What Employers Need to Know about the Families First Coronavirus Response Act by Deanna Rader

On March 18, 2020, the Families First Coronavirus Response Act (the “Act”) was signed into law, and it goes into effect on April 2, 2020. It is the first relief package approved by Congress and requires certain employers to provide employees with emergency paid sick leave and expanded family and medical leave for specified reasons related to COVID-19. These provisions will apply from April 2, 2020 through December 31, 2020.

Generally, the Act provides that covered employers must provide to all employees:[1]

  • Two weeks (up to 80 hours) of emergency paid sick leave at the employee’s regular rate of pay where the employee is unable to work because the employee is quarantined (pursuant to Federal, State, or local government order or advice of a health care provider), and/or experiencing COVID-19 symptoms and seeking a medical diagnosis; or
  • Two weeks (up to 80 hours) of emergency paid sick leave at two-thirds the employee’s regular rate of paybecause the employee is unable to work because of a bona fide need to care for an individual subject to quarantine (pursuant to Federal, State, or local government order or advice of a health care provider), or care for a child (under 18 years of age) whose school or child care provider is closed or unavailable for reasons related to COVID-19, and/or the employee is experiencing a substantially similar condition as specified by the Secretary of Health and Human Services, in consultation with the Secretaries of the Treasury and Labor.

Employers may not require employees to use other forms of paid leave prior to using emergency paid sick leave. For employers with existing paid sick or other leave policies, emergency paid sick leave is in addition to such paid leave, including Arizona’s earned paid sick time. employers are prohibited from modifying any paid leave policies to avoid being subject to this requirement. Employers may not require the employee to identify a replacement employee in order to take paid sick leave.

A covered employer must provide to employees that it has employed for at least 30 days:[2]

  • Up to an additional 10 weeks of expanded family and medical leave at two-thirds the employee’s regular rate of pay where an employee is unable to work due to a bona fide need for leave to care for a child whose school or child care provider is closed or unavailable for reasons related to COVID-19.

Covered Employers

The emergency paid sick leave and expanded family and medical leave provisions of the Act apply to certain public employers, and private employers with fewer than 500 employees.[3]

Small businesses with fewer than 50 employees may qualify for exemption from the requirement to provide leave due to school closings or child care unavailability if the leave requirements would jeopardize the viability of the business as a going concern.

Eligible Employees

All employees of covered employers are eligible for two weeks of emergency paid sick leave for specified reasons related to COVID-19. Employees employed for at least 30 days are eligible for up to an additional 10 weeks of paid family leave to care for a child under certain circumstances related to COVID-19.[4]

Notice

Where leave is foreseeable, an employee should provide notice of leave to the employer as is practicable. After the first workday of expanded family and medical leave, an employer may require employees to follow reasonable notice procedures in order to continue receiving expanded family and medical leave.

Qualifying Reasons for Leave

Under the Act, an employee qualifies for emergency paid sick leave and expanded family and medical leave if the employee is unable to work (or unable to telework) due to a need for leave because the employee:

  1. is subject to a Federal, State, or local quarantine or isolation order related to COVID-19;
  2. has been advised by a health care provider to self-quarantine related to COVID-19;
  3. is experiencing COVID-19 symptoms and is seeking a medical diagnosis;
  4. is caring for an individual subject to an order described in (1) or self-quarantine as described in (2);
  5. is caring for a child whose school or place of care is closed (or child care provider is unavailable) for reasons related to COVID-19; or
  6. is experiencing any other substantially similar condition specified by the Secretary of Health and Human Services, in consultation with the Secretaries of Labor and Treasury.

Under the Act, an employee qualifies for expanded family and medical leave if the employee is caring for a child whose school or place of care is closed (or child care provider is unavailable) for reasons related to COVID-19.

Duration of Leave

For reasons (1)-(4) and (6): A full-time employee is eligible for 80 hours of leave, and a part-time employee is eligible for the number of hours of leave that the employee works on average over a two-week period.

For reason (5): A full-time employee is eligible for up to 12 weeks of leave (two weeks of paid sick leave followed by up to 10 weeks of paid expanded family & medical leave) at 40 hours a week, and a part-time employee is eligible for leave for the number of hours that the employee is normally scheduled to work over that period.

Calculation of Pay[5]

For leave reasons (1), (2), or (3): employees taking leave are entitled to pay at either their regular rate or the applicable minimum wage, whichever is higher, up to $511 per day and $5,110 in the aggregate (over a 2-week period).

For leave reasons (4) or (6): employees taking leave are entitled to pay at 2/3 their regular rate or 2/3 the applicable minimum wage, whichever is higher, up to $200 per day and $2,000 in the aggregate (over a 2-week period).

For leave reason (5): employees taking leave are entitled to pay at 2/3 their regular rate or 2/3 the applicable minimum wage, whichever is higher, up to $200 per day and $12,000 in the aggregate (over a 12-week period). An employee may elect to substitute any accrued vacation leave, personal leave, or medical or sick leave for the first two weeks of partial paid leave under this section.

Tax Credits

Covered employers qualify for dollar-for-dollar reimbursement through tax credits for all qualifying wages paid under the Act. Qualifying wages are those paid to an employee who takes leave under the Act for a qualifying reason, up to the appropriate per diem and aggregate payment caps. Applicable tax credits also extend to amounts paid or incurred to maintain health insurance coverage.

When employers pay their employees, they are required to withhold from their employees’ paychecks federal income taxes and the employees’ share of Social Security and Medicare taxes. The employers then are required to deposit these federal taxes, along with their share of Social Security and Medicare taxes, with the IRS and file quarterly payroll tax returns (Form 941 series) with the IRS.

Under guidance that will be released by the IRS next week, eligible employers who pay qualifying sick or child care leave will be able to retain an amount of the payroll taxes equal to the amount of qualifying sick and child care leave that they paid, rather than deposit them with the IRS.

The payroll taxes that are available for retention include 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 there are not sufficient payroll taxes to cover the cost of qualified sick and child care leave paid, employers will be able file a request for an accelerated payment from the IRS. The IRS expects to process these requests in two weeks or less. The details of this new, expedited procedure will be announced next week.

Examples Provided by the IRS:

  • If an eligible employer paid $5,000 in sick leave and is otherwise required to deposit $8,000 in payroll taxes, including taxes withheld from all its employees, the employer could use up to $5,000 of the $8,000 of taxes it was going to deposit for making qualified leave payments. The employer would only be required under the law to deposit the remaining $3,000 on its next regular deposit date.
  • If an eligible employer paid $10,000 in sick leave and was required to deposit $8,000 in taxes, the employer could use the entire $8,000 of taxes in order to make qualified leave payments and file a request for an accelerated credit for the remaining $2,000.

Equivalent child care leave and sick leave credit amounts are available to self-employed individuals under similar circumstances. These credits will be claimed on their income tax return and will reduce estimated tax payments.

Employer Notice

Each covered employer must post in a conspicuous place on its premises a notice of Act requirements. The U.S. Department of Labor will issue a model notice no later than March 25, 2020, which should be made available for download and or printing from its website at www.dol.gov.

Prohibitions

Employers may not discharge, discipline, or otherwise discriminate against any employee who takes expanded family and medical leave under the Act and files a complaint or institutes a proceeding under or related to the Act.

Penalties and Enforcement

Employers in violation of the first two weeks’ expanded family and medical leave or unlawful termination provisions of the Act will be subject to the penalties and enforcement described in Sections 16 and 17 of the Fair Labor Standards Act. 29 U.S.C. 216; 217. Employers in violation of the provisions providing for up to an additional 10 weeks of expanded family and medical leave to care for a child whose school or place of care is closed (or child care provider is unavailable) are subject to the enforcement provisions of the Family and Medical Leave Act. The U.S. Department of Labor has stated that it will observe a temporary period of non-enforcement for the first 30 days after the Act takes effect, so long as the employer has acted reasonably and in good faith to comply with the Act.  For purposes of this non-enforcement position, “good faith” exists when violations are remedied and the employee is made whole as soon as practicable by the employer, the violations were not willful, and the U.S. Department of Labor receives a written commitment from the employer to comply with the Act in the future.

[1] Certain health care providers and emergency responders may be excluded from the definition of eligible employee under the Act.

[2] Certain health care providers and emergency responders may be excluded from the definition of eligible employee under the Act.

[3] Certain provisions may not apply to certain employers with fewer than 50 employees. We are waiting for the U.S. Department of Labor to issue regulations (expected April 2020) for additional guidance for small employers.

[4] Under the Act, special rules apply for Health Care Providers and Emergency Responders.

[5] Paid sick time provided under this Act does not carry over from one year to the next. Employees are not entitled to reimbursement for unused leave upon termination, resignation, retirement, or other separation from employment.

Deanna Rader is a founding partner of Rader Mayrose, LLP. Ms. Rader is an experienced litigator, representing and defending employers in state and federal court. Ms. Rader’s clients include public, nonprofit, and business clients. Caritas clients are encouraged to contact Ms. Rader directly at drader@radermayrose.com with questions on the new Coronavirus Response Act.

 

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