On March 18, 2020, Congress passed, and the President signed into law, the Families First Coronavirus Response Act, an economic stimulus plan intended to cushion the impact of the COVID-19 outbreak on Americans and introducing paid sick leave and an expanded family and medical leave act to the nation’s employers. The Act includes many provisions applicable to employers, such as paid sick leave for employees impacted by COVID-19 and those serving as caregivers for individuals with COVID-19.
Two provisions provide paid leave to employees forced to miss work because of the COVID-19 outbreak: (1) an emergency expansion of the Family and Medical Leave Act (FMLA); and (2) a new federal paid sick leave law.
The Emergency Family and Medical Leave Expansion Act
- Effective Date and Expiration: This program will become effective on April 1, 2020, and remain in effect until December 31, 2020.
- Expanded Coverage and Eligibility: The Act significantly amends and expands the FMLA temporarily. The current employee threshold for FMLA coverage would change from only covering employers with 50 or more employees to instead covering those employers with fewer than 500 employees. It also lowers the eligibility requirement in that any employee who worked for the employer for at least 30 days before the designated leave may be eligible to receive paid family and medical leave.
- Exemptions: The Act includes language that excludes healthcare providers and emergency responders from the definition of employees who may take this new leave, and to exempt small businesses with fewer than 50 employees if the required leave would jeopardize the viability of their business.
- Reasons for Emergency Leave: Any individual employed by the employer for at least 30 days (before the first day of leave) may take up to 12 weeks of job-protected leave to allow an employee, who is unable to work or telework, to care for the employee’s child (under 18 years of age) if the child’s school or place of care is closed or the childcare provider is unavailable due to a public health emergency. This is now the only qualifying need for Emergency FMLA.
- Paid Leave: The first ten days of Emergency FMLA may be unpaid. During this period, an employee may elect to substitute any accrued paid leave (like vacation or sick leave) to cover some or all of the ten-day unpaid period. After the ten days, the employer generally must pay full-time employees at two-thirds the employee’s regular rate for the number of hours the employee would otherwise be normally scheduled to work. The Act limits this pay entitlement to $200 per day and $10,000 in the aggregate per employee.
- Calculating Pay for Part-Time Employees: Employees who work a part-time or irregular schedule are entitled to pay based on the average number of hours the employee worked for the six months before taking Emergency FMLA. Employees who have worked for less than six months prior to leave are entitled to pay based on the employee’s reasonable expectation at the time of hiring of the average number of hours the employee would usually be scheduled to work.
- Job Restoration: Employers with 25 or more employees will have the same obligation as under traditional FMLA to return any employee who has taken Emergency FMLA to the same or equivalent position upon the return to work. However, employers with fewer than 25 employees are generally excluded from this requirement if the employee’s position no longer exists following the Emergency FMLA leave due to an economic downtown or other circumstances caused by a public health emergency during the period of Emergency FMLA. This exclusion is subject to the employer making reasonable attempts to return the employee to an equivalent position and requires an employer to make efforts to return the employee to work for up to a year following the employee’s leave.
The Emergency Paid Sick Leave Act
- Effective Date and Expiration: This program will become effective on April 2, 2020, and there is no expiration date.
- Reasons for Paid Sick Leave: The Act allows an eligible employee to take paid sick leave because the employee is:
- subject to a federal, state or local quarantine or isolation order related to COVID-19;
- advised by a health care provider to self-quarantine due to COVID-19 concerns;
- experiencing COVID-19 symptoms and seeking medical diagnosis;
- caring for an individual (note – not just family members) subject to a federal, state or local quarantine or isolation order, or advised by a health care provider to self-quarantine due to COVID-19 concerns;
- caring for the employee’s child if the child’s school or place of care is closed or the child’s care provider is unavailable due to public health emergency; or
- experiencing any other substantially similar condition specified by the Secretary of Health and Human Services in consultation with the Secretary of the Treasury and the Secretary of Labor.
- Eligibility: Employers with fewer than 500 employees must provide full-time employees (regardless of the employee’s duration of employment prior to leave) with 80 hours of paid sick leave at the employee’s regular rate (or two-thirds the employee’s regular rate to care for qualifying reasons 4, 5, or 6 listed above).
- Exemption: The Act provides an exception for employers who are healthcare providers or emergency responders.
- Cap on Paid Sick Leave Wages: The Act places limits on paid sick leave. Specifically, paid sick leave wages are limited to $511 per day up to $5,110 total per employee for their own use and up to $200 per day up to $2,000 total to care for others and any other substantially similar condition.
- Carryover and Interaction with Other Paid Leave: This paid sick leave will not carry over to the following year and may be in addition to any paid sick leave currently provided by employers.
- Calculating Rate of Pay: Employees who work a part-time or irregular schedule are entitled to be paid based on the average number of hours the employee worked for the six months before taking paid sick leave. Employees who have worked for less than six months prior to leave are entitled to the average number of hours the employee would normally be scheduled to work over a two-week period. A business employing fewer than 500 employees is required, at the request of the employee, to pay a full-time employee for 80 hours of mandated emergency paid sick leave instead of the initial ten days of unpaid leave permitted by the Emergency Family and Medical Leave Expansion Act (summarized above).
The Emergency Unemployment Insurance Stabilization and Access Act of 2020
This Act provides $1 billion in 2020 for emergency grants to states for activities related to unemployment insurance benefit processing and payment, under certain conditions.
Half of the resources are to be allocated to provide immediate funding to all states for administrative costs so long as they meet some basic requirements, including (1) requiring employers to provide notification of the availability of unemployment compensation at the time of separation; (2) ensuring applications for unemployment compensation and assistance with the application process are accessible in at least two ways (in-person, by phone, or online); and (3) notifying applicants when their application is received and being processed, as well as providing information about how to ensure successful processing if the application cannot be processed.
The other half will be reserved for emergency grants to states that experience an increase of unemployment compensation claims of at least 10 percent compared to the same quarter in the prior calendar year. Those states would be eligible to receive an additional grant to assist with costs related to such an unemployment spike if they meet additional requirements, including: (1) expressing of commitment to maintain and strengthen access to unemployment compensation; and (2) taking or planning to take steps to ease eligibility requirements and access (like waiving work search requirements and the waiting period). The Act will provide those states meeting these requirements with 100 percent federal funding to provide extended unemployment benefits, up to an additional 26 weeks after the initial 26 weeks (up to 52 weeks of benefits). Previously, states had to pay 50 percent of extended unemployment benefits. This provision will also remain in effect until December 31, 2020.
Tax Credits for Paid Sick and Paid Family and Medical Leave
The Act provides a series of refundable tax credits for employers who are required to provide the Emergency Paid Sick Leave and Emergency Paid Family and Medical Leave described above. These tax credits are allowed against the employer portion of Social Security taxes. While this limits the application of the tax credit, employers will be reimbursed if their costs for qualified sick leave or qualified family leave wages exceed the taxes they would owe.
Specifically, employers are entitled to a refundable tax credit equal to 100 percent of the qualified sick leave wages paid by employers for each calendar quarter in adherence to the Emergency Paid Sick Leave Act. The qualified sick leave caps wages at $511 per day ($200 per day if the leave is for caring for a family member or child) for up to 10 days per employee in each calendar quarter.
Similarly, employers are entitled to a refundable tax credit equal to 100 percent of the qualified family leave wages paid by employers for each calendar quarter in accordance with the Emergency Family and Medical Leave Expansion Act. The qualified family leave caps wages at $200 per day for each individual up to $10,000 total per calendar quarter. Only those employers required to offer Emergency FMLA and Emergency Paid Sick Leave (summarized above) may receive these credits.
Insurance Coverage for COVID-19 Testing
The Act requires private health plans (including insured, self-insured, and grandfathered) to provide coverage for COVID-19 diagnostic testing and related services to employees and their covered dependents, without cost sharing (like deductibles, copayments, and coinsurance) from the enactment of the Act through the end of the national emergency period.
Covered services and related cost waivers apply to diagnostic testing, healthcare provider services (in-person and telehealth), and facility costs (physician office, urgent care center, and emergency room) to the extent the costs are related to evaluating the need for, or furnishing, COVID-19 diagnosis and treatment. Besides coverage and cost waiver provisions, plans shall not require prior authorization or similar medical management requirements as a precondition of COVID-19 testing or services.
What Does All of This Mean?
Employers with fewer than 500 employees will not only need to adhere to the above leave requirements, but such employers will also be required to provide notice to their employees through postings and policies. However, the employers will later be eligible for reimbursement tax credits from the federal government.
Employers with less than 50 employees who wish to apply for an exemption to the paid leave mandate because they think it would “jeopardize the viability” of their business can contact the Department of Labor.
Additionally, employers cannot discharge, discipline, or otherwise discriminate against employees who take paid sick leave or have filed a complaint, instituted an action, or participated in a proceeding under or related to paid sick leave.
Besides this federal Act, many states are proposing similar emergency legislation to enact or expand their own paid sick leave or family and medical leave laws to cover coronavirus-related issues. Some of these state laws may be in addition to these new requirements at the federal level. We will keep an eye on Michigan’s efforts and provide an update if any additional requirements arise.
Speak with a Michigan Employment Law Attorney Today
If you have questions or concerns about employment issues involving COVID-19, including Emergency FMLA or other paid sick leave, the employment law attorneys at Kreis Enderle can provide you with sound, straightforward counsel to guide your decision-making.