New Coronavirus Law Passed: Now What?
The Coronavirus outbreak has been declared a world-wide pandemic, requiring all citizens, including employers, to take certain measures to protect themselves and others. In response to COVID-19, the disease caused by the novel Coronavirus, Congress passed the Families First Coronavirus Response Act (FFCRA), which was signed into law on March 18, 2020. This law contains several provisions to increase funding for benefit programs, but this article will address the key leave provisions of the Act which affect employers.
The FFCRA provides for paid leave under certain circumstances and applies to all employers with fewer than 500 employees. It provides two avenues of paid leave for employees that have to be absent because of the COVID-19 outbreak: paid sick leave and paid leave under the Family Medical Leave Act (COVID-19 FMLA Leave).
These provisions will become effective on April 1, 2020.
Paid Family Medical Leave
Covered Employers. The FFCRA amends and expands the FMLA temporarily and requires employers with fewer than 500 employees (Covered Employers) to provide paid leave for temporary additional reasons specifically related to the Coronavirus/COVID-19 crisis. The law gives the Secretary of Labor the authority to exempt small businesses with fewer than 50 employees if the required leave would jeopardize the viability of their business.
Qualified Employees. The FFCRA expands coverage to employees who have been working for at least 30 calendar days before COVID-19 FMLA leave is taken. The usual FMLA requirements that the employee has been employed for a year, worked for 1,250 hours, and works in a location where there are 50 employees within a 75-mile radius, do not apply.
Reasons for Leave.
Leave under this extended provision can be used when the employee needs leave due to the Coronavirus/COVID-19public emergency, for one of the following reasons:
- To comply with a recommendation or order by a health authority or a health care provider that the physical presence of the employee on the job would jeopardize the health of others because of the (a) exposure of the employee to coronavirus, or (b) exhibition of symptoms of Coronavirus/COVID-19 by the employee, and the employee is unable to both perform the functions of the job and comply with the recommendation or order; or
- To care for a family member of an eligible employee, where a health authority or a healthcare provider makes a determination that the presence of the family member in the community would jeopardize the health of others in the community because of the (a) exposure of the family member to Coronavirus/COVID-19 or (b) exhibition of symptoms of Coronavirus/COVID-19 by the family member; or
- To care for a child of the employee who is under 18 years old if the elementary or secondary school or place of care has been closed, or the childcare provider of the child is unavailable, due to a public health emergency.
First 10 Days Not Covered. The first 10 days of COVID-19 FMLA absences are not covered by the FFCRA and may be unpaid. During this period, employees may use accrued personal or sick leave if they choose to do so, but Covered Employers may not require employees to use their accrued leave.
Rate of Pay. After the first 10 days of COVID-19 FMLA leave days are taken, employees must be paid at a rate of no less than two-thirds of the employee’s regular rate of pay for the number of hours the employee would otherwise be normally scheduled. The new Act now limits this pay entitlement to $200 per day and $10,000 maximum per employee. 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 prior to taking COVID-19 FMLA leave. Employees who have worked for less than six months prior to the leave period are entitled to the employee’s reasonable expectation at the time of hiring, the average number of hours the employee would normally be scheduled to work.
Job Protection. COVID-19 FMLA leave is job-protected, meaning that the employee must be restored to the same or equivalent position after the leave, but only for employers with 25 or more employees. Employers with less than 25 employees are not required to return the employee to the same or similar position if the employee’s position no longer exists due to economic conditions or other conditions caused by the public health crisis during the period of leave. However, the employer must make reasonable efforts to restore the employee to the same or an equivalent position, and, if the reasonable efforts fail, the employer must continue to make an effort to return the employee to work for a year after the leave is taken.
Emergency Paid Sick Days
Covered Employers. The FFCRA Paid Sick Leave provision covers employers with fewer than 500 employees (Covered Employers) to provide paid sick leave for specified reasons related to the COVID-19 pandemic. Employers that are health care providers and emergency responders are allowed to opt out of this requirement.
Qualified Employees. This provision of the FFCRA covers all employees, regardless of the length of employment.
Reasons for Paid Sick Leave. The FFCRA lists the following reasons that qualify for paid sick leave:
- The employee is subject to a federal, state or local quarantine or isolation order related to COVID-19;
- The employee is advised by a health care provider to self-quarantine due to COVID-19 concerns;
- The employee is experiencing COVID-19 symptoms and seeking medical diagnosis;
- The employee is caring for an individual (not just a family member) who is 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;
- The employee is 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
- The employee is 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
Rate of Pay: Full-time employees must receive Paid Sick Leave at their regular rate of pay for the employee’s own use (reasons 1-3) or two-thirds the employee’s regular rate of pay if the employee is caring for someone else (reasons 4-6), for a maximum of 80 hours of pay, with limits of $511 per day, up to $5,110 total per employee for their own use (reasons 1-3), and $200 per day, up to $2,000 total, to care for others (reasons 4-6) and any other “substantially similar condition.” Significantly, a full-time employee may elect to request payment of the required 80 hours of Paid Sick Leave during the first 10 days of COVID019 FMLA leave, which, unless the employee had accrued leave, would otherwise be unpaid. If such a request is made by a full-time employee, the employer must pay the benefit. 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 prior to taking Paid Sick leave. Employees who have worked for less than six months prior to the leave are entitled to the average number of hours the employee would normally be scheduled to work over a two-week period.
Tax Credits for COVID-19 FMLA Leave and Paid Sick Leave
There are certain refundable tax credits for employers who are required to provide the paid leave as described above. These tax credits are allowed against the employer portion of Social Security taxes. While this limits 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% of the qualified sick leave wages paid by employers for each calendar quarter under the Paid Sick Leave provision. The qualified sick leave wages are capped 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% of the qualified family leave wages paid by employers for each calendar quarter under the COVID-19 FMLA provision. The qualified family leave wages are capped at $200 per day for each individual up to $10,000 total per calendar quarter. Only those employers who are required to offer Emergency FMLA and Emergency Paid Sick Leave (i.e., those with less than 500 employees) may receive these credits.
The new Coronavirus law also provides $1 billion in emergency unemployment insurance (UI) relief to the states to assist in quickly processing and funding unemployment claims related to unemployment and underemployment related to the COVID-19 crisis. It does not provide relief to employers in the setting of premiums based on experience ratings.
Coverage for Testing for COVID-19
This provision 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, for free through the end of the emergency response period.
Stay tuned for additional information for employers as the COVID-19 crisis develops.
©ScottHulse, P.C. This material is provided for informational purposes only. It is not intended to constitute legal advice nor does it create a client-lawyer relationship between ScottHulse and any recipient. Recipients should consult with counsel before taking any actions based on the information contained within this material.
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