New Law Requires Employers at Certain Firms Provide Leave, Gives Employer Tax Credits

The Families First Coronavirus Response Act was enacted into law on March 18, 2020. Key provisions of interest to employers are the Emergency Family and Medical Leave Expansion Act, Emergency Paid Sick Leave Act and corresponding tax credits available to employers to offset some of the associated costs.

Emergency Family and Medical Leave Expansion Act

The law provides for special leave provisions with respect to the coronavirus (COVID-19) that applies only to employers with fewer than 500 employees, and only to employees who have been employed for at least 30 days. The law amends the Family and Medical Leave Act (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 the employee is unable to work (or telework) due to a need for leave to care for the son or daughter under 18 years of age of such employee if the school or place of care has been closed, or the child care provider of such son or daughter is unavailable because of an emergency with respect to COVID-19 declared by a federal, state or local authority. This amendment narrows the conditions precedent for taking leave.

The first 10 days of leave can be unpaid, but an employee may elect to substitute any accrued vacation leave, personal leave or medical/sick leave, and employers are prohibited from requiring the substitution of paid leave.

If leave for a qualifying need related to a public health emergency continues beyond 10 days, it must be paid. The leave paid at a rate of two-thirds of employee's regular rate of pay as determined under the Fair Labor Standards Act (FLSA) and is based on the number of hours the employee normally would have been scheduled to work. For employees with varying work hours, a special formula is provided. In all cases, an employer need not pay an employee more than $200 per day and $10,000 in the aggregate.

Employees are required to provide notice as soon as practicable when the need for leave is foreseeable.

Generally, employers with 25 or more employees must restore employees to their positions following their return from leave in the same manner as generally mandated by the FMLA. Employers with less than 25 employees also must reinstate employees unless certain conditions are satisfied. 

The U.S. Department of Labor (DOL) will have the authority to issue regulations 1) excluding certain healthcare providers and emergency responders from being eligible for public health emergency leave and 2) to exempt businesses with fewer than 50 employees from having to provide emergency leave if doing so would jeopardize the viability of the business. In addition, an employer of an employee who is a healthcare provider or emergency responder may elect to exclude that employee from the leave provisions provided by the Act.

There are special rules when the employer is a party to a multiemployer bargaining agreement.

The Emergency Family and Medical Leave Expansion Act becomes effective no later than 15 days after becoming law and expires on Dec. 31, 2020.

Emergency Paid Sick Leave Act

The law also provides for paid emergency sick leave in the case of certain absences related to COVID-19. Again, this provision only applies to employers with fewer than 500 employees.

Specifically, any employee that has been employed for at least 30 days, is entitled to paid sick leave for the following situations:

1. The employee is subject to a federal, state or local quarantine or isolation order related to COVID-19.
2. The employee has been advised by a healthcare provider to self-quarantine because of concerns related to COVID-19.
3. The employee is experiencing symptoms of COVID-19 and seeking a medical diagnosis.
4. The employee is caring for an individual who is subject to an order as described in subparagraph (1) or has been advised as described in paragraph (2).
5. The employee is caring for a son or daughter of such employee if the school or place of care of the son or daughter has been closed, or the child care provider of such son or daughter is unavailable, because of COVID-19 precautions.
6. 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.

In these cases, employees are entitled to up to 80 hours of paid sick leave, and part-time employees are entitled to a number of hours equal to the number of hours that such employee works, on average, over a two-week period. Employees taking paid sick leave are entitled to be paid at their regular rate of pay (at least the applicable federal, state or local minimum wage) except if they are caring for a family member, in which case they are entitled to two-thirds of their regular rate of pay. Paid sick leave may be capped at $511 per day per employee ($5,110 aggregate) for leave taken for the reasons set forth in items (1) through (3), above, and may be capped at $200 per day per employee ($2,000 aggregate) for leave taken for the reasons set forth in items (4) through (6), above.

The paid sick days required by the law must be offered in addition to any existing leave benefits and employers are not allowed to change their policies after enactment to avoid the new requirements.

Employers may exclude employees who are healthcare providers or first responders from the paid sick leave benefits provided by the Act.

Like the Emergency Family and Medical Leave Act expansion, these rules would go into effect no later than 15 days after enactment and there are special rules when the employer is a party to a multiemployer bargaining agreement. The provision expires on Dec. 31, 2020.

Tax Credits for Paid Leave   

To offset some of the costs of these two new mandates, the law also created employer tax credits. These credits are dollar-for-dollar credits based on the wages paid, but are limited both daily and in the aggregate. For example, under the Emergency Paid Sick Leave Act, the credit is capped at $511 per day, or $200 if for employees who take leave to care for others or for childcare. The credit is refundable.

For more information or any questions, please contact the authors or another member of Holland & Knight's Public Policy & Regulation Group or Labor, Employment and Benefits Group.

DISCLAIMER: Please note that the situation surrounding COVID-19 is evolving and that the subject matter discussed in these publications may change on a daily basis. Please contact the author or your responsible Holland & Knight lawyer for timely advice.

Information contained in this alert is for the general education and knowledge of our readers. It is not designed to be, and should not be used as, the sole source of information when analyzing and resolving a legal problem. Moreover, the laws of each jurisdiction are different and are constantly changing. If you have specific questions regarding a particular fact situation, we urge you to consult competent legal counsel.