On March 18, 2020, the President signed into law H.R. 6201, incorporating substantial revisions to the Families First Coronavirus Response Act, which was originally passed by the House on March 14 and revised on March 16. On March 15, we provided a detailed summary of the original House-passed bill. We now provide this update to clarify changes made since then to this final version that was enacted late yesterday, along with a detailed question and answer section that describes its important provisions. The new law goes into effect on April 2, 2020.
EXECUTIVE SUMMARY OF CHANGES
As per our prior update, the final version of the Families First Coronavirus Response Act includes two new forms of leave: (1) 12 weeks of mostly paid leave for employees (the FMLA Expansion Act), and (2) 14 days of Emergency Paid Sick Leave. Both types of leave continue to apply only to companies with 500 or fewer employees, exempting large employers. The major changes between the bill signed by the President and the prior version passed by the House are as follows:
1. Qualifying Reasons for Leave.
- FMLA Expansion Act:
- This enacted bill substantially reduces the qualifying reasons for leave. Now, the leave is limited to caring for a son or daughter because of COVID-19-related school closures or an unavailable child care provider.
- Emergency Paid Sick Leave:
- This enacted bill retains all of the original reasons (described below) and adds a new qualifying reason for emergency paid sick leave: when a person is unable to work or telework due to COVID-19 or a condition determined by the Secretary of Labor to be substantially similar.
- The benefit is also now available to employees who must care for any “individual”—which is substantially broader than the prior version, which was limited to family members.
2. Paid Leave Amounts. This enacted bill caps benefits to employees as described below. These benefit caps are a change from the prior version of the bill, which included monetary limitations on the tax credits but not on the actual benefit payments to employees.
3. Employers With 50 or Fewer Employees and Healthcare Providers/First Responders. The Secretary of Labor is given the power to issue regulations to exempt these groups from the requirements of both forms of leave. In the prior version of the bill, this power was limited to the FMLA Expansion Act leave, but not the Emergency Paid Sick Leave. Now, the Secretary may exempt these groups from both forms of leave. Until such regulations are finalized, however, employers of 25 or fewer employees may still avoid the 12-week leave requirements of the FMLA Expansion Act if they meet certain criteria, described below.
Below is an updated set of frequently asked questions pertaining to the final enacted bill:
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 Family and Medical Leave Act (FMLA) and provides 12 weeks of Public Health Emergency Leave to employees of any employers (government or private) of 500 or fewer employees, whether or not such employer was previously subject to the FMLA.
Due to a public health emergency, eligible employees may take leave under the FMLA Expansion Act when they are unable to work (or telework) due to a need to care for a son or daughter under the age of 18 if the son or daughter’s school, childcare provider, or place of care has been closed or is unavailable due to a declared local, state or federal emergency with respect to COVID-19. The bill retains the definitions of “son” and “daughter” under the FMLA to include a biological, adopted, or foster child; a stepchild; a legal ward; or a child of a person standing in loco parentis who is under 18 years of age, or is 18 years of age or older and incapable of self-care due to a physical or mental disability.
Importantly, this bill removes the requirement of leave for a large class of circumstances that were covered under the prior version—namely, when an employee requires leave due to quarantine or illness, when an employee (1) is exposed to coronavirus, (2) exhibits symptoms of coronavirus, or (3) must care for a family member who has been exposed or exhibits symptoms of coronavirus. Moreover, the bill does not address absences or leave for the type of “social distancing” that is currently being recommended by many public health officials and being mandated in some jurisdictions.
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 or more days for an employer. Eligibility continues until December 31, 2020.
HOW MUCH NOTICE DO EMPLOYEES NEED TO PROVIDE?
When the need for leave is foreseeable, employees must provide as much notice as is practicable.
IS THIS LEAVE PAID?
Partially. The first 10 days of such leave may be unpaid (14 days under the prior iteration of this bill); 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.
This revision further limits payments to no more than $200 per employee per day or a maximum of $10,000 per employee.
WHAT IF I AM A SMALL BUSINESS OR I CANNOT AFFORD TO COMPLY WITH THIS?
Even small businesses of 25 or fewer employees 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 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.” Notably, this enacted iteration of the bill also authorizes the employer of such individuals to opt out of this expansion. Second, small businesses with 50 or fewer employees whose viability as a going concern would be jeopardized 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 based on the average number of hours worked for part-time employees—when the employee is unable to work (or telework) due to a need for leave related to COVID-19. It also applies to all employers with 500 or fewer employees. Specifically, pay must be provided for leave related to (1) the diagnosis, care and/or self-quarantine ordered by a healthcare provider or quarantine order related to coronavirus exposure or symptoms; or (2) to assist an individual who is self-isolating because such individual has been diagnosed with coronavirus, is experiencing symptoms and needs to obtain medical care/diagnosis or preventive care, or has been quarantined; (3) to care for a son or daughter whose school, place of care or child care provider is unavailable due to a public health emergency; or (4) the employee is experiencing any conditions substantially similar to COVID-19, as those conditions are determined by the secretaries of Health and Human Services, the Treasury and Labor. Employers subject to a multiemployer collective bargaining agreement must also comply with the requirements of the act.
WHAT IF THE COMPANY HAS EXISTING PAID TIME OFF OR SICK LEAVE?
Under the enacted iteration of the bill, employers may not require an employee to use other paid leave before the employee uses paid sick time under this bill. The prior iteration of the bill made clear that employers with policies that comply with existing sick leave laws would still need to provide this separate form of leave, in addition to any policies already in existence. The final version of the bill suggests that current sick leave policies may be used to comply with this requirement, so long as the leave is available for all purposes specified. An employer may not, however, 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 FOR ALL LEAVES UNDER THIS ACT?
No. Sick leave is paid at two-thirds the employee’s regular rate if the leave is provided (1) to care for or assist an individual who is quarantined, (2) to care for an individual who has been advised by a healthcare provider to self-quarantine due to concerns related to COVID-19, or (3) to care for the son or daughter of the employee if the school/place of care or care provider is closed/unavailable due to the public health emergency. For these purposes, paid sick leave is limited to $200 per employee per day and up to a maximum of $2,000 per employee. When the leave is for the employee’s own care/diagnosis or self-quarantine as ordered by a healthcare provider or quarantine/isolation as ordered by federal, state or local authorities, the leave is limited to $511 per employee per day and up to a maximum of $5,110 per employee.
WHAT IF THE EMPLOYEES HAVE NOT WORKED AT THE COMPANY FOR 30, 60 or 90 DAYS?
Under the bill, as with the prior version, there is no employment duration required and employers must provide this leave immediately to all employees. It is not a benefit subject to accrual as many sick leave policies currently provide.
HOW MUCH NOTICE DO EMPLOYEES NEED TO PROVIDE?
Following the first day of the need for leave, employees must follow the employer’s reasonable notice procedures to continue to receive this leave.
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 against employees who take leave under the act is considered retaliation in violation of the FLSA.
WHAT IF I CANNOT AFFORD TO COMPLY?
This enacted version of the bill, as with the FMLA Expansion Act, allows the Secretary of Labor to issue regulations to exclude certain healthcare providers, emergency first responders, and small businesses with 50 or fewer employees, whose viability as a going concern would be jeopardized if required to provide this leave. Similarly, this iteration of the bill also authorizes the secretary to issue regulations permitting the employer of healthcare providers and first responders to opt out of this expansion.
HOW IS THIS PAID SICK LEAVE BENEFIT DIFFERENT FROM THE PAID SICK LEAVE UNDER THE FMLA EXPANSION ACT?
The primary difference is that the Emergency Paid Sick Leave Act applies to all employees immediately regardless of employment duration. It also has no unpaid period and applies to a wider array of COVID-19-related leaves, including for the care of another person who is ill. This act may fill the gap of unpaid leave for qualifying employees under the FMLA Expansion Act.
WHAT DOES A 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 that must be posted at worksites. The Secretary will also issue guidance on the calculation of emergency paid sick leave, no later than April 2, 2020. The leave requirements under this act will expire on December 31, 2020.
TAX CREDIT ASSISTANCE TO 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 the Emergency Paid Sick Leave Act, 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 in relation to 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. These credits are limited to up to 10 days per employee.
The employer will be able to reduce its payroll tax obligations up to the maximums provided above, along with amounts paid to maintain a group health employer plan that are allocable to the required leave wages.
Employers should contact their counsel immediately to revise their policies and ensure compliance with all new provisions of this bill immediately upon enactment.
UNEMPLOYMENT INSURANCE
The bill also includes 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, and employer experience ratings as a result of UI claims filed in response to the spread of COVID-19.
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 regular updates on the major challenges companies are facing, please visit our COVID-19 resources page and subscribe for timely updates in your inbox here.