What Employers Need to Know about the Families First Coronavirus Response Act

Last week, the President signed into law the Families First Coronavirus Response Act (“FFCRA”), the first of what promises to be a number of legislative enactments addressing the current pandemic.  The FFCRA contains three specific laws that small to mid-sized employers should review: Public Health Emergency Leave, the Emergency Paid Sick Leave Act, and the Tax Credits for Paid Sick and Paid Family and Medical Leave.  According to guidance published by the Department of Labor (“DOL”) on March 24, 2020, the enactment period for these laws will run from April 1 to December 31, 2020.

As with most statutory enactments, there are open questions concerning details of enforcement that will, hopefully, be cleared up by new agency regulations and guidance over the coming weeks.  The DOL has indicated that it will issue a “temporary non-enforcement policy” that will give employers until April 17, 2020 to come into compliance with the FFCRA.  The DOL will be looking at whether the employer acted “reasonably and in good faith” in complying with the Act.

The following is a brief summary of the relevant portions of the FFCRA.  Employers with specific questions or concerns should contact their legal counsel.

Public Health Emergency Leave

The Public Health Emergency Leave amends the Family Medical Leave Act (“FMLA”) to create a new leave benefit for employees to ensure that parents can care for their children. Unlike the FMLA, which applies to all employers with more than 50 employees, the Public Health Emergency Leave applies to all employers with less than 500 employees.  While FMLA covers only employees who have worked at least 1,250 hours over the previous 12 months, all employees who have worked at least 30 days for their employer are eligible to take Public Health Emergency Leave.  In order to qualify for this leave, the employee must be “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.” 

Employees who qualify for Public Health Emergency Leave do not get any more time for leave than was already allowed under FMLA (except those who previously were not covered by the law).  The first ten days of any Public Health Emergency Leave are unpaid.  Employees can opt to use any available paid leave, such as sick leave or vacation leave, during that period, but their employers cannot force them to do so.  After ten days, the Public Health Emergency Leave Act requires that the employer pay at least two-thirds of the employee’s salary at his or her regular rate of pay for the remaining 10 weeks of leave allowed under the FMLA.  However, the employer does not have to pay the employee more than $200 a day or $10,000 altogether. 

The employer is required to restore any employee returning from Public Health Emergency Leave to his or her position.  The FFCRA does make an exception for employers with less than 25 employees if they meet one of the following criteria:

1. The position held by the employee when the leave commenced does not exist due to economic conditions or other changes in operating conditions of the employer that affect employment and are caused by a public health emergency during the period of leave.
2. The employer makes reasonable efforts to restore the employee to a position equivalent to the position the employee held when the leave commenced, with equivalent employment benefits, pay, and other terms and conditions of employment.
3. If the reasonable efforts of the employer fail, the employer must make reasonable efforts to contact the employee if an equivalent position becomes available for one year following the ‎conclusion of the coronavirus-related emergency or the conclusion of the 12-weeks of ‎coronavirus-related leave taken by the employee, whichever is earlier.‎

The Act also gives the Secretary of Labor the authority to create regulations excluding health care providers and emergency responders and exempting small businesses with fewer than 50 employees “when the imposition of such requirements would jeopardize the viability of the business as a going concern.”

The Emergency Paid Sick Leave Act

The Emergency Paid Sick Leave Act (the “Paid Sick Leave Act”) provides that an employee is entitled to paid sick leave for the following circumstances:

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 healthcare provider to self-quarantine because of ‎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 an order as described in (1) or has been advised as described in (2).‎
5. The employee is caring for a son or daughter of such employee if the school or place of ‎care of the son or daughter has been closed, or the child care provider of such son or ‎daughter is unavailable, because of COVID-19 precautions.‎
6. The employee is experiencing any other substantially similar condition specified by the ‎Secretary of Health and Human Services.

Full-time workers who qualify are entitled to receive 80 hours of paid leave.  Part-time workers are entitled to paid leave for the average number of hours they normally work in a two-week period.  In the circumstances described in 1-3, above, employees must be paid their full compensation up to $511 a day and $5,110 in total.  Those on leave for the circumstances descried in 4-5, above, must be paid two-thirds of their regular rate of pay up to $200 a day and $2,000 in total. 

This new leave allotment is in addition to any rights or benefits the employee may have under other laws or employer policies.  This leave is available to all employees, no matter how long they have been with the organization.  An employer cannot require an employee to use PTO or other leave until the employee has exhausted leave under the Paid Sick Leave Act.  

The Sick Leave Act prohibits any employer from discharging, disciplining, or in any other manner ‎discriminating against any employee who takes leave allowed by the act, files a complaint, causes a proceeding to be instituted under the act, or provides testimony in any such proceeding.  Any employer who willfully violates this prohibition is deemed in ‎violation of the FLSA and is subject to penalties.

The Tax Credits for Paid Sick Leave and Paid Family and Medical Leave

The Tax Credits for Paid Sick and Paid Family and Medical Leave provide a dollar-for-dollar credit for any payments made by employers to eligible employees who take leave under the FFCRA.  The IRS has announced that it will issue guidance this week, which may provide further information. 

An employer that pays qualifying sick or child care leave under the FFCRA will be able to retain an amount of the payroll taxes equal to the amount of qualifying sick and child care leave that it paid, rather than deposit them with the IRS.  The payroll taxes that are available for retention include (i) withheld federal income taxes, (ii) the employee share of Social Security and Medicare taxes, and (iii) the employer share of Social Security and Medicare taxes with respect to all employees.  Employers may also obtain an additional tax credit for the costs to maintain health insurance coverage for the eligible employee during the leave period.

If there are insufficient payroll taxes to cover the cost of qualified sick and child care leave paid, the employer can file a request for an accelerated payment of tax credits from the IRS. The IRS expects to process these requests in two weeks or less.

Jeff Wilson is a Pender & Coward attorney focusing his practice on employment law matters, including counseling and business litigation.