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What is the Families First Coronavirus Response Act and How Will It Affect Your Business on April 1, 2020?
March 25, 2020
The Families First Coronavirus Response Act is a new federal employment law that was passed by Congress and signed into law by President Trump on March 18, 2020. The Act provides for two paid leaves that employers across the United States must provide to employees in response to the coronavirus epidemic. The Act goes into effect on April 1, 2020, and applies to U.S. business employers with 500 or fewer employees. It expires on December 31, 2020. The Act provides for two sources of paid leave: Emergency Paid Sick Leave Act and the Emergency Family and Medical Leave Expansion Act. Yesterday on March 24, 2020, the U.S. Department of Labor issued guidance to help workers and employers navigate the leave provisions of last week’s leave package, including a more detailed explanation of how businesses with less than 50 employees can become exempt from the new paid laws if the sick leave payments “would jeopardize the viability of the business as a going concern.”
I. Emergency Paid Sick Leave Act (EPSLA)
Covered Employees: All employees.
Covered Employers: Employers with fewer than 500 employees.
Amount of Leave:
Full time employees: up to 80 hours of paid leave
Calculated at their regular rate of pay or the minimum wage, whichever is greater.
Part-time employees: Average number of hours worked over a two-week period.
The Emergency Paid Sick Leave Act sets forth six covered reasons qualifying for paid sick leave, corresponding rates of pay for the employee, and a cap on payments to the employees depending on the reason for leave.
Employers cannot require employees to use any other leave prior to using the Emergency Paid Sick Leave.
Notice requirements: Employers must post a notice in conspicuous places on the premises of a notice to be prepared by the Secretary of Labor. The Secretary of Labor has 7 days after the enactment of the Act to make the notice publicly available.
The Act cannot not diminish the rights or benefits of employees provided under any other Federal, State, or local law, collective bargaining agreement, or existing employer policy.
Employers are not required to pay out any unused Emergency Paid Sick Leave at the end of employment.
II. Emergency Family and Medical Leave Expansion Act
Eligible employees: An employee who has been employed for at least 30 calendar days.
Covered employers: An employer with fewer than 500 employees.
Qualified reasons for paid FMLA leave: When the employee is unable to work (or telework) due to a need for leave 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 (with respect to a COVID-19 declared by a Federal, State, or local authority), the employee may take up to 12 weeks of leave.
Amount of paid leave:
First 10 days may be unpaid (but employee may use other paid leaves during this time)
Paid at no less than two-thirds of the employee’s regular rate of pay (as determined by the FLSA) and the number of hours the employee would normally be scheduled to work for up to 12 weeks.
Along with the sick leave credit, for an employee who is unable to work because of a need to care for a child, eligible employers can receive a refundable child care leave credit. The credit is equal to two-thirds of the employee’s regular pay, capped at $200 per day or $10,000 in the aggregate. Up to 10 weeks of qualifying leave can be counted towards the child care leave credit.
Reinstatement rights: Employees are entitled to reinstatement to the same position or an equivalent position, unless the employer employs fewer than 25 employees. In that case, the employer must make reasonable efforts to provide the employee with a position or an equivalent position for 1 year after the “public health emergency concludes” or 12 weeks after commencement of the leave, whichever is earlier.
Exclusions: The Secretary of Labor has authority to issue regulations for good cause to exclude certain health care providers and emergency responders, and to exempt small businesses with fewer than 50 employees if requirements would “jeopardize the viability of the business as a going concern.” Yesterday the FAQ sheet on this issue from the Department of Labor states as follows:
If providing child care-related paid sick leave and expanded family and medical leave at my business with fewer than 50 employees would jeopardize the viability of my business as a going concern, how do I take advantage of the small business exemption?
To elect this small business exemption, you should document why your business with fewer than 50 employees meets the criteria set forth by the Department, which will be addressed in more detail in forthcoming regulations.
You should not send any materials to the Department of Labor when seeking a small business exemption for paid sick leave and expanded family and medical leave.
Tax Credits: The Act provides payroll tax credits granted to employers to offset the costs associated with these employer provided mandates. To take advantage of the paid leave credits, businesses can keep and access funds they would otherwise pay to the IRS in payroll taxes. If those amounts aren’t enough to cover the cost of paid leave, employers can seek an expedited advance from the IRS by submitting a streamlined claim form that will be released next week. Eligible employers are entitled to an additional tax credit determined based on costs to maintain health insurance coverage for the eligible employee during the leave period. Covered employers qualify for dollar-for-dollar reimbursement through tax credits for all qualifying wages paid under the FFCRA. Qualifying wages are those paid to an employee who takes leave under the Act for a qualifying reason, up to the appropriate per diem and aggregate payment caps. Applicable tax credits also extend to amounts paid or incurred to maintain health insurance coverage. For more information, please see the Department of the Treasury’s website.
Employer Notice: Each covered employer must post in a conspicuous place on its premises a notice of FFCRA requirements.
Prohibitions: Employers may not discharge, discipline, or otherwise discriminate against any employee who takes paid sick leave under the FFCRA and files a complaint or institutes a proceeding under or related to the FFCRA.
Penalties and Enforcement: Employers in violation of the first two weeks’ paid sick time or unlawful termination provisions of the FFCRA will be subject to the penalties and enforcement described in Sections 16 and 17 of the Fair Labor Standards Act. 29 U.S.C. 216; 217. Employers in violation of the provisions providing for up to an additional 10 weeks of paid leave to care for a child whose school or place of care is closed (or child care provider is unavailable) are subject to the enforcement provisions of the Family and Medical Leave Act. The Department will observe a temporary period of non-enforcement for the first 30 days after the Act takes effect, so long as the employer has acted reasonably and in good faith to comply with the Act. For purposes of this non-enforcement position, “good faith” exists when violations are remedied, the employee is made whole as soon as practicable by the employer, the violations were not willful, and the Department receives a written commitment from the employer to comply with the Act in the future.
The employment law attorneys at Thakur Law Firm, APC are knowledgeable in the latest developments in employment law and Coronavirus-related issues in the workplace, and they are ready to assist you immediately and can be contacted at email@example.com or 714-772-7400.