Congress Enacts Families First Corona Virus Response Act

March 20, 2020

In response to the devastating economic impact of the COVID-19 crisis, on March 18, 2020, Congress passed the Families First Coronavirus Response Act (“FFCRA”) that will become effective on April 2, 2020. The FFCRA applies to all private employers with fewer than 500 employees and to all public employers. In addition to various provisions regarding health insurance, the FFCRA contains two separate yet interrelated provisions critically important to small business, the first being the Emergency Family and Medical Leave Expansion Act which amends the FMLA, and the second being the Emergency Paid Sick Leave Act (“Sick Leave Act”) which mandates paid sick leave for certain COVID-19 related absences. Each will be addressed in turn, but the overriding change is that employers will be required to provide up to two weeks of paid sick leave, and provide up to 12 weeks of paid FMLA leave for workers required to care for children whose school has closed or who have otherwise been left without daycare.

FMLA

Prior to passage of the FFCRA, the FMLA allowed eligible employees to take a total of 12 weeks of unpaid leave if they suffered from their own serious health condition or had to care for an immediate family member suffering from a serious health condition. To address the millions of workers affected by prolonged school closures, the FFCRA amended the FMLA to grant FMLA protected leave to employees unable to work (or telework) due to the need to care for a minor child if the child’s school or place of care has been closed, or the child’s daycare provider is unavailable due to a public health emergency. Public health emergency under the FFCRA means an emergency with respect to COVID-19. A “child care provider” is defined as a provider who receives compensation for providing child care on a regular basis. Therefore, if an employee’s relative was watching the employee’s young child at no charge and that relative is no longer available, that employee is not protected by the FFCRA. However, the overwhelming majority of affected employees will have new FMLA protections. Further, this provision of the FMLA applies to employees who have worked for their employer for at least 30 days, relaxing the FMLA’s regular restriction that allows leave only if an employee has worked for more than 12 months.

Ordinarily the FMLA allows only unpaid leave (unless the employee simultaneously uses available paid time off). Importantly, the FFCRA’s amendment to the FMLA provides for a period of paid leave. The first 10 days of leave are unpaid, following which the remaining leave shall be paid at a rate of two-thirds of the employee’s regular rate of pay. However, the employee can also elect to substitute accrued paid time off for the initial ten days of unpaid leave (*see below regarding the Sick Leave Act), and the pay is capped at $200 per day and/or $10,000 in the aggregate. In the case of an employee whose schedule varies week to week, the number of hours for which the employee’s regular rate is calculated shall be the average number of hours that the employee was scheduled per day over the previous six month period.

The FMLA requires that an employee who takes leave be restored to the employee’s same or equivalent position upon return. The FFCRA relaxes that provision with regard to employers that employ less than 25 employees under certain conditions. If because of the public health emergency the employee’s position no longer exists due to a change in economic conditions, or other change in operations, the employee need not be restored as long as the employer makes reasonable efforts to restore the employee. If that is not possible, the employer must contact the employee if a position becomes available within the next year.

The FMLA amendments will not apply to all workers. Congress has authorized the Department of Labor to issue regulations that would exclude certain health care providers and emergency responders from its provisions. The Department of Labor may also issue regulations that would exempt a business with fewer than 50 employees if allowing an employee’s leave would “jeopardize the viability of the business as a going concern.” As of now, there are no regulations to provide guidance in this regard.

Lastly, whereas the FMLA allows employees who have been deprived of their FMLA rights or have suffered retaliation for exercising their FMLA rights with a private cause of action against their employers, employers with less than 50 employees will not be subject to a private cause of action for a violation of these new provisions. Nonetheless, the Department of Labor can still bring an enforcement action so employers cannot violate the law with impunity.

Emergency Paid Sick Leave Act

Under Federal law, and in most jurisdictions, employers are not required to provide paid sick leave to their employees. The FFCRA has changed that as far as COVID-19 is concerned. The Sick Leave Act requires that employers provide their employees with paid sick time if the employee is unable to work (or telework) because:

  1. the employee is subject to a federal, state or local quarantine or isolation order related to COVID-19;
  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 a quarantine or isolation order or has been advised to self-quarantine;
  5. the employee is caring for a child whose school has closed or whose childcare provider is unavailable due to COVID-19 precautions (like the amendments to the FMLA, the Secretary of Labor is authorized to issue regulations that would exempt small businesses with fewer than 50 employees from the paid sick leave requirements for persons taking leave to care for a child home from school if granting paid sick leave would jeopardize the viability of the business as a going concern) ; or
  6. the employee is experiencing any other substantially similar condition specified by the Secretary of Health and Human Services.

 

Like the FMLA amendments, an employer of an employee who is a health care provider or an emergency responder may exclude such an employee from application of the Sick Leave Act.

Full-time employees who are eligible for leave under the Sick Leave Act are entitled to 80 hours of paid leave, and part-time employees are entitled to paid leave equaling the number of hours they would work on average over a two week period. The Sick Leave Act caps the amount of sick leave an employer must pay at $511 per day ($5,110 in the aggregate) for an employee’s use of sick leave for the employee’s own COVID-19 health issues under reasons 1-3 above, or $200 per day ($2,000 in the aggregate) if the employee’s use of sick leave is for reasons 4-6 above. An employee who takes sick leave due to their own COVID-19 condition is entitled to full pay (subject to the aforementioned cap), whereas an employee who uses paid sick time for any use described in paragraphs 4-6 above must be compensated at the rate of two-thirds the employee’s regular rate of pay (subject to the cap). Paid sick time under the Sick Leave Act is available for immediate use by the employee no matter how long the employee has worked for the employer. Moreover, an employer may not require the employee to use other paid sick leave provided by the employer before the employee uses paid sick time made available under the Sick Leave Act. Also, employers may not require as a condition of providing paid sick leave that the employee find a replacement.

The Secretary of Labor will soon publish a model notice advising of employee rights under the Sick Leave Act, and employers are required to post that notice at their place of employment. Employers who violate the Sick Leave Act by refusing to provide paid sick leave, or by unlawfully terminating employees who take paid sick leave, will be considered in violation of the Fair Labor Standards Act and subject to penalties including payment of wages, liquidated damages and attorneys’ fees.

There is an intended interplay between the FMLA amendments and Sick Leave Act provisions. Most notably, although the amendments to the FMLA indicate that the first ten days of leave is to be unpaid, the Sick Leave Act requires that those first two weeks be paid. Therefore, the FFCRA mandates that employers pay employees who are required to miss work in order to care for a child home from school, or otherwise without daycare due to COVID-19, at a rate of two-thirds their regular rate of pay subject to the statutory caps. Both sections of the FFCRA allow for the Department of Labor to issue regulations that would provide some relief for small businesses, but until such regulations are promulgated, it is unknown what a small business would be required to show in order to be excused from the obligations otherwise imposed by this new law. The FFCRA does provide some measure of relief to private employers inasmuch as it allows employers to take a tax credit equal to 100% of the FFCRA mandated paid leave wages. The tax credits are not available to public employers.

The FFCRA was clearly enacted on an emergency basis and leaves many questions to be answered. We will update this alert as new information comes out or as new regulations are enacted. The employment law group at HRMM&L stands by ready to assist its business clients navigate through these troubled waters.

What Employers Should Do Now:

  1. Review and possibly revise current paid time off policies
  2. Anticipate employee leave requests and, if need be, take appropriate action before effective date of legislation

The FFCRA was clearly enacted on an emergency basis and leaves many questions to be answered. We will update this alert as new information comes out or as new regulations are enacted. The employment law group at HRMM&L stands by ready to assist its business clients navigate through these troubled waters. Please contact Ethan O’Shea with any questions at (215) 661-0400 or EOShea@HRMML.com

Questions Every Business Must Ask

Q. Has your business recently reviewed its legal structure to determine whether it is set up in the most advantageous manner for legal and tax purposes, considering recent developments and changes in the law?

Q. Do the owners of your business have a current, updated buy-sell agreement which controls how ownership interests in the business are to be transferred in the event of an owner’s death, disability or termination of employment?

Q. Have the owners of your business developed a succession plan to define how ownership and authority will transition upon the death or retirement of the present owners?

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