Laws Implicated by Coronavirus in the Workforce: Who is Covered and What is Granted

03.20.20

Families First Coronavirus Response Act

On March 18, 2020 the Families First Coronavirus Response Act became law and will be effective no later than April 2, 2020. This law effectuates, among other changes, three new laws: The Emergency Family and Medical Leave Expansion Act (EFMLEA); the Emergency Paid Sick Leave Act (EPSLA); and Tax Credits for Paid Sick and Paid Family and Medical Leave. This article describes who is covered and what rights are granted under the act.

The Emergency Family and Medical Leave Expansion Act (EFMLEA)

This law amends the current Family and Medical Leave Act (FMLA), with significant changes as to covered employers and eligible employees.

When is the Law Effective?
No later than April 1, 2020.

What Employers are Covered?
Employers with fewer than 500 employees.

Exception: Provided that the Department of Labor exercises its authority to issue such regulations, employers may be exempt if they have fewer than 50 employees and the “imposition of such requirements would jeopardize the viability of the business as a going concern.”

Which Employees are Eligible?
Employees who have been employed with a covered employer for at least 30 calendar days and need leave for the following reason:¹

Qualifying Need Related to a Public Health Emergency: Employee who is unable to work (or telework) due to a need for leave to care for the employee’s son or daughter under 18 years of age if the school or place of care has been closed, or the child care provider of such son or daughter is unavailable, due to public health emergency with respect to COVID-19 declared by Federal, State, or local authority.

What Benefits are Granted?
12 weeks of protected leave. The first ten days of EFMLEA leave are unpaid, but the employee may elect to substitute any accrued vacation, personal, medical, or sick leave concurrently with this leave. After 10 days, the employer shall provide paid leave to the employee at a rate of two-thirds of the employee’s regular rate of pay, based on the number of hours the employee would otherwise normally be scheduled to work – up to $200 per day and $10,000 in the aggregate.²

Restoration of Position. The employee must be restored to their position or equivalent position unless the employer employs fewer than 25 employees and the following conditions are met:

the employee takes leave based on a qualifying need related to a public health emergency;
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 leave;
the employer makes reasonable efforts to restore the employee to a position equivalent to the position the employee held when leave commenced, with equivalent employment benefits, pay, and other terms and condition of employment; and
if the reasonable efforts fail, the employer makes reasonable efforts during the “contact period” to contact the employee if an equivalent position becomes available. The contact period is the one-year period beginning on the earlier of the date on which the qualifying need related to a public health emergency concludes; or the date that is 12 weeks after the date on which the employee’s leave based on a qualifying need related to a public health emergency commenced.

These benefits will only be provided through December 31, 2020, unless otherwise extended by law.

How Does this Law Interplay with Current Employer Policies?
Employees may use any paid personal, sick, or medical leave during the first two weeks of unpaid leave. When the need for leave is foreseeable, the employee must provide the employer with notice as is practicable.

The protections from retaliation against using FMLA leave similarly apply to employees requesting or using leave under EMFLEA.

What are the penalties for violations?
Same as FMLA, which may include lost back pay, lost front pay, liquidated damages, and attorneys’ fees and costs.

Emergency Paid Sick Leave Act (EPSLA)

When is the Law Effective?
No later than April 2, 2020, by which date the Secretary of Labor is also expected to issue guidelines to assist employers in calculating the amount of paid sick leave to which employees will be entitled.

What Employers are Covered?
Private employers³ with fewer than 500 employees and which are engaged in commerce or any industry or activity affecting commerce.

Public agencies⁴ (or other non-private entities or individuals) employing 1 or more employees and which are engaged in commerce or any industry or activity affecting commerce.

Which Employees are Eligible?
Full-time and part-time employees,⁵ regardless of how long they have worked for employer. Employees unable to work (or telework) may use leave immediately due to a need for leave because:

Employee is subject to a Federal, State, or local quarantine or isolation order related to coronavirus;
Employee has been advised by a health care provider (as defined by the FMLA) to self-quarantine due to concerns related to coronavirus;
Employee is experiencing symptoms of coronavirus and seeking a medical diagnosis;
Employee is caring for an individual who is subject to an order of quarantine as described in the first and second reasons above;
Employee is caring for employee’s son or daughter (as defined by FMLA), whose school or place of care has been closed, or the childcare provider is unavailable, due to coronavirus precautions; or
Employee is experiencing any other substantially similar condition specified by the Secretary of Health and Human Services in consultation with the Secretary of Treasury and Secretary of Labor)

Exception: An employer of an employee who is a health care provider or emergency responder may elect to exclude such employees from eligibility for paid leave under this law. The law also states that the Department of Labor has authority to issue regulations excluding certain health care providers and emergency responders from the definition of eligible employee.

What Benefits are Granted?
Full-time employees: Paid sick time for 80 hours.

Part-time employees: Paid sick time for the average number of hours that the employee works over a two-week period.⁶

Paid sick leave shall be paid at the following rates and caps, depending upon the reason for using the leave:

If using the leave for reasons (1) – (3):

o Rate: The highest rate of the following: the employee’s regular rate of pay; minimum wage under FLSA; or minimum wage under State or local law in which employee is employed.

o Cap: Up to $511 per day and $5,110 in the aggregate.
If using the leave for reasons (4) – (6):

o Rate: Two-thirds of the amount otherwise paid for reasons (1) – (3)

o Cap: Up to $200 per day and $2,000 in the aggregate.

Paid sick leave shall end effective the employee’s next scheduled work shift immediately following the termination of need for paid sick time. Paid sick leave does not carry over form one year to the next.

These benefits will only be provided through December 31, 2020, unless otherwise extended by law.

How Does this Law Interplay with Current Employer Policies?
After the first day (or portion of a day) in which an employee receives paid sick leave, employers may require employees to follow reasonable notice procedures to continue receiving paid sick leave. However, employees using paid sick leave must not be required by the employer to find a replacement employee to cover the hours for which that employee is using paid sick time.

Employers may not require an employee to use other paid leave before the employee uses paid sick time under this new law. Employers are not required to pay out any unused paid sick time to an employee, upon termination, resignation, retirement, or other separation from employment.

Employers must post a notice in their workplace, as prepared and approved by the Secretary of Labor, and which shall be available no later than 7 days after enactment of the law.

The protections from discrimination and retaliation similarly apply to employees, in that employers may not discharge, discipline, or discriminate against an employee who takes leave under the new law, has filed a complaint or started a proceeding related to the law, or testified in any such proceeding.

This law specifically states that it does not diminish the rights or benefits of an employee under other Federal, State, or local law, a collective bargaining agreement, or an existing employer policy.

What are the penalties for violations?
Violation of this new law by failure to pay paid sick leave to an eligible employee will be considered as an employer’s failure to pay minimum wages in violation of the Fair Labor Standards Act (“FLSA”). Penalties under the FLSA may include payment of unpaid wages under the act, and for willful violations – double damages of amounts that should have been paid to employees and were not, fines, and imprisonment.⁷

An employer who unlawfully terminates an employee shall also be considered to be in violation of the FLSA and will be subject to the penalties in Sections 16 and 17 of the FLSA.

Tax Credits for Paid Sick and Paid Family and Medical Leave

What Employers May Receive Tax Credit?
All employers, except for the Government of the United States, the government of any state or political subdivision, or any agency or instrumentality of the foregoing. This includes self-employed individuals, with some subtle nuances as to how the credit is calculated and limited.

What Benefits are Granted?
Credits for qualified sick leave wages, which will be recovered by employers as a tax credit against social security and Medicare taxes for each calendar quarter. For self-employed individuals, the tax credit is taken against income tax.

Credit Amount for Wages: 100 percent of the qualified sick and family leave wages paid by the employer in that calendar quarter under the Emergency Paid Sick Leave Act and Emergency Family and Medical Leave Expansion Act. These credits are limited, however, to the following caps:

Emergency Paid Sick Leave Act
o $200 per individual ($511 for paid sick leave under the first three reasons of EPSLA), per day;

o An aggregate of 10 days of paid sick leave under EPSLA per employee; and

o Up to the total taxes imposed under social security and Medicare in the respective quarter.
Emergency Family and Medical Leave Expansion Act
o $200 per individual paid under the EFMLEA, per day;

o $10,000 in the aggregate, with respect to all calendar quarters; and

o Up to the total taxes imposed under social security and Medicare in the respective quarter.

Credit Amount for Health Plan Expenses: Employers will receive a credit in the amount of the employer’s qualified health plan expenses, as are properly allocable to the qualified sick and family leave wages for which credit is allowed. Qualified health plan expenses means the amounts incurred to maintain a health plan, but only to the extent such amounts are excluded from the gross income of employees. Unless the Secretary of the Treasury prescribes some other manner, the allocation should be made by taking the pro rata cost among covered employees and pro-rated period of paid sick leave taken.

Refund: Any credits in excess of the social security and Medicare taxes otherwise owed shall be treated as a credit, and thereby overpayment, with a refund due to the employer.

Employers can elect not to seek credits otherwise permitted under this law. Credits under this law, if taken, are only available on wages paid and health plan expenses incurred through December 31, 2020.

How Does this Law Interplay with Other Employer Obligations?
The amount of credit received by the employer shall be considered gross income of the employer in the taxable year, and wages taken into account in determining the credit allowed shall not count toward a credit under section 45S of the IRC.

Any wages required to be paid under the EPSLA or EFMLEA shall not be considered wages for purpose of 3111(a) or compensation for purposes of 3221(a) of the Internal Revenue Code.

¹Exception: Employer of an employee who is a health care provider or emergency responder may elect to exclude such employees from eligibility for paid leave under this law. The law also states that the Department of Labor has authority to issue regulations excluding certain health care providers and emergency responders from the definition of eligible employee.

²For variable hour employees, the normally scheduled hours for variable hour employees shall consist of the hours worked and hours taken as leave for the six-month period ending on the date when employee took the leave

³Notably, covered employers include “any person acting directly or indirectly in the interest of an employer in relation to an employee” and “any successor in interest of an employer.”

⁴Public agencies (per 29 USC 203(x)) and the Government Accountability Office and the Library of Congress are specifically listed as covered employers.

⁵“Employee” has meaning as defined in the FLSA who is not covered under (E) or (F) including employee of the Library of Congress – with a limited exception, employee of the Government Accountability Office, State employee per the Government Employee Rights Act, employee under 3 USC § 411(c), federal officer or employee under 5 USC chapter 63(V), and any other civil service person under 5 USC § 2101(1)

⁶For variable hour employees, this number is equal to the average number of hours that the employee was scheduled per day over the six-month period ending on the date on which the employee takes the paid sick leave, including any hours which the employee took any leave or if the employee did not work over such six-month period, the reasonable expectation of the employee at the time of hiring of the average hours per day that the employee would be scheduled to work.

⁷See Sections 16 and 17 of the Fair Labor Standards Act.