Late Wednesday evening, President Trump signed the Families First Coronavirus Response Act (the Act) in response to the coronavirus (COVID-19) outbreak. Employers have until April 2, 2020, to achieve full compliance with the Act’s paid leave obligations.
The Act consists of two components that address paid sick leave: (1) the Emergency Family and Medical Leave Expansion Act (Emergency FMLA), which makes significant amendments to the Family and Medical Leave Act; and (2) the Emergency Paid Sick Leave Act (Emergency PSLA). Pursuant to the Act, the Emergency FMLA and Emergency PSLA will take effect no later than 15 days after the date of enactment of the Act and will expire on December 31, 2020.
The following summarizes the key provisions of the Act.
The Emergency Family and Medical Leave Expansion Act
The Emergency FMLA provides special leave protections that are applicable to employers with fewer than 500 employees, and only to employees who have been employed for at least 30 calendar days. Specifically, the Emergency FMLA amends the FMLA to provide up to 12 weeks of leave “because of a qualifying need related to a public health emergency.” A qualifying need related to a public health emergency arises when, due to a public health emergency, the employee is unable to work (or telework) due to the need to care for a child under the age of 18 if the child’s school or place of child care has been closed or the child care provider is unavailable.
Under the Emergency FMLA, the first 10 days of leave may be unpaid. After 10 days of unpaid leave, an employer must provide paid leave at two-thirds of the employee’s regular rate of pay, for
the number of hours the employee would otherwise have been scheduled to work. The amount of paid leave under Emergency FMLA can be no more than $200 per day and $10,000 in the aggregate. The Secretary of Labor has the authority to issue regulations for good cause to exempt small business with fewer than 50 employees from these requirements if the viability of the business as a going concern is jeopardized.
Employer Tax Credits: An employer is allowed a credit against its quarterly FICA tax obligations in an amount equal to 100% of the qualified family leave wages paid by the employer each quarter.
The qualified family leave wages that may be taken into account when calculating the tax credit available to the employer is limited to $200 for any day that the employee is paid qualified family leave wages and $10,000 in the aggregate for each employee. If the credit exceeds the employer’s portion of the quarterly FICA tax obligations, the excess credit shall be treated as an overpayment, which can be refunded or applied to future tax obligations, consistent with previous Treasury procedures for overpayments.
The Emergency Paid Sick Leave Act
The Emergency PSLA provides that employers are required to provide paid sick leave to an employee who is unable to work or telework for the following reasons:
Under the Emergency PSLA, full-time employees are entitled to 80 hours of paid sick time, and part-time employees are entitled to sick leave equivalent to those hours the employee works in a
typical two-week period. An employer must provide paid leave up to $511 per day ($5,110 in the aggregate) where an employee takes leave for reasons (1), (2), or (3) stated above; and up to $200
per day ($2,000 in the aggregate) where an employee takes leave for reasons (4), (5), or (6) stated above.
Under the Emergency PSLA, employees may use the paid sick leave immediately, regardless of how long the employee has been employed by the employer. Paid sick time under the Emergency PSLA does not carry over from year to year.
Employer Tax Credits: An employer is allowed a credit against its quarterly FICA tax obligations in an amount equal to 100% of the qualified sick leave wages paid by the employer each quarter.
The amount of qualified sick leave wages taken into account for the tax credit for each employee is limited to $511 for any day of leave under reasons (1), (2), or (3) and $200 for any day in the
case of leave under reasons (4), (5), and (6). If the credit exceeds the employer’s portion of the quarterly FICA tax obligations, the excess credit shall be treated as an overpayment, which can be refunded or applied to future tax obligations, consistent with previous Treasury procedures for overpayments.
Employers are required to post notices explaining an employee’s right to paid sick leave under the Act. The Secretary of Labor will be drafting a model notice that employers may utilize. Employers
cannot compel employees to utilize other paid leave (e.g., existing sick leave, vacation leave, or paid time off) before using the paid sick time granted by the Act. Additionally, employers cannot require that employees find a replacement to cover time taken pursuant to the Act. Further, the Act contains certain employment protections for employees who take paid leave. Employers shall
not take any disciplinary action or discriminate in any manner against employees who take leave under the Act.
Failing to allow employees to take paid sick leave under the Act will be deemed a violation of the Fair Labor Standards Act. If an employer willfully discriminates against or retaliates against an
employee in violation of the Act, the employer will be deemed to have violated Section 15(a)(3) of the FLSA. In either instance, the employer will be subject to penalties for lost wages, an equal
amount in liquidated damages, attorneys’ fees, and costs.
We will continue to update you about this and other major federal and state measures addressing the ever-developing COVID-19 pandemic. For additional information on this or any related topic,
please contact McNeelyLaw’s labor and employment law attorneys by visiting www.mcneelylaw.com or calling our office at 317-825-5110.
This McNeelyLaw LLP publication should not be construed as legal advice or legal opinion on any specific facts or circumstances. The contents are intended for general informational purposes only, and you are urged to consult your own lawyer on any specific legal questions you may have concerning your situation.