What the New Federal Sick Leave Law Means

On March 18, 2020, the Families First Coronavirus Response Act (FFCRA) was signed into law. This article focuses on the main aspects of the law that will immediately impact employers. Namely, we will review the requirements of the Emergency Paid Sick Leave and the Emergency Family and Medical Leave Extension requirements, which will go into effect no later than 15 days after enactment.

1. Mandatory Paid Sick Leave

The Emergency Paid Sick Leave provisions of the FFCRA apply to private employers with fewer than 500 employees and all local and state government employers. Employers covered by the law would be required to provide employees with two weeks (80 hours) of paid sick leave, paid at the employee’s “regular rate” and capped at $511 per day if they cannot work or telework for any of the following reasons:

1. The employee is subject to a Federal, State, or local specific quarantine or isolation order related to COVID–19 (this does not include general shelter-in-place or similar precautionary orders; the new CARES Act will provide additional relief to employees in that respect);
2. The employee has been advised by a health care provider to self-quarantine due to concerns related to COVID–19;
3. The employee is experiencing symptoms of COVID–19 and seeking a medical diagnosis;
4. The employee is caring for an individual who is subject to an order as described in subparagraph (1) or has been advised as described in paragraph (2);
5. 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. Since all schools are closed by emergency orders, any employee with elementary, middle or high school age children who are students, if needed to care for their children are covered by this section; or
6. 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.

Except that an employer of an employee who is a health care provider or an emergency responder may elect to exclude such employee from the application of this subsection.

For an employee taking paid sick leave to care for a family member or to care for a child whose school has closed, the pay entitlement is reduced to two-thirds of the employee’s regular rate of pay and capped at $200 per day. Most employees would be eligible for leave regardless of their tenure with the organization or full or part time status. Part time employees’ sick pay is pro-rated based on the average weekly hours worked. The emergency paid sick leave expires as of December 31, 2020, cannot be carried over into the new year, and employers are not required to pay employees for unused leave.

 

Employers may not require employees to exhaust their current sick leave before using leave provided under FFCRA. Further, employers cannot change their existing paid leave policies, like vacation or paid time off (PTO), to undermine or limit the impact of the FFCRA. The paid leave must be in addition to the paid leave already provided by employers as of the day before enactment of the bill.

Lastly, employers are required to post a notice related to the paid sick leave in a conspicuous place in the workplace.  A model notice is attached.

2. Temporary Expansion of Family and Medical Leave Act (FMLA) Requirements and Coverage

The Emergency Family and Medical Leave Expansion provisions of the bill also apply to private employers with fewer than 500 employees and all local and state government employers. Employees who have worked for the employer for at least 30 days will be entitled to take up to 12 weeks of job-protected leave under the Family and Medical Leave Act (FMLA) if the employee cannot work or telework because of a need to care for a son or daughter under the age of 18 because the child’s school or place of care has been closed, or the childcare provider is unavailable, due to a public health emergency.

The first two weeks (10 days) of the FMLA provided leave is unpaid, but this period may work in tandem and be covered by the two weeks of paid sick leave provided above. The employee may also choose to substitute accrued vacation leave, personal leave, or other medical or sick leave during this period, but an employer may not require an employee to do so. After the two weeks of unpaid leave, employers must provide up to 10 weeks of paid FMLA leave at a rate of no less than two-thirds of the employee’s regular rate of pay.

The Secretary of Labor may exclude certain health care providers and emergency responders from the employees who are eligible for leave. Additionally, the Secretary of Labor may exempt small businesses with fewer than 50 employees for a hardship if providing the paid leave “would jeopardize the viability of the business.” Like the mandatory paid sick leave, the expansion of FMLA is temporary and will end as of December 31, 2020.

As with traditional FMLA leave, this leave is job-protected, meaning an employer must offer the employee the same or equivalent position upon their return to work. An exception to this requirement is built in for employers with fewer than 25 employees if the employee’s position does not exist after FMLA leave due to an economic downturn or other operating conditions that affect employment caused by a public health emergency during the period of leave. Certain conditions, including reasonable attempts to return the employee to an equivalent position, and required efforts to contact a displaced employee for up to a year after they are displaced, are required.

3. Tax Credits for Employers

To assist businesses in paying for these new paid leave benefits, the new law provides a refundable tax credit worth 100 percent of the amount of the qualified wages paid as leave provided to the employees. The credits will apply to the employer’s quarterly payroll tax obligations.

There are limits to the tax credits offered. The credit amount for FMLA extended leave benefits is capped at $200 per day for an employee and $10,000 for all calendar quarters. The amount for paid sick leave is capped at $511 per day. In instances when an employee receives paid sick leave because they are caring for another individual or child, the amount is capped at $200 per day.

Credit for Health Plan Expenses. The credits are increased to include amounts employers pay for the employee’s health plan coverage while they are on leave. Specifically, the bill allows for the credit amounts to be increased by the amount of the employer’s group health plan expenses that are “properly allocated” to the qualified emergency leave and sick leave wages. Health plan expenses are “properly allocated” to qualified wages if made on a pro rata basis (among covered employees and periods of coverage).

Refundability of Excess Credit: The amount of the paid sick leave credit that is allowed for any calendar quarter cannot exceed the total employer payroll tax obligations on all wages for all employees. If the amount of the credit that would otherwise be allowed is so limited, the amount of the limitation is refundable to the employer.

4. Employer Action

Because these benefits will be available to employees almost immediately after enactment, employers should plan to take the following action:

1. Confirm employee headcount, taking into account part-time employees and any planned layoffs, to determine which provisions of the bill would apply;
2. Think about drafting a stand-alone emergency leave policy that outlines these FMLA and sick leave rights, with an eye for ensuring that this policy aligns with the company’s leave of absence, sick leave, and PTO policies;
3. Prepare to account for the new paid FMLA and sick leave entitlements from a financial/accounting perspective;
4. Consider potential fluctuations in staffing levels in anticipation of employees taking advantage of these leave entitlements this calendar year; and
5. Be mindful of parallel or overlapping leave and PTO requirements under applicable state and local laws.

Any questions please contact labor and employment attorneys Neil A. Morris, Esq. and Gabriel V. Celii, Esq.
at Offit Kurman, P.A. [email protected], [email protected].