On Wednesday, March 18, Congress passed and the President signed off on the Families First Coronavirus Response Act (FFCRA), which will be going into effect on April 1, 2020. This new law, which curiously applies only to private employers with less than 500 employees as well as some government employers, contains two significant employment-related components: (1) it provides all employees of such employers up to 10 days of paid sick leave for specified reasons related to COVID-19, and (2) it provides employees who have worked for such employers for at least 30 days up to 12 weeks of partially paid leave where employees are unable to work because they need to care for their child whose school or place of care has been closed or the childcare provider is unavailable due to a COVID-19 related reason. The law builds in provisions entitling employers to receive dollar-for-dollar payroll tax credits for the payments made. The law raises many unanswered questions, and the Secretary of Labor is supposed to be issuing further guidance to employers soon. Below is an overview of the employment-related provisions of this new law:
1. Emergency Paid Sick Leave
This portion of the new law requires employers with fewer than 500 employees to provide 10 days (up to 80 hours) of paid sick leave to employees who are unable to work (and unable to work remotely) because:
- The employee is subject to a federal, state, or local quarantine or isolation order related to COVID-19;
- The employee has been advised by a health care provider to self-quarantine due to concerns related to COVID-19;
- The employee is experiencing symptoms of COVID-19 and seeking a medical diagnosis;
- The employee is caring for an individual who is either subject to an isolation order as described in item (1) above, or caring for an individual who has been advised by a health care provider to self-quarantine due to COVID-19 concerns as described in item (2) above;
- The employee is caring for the employee’s child because the child’s school or place of care has been closed, or the childcare provider is unavailable, due to COVID-19 precautions;
- The employee is experiencing “any other substantially similar condition specified by the Secretary of Health and Human Services in consultation with the Secretaries of the Treasury and Labor.”
Calculation of Paid Sick Leave Payout: Paid sick leave used for purposes 1-3 above is paid at the employee’s regular rate of pay, subject to a cap at $511 per day and up to $5,110 total per employee. Paid sick leave used for purposes 4-6 above is paid at two-thirds the employee’s regular rate, subject to a cap at $200 per day and up to $2,000 total per employee.
The Department of Labor explains that to calculate an employee’s regular rate of pay, the employer must average the employee’s regular rate of pay over a period of up to six months prior to the date on which the employee takes leave. Commissions, tips, and piece rates are incorporated into the regular rate calculation.
Calculation of Available Paid Sick Leave Hours: Full-time employees will be entitled to 80 hours of Emergency Paid Sick Leave. Part-time employees will be entitled to a number of hours of paid sick leave that is equal to the number of hours that such employee works, on average, over a two-week period. For those part-time employees whose schedule varies or is unknown, employers may use a 6-month average to calculate their average daily hours.
Potential Limited Exemption for Businesses with Less than 50 Employees: The law gives the Secretary of Labor the authority to issue regulations exempting small businesses with fewer than 50 employees from providing the childcare-related paid leave set out in item (5) when complying with such a requirement would “jeopardize the viability of the business as a going concern.”
The Department of Labor explains that to elect this exemption, employers will be required to document why their business meets specific criteria that will be set out in forthcoming regulations.
No Length of Service Requirement: Employees will be entitled to immediate use of Paid Sick Leave under this law regardless of how long they have been employed with the employer. It is unclear whether furloughed employees will be eligible for the benefits of this law and we hope the Secretary of Labor will be providing guidance on this subject soon.
Coordination with Existing Paid Sick Leave and Paid Time Off Policies: Employers in California are already required to provide paid sick leave to employees, and many also offer other paid time off that can be used for purposes of sick leave. The Department of Labor has clarified that the Emergency Paid Sick Leave afforded by this new law is in addition to employees’ preexisting leave entitlements.
No Payout Required Upon Termination: The law does not require employers to pay out accrued, unused Emergency Paid Sick Leave upon termination.
Sunset Clause + No Carry Over: The law is written to automatically expire on December 31, 2020. Unused Emergency Paid Sick Leave does not roll over from one year to the next.
Health Care Providers and Emergency Responders Can Be Excluded: Employers may elect to exclude health care providers or emergency responders from Emergency Paid Sick Leave benefits. If you would like to discuss whether particular employees may fall under this exclusion, please contact us.
Prohibition on Requiring Employee to Find Replacement: Employers may not require employees to search for or find a replacement employee to cover the hours during which the employee is using paid sick time.
Employers Cannot Require Employees to Use Other Paid Sick Leave First: Employers may not require employees to use other paid leave available to the employee before using the paid sick time provided by this law. Practically speaking, because employers will receive a tax credit for making the payments required by this law, it makes more sense to make the payouts required by this law before any other paid leave available under your policies.
Notice Requirement: Employers must post a notice in conspicuous places on the employer’s premises informing employees of this law. The Secretary of Labor has made available this Notice to enable employers to satisfy this obligation.
The Department of Labor has instructed that where an employer’s workforce is teleworking, an employer may satisfy the notice requirement by emailing or direct mailing this notice to employees or posting this notice on an employee information internal or external website.
Anti-Discrimination Provisions + Enforcement: Employers who fail to comply with the law can be subject to claims for unpaid wages and penalties. In addition, the law makes it illegal for an employer to discriminate against employees who, among other reasons, take leave pursuant to this law or file a complaint related to this law.
2. Emergency Family and Medical Leave Expansion Act
This portion of the new law amends the Family and Medical Leave Act, which previously applied only to employers with 50 or more employees and allowed employees meeting certain eligibility criteria to take unpaid job-protected leave for specified reasons. The Emergency Family and Medical Leave Expansion Act (EFMLA) expands the FMLA by adding a new provision requiring employers with fewer than 500 employees, including those with fewer than 50 employees, to provide a job-protected leave of absence for up to 12 weeks to an employee who is unable to work (or is unable to work remotely) due to a need to care for the employee’s child whose school or place of care has been closed or the childcare provider is unavailable due to a COVID-19 related reason. To be eligible for this leave, the employee seeking leave must have been employed with the employer for at least 30 calendar days.
First 10 Days of Leave: The first 10 days of this leave may consist of unpaid leave. However, an employee may elect to use during these 10 days any accrued vacation, PTO, or sick leave, including any available Emergency Paid Sick Leave discussed above.
Subsequent Days of Leave: After the first 10 days of leave, employees taking this leave will be entitled to be paid for up to 10 weeks at two-thirds the employee’s regular rate, subject to a cap at $200 per day and up to $10,000 total per employee.
Job Protection: Employees taking this leave will be entitled to reinstatement into their same or an equivalent position consistent with existing FMLA regulations. However, employers with less than 25 employees are not required to reinstate employees who take this leave if (1) the position held by the employee when the leave commenced does not exist due to economic conditions or other changes in the employer’s operating conditions caused by the public health emergency, (2) the employer makes reasonable efforts to restore the employee to a position equivalent to the employee’s previously held position (with equivalent pay, benefits, and other terms and conditions of employment), and (3) if no such position is available at that time, the employer makes reasonable efforts during a one-year period to contact the employee if an equivalent position becomes available.
Potential Exemption for Businesses with Less than 50 Employees: The law gives the Secretary of Labor the authority to issue regulations exempting small businesses with fewer than 50 employees from the requirements of this law when complying with such requirements would “jeopardize the viability of the business as a going concern.”
The Department of Labor explains that to elect this exemption, employers will be required to document why their business meets specific criteria that will be set out in forthcoming regulations.
Health Care Providers and Emergency Responders Can Be Excluded: The Secretary of Labor is authorized to issue regulations allowing employers to exclude health care providers or emergency responders from these benefits. If you would like to discuss whether particular employees may fall under this exclusion, please contact us.
3. Tax Credits
Employers subject to this law will qualify for a dollar-for-dollar reimbursement through tax credits for all qualifying wages paid pursuant to the law. Additional information regarding the tax credits is expected to come from the IRS next week.
The Department of Labor has created a COVID-19 page containing additional informational resources about the FFCRA. If you have any questions about this new law or any other employment-related matters, please contact us.
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The above summary has been prepared for general informational purposes only and is not intended as legal advice.
Bernstein & Friedland, P.C. is a boutique employment law firm in Los Angeles specializing in wrongful termination, discrimination, harassment, retaliation, and unpaid wage and overtime matters. Please visit our website at https://laemploymentcounsel.com to learn more about us.
