COVID-19: Expect New Employer Obligations

By Ann Sullivan

(Update 4/26/20: For more information, check out the DOL FAQ on these provisions here: https://www.dol.gov/agencies/whd/pandemic/ffcra-questions)

Legislation drafted in a hurry, like the Families First Coronavirus Response Act negotiated by Speaker Nancy Pelosi and Secretary of the Treasury Steven Mnuchin, can be confusing.  We are concentrating only on the employer/employee provisions in this comprehensive coronavirus response package. The President signed this bill into law on March 18.

There are two different employer requirements: emergency sick leave and emergency family leave.  Let’s talk about sick leave first.  Every employer under 500 employees is required to offer two weeks of paid sick leave to employees who are sick from the coronavirus, taking care of someone who is sick with the virus or are providing childcare due to cancelled school/daycare – without fear of losing their jobs.  Full time employees who are sick are allotted 80 hours of sick leave and part time employees/hourly workers are given the typical hours worked in a two-week period. Employers are required to pay employees their normal wages or the minimum wage at the federal/state/local level, whichever is the higher.  Employees who are taking care of others are entitled to two-thirds of their regular earnings.  As I read the current bill, these two weeks are in addition to an employer’s existing sick leave policy.  The bill allows the Secretary of Labor to issue regulations exempting businesses with fewer than 50 employees from the paid leave requirement if it would jeopardize the viability of the business. 

With respect to emergency family leave, which is an expansion of the Family and Medical Leave Act (FMLA), the bill expands FMLA availability to employers under 50 employees.  As context, the current law requires 12 weeks of FMLA for employees of companies above 50 employees.  In order to make FMLA applicable to dealing with the coronavirus, the bill expands the definition of who is eligible for FMLA by adding employees who are unable to work because they are providing childcare due to closed schools/daycare centers.  This change is effective through December 31, 2020.  Requirements for employers include paying employees two-thirds pay for a little more than 10 weeks.  The first 10 days of the 12-week period do not need to be paid.  Employers with less than 25 employees would be exempt from requirements to restore an employee's original position if it no longer exists due to changes in either economic conditions or a change in operations as a result of this public health emergency. The Labor Secretary is allowed to issue similar regulations as the family leave exemptions regarding businesses with fewer than 50 employees. In fact, DOL is looking for feedback from employers on compliance for these new rules through March 29.

So, how will this be paid for?  Employers offering this emergency sick leave and family leave will be able to get 100% payroll tax credit for these additional costs on a quarterly basis.  Employers may deduct up to $511 per day for sick employees or $200 per day for employees who are taking care of others.  The tax credit for family leave is up to $200 per day, not to exceed $10,000.  For the self-employed, these credits will be applied against the self-employment tax.  

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Employer Obligations in H.R. 6201: Families First Coronavirus Response Act

Emergency Paid Sick Leave:

• Requires private employers with fewer than 500 employees and all public employers to provide 80 hours of paid leave for full-time employees and part time employees/hourly workers are given the typical hours worked in a two-week period without fear of losing their job. 
• Reasons for this leave can be: 
• Comply with a federal, state, or local quarantine or isolation order.
• Self-quarantine per a health-care provider’s advice.
• Obtain a medical diagnosis for coronavirus.
• Care for an individual who is in quarantine or for a child whose school or day care has closed due to coronavirus.
• Bill caps per employee costs are $5,110 for an employee who is taking the leave for their own illness or $2,000 for employees caring for another individual or child.  
• Leave mandate sunsets on December 31, 2020 and commences 15 days after the bill is signed into law. 
• Allows the Secretary of Labor to issue regulations exempting businesses with fewer than 50 employees from the paid leave requirement if it would jeopardize the viability of the business.
• An employer cannot require a worker to use any other available paid leave before using the sick time or require a worker to find a replacement to cover their hours.

Emergency Paid Family Leave: 

• Requires all employers with fewer than 500 employees to provide to up to 12-weeks of job-protected leave under FMLA for employees who are unable to work or telework because they have to care for a child younger than 18 whose school or day care has closed because of the coronavirus.
• First 10 days of leave could be unpaid, though a worker could choose to use accrued vacation days, personal leave, or other available paid leave for unpaid time off.
• Following the first 10 days, workers would receive a benefit from their employers that will be at least two-thirds of their normal pay rate.
• Per employee cap on costs for the leave are set at $200 per day or $10,000 total. 
• Leave mandate sunsets on December 31, 2020 and commences 15 days after the bill is signed into law. 
• Employers with less than 25 employees would be exempt from requirements to restore an employee's original position if it no longer exists due to changes in either economic conditions or a change in operations as a result of this public health emergency.
• Allows the Secretary of Labor to issue regulations exempting businesses with fewer than 50 employees from the paid leave requirement if it would jeopardize the viability of the business. 

Employer Tax Credits:

• Employers offering this emergency sick leave and family leave will be able to get 100% payroll tax credit for these additional costs on a quarterly basis. 
• Emergency sick leave credit:
• For each employee the credit would be for wages of as much as $511 per day while the employee is receiving paid sick leave because they are quarantined, or $200 if they are caring for someone else who is quarantined or their child’s school is closed.
• Emergency family leave credit:
• As much as $200 per day while the employee is receiving paid leave, or a total of $10,000.
• The credit would be in effect for wages through the end of 2020.
• For self-employed, there is a similar credit applied against the self-employment tax.