LawFlash

Employers Mandated to Provide Emergency Paid Sick Leave and Emergency FMLA Leave Amid COVID-19

April 06, 2020

The Families First Coronavirus Response Act imposes a mandate on all employers with fewer than 500 employees, and on all federal and state employers, to provide emergency paid sick leave and emergency paid FMLA leave to employees who need leave for reasons connected to the coronavirus (COVID-19) public health emergency. Employers (other than federal and state employers) will receive a tax credit equal to 100% of the money they spend on the paid leave mandated under the law. The law is in effect from April 1, 2020 until December 31, 2020.

Although employers with 500 or more employees are not covered under the Families First Coronavirus Response Act (FFCRA), it is useful for all employers to understand FFCRA requirements since one can expect that additional congressional efforts may be made to include larger employers in a paid leave mandate. Employers should also be aware of the increasing state and local paid leave laws being enacted in response to the COVID-19 pandemic.

Structure of the Mandate

The FFCRA includes the requirement to provide 10 days of emergency paid sick leave in a new freestanding law that incorporates several provisions of the Fair Labor Standards Act (FLSA). The FFCRA includes the requirement to provide emergency Family and Medical Leave Act (FMLA) leave for 12 weeks (of which 10 weeks must be paid) as an amendment to the existing FMLA.

How to Count Employees for Purposes of Determining Coverage

The US Department of Labor (DOL) has issued a rule addressing this issue.

  • Only US-based employees count toward the 500-employee threshold, including employees in US territories and possessions. Employers must count employees on leave, jointly employed employees, and day laborers supplied by a temporary agency, but not independent contractors.
  • Where a corporation has an ownership interest in another corporation, the two corporations are separate for purposes of counting toward the 500-employee threshold unless they are joint employers under the FLSA, in which case, the joint employees must be counted as employees of both entities.
  • Separate, unrelated entities must count all employees toward the 500-employee threshold if they meet the FMLA’s integrated employer test.

Employees Who Are Eligible

Full-time and part-time employees are eligible for the short-term paid sick leave (emergency paid sick leave), regardless of when an employee started working for the employer.

Full-time and part-time employees are eligible for the long-term paid leave (emergency FMLA leave). However, to be eligible, the employee must have been employed for at least 30 days. Employees who were laid off on or after March 1, 2020, but were subsequently rehired are also eligible for emergency FMLA leave, so long as the employee worked for 30 of the last 60 days before the layoff.

An employer of healthcare providers or emergency responders has the option of excluding an employee who is a healthcare provider or emergency responder from the emergency paid sick leave and/or the emergency FMLA leave. The Secretary of Labor has issued a rule defining “healthcare provider” for this provision of the law as anyone employed by a wide range of healthcare institutions and businesses and anyone employed by an entity that contracts with such institutions.

Exemption for Small Employers for One Type of Leave

The FFCRA provided the Secretary of Labor authority to exempt businesses with fewer than 50 employees from providing leave if an employee needed to care for a child if a school or place of care was closed, or if the child’s care provider was unavailable for a reason related to COVID-19. The DOL’s rule permits small employers (including nonprofit organizations) to self-certify for the exemption, based on several criteria relating to the financial viability of the business or organization.

Number of Hours of Paid Leave Required

Full-time employees must be provided with 80 hours (10 days) of short-term sick leave. Part-time workers are entitled to the number of hours they work on average over a two-week period.

The paid sick time does not carry over to the following year. Employers are also not required to reimburse employees for paid sick time not used by the employee when the employee leaves the job.

With regard to long-term leave, employees must be provided with 12 weeks of job-protected leave. The first two weeks (10 days) of such leave can be unpaid, while the following 10 weeks must be paid. For the first 10 days, the employee may use the 10 days of paid sick leave provided by the law or use any other paid leave otherwise available from the employer.

Amount of Wage Replacement

If an employee needs leave for the employee’s own illness, the need to self-quarantine, or the need to get a medical diagnosis, the employer must pay the employee’s full regular wage for the 10 days of paid sick leave.

If the employee needs leave to care for someone else, the employer must pay the employee two-thirds of the employee’s wages for the 10 days of paid sick leave.

For the 10 weeks of emergency FMLA leave, the employer must pay two-thirds of the employee’s regular wage.

However, regardless of the employee’s salary, the law limits the amount of payments the employer must make, so that such payments will be equal to the tax credit the employer will receive in return.

For emergency paid sick leave payments, that means an employee may receive a maximum of $511 per day and $5,110 in the aggregate if the employee uses the sick time because of their own needs. The employee may receive up to $200 per day and $2,000 in the aggregate if the employee uses the 10 sick days to care for someone else. The employee may use other paid leave available under the employer’s program to increase the payments received.

For emergency FMLA leave payments, the employee may receive a maximum of $200 per day and $10,000 in the aggregate.

Thus, the amount of wages that employers must pay for either the new mandated emergency paid sick leave or emergency FMLA leave will never exceed the tax credit that the employer will be permitted to apply against certain taxes. (See description of the tax credit below.)

Paid Leave Uses

The emergency paid sick leave may be used if an employee cannot work (or telework) because of the following reasons:

  • 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 healthcare provider to self-quarantine based on a belief that the employee (1) has COVID-19, (2) may have COVID-19, or (3) is particularly vulnerable to COVID-19.
  • The employee is seeking a medical diagnosis because the employee is experiencing the symptoms of COVID-19.
  • The employee is caring for an individual who is subject to a federal, state, or local quarantine or isolation order related to COVID-19, or has been advised by a healthcare provider to self-quarantine based on a belief that the individual (1) has COVID-19, (2) may have COVID-19, or (3) is particularly vulnerable to COVID-19.
  • The employee needs to care for a child if the child’s school or child care location has been closed, or if the child’s care provider is unavailable due to precautions related to COVID-19. This includes an adult child who has a mental or physical disability and is incapable of self-care because of that disability.

For purposes of the emergency FMLA leave, the only qualifying reason for that leave is if the employee is unable to work or telework because he or she must care for a child if, due to a declared public health emergency related to COVID-19, (1) the child’s school or place of care has been closed, or (2) the child’s care provider is unavailable due to reasons related to COVID-19.

If the closure of the school or place of care or the unavailability of the child’s care provider is foreseeable, the employee must provide the employer with notice of leave as soon as practicable.

Notices

An employer must post a notice for employees about the requirements of the law. The DOL has provided model posters for federal and nonfederal employees. The DOL has posted FAQs about the notice requirement and has expanded on the notice requirements in its rule.

The employer may not require that the employee find or search for a replacement to cover the hours the employee will be on sick leave.

Tax Credit

The FFCRA authorizes a tax credit for qualified sick leave wages and qualified family medical leave wages. The tax credits are equal to the maximum amounts that the employers must pay to employees under the law.

The IRS has provided FAQs on the tax credit provision that include the following information:

  • Employers are entitled to a credit for health insurance costs required to maintain insurance for employees during their leave periods.
  • Employers may retain (i.e., not send to the IRS) taxes they would have paid for both the employee and the employer share (for all employees) of Social Security and Medicare taxes, as well as amounts that would have been withheld for employees’ federal income taxes.
  • If the amount the employer retains is not sufficient to cover the costs of the qualified leave, the IRS will allow employers to seek an expedited advance from the IRS.
  • Tax-exempt employers with fewer than 500 employees can use the credit to offset their payroll tax liability.

Multiemployer Collective Bargaining Agreements

For employers that participate in multiemployer collective bargaining agreements (CBAs), the employer can fulfill the law’s requirements by making contributions to the multiemployer fund or plan based on the hours of paid short-term and long-term leave each of its employees is entitled to under the law. But the fund must allow employees to secure pay from the fund or plan for the paid leave the law requires.

Nondiscrimination and Antiretaliation

The law prohibits an employer from discriminating against an employee for using emergency paid sick leave or emergency FMLA leave, filing a complaint, or testifying in an action under the law. The FMLA’s existing prohibition against retaliation applies with regard to employees who take the emergency FMLA leave.

Enforcement

An employer that fails to provide the required leave or engages in discrimination, including retaliation, faces enforcement actions under the FLSA. An enforcement action can be brought by a single employee or as a collective action, or by the US Secretary of Labor. Penalties would include payment of the unpaid wages plus an equal amount as liquidated damages, equitable relief (such as reinstatement), injunctive relief, and even criminal prosecution for willful violations. Attorney fees and costs can also be awarded.

An employer who fails to provide the emergency FMLA leave faces the enforcement provisions of the FMLA.

The DOL will hold off on strict enforcement, however, for 30 days, to provide employers time to comply. The DOL will not enforce violations during this period so long as employers have acted reasonably and in good faith to comply. There is no similar restriction on actions brought by employees.

Non-Preemption

Nothing in the law diminishes the rights that employees have under federal, state, or local laws; a collective bargaining agreement; or an employer’s existing policy.

Coronavirus COVID-19 Task Force

For our clients, we have formed a multidisciplinary Coronavirus COVID-19 Task Force to help guide you through the broad scope of legal issues brought on by this public health challenge. We also have launched a resource page to help keep you on top of developments as they unfold. If you would like to receive a daily digest of all new updates to the page, please subscribe now to receive our COVID-19 alerts.

Contacts

For a detailed summary of the DOL’s rule implementing the Emergency Paid Sick Leave Act and the Emergency Family and Medical Leave Expansion Act, as well as for a comprehensive package of implementing materials (view a table of contents), please contact any of the following Morgan Lewis lawyers:

Washington, DC
Chai R. Feldblum
Susan Harthill

Princeton
Michelle Seldin Silverman