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New Mandate for Paid Sick Leave and Long-Term Leave for Some Employers Due to COVID-19 Emergency

March 17, 2020 (Updated March 27, 2020)

See our April 6 update on this topic >>

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 paid time off to employees who need leave for reasons connected to the 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. The law goes into effect on April 1, 2020, but employers may take advantage of the tax credit immediately for leave they are providing for reasons covered under the law.

Although employers with 500 or more employees are not covered under the law, it is useful for all employers to understand the approach taken by Congress since one can expect that efforts may continue to be made to include larger employers.

WHEN THE MANDATE STARTS

All employers with fewer than 500 employees, and all federal and state employers, must offer a certain amount of paid time off to their employees, for certain reasons, within 15 days after enactment of the law.

STRUCTURE OF THE MANDATE

The requirement to provide 10 days of paid sick leave is in a new free-standing law, but incorporates several provisions of the Fair Labor Standards Act (FLSA). The requirement to provide job-protected leave for 12 weeks (of which 10 weeks must be paid) is an amendment to the Family and Medical Leave Act.

HOW TO COUNT EMPLOYEES FOR PURPOSES OF DETERMINING COVERAGE

The DOL has issued FAQs addressing this issue:

  • Only US-based employees count toward the 500-employee threshold, including employees in US territories and possessions. Employers may 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.
  • Separate, unrelated entities may count all employees towards 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, regardless of when the employee started working for the employer.

Full-time and part-time employees are eligible for the long-term paid leave. However, to be eligible, the employee must have been employed for at least 30 days.

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 10 days of paid sick leave requirement of the law. The Secretary of Labor has the authority to issue regulations to exclude categories of healthcare providers from both the 10 days of paid sick leave and the longer term leave requirements of the law. 

A stimulus bill passed by the Senate on March 26, 2020, would define an employee eligible for long-term leave as including an employee who was laid off on or after March 1, 2020, but was subsequently rehired, so long as the employee worked for 30 of the last 60 days before the layoff. That bill is expected to be passed by the House of Representatives and signed by the president.

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 medical treatment, 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 those wages for the 10 days of paid sick leave.

For the 10 weeks of long-term 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 sick leave payments, that means an employee may receive up to $511 per day and $5,110 in the aggregate if the employee uses the sick time because of his or her 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.

For long-term (FMLA) payments, the employee may receive $200 per day and $10,000 in the aggregate.

Thus, the amount of wages that employers must pay for either the short-term sick leave or the long-term 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.)

USES OF THE PAID LEAVE

The short-term paid sick leave may be used if the 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 due to concerns related 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 due to concerns related to COVID-19
  • The employee needs to care for a son or daughter if the child’s school or child care location has been closed, or if the child care provider of the child is unavailable due to COVID-19

The Secretary of Health and Human Services, in consultation with the Secretary of the Treasury and the Secretary of Labor, is authorized to identify other “substantially similar” conditions that would trigger the paid sick leave provisions.

For purposes of the long-term paid 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 (under 18 years of age) if, due to a declared public health emergency related to COVID-19:

  • the child’s school or place of care has been closed, or
  • the child’s care provider (someone who receives compensation for providing child care on a regular basis) is unavailable due to a COVID-19 reason.

If the closure of the school or place of care, or the unavailability of the child care provider is foreseeable, the employee must provide the employer with notice of leave as is practicable. (The law does not define what is “foreseeable” nor does it define what is “practicable.”  DOL may issue guidance to help define these terms.)

NOTICES AND PROCEDURES

An employer must post a notice for employees about the requirements of the law. The DOL has provided model posters for federal and non-federal employees. The DOL has posted FAQs about the notice requirement.

After the first workday that an employee receives paid sick time, the employer may require the employee to follow “reasonable notice” procedures in order to continue receiving the paid sick time. “Reasonable notice” is not defined in the law.

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 Act 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 issued an announcement with information about the tax credit. The announcement is easy to read, has useful examples, and includes the following information:

  • The tax credit is available immediately. Although the law’s mandate does not become effective until April 1, 2020, if employers begin paying their employees sick time leave now, they will receive a tax credit for those payments.
  • 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 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.

The IRS has also now issued a series of more detailed FAQs on the tax credit provision.

MULTIEMPLOYER COLLECTIVE BARGAINING AGREEMENTS

For employers who 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 ANTI-RETALIATION

The law prohibits an employer from discriminating against an employee for using paid sick 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 long-term family leave.

ENFORCEMENT

An employer who fails to provide required sick leave, or who engages in discrimination, including retaliation, faces enforcement actions under the Fair Labor Standards Act (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 long-term family 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. According to the DOL, under its forthcoming non-enforcement policy, the DOL will not enforce violations of the Act during this period so long as employers have acted reasonably and in good faith to comply.

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.

POSSIBLE EXEMPTION FOR EMPLOYERS WITH FEWER THAN 50 EMPLOYEES

The law gives the Secretary of Labor the authority to exempt businesses with fewer than 50 employees from providing leave if an employee needs to care for a child when a school or place of care is closed, or if the child’s paid care provider is unavailable for a reason related to COVID-19. This exemption applies to sick leave days that might be necessary for that purpose, as well as for the longer-term leave. The standard the Secretary of Labor will use to exempt such business is if the leave requirements would "jeopardize the viability" of the business as a going concern.

EMPLOYEE LAYOFFS FOR REASONS NOT COVERED UNDER A PAID LEAVE LAW

Many employers have already furloughed or are facing the need to furlough employees. Sometimes these furloughs are because employers cannot afford to pay the employees, and sometimes it is because a local or state “stay-at-home” order has kept employees at home and the employees’ jobs are such that they cannot telework.

“Stay-at-home” orders are not addressed explicitly in the paid sick leave law. One of the reasons an employee may receive the 10 paid sick days is because the employee is subject to a “federal, state, or local quarantine or isolation order related to COVID-19.” On its face, this provision does not seem to encompass the more generally preventive “stay-at-home” orders. However, we should stay alert for any guidance from DOL on this issue.

In the meantime, to address the financial concerns of employees whose employment has been terminated, a bill passed by the Senate on March 25, 2020 establishes a federally funded temporary unemployment assistance program.

ONGOING LEGISLATIVE EFFORTS ON THE PAID LEAVE FRONT

One should expect ongoing legislative efforts on the paid leave front. The House Democratic leadership introduced HR, 6379, Take Responsibility for Workers and Families Act. This is its version of a stimulus approach for the country and is useful largely for considering future items that may become topics of negotiation with the Senate. 

With regard to paid leave, this bill would amend the recently enacted paid sick leave and expanded FMLA leave laws as follows:

  • Every employer would be covered, regardless of the number of its employees.
  • The law would explicitly state that paid sick leave must be provided in addition to any existing leave offered by the employer and would prohibit an employer from changing its paid leave policy on or after the enactment of the law to avoid being subjected to the law’s requirements.
  • An employee’s need to obtain care if the employee is experiencing symptoms of COVID-19 would be a covered reason for leave, and not only an employee’s need to obtain a diagnosis experiencing symptoms.
  • The expanded long-term FMLA leave would be available for all reasons currently available for short-term paid sick leave.
  • The emergency FMLA leave would not detract from an employee’s right to 12 weeks of ordinary FMLA leave.
  • Employers of healthcare provider and emergency responder employees could not exempt such employees from the law and the Secretary of Labor could not issue regulations to exempt certain healthcare providers.
  • The Secretary of Labor could not issue regulations to exempt employers with fewer than 50 employees from any portion of the laws.

Coronavirus COVID-19 Task Force

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CONTACTS

If you have any questions or would like more information on the issues discussed in this LawFlash, please contact any of the following Morgan Lewis lawyers:

Washington, DC
Chai R. Feldblum
Susan Harthill