In the early morning hours of March 14, 2020, the U.S. House of Representatives overwhelmingly passed H.R. 6201, the Families First Coronavirus Response Act (the Act), which provides various forms of relief to those affected by COVID-19. As it pertains to employers and their workforces, the bill expands the Family and Medical Leave Act (FMLA), creating a new form of mostly paid job-protected leave for affected employees. It also creates a new form of immediately available, short-term paid sick leave. These provisions are to take effect within the next 15 days after it is signed by the President. Employers should contact their counsel immediately to revise their policies and ensure compliance with all new provisions.
While we are providing a detailed summary of the House-passed bill, which appears to have the support of the Senate and the President, companies should continue to check for any updates we provide for changes made before it is enacted. For example, this final version of the House bill differs significantly from the version introduced on March 11, 2020, with respect to the size of covered employers. As it now stands, employers with 500 or more employees are exempted from its requirements. This is a departure from the other provisions of the FMLA, which generally apply to employers with 50 or more employees.
Relevant provisions are as follows:
NEW JOB-PROTECTED LEAVE UNDER THE FMLA
HOW DOES THE BILL CHANGE THE FMLA?
The bill includes the Emergency Family and Medical Leave Expansion Act (FMLA Expansion Act), which expands and revises the FMLA, and provides 12 weeks of Public Health Emergency Leave to employees of any employers of 500 or fewer employees, as well as government staffers, whether or not such employer was previously subject to the FMLA. Companies with 500 or more employees should continue to check for updates until the final version of the bill is passed. Notably, the 500-employee cap was included later in the process, and has already been the subject of some public backlash.
Employees must be afforded leave due to quarantine or illness if the employee (1) is exposed to the coronavirus, (2) exhibits symptoms of the coronavirus, (3) must care for a family member who has been exposed or exhibits symptoms of the coronavirus, or (4) must care for a son or daughter under 18 years of age if school/daycare, or other provider, has been closed due to a declared public health emergency by federal, state or local authorities.
Importantly, the bill does not address absences or leave for the type of “social distancing” that is currently being recommended by many public health officials.
ARE EMPLOYEES WHO HAVE BEEN WITH THE COMPANY FOR LESS THAN ONE YEAR ELIGIBLE?
Yes. Unlike the rest of the FMLA, this expansion covers employees who have worked 30 days or more for an employer. Eligibility continues for one year from the date of enactment.
HOW MUCH NOTICE DO EMPLOYEES NEED TO PROVIDE?
When the need for leave is foreseeable, employees must provide as much notice as practicable.
WHO IS COVERED BY THE ‘CARE’ PROVISION OF THIS ACT?
The care provision of the bill covers a greater scope of employees than those covered by the regular FMLA. Under the FMLA Expansion Act, family members include a parent, spouse, son/daughter under 18, or an individual who is pregnant, disabled, elderly, or a senior citizen, and is a son/daughter, next of kin, grandparent or grandchild of the employee.
IS THIS LEAVE PAID?
Partially. The first 14 days of such leave may be unpaid; however, thereafter, paid leave will be available at two-thirds of the employee’s regular rate for hours the employee would normally be scheduled to work, or if the schedule is varied, based on the average number of hours the employee would work over the six months preceding the date of leave.
WHAT IF I AM A SMALL BUSINESS OR I CANNOT AFFORD TO COMPLY WITH THIS?
Even small businesses of 25 employees or less have to provide job protection for their employees unless (1) the position did not exist at the time the leave commenced due to economic conditions or other changes caused by the public health emergency, and (2) the employer makes efforts to restore the employee to the position and to contact the employee if such position becomes available for one year after the date such leave is needed.
The bill also authorizes the Secretary of Labor to issue regulations to exempt several groups of businesses. First, certain healthcare providers and emergency first responders may be excluded from the definition of “eligible employee.” Second, small businesses with fewer than 50 employees, and whose viability would be jeopardized as a going concern if required to provide this leave, may be exempted from the leave requirements of the FMLA Expansion Act.
EMERGENCY SHORT-TERM PAID SICK LEAVE
WHAT DOES THE EMERGENCY PAID SICK LEAVE ACT PROVIDE?
The Emergency Paid Sick Leave Act establishes the immediate availability of two weeks of paid sick leave—80 hours for full-time employees, or for part-time employees, based on average number of hours worked—for reasons related to COVID-19. It also applies to all employers with fewer than 500 employees. Specifically, pay must be provided for leave related to (1) the diagnosis, care, self-isolation, or quarantine related to coronavirus exposure or symptoms, or (2) assisting an employee’s family member who is self-isolating because such family member has been diagnosed with the coronavirus, is experiencing symptoms and needs to obtain medical care/diagnosis or preventive care, or has been quarantined, or (3) caring for a child if the school, place of care or child care provider of such child is unavailable due to a public health emergency. Employers subject to a multi-employer collective bargaining agreements (CBA) must also comply with the requirements of the Act.
As set forth above, family member includes parent, spouse, child, a domestic partner granted legal recognition by any state or local government, son/daughter under age 18, or an individual who is pregnant, disabled, elderly, or a senior citizen, and is a son/daughter, next of kin, grandparent or grandchild, of the employee.
WHAT IF THE COMPANY HAS EXISTING PAID TIME OFF OR SICK LEAVE?
Employers that have policies that comply with existing sick leave laws must still provide this separate form of leave, in addition to any policies already in existence. Existing paid sick leave policies will not count toward the requirements of this Emergency Paid Sick Leave Act. An employer may not change existing policies after the date of this Act to avoid the obligations of paid sick leave, or require that employees use other forms of paid time off (such as vacation) prior to using this form of sick leave.
DOES THE COMPANY HAVE TO PAY ALL EMPLOYEES THE SAME UNDER THIS ACT?
No. Paid sick leave is at two-thirds of the employee’s regular rate if the leave is provided (1) to care for or assist a family member, or (2) to care for the child of such employee if the school/place of care or provider is closed/unavailable due to the public health emergency.
WHAT IF THE EMPLOYEES HAVE NOT WORKED AT THE COMPANY FOR 30, 60 or 90 DAYS?
Under the bill, there is no employment duration required, and employers must provide this leave immediately to all employees. It is not a benefit subject to accrual like many sick leave policies currently provide.
WHAT WILL HAPPEN IF THE COMPANY DOES NOT COMPLY?
A violation of the Act will subject the employer to all the penalties available under the Fair Labor Standards Act (FLSA) for unpaid minimum wages, including liquidated damages. Retaliation for using leave under the Act is considered retaliation in violation of the FLSA.
WHAT IF I CANNOT AFFORD COMPLIANCE?
Employers should consult with counsel on options. There are no exceptions to the paid sick leave provision for small businesses. Prior to the date of the enactment, employers can make changes to their current policies.
HOW IS THIS PAID SICK LEAVE BENEFIT DIFFERENT FROM THE PAID SICK LEAVE UNDER THE FMLA EXPANSION ACT?
The primary difference is that Emergency Paid Sick Leave Act applies to all employees immediately regardless of employment duration. It also has no unpaid period, and may fill the gap of the two weeks of unpaid leave for qualifying employees under the FMLA Expansion Act.
WHAT DOES THE COMPANY NEED TO DO NOW?
Not later than seven days following enactment of this bill, the Secretary of Labor is required to issue a model notice which must be posted at worksites. It will also issue guidance on the calculation of emergency paid sick leave no later than 15 days from the enactment. The leave requirements under this Act will expire on December 31, 2020.
TAX CREDIT ASSISTANCE FOR EMPLOYERS
Employers will be entitled to a payroll tax credit for certain wages paid to employees for mandated paid emergency or sick leave, subject to the following limits:
- For FMLA Expansion Act leave, employers will be able to claim a credit for wages paid up to $200 per employee per day, but no more than $10,000 total per employee.
- For Emergency Paid Sick Leave, employers will be able to claim a credit for wages paid up to $200 per employee per day for all employees who are taking leave for family care, including leave resulting from the closure of schools due to COVID-19, and $511 per employee per day for all employees taking leave for prevention, care, or treatment of COVID-19/coronavirus. These credits are limited to up to ten days per employee.
The employer will be able to reduce its payroll tax obligations up to the maximums provided above, but the amount of the credit will be taxable income for the employer.
UNEMPLOYMENT INSURANCE
The bill also include the Emergency Unemployment Insurance Stabilization and Access Act of 2020, which provides $1 billion for emergency funds to state governments to expand the availability of unemployment insurance (“UI”) for employees affected by the coronavirus outbreak. Among other things, this bill authorizes states to temporarily modify requirements for UI, including waiting periods, work search requirements, as well as employer experience ratings as a result of UI claims filed in response to the spread of COVID-19.
Employers should contact their counsel immediately to revise their policies and ensure compliance with all new provisions of this bill immediately upon enactment.
For additional assistance with compliance and concerns regarding the response to COVID-19, please reach out to a member of the Employment and Labor team at Manatt.
For a broader analysis of all provisions of the bill from our Government and Regulatory Practice Group, check here.