Submitted by Bob Dunlevey and Nadia A. Lampton, Taft/Law
The Families First Coronavirus Response Act (the “Act”) was signed into law by President Trump on March 18, 2020, after passing in the House of Representatives on March 14, 2020, and passing in the Senate on March 18, 2020. The Act has a substantial impact to employers across the country by extending employee sick leave benefits through two components – the Emergency Family and Medical Leave Expansion Act (“E-FMLA”) and the Emergency Paid Sick Leave Act (“E-PSL”). Although the Act leaves unanswered many questions, which will likely be addressed by agency regulations in the coming days or week, employers should take measures now to prepare for implementation. Here is what employers need to know:
Emergency Family and Medical Leave Expansion Act
Effective Dates: The E-FMLA leave provisions will go into effect on April 1, 2020, and will apply to leave taken between April 1, 2020, and December 31, 2020.
Employers Impacted: E-FMLA applies to employers with fewer than 500 employees, which includes both full and part-time employees among all worksites/divisions, as well as temporary employees and employees currently on leave. E-FMLA does not apply to employers of healthcare providers and emergency responders. Employers with less than 50 employees are under the same obligations to provide benefits; however, these employers with less than 50 employees will not be subject to civil liability for failing to do so. Additionally, the E-FMLA gives authority to the Department of Labor to issue regulations that would exempt small businesses with fewer than 50 employees from the requirements of E-FMLA, but only “when the imposition of such requirements would jeopardize the viability of the business as a going concern.”
Eligible Employees: E-FMLA applies to all employees who have been employed by the employer for at least 30 calendar days before the leave is requested.
Paid Leave Benefit: E-FMLA requires employers to provide up to 12 weeks of leave to eligible employees based on a qualifying reason (less any FMLA the employee has already used during the preceding 12 months). Under E-FMLA, the type of leave is unpaid leave for the first 10 days of leave. After the first 10 days of unpaid leave, employers must pay employees two-thirds their regular rate of pay for the number of hours the employee normally would be scheduled to work over that time period. However, in no event is the employer required to pay the employee more than $200 per day, or $10,000 over the entire course of E-FMLA leave.
Qualifying Reasons for Leave: Employees are entitled to up to 12 weeks of E-FMLA (less any FMLA leave the employee has already used in the preceding 12 months) due to a “qualifying need related to a public health emergency.” Under the E-FMLA, this only includes an employee’s inability to work (or telework) due to a bona fide need for leave to care for a son or daughter under 18 years of age who was affected by school or child care closures or whose child care provider is unavailable due to a public health emergency.
If the need is foreseeable, employees must provide as much notice as is practicable under the circumstances.
Obligation to Restore Employee to Equivalent Position: Employers are obligated to restore employees who take E-FMLA to an equivalent position upon their return to work. Employers with less than 25 employees must make reasonable efforts to restore the employee to an equivalent position with equivalent pay and benefits, unless the position was eliminated due to (1) economic conditions, or (2) other changes in operating conditions affecting employment and caused by the coronavirus emergency. If an equivalent position is not available, then the employer must make reasonable efforts for one year to contact the employee regarding any equivalent positions that become available.
Penalties: Violation of the E-FMLA is subject to the same penalties and enforcement mechanisms as the FMLA.
Emergency Paid Sick Leave Act
Effective Dates: The E-PSL sick leave provisions will go into effect on April 1, 2020, and will apply to sick leave taken between April 1, 2020, and December 31, 2020.
Employers Impacted: E-PSL applies to employers with fewer than 500 employees.
Eligible Employees: E-PSL applies to all employees, regardless of how long they have been employed.
Paid Leave Benefit: E-PSL requires employers to provide full-time employees with 80 hours of paid sick time, and part-time employees with paid sick time equivalent to the number of hours the employee works on average over a 2-week time period. For variable-hour employees, the employer must use the number of hours worked by the employee in the 6-month period preceding the leave. If the employee has worked for the employer for less than 6 months, then the employer must use the reasonable expectation of the average number of hours that the employee would be anticipated to work. Paid leave under E-PSL is in addition to, not instead of, any existing paid leave the employee has accrued as of the date of the Act (although employers may not require employees to use existing accrued leave). Paid leave under E-PSL may also be used during the first 14 days of unpaid leave under the E-FMLA.
Qualifying Reasons for Leave: Employees are entitled to use E-PSL for the following reasons:
The employee is subject to a government-mandated quarantine or isolation order related to COVID-19;
The employee has been advised by a healthcare provider to self-quarantine due to COVID-19;
The employee is experiencing COVID-19 symptoms and is seeking a medical diagnosis;
The employee is caring for another individual covered under Nos. 1 or 2, above;
The employee is caring for a child whose school has been closed or the child care provider is unavailable due to COVID-19; or
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.
Benefit Calculation: Pay is calculated differently depending on the reason for the leave. If the employee takes leave related to reasons (1), (2), or (3) above, then the employee will be paid their regular hourly rate (or minimum wage, if higher) up to $511/day or $5,110 in the aggregate (over a two-week period). If the employee takes leave related to reasons (4), (5), or (6) above, then the employee will be paid two-thirds their regular rate of pay (or minimum wage, if higher) up to $200/day or $2,000 in the aggregate.
Employer Prohibitions: Employers are prohibited from disciplining, discharging, and discriminating or retaliating against employees who take leave under the E-PSL or who file a complaint or institute a proceeding related to the use of E-PSL.
Notice Posting: Similar to other employee rights, such as the FMLA, employers are required to post a notice about the E-PSL Act (which will be provided by the Secretary of Labor) in a conspicuous location where similar notices are posted.
Penalties: Violation of the E-PSL will result in a finding that the employer failed to pay minimum wages in violation of the Fair Labor Standards Act. Violations will be subject to the same penalties and enforcement mechanisms as the Fair Labor Standards Act.
Signatories to Multi-Employer Collective Bargaining Agreements
Employers who are signatories to a multi-employer collective bargaining agreement (“CBA”) may fulfill their obligations to provide benefits under the E-FMLA and E-PSL by making contributions to a multi-employer fund or plan if such mechanisms exist under the applicable CBA. However, if the CBA does not provide for such funds or plans, then those employers remain obligated to separately provide the benefits under the E-FMLA and E-PSL.
Tax Credits
The Act provides dollar-for-dollar reimbursement to employers through tax credits for qualifying wages paid for sick leave covered by both the E-FMLA and the E-PSL. The amount of the tax credit is capped as follows:
· $511 wages/day per employee for leave taken on behalf of the employee;
· $200 wages/day per employee for leave taken to care for others or a child.
The tax credits also extend to amounts paid or incurred by the employer to maintain health insurance coverage. According to a joint press release from the Treasury, IRS, and DOL, guidance will be issued in the coming days that will allow employers to retain an amount of payroll taxes equal to the amount of qualifying sick and child care leave that they would other have to deposit with the IRS. If these payroll taxes are insufficient to cover the costs associated with qualified sick and child care leave payments, then employers will be able to request an accelerated payment from the IRS. Details for this new expedited procedure will also be announced by IRS in the coming days.
Non-Enforcement Period
The Wage & Hour Division of the Department of Labor has issued a temporary non-enforcement order related to the E-FMLA and E-PSL that provides for a non-enforcement period between March 18, 2020, through April 17, 2020. During this time period, DOL will not bring enforcement actions against any employer for violating the new E-FMLA and new E-PSL provisions, so long as the following conditions are met:
(1) The employer has acted “reasonably” and “in good faith” in an effort to comply with the Act;
(2) The employer remedies any violations, which includes making affected employees whole as soon as practicable under the circumstances;
(3) The employer’s violations of the Act were not “willful” violations; and
(4) The employer provides to DOL written commitment that it will comply with the Act in the future.
If the above conditions are not satisfied, then DOL will exercise its enforcement authority related to the new E-FMLA and E-PSL provisions. This non-enforcement period ends on April 17, 2020.
For more specific information and to request a copy of our recent Coronavirus Q&A, contact Bob Dunlevey, Board Certified Specialist in Labor and Employment Law, at rdunlevey@taftlaw.com or (937) 641-1743 or Nadia A. Lampton at nlampton@taftlaw.com or (937) 641-2055.
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