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With the passage of the Families First Coronavirus Response Act (FFCRA), H.R. 6201, this week, employers with fewer than 500 employee are now required to provide sick leave and family leave for employee absences related to the coronavirus. Employers will be eligible to receive a refundable federal payroll tax credit to offset the payments made to employees for such leave. Certain healthcare providers and economically vulnerable employers with fewer than 50 employees may have the ability to opt out of the FFCRA requirements.

The FFCRA will have substantial impacts in the near-term and throughout the remainder of 2020. The FFCRA takes effect April 1, 2020. Employers need to act timely to modify policies and train employees to ensure compliance with the new law. Below is a summary of the key provisions of the FFCRA, in a question and answer format.

EMERGENCY SICK LEAVE

When is sick leave required?

All employees are eligible for emergency sick leave, and such leave is available for immediate use regardless of how long the employee has worked for the employer. Employers must provide emergency sick leave to employees who cannot work (or work remotely) if the employee:

1. is subject to a coronavirus quarantine or isolation order;
2. has been advised by a health care provider to self-quarantine due to coronavirus concerns;
3. is experiencing symptoms of coronavirus and is seeking a medical diagnosis;
4. is caring for an individual who is either subject to a coronavirus quarantine or isolation order or has been advised by a health care provider to self-quarantine due to coronavirus concerns;
5. is caring for an employee’s child (under the age of 18) whose school or place of care is closed, or the child care provider of the child is unavailable, due to public health emergency (whether declared by local, state, or federal government); or
6. is experiencing any other “substantially similar condition” specified by the Department of Health and Human Services (in consultation with the Treasury and Labor Departments).

Items 1-3 are each referred to as a “self-care” reason for absence, while items 4-5 are referred to as a “family-care” reason for absence. Item 6 will likely be categorized as “self-care,” but employers will need to wait for guidance from the Department of Health and Human Services if and when the Department specifies a “substantially similar condition.”

How much emergency sick leave is an employer required to give?

The amount of sick leave is limited: (1) full-time employees are eligible to receive 80 hours of sick leave; and (2) each part-time employee is eligible to receive sick leave equivalent to his or her average hours worked in a two-week period. Unused paid sick leave under the FFCRA will not (a) carry over from year to year or (b) be payable to employee on termination of employment.

When does the obligation cease?

Paid sick time provided to an employee will eventually end. The end date is determined under the FFCRA by reference to the employee’s regularly scheduled work shifts. Paid sick time ends as of the next regular work shift, after need for leave ends under the FFCRA.

What pay rates apply?

Required pay rates are different for self-care absences versus family care absences. Normal wage rates apply to self-care absences. That is, employees subject to quarantine or experiencing coronavirus symptoms must be paid at least their normal wage or the applicable federal, state, or local minimum wage, whichever is greater. Reduced wage rates apply to family-care absences. Employees on leave for family-care must be paid at just two-thirds of the wage rate applicable to self-care absences. Employers should note that the employer side of 6.2 percent social security payroll tax will not apply to coronavirus sick-leave pay.

What are the caps on payment?

Pay for sick leave is capped at $511 per day and $5,110 in the aggregate for self-care absences (i.e., coronavirus quarantine or isolation order; self-quarantine at the advice of a healthcare provider; and seeking a medical diagnosis while experiencing symptoms of coronavirus). Pay for sick leave is capped at $200 per day and $2,000 in the aggregate for family-care absences.

How does this impact existing employer leave policies?

Employers must provide sick leave under this law, regardless of existing paid-leave policies. An employer cannot require an employee to use other available paid leave (e.g., vacation) before using available sick time. Employers will need to evaluate and change their existing policies where necessary to accommodate this requirement. Employers can no longer require an employee to find a replacement to cover the employee’s hours during his or her time off for coronavirus absences. Employers may not discharge or otherwise retaliate against employees for requesting paid sick leave or filing a complaint against the employer.

How does the FFCRA impact employer notices to employees?

Section 5103 of the FFCRA requires employers to post notices regarding the FFCRA. The Department of Labor will be updating the employer notices within the next week. Employers will have to post the notices shortly after publication.

Which employers may opt out of the new law?

Employers may opt out of the FFCRA requirements with respect to their employees who are healthcare providers and emergency responders. Certain financial vulnerable small businesses may have the ability to opt out of the FFCRA requirements altogether. In general, the ability to opt out altogether will be limited to small businesses with fewer than 50 employees, “when the imposition of such requirements would jeopardize the viability of the business as a going concern.” The FFCRA contemplates that the Department of Labor will issue guidance or regulations on the ability to opt out.

EMERGENCY FAMILY LEAVE

What triggers emergency family leave?

An eligible employee is entitled to leave if he or she is unable to work onsite or remotely due to the obligation to care for a minor child if the child’s school or place of care is closed or if the childcare provider of that child is unavailable, due to coronavirus precautions.

Which employees are eligible?

Emergency family leave is available to all employees who have worked for the covered employer for at least 30 days. The FFCRA applies to all private employers and individuals with fewer than 500 employees (i.e., there is no 50-employee threshold for coverage).

What is the employer’s payment obligation when an employee is on emergency family leave?

A covered employer is not required to pay for the first 10 days of emergency family leave. An employee, however, may use accrued vacation days or other available paid leave for those days. After the first 10 days, Employees must receive at least two-thirds of their normal pay rate, capped at $200 per day and $10,000 in the aggregate. The employer’s 6.2 percent Social Security payroll tax will not apply to family leave payments.

Is the employer required to hold the position for the employee?

In general, an employee will be entitled to come back to his or her same position, after going on family leave. An employer with fewer than 25 employees will not be subject to this requirement if the position held by the employee on leave no longer exists due to economic conditions or change to employer’s operations caused by the pandemic. Such an employer, nevertheless, must make reasonable efforts place the employee in an equivalent position, if possible.

Which employers may opt out of the new law?

The FFCRA states that an employer of healthcare providers and emergency responders may exclude such employees from the FFCRA’s family medical leave requirements. The FFCRA permits the Department of Labor to issue guidance or regulations (i) to exclude healthcare providers and emergency responders from eligible employees and (ii) to exempt small businesses with fewer than 50 employees, “when the imposition of such requirements would jeopardize the viability of the business as a going concern.”

EMPLOYER TAX CREDITS

Employers are eligible for a refundable credit from the Old-Age, Survivors, and Disability Insurance component of payroll taxes, commonly known as the 6.2 percent employer portion of the Social Security payroll tax.

How much is the credit for emergency sick leave?

Employers are entitled to a credit for the actual wages (including qualified health plan expenses relating to those wages) paid to employees for required sick leave under the FFCRA. The amount of the credit cannot exceed $511 per day for each qualifying employee on self-care sick leave, or $200 per day for each qualifying employee on family-care sick leave. The credit is limited to 10 days for each qualifying employee per quarter.

How much is the credit for emergency family leave?

Employers are entitled to a credit for the actual wages (including qualified health plan expenses relating to those wages) paid to employees for required family leave under the FFCRA. The amount of the credit will not exceed $200 for qualifying employees per day, and no more than $10,000 for each qualifying employee in the aggregate for all calendar quarters. The Department of the Treasury will issue regulations or guidance relating to the credits, as there are numerous unanswered questions.

Can self-employed individuals take advantage of the credit?

Self-employed individuals are also eligible for credits in the amounts discussed above. Instead of a social security tax credit, self-employed individuals will receive an income tax credit.

Should you have any questions, please reach out to a Moss & Barnett attorney.

Copyright Moss & Barnett 2020