On Wednesday, March 18th, President Trump signed the Families First Coronavirus Response Act (H.R. 6201) into law. This new legislation aims to address the economic fallout that workers have experienced as a result of the COVID-19 outbreak.
This economic plan includes many provisions that employers must be aware of, such as paid sick leave for employees impacted by COVID-19 and those serving as caregivers for individuals with COVID-19. To guide employers on what changes to expect, here’s a breakdown summarizing the main provisions of the Families First Coronavirus Response Act.
Families First Coronavirus Response Act’s Important Provisions
Three key provisions will affect employers once passed:
- An emergency expansion of the Family Medical Leave Act (FMLA);
- A new federal paid sick leave law; and
- Expanded unemployment insurance benefits.
Emergency Family and Medical Leave Expansion Act
Expanded Coverage and Eligibility
The Act significantly amends and expands the FMLA temporarily. The current employee threshold for coverage would be increased, covering employers with up to 500 employees. It also lowers the eligibility requirement for paid family and medical leave; an employee who has worked for the employer for at least 30 days before the designated leave is considered eligible.
Reasons for Emergency Leave
Any individual employed by the employer for at least 30 days (before the first day of leave) may take up to 10 weeks of paid, job-protected leave. And this emergency leave is only available to an employee who is “unable to work (or telework) 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.”
The first 10 days of Emergency FMLA may be unpaid, but an employee may choose to cover some or all of this 10-day unpaid period with their accrued paid time off, including vacation or sick leave. But after the 10 days, the employer must:
- Pay their full-time employees two-thirds the employee’s regular rate for the number of hours the employee would work for.
- Pay their part-time employees (or those who work irregular schedules) based on the average number of hours the employee worked for the six months before taking Emergency FMLA.
- Pay their employees who have worked for less than six months based on the average number of hours the employee would normally be scheduled to work.
- Employers with bargaining unit employees would apply the Emergency FMLA provisions consistent with the bargaining agreement.
The cap on paid leave for the 10 weeks following the initial 10-day period of unpaid leave is $200 per day and $10,000 total.
The Act also expands the definition of who is considered a “parent” under FMLA:
- Parent-in-law of the employee,
- Parent of a domestic partner of the employee, and
- Legal guardian or person who served as the employee’s parent when the employee was a child.
Small Business and Other Exemptions
Small businesses under 50 employees and many health care providers may be exempted from paying sick leave if they can prove that compliance would jeopardize the viability of the business.
Effective Date and Expiration
This program will go into effect within 15 days of enactment and remain until December 31, 2020.
Emergency Paid Sick Leave Act
This provision requires employers with fewer than 500 employees to provide employees (regardless of their duration of employment) with paid sick leave.
Employees who need sick leave due to Coronavirus concerns must receive sick leave at the employee’s regular rate, or applicable minimum wage, whichever is greater, but is limited to $511 per day and $5,110 total.
Employers must provide sick leave at two-thirds the employee’s regular rate, or applicable minimum wage (whichever is greater), if the employee must leave to:
- Care for a child whose school or daycare has closed due to coronavirus, or
- Care for a family member who is self-isolating due to a coronavirus diagnosis, who is exhibiting symptoms and needs to obtain medical care, or who is complying with a requirement or recommendation to quarantine.
Reasons for Paid Sick Leave
Employees are allowed to take paid sick leave for any of the following reasons:
- To comply with a federal, state or local quarantine or isolation order related to COVID-19;
- To self-isolate because the employee is diagnosed with coronavirus by a health care provider;
- To obtain a diagnosis or care because the employee is exhibiting symptoms;
- To care for or assist an individual who is subject to a federal, state or local quarantine order, or has been advised to self-quarantine due to concerns related to COVID-19;
- To take care of the employee’s child if the child’s school or place of care has been closed due to the COVID-19 coronavirus (including if the childcare provider is unavailable; or
- To self-isolate because the employee is experiencing any other substantially similar condition specified by Health and Human Services in consultation with the Department of the Treasury and the Department of Labor.
This paid sick leave will not carry over to the following year and is in addition to any paid sick leave currently provided by employers. Employers are prohibited from requiring employees to use other paid leave provided by the employer before using the new paid sick time.
Calculating Rate of Pay
Full-time employees will be entitled to 80 hours’ worth of paid sick time. For employees who work a part-time or irregular schedule, pay will be based on the average number of hours the employee worked for the six months before taking paid sick leave. For those who have worked for less than six months before leave, pay will be based on the average number of hours the employee would normally be scheduled to work.
A business employing fewer than 500 employees is required, at the request of the employee, to pay the employee for 10 days of mandated emergency paid leave instead of the initial 10 days of unpaid leave required by the Emergency Family and Medical Leave Expansion Act (summarized above). This program will be administered by the Social Security Administration over the next year until these requirements expire on December 31, 2020.
Emergency Unemployment Insurance Stabilization and Access Act Of 2020
This Act will provide $1 billion in 2020 for emergency grants to states for activities related to unemployment insurance benefit processing and payment, under certain conditions.
Half of the resources will be allocated to provide immediate funding to all states for administrative costs as long as they meet some basic requirements, including:
- Requiring employers to provide notification of the availability of unemployment compensation at the time of separation;
- Ensuring applications for unemployment compensation as well as assistance with the application process are accessible in at least two ways (in-person, by phone, or online); and
- Notifying applicants when their application is received and being processed, as well as providing information about how to ensure successful processing if the application cannot be processed.
The other half would be reserved for emergency grants to states which experience an increase of unemployment compensation claims of at least 10%, in comparison to the same quarter in the prior calendar year. Those states would be eligible to receive an additional grant to assist with costs related to the unemployment spike if they meet additional requirements, including:
- Expressing of commitment to maintain and strengthen access to unemployment compensation; and
- Taking or planning to take steps to ease eligibility requirements and access (like waiving work search requirements and the waiting period).
This provision will remain in effect until December 31, 2020.
Tax Credits for Paid Sick and Paid Family and Medical Leave
This section will provide a series of refundable tax credits for employers who are required to provide the Emergency Paid Sick Leave and Emergency Paid Family and Medical Leave described above. These tax credits can be used against the tax imposed by Internal Revenue Code Section 3111(a), which deals with the employer portion of Social Security taxes.
Employers will be reimbursed if their costs for qualified sick leave or qualified family leave wages exceed the taxes they would owe. Specifically, employers are entitled to a refundable tax credit equal to 100% of the qualified sick leave wages employers have to pay for each calendar quarter in adherence to the Emergency Paid Sick Leave Act ($511 per day and $5,110 total). Similarly, employers are entitled to a refundable tax credit equal to 100% of the qualified family leave wages employers have to pay for each calendar quarter under the Emergency Family and Medical Leave Expansion Act ($200 per day and $10,000 total).
Coverage for Testing For COVID-19
Under this section, private health plans must provide coverage for COVID-19 diagnostic testing, including the cost of a provider, urgent care center and emergency room visits to receive testing. Coverage must be provided at no cost to the employee and any others covered under the employee’s health plan.
As mentioned above, employers should note that there may be changes made by the Senate before this legislation is finalized as well as follow-up “clean-up” legislation. Also, be aware of similar emergency legislation that covers coronavirus-related issues passed by state governments.
For further information on how you should navigate paid sick and emergency leave during this time, please contact Hackler Flynn & Associates.
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