March 20, 2020

Significant Coronavirus Legislation for Employers with Fewer than 500 Employees

As part of efforts to address the impact of the Coronavirus pandemic on the American workforce, Congress enacted, and President Trump signed, the Families First Coronavirus Response Act, which contains two important pieces of legislation regarding emergency leave from work.  Both apply to employers with 500 or fewer employees.  Both significantly change an employer’s obligation to provide paid leave.  Details are provided below:

    • Effective Date: This legislation goes into effect on April 2, 2020 and expires on December 31, 2020.
    • Covered Employers: This legislation is applicable to any employer with fewer than 500 employees.  Public employers of any size are also covered.
    • Eligible Employees/Leave: All full-time or part-time employees that have been on the employer’s payroll for 30 calendar days are eligible (employers may exclude health care workers or emergency responders). Eligible employees can take up to 12 weeks of leave for a “qualifying need related to a public health emergency.”  A “qualifying need” arises when an employee is unable to work (or telework) because he/she needs to care for a minor child if the child’s school or daycare is closed due to a public health emergency.
    • Employee Benefits
      • Pay. The leave is unpaid for the first ten days/two weeks, BUT an employee can substitute accrued paid leaving, including the Emergency Paid Sick Leave discussed below.  The additional ten weeks are paid at 2/3 of the employee’s regular rate of pay at the number of hours the employee is normally scheduled to work.  Paid leave is capped at $200 per day and $10,000 total.
      • Restoration to Position. During Emergency Family and Medical Leave, an employee’s job is protected, meaning the employee should be restored to the same or equivalent position upon their return to work.  Exceptions may be made for employers with 25 or fewer employees, if the position is eliminated due to a dramatic downturn in business caused by the pandemic. Efforts must also be made to rehire the employee if business picks back up and an equivalent position becomes available.
    • Employer Benefits
      • Small Employers Immune from Suit. Employers with 50 or fewer employees cannot be sued for violations of the Act.
      • Tax Credits: Employers can receive a 100% tax credit for all wages paid under the Act.  The credit applies to the employer portions of Social Security taxes.  The credit is capped at $200 per day and $10,000 total for each employee.  If the credit exceeds the employer’s obligation for Social Security taxes, the excess credit goes to the employer as a refund.
    • Effective Date: This legislation goes into effect on April 2, 2020 and expires on December 31, 2020.
    • Covered Employers: This legislation is applicable to any employer with fewer than 500 employees.  Public employers of any size are also covered.  Quasi-governmental agencies are likely also covered, although the legislation is not clear on this point.  Employers must post a notice of employee rights under this Act (a poster will be forthcoming)
    • Eligible Employees: Any employee is immediately eligible, regardless of length of service (no 30-day waiting period).
    • Reasons for Leave: The following situations result in an employer obligation to provide paid sick leave:
      • The employee is subject to a federal, state, or local quarantine or isolation order related to COVID-19;
      • The employee has been advised by a health care provider to self-quarantine because of COVID-19;
      • The employee is experiencing symptoms of COVID-19 and is seeking a medical diagnosis;
      • The employee is caring for an individual subject to or advised to quarantine or isolate;
      • The employee is caring for a son or daughter whose school or place of care is closed, or child care provider is unavailable, due to COVID-19 precautions; or
      • Substantially similar conditions as determined by HHS.
    • How much paid leave is required? Full-time employees receive 80 hours of paid leave at their regular rate, unless they are caring for a family member, in which case the leave is paid at 2/3 the regular rate.  For part-time employees, the leave allotment is calculated as the number of hours that the employee works, on average, in a 2-week period.
    • Sequencing of Leave: Employers must allow Emergency Paid Sick Leave to be used first before employees use any remained paid leave provided under an employer’s policy.  This leave is in addition to any paid leave previously provided by the employer.  Note, however, than any Emergency Paid Sick Leave not used expires on December 31, 2020, and does not carry over into 2021.
    • Penalties: The Act contains an anti-retaliation provision (meaning employers should not discharge or discipline someone who asks for or takes this leave), as well as penalties for failure to pay the required benefits.
    • Tax Credits: Like Emergency FMLA, Emergency Paid Sick Leave allows employers reimbursement through a tax credit equal to 100 percent of the wages paid (also applied to the employer portion of Social Security taxes).

The Labor & Employment attorneys of Strong & Hanni are happy to advise you on navigating these two new pieces of legislation.  Contact Michael Stanger, or 801-323-2128 with questions.