are provided against the employer portion of Social Security taxes.   

The Act further provides that the emergency family and medical leave and paid sick leave tax credits would be increased to include amounts employers pay for an employee’s health plan coverage while the employee is on leave.

Tax Refund payments of the excess tax credits:  Subject to the limitations in the Act, there is an ability to claim a refund of the tax credits to the extent that the amount of the credit exceeds certain payroll tax obligations of the employer. This means generally that subject to the limitations in the Act, employers will be reimbursed (via refund) for qualified sick leave or family leave wages in excess of the credit taken against the employer portion of Social Security taxes.

We are not aware of any IRS forms that are available yet, but we will be monitoring this closely.  We expect the IRS to post new or revised forms and guidance shortly.  As always, careful record keeping will be essential.   

Who to contact with questions:  Our employment, tax, and business attorneys are available to answer your specific questions about this new law and will help you implement the requirements.  Please reach out to your Lashly & Baer attorney with any questions.

Prepared by:
James Hetlage
Phone: 314-436-8322
Email: jhetlage@lashlybaer.com

Rhonda O’Brien
Phone: 314-436-8336
Email: raobrien@lashlybaer.com

Julie Devine
Phone: 314-436-8329
Email: jdevine@lashlybaer.com

This summary and legal alert is an overview of the new law. It is not intended to be, and should not be construed as, legal advice for a specific factual situation.