On March 18, 2020, President Trump signed the Families First Coronavirus Response Act (the “Act”), which aims to address the impact of the COVID-19 pandemic by, among other things, providing a limited period of paid sick leave for employees affected by COVID-19 and expanding the Family and Medical Leave Act (“FMLA”) for a public health emergency. The paid sick leave and Emergency FMLA expansion (“E-FMLA”) provisions of this new law apply to employers with fewer than 500 employees. For employers with more than 500 employees, the new law does not impact or change existing legal obligations under the FMLA or other federal employment laws, which remain as is.
Employers will be required to “front” the money for the leave required by the Act by paying employees directly, but the amounts will be subsidized by the federal government in the form of a tax credit or reimbursement. The Act will become effective on April 1, 2020, and will remain in effect until December 31, 2020. This alert summarizes the key provisions of the Act for employers. A summary in chart form, prepared by the House Ways and Means Committee, can be found here. This document has been updated to reflect changes to the FFCRA enacted by the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) as well some portions of the interpretive guidance issued by the Department of Labor, including its Families First Coronavirus Response Act: Questions and Answers (DOL Q&A), which itself continues to be updated frequently. We note that the guidance published as of March 29, 2020 may not have incorporated amendments implemented through the CARES Act.
PAID SICK LEAVE [updated]
The Act requires private employers with fewer than 500 employees to provide paid sick time to any employee, regardless of tenure, who is unable to work for any of the following reasons:
- 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 is seeking a medical diagnosis;
- The employee is caring for an individual who is subject to a quarantine or isolation order or has been advised by a health care provider to self-quarantine (note that this is not limited to just family members);
- The employee is caring for a child because the child’s school or place of care is closed or the child’s care provider is unavailable due to a public health emergency; or
- 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.
However, employers of healthcare providers or emergency responders may elect not to provide paid sick leave to those employees. In addition, the Secretary of Labor has the authority to exempt businesses with fewer than 50 employees from providing leave for reason 5 if the required leave would jeopardize the viability of the business. Small business may claim this exemption “if an authorized officer of the business has determined that:” (1) providing the paid leave “would result in the small business’s expenses and financial obligations exceeding available business revenues and cause the small business to cease operating at a minimal capacity;” (2) the absence of the employee(s) requesting paid leave “would entail a substantial risk to the financial health or operational capabilities of the small business because of their specialized skills, knowledge of the business, or responsibilities;” or (3) “there are not sufficient workers who are able, willing, and qualified, and who will be available at the time and place needed, to perform the labor or services provided by the employee or employees requesting paid … leave, and these labor or services are needed for the small business to operate at a minimal capacity.” The DOL will provide information on how this will be implemented; for now, employers seeking to use this exemption are advised to record the reasons why they qualify. See the DOL Q&A (nos. 4, 58-59), for details.
Duration of Leave [updated]
Full-time employees may take up to 80 hours of paid sick time, while part-time employees (defined by the DOL guidance as those normally scheduled to work fewer than 40 hours per week) are entitled to the average number of hours worked over a two-week period. Part-time employees who work variable hours must be paid based on the number of hours they worked over the preceding six-month period or, if an employee has been employed less than six months prior to taking leave, based on the employee’s reasonable expectation at the time of hire. This paid sick time may not be carried over from year to year, the employer is not required to provide further sick leave under the Act once the employee returns to work if all the available leave has been used, and unused time need not be paid out at termination. An employer also cannot require an employee to find a replacement before taking paid sick time. The paid sick time to which employees are entitled under the Act is in addition to all other sick time or PTO provided to employees under the employer’s policy or other applicable laws (such as the Massachusetts paid sick time law). Paid sick time for reasons 1-4 and 6 may only be taken intermittently if the employee teleworks and the employer agrees; paid sick time for reason 5 may be taken intermittently regardless of whether the employee works on site or teleworks, but again employer agreement is required. In addition, the paid sick time is available only for time the employee is otherwise scheduled to work. See our alert, COVID-19 Challenges: A Q&A For Employers (nos. 18 and 23) and the DOL Q&A (nos. 28, 20-22, 49), for details.
Rate of Pay
Employees who take leave for self-care (reasons 1-3 above) must be compensated at the higher of (1) the employee’s regular rate of pay, (2) the federal minimum wage, or (3) the local minimum wage. Employees who take leave to care for others or for a substantially similar condition (reasons 4-6 above) must be compensated at two-thirds of their regular rate of pay.
However, the paid sick leave amounts are capped at $511 per day for 10 days ($5,110 total) for employees who take leave for self-care, and at $200 per day for 10 days ($2,000 total) for employees who take leave to care for others or for a substantially similar condition.
Employer Tax Credits [updated]
The Act provides for certain tax credits to ease the financial burden on employers. Employers are entitled to a refundable tax credit equal to 100% of the paid sick leave wages paid to employees in each calendar quarter in accordance with the Act (up to the caps described above). The amount of the credit is increased by the amount of nontaxable group health plan expenses paid by the employer that are properly allocable to the qualified sick leave for which the credit is allowed. The tax credit is allowed against payroll tax payments (including withheld federal income taxes, the employee share of Social Security and Medicare taxes, and the employer share of Social Security and Medicare taxes with respect to all employees). If the payments are not large enough to cover the credit, employers will be issued a refund.
Employers are prohibited from discriminating against an employee who takes paid sick leave under the Act or has filed any complaint, instituted or caused to be instituted any proceeding under the Act, or has testified or is about to testify in any such proceeding. Employers that terminate an employee for such discriminatory reasons, or who fail to provide paid sick time under the Act, will be considered in violation of the Fair Labor Standards Act and will be subject to its penalties, including payment of back pay, liquidated damages and attorneys’ fees.
EMERGENCY FMLA EXPANSION [updated]
The Act also substantially expands FMLA leave (“Emergency FMLA” or “E-FMLA”). The Act provides for up to 12 weeks of Emergency FMLA leave to any eligible employee who is unable to work (or telework) in order to care for a child who is under 18 because the child’s school or place of care is closed or the child’s childcare provider is unavailable due to the public health emergency. Leave may be taken intermittently regardless of whether the employee works on site or teleworks, but only with employer agreement. All employers with fewer than 500 employees are required to provide E-FMLA leave. However, the Secretary of Labor has the authority to exempt employers of healthcare providers and emergency responders, and to exempt businesses with fewer than 50 employees if the required leave would jeopardize the viability of the business. The criteria for exemption for small businesses are the same as described for sick leave taken for reason 5. See the DOL Q&A (nos. 4, 58-59), for details.
Eligible Employees [updated]
Any employee is eligible for E-FMLA leave if the employee has worked for the employer for at least 30 days prior to taking leave; employees who were terminated after March 1, 2020 and rehired qualify if they worked 30 of the last 60 calendar days prior to the layoff.
Rate of Pay [updated]
The first 10 days of E-FMLA leave may be unpaid. During the unpaid period, an employee may elect (and an employer may require an employee) to substitute any accrued vacation, personal, or medical or sick leave for unpaid leave. Employees could also elect to use paid sick time under the Act to cover the first 10 days. After the 10-day period, the employer 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. Employees who work variable schedules must be paid based on the number of hours they worked over the preceding six-month period or, if an employee has been employed less than six months prior to taking leave, based on the employee’s reasonable expectation at the time of hire. The Act limits paid FMLA leave to $200 per day and $10,000 total per employee (equivalent to 10 weeks of E-FMLA payments).
Employer Tax Credits [updated]
As with paid sick leave, employers may claim a refundable tax credit equal to 100% of the payments made to employees for E-FMLA leave in each calendar quarter, up to the caps described above. Similarly, the amount of the credit is increased by the amount of nontaxable group health plan expenses paid by the employer that are properly allocable to the qualified E-FMLA leave for which the credit is allowed. These tax credits are allowed against payroll tax payments (including withheld federal income taxes, the employee share of Social Security and Medicare taxes, and the employer share of Social Security and Medicare taxes with respect to all employees), and employers will receive a refund if the payments are not large enough to cover the credit. However, employers are not allowed to take the credit with respect to any wages for which the general business credit for FMLA leave is allowed.
Job Restoration [updated]
Employers are subject to the standard FMLA obligation to return any employee who has taken leave to the same or equivalent position upon return to work. The only changes under Act are: (1) employers with fewer than 25 employees are excluded from the requirement to return the employee to the same or an equivalent position if the position no longer exists when an employee seeks to return from Emergency FMLA leave because of an economic downturn or other conditions caused by a public health emergency, and (2) an excluded employer must attempt to contact the employee if an equivalent position becomes available in the next year. While this explicit exception for small employers could be read to mean that no such exception is available for employers with more than 25 employees, this would contradict existing FMLA regulations (which appear to be incorporated into the Act) providing that there is no reinstatement obligation if an employer can show that “an employee would not otherwise been employed at the time reinstatement is requested” as the result of a reduction-in-force. 29 C.F.R. § 825.216(a). The current DOL guidance may be seeking to reconcile this apparent contradiction by stating that this new provision is in addition to the existing FMLA standards. See the DOL Q&A (nos. 43), for details.
While the Act does not explicitly require employers to provide notice of the E-FMLA provisions, these are covered in DOL’s model posters (in English and Spanish), which are required to be posted for compliance with the paid sick leave provisions of the Act.
NEXT STEPS FOR EMPLOYERS
Employers with fewer than 500 employees should take steps immediately to prepare to comply with the provisions of the Act. Employers will also be required to provide notice to their employees in the form approved by the Secretary of Labor. In addition to the federal Act, several states have proposed legislation to enact or expand their own paid sick leave or family and medical leave laws to address COVID-19 issues. These state laws may impose additional requirements beyond the requirements of the federal Act. Though Massachusetts has not yet enacted legislation to expand paid sick leave or family and medical leave, the legislature has taken several measures to address the needs of employees and businesses in the Commonwealth, including loosening restrictions on unemployment claims and working with banks and other stakeholders to ease financial pressures on businesses. We will continue to monitor legal developments related to COVID-19 and provide updates as new laws applicable to employers are enacted.
 We note that it appears the posters are still being updated, so employers may wish to check the linked page for the most updated version immediately before posting.