Responding to the Coronavirus (COVID-19) Outbreak: UPDATE FOR EMPLOYERS

On Saturday, March 14, 2020, the U.S. House of Representatives passed the Families First Coronavirus Response Act (the “Bill”), with the goal of providing economic assistance to employees and their families in response to the 2019 novel Coronavirus (COVID-19). If passed by the Senate and signed into law by President Trump, the Bill would, among other things, (i) expand benefits under the Family and Medical Leave Act (“FMLA”), including paid family leave benefits; (ii) provide emergency paid sick leave benefits; and (iii) enhance the availability of unemployment insurance to certain affected workers.

The President has stated that he is in support of the Bill, and the Senate is expected to act on it very soon. While there may be some “tweaks” as the Bill goes through the Senate, here are some of the key elements of the Bill as it stands now:

The Bill amends the FMLA by greatly expanding the group of employees eligible for leave, and also provides paid leave to certain employees impacted by COVID-19. Significantly, employers will be given a tax credit to reimburse them for the costs of the paid leave. 

Reasons for Leave

Employees would be for eligible for leave “because of a qualifying need related to a public health emergency” declared by a federal, state or local authority (“Public Health Emergency Leave”). Thus, an employee may take Public Health Emergency Leave to:

• Comply with a recommendation or order by an authorized public official or a health care provider that the physical presence of the employee on the job would jeopardize the health of others due to COVID-19 exposure or symptoms, and the employee is not able to work remotely;

• Care for a family member where an authorized public official or a health care provider has determined that the physical presence of the employee in the community would jeopardize the health of others in the community due to COVID-19 exposure or symptoms; or

• Care for a child under the age of 18 if the child’s school or place of care has been closed, or the childcare provider of the child is unavailable, due to a public health emergency.

Eligibility

Eligibility requirements under the FMLA have been significantly relaxed, but only with respect to employees seeking Public Health Emergency Leave. In such a case, the employee need only have been employed by the employer for at least 30 days. Moreover, the definition of “Covered Employer” has been modified to include those employers with less than 500 employees, as opposed to those with 50 or more employees.

Pay During Public Health Emergency Leave

Employees are not entitled to pay for the first 14 days of Public Health Emergency Leave. However, an employee may choose to use accrued paid leave, but an employer cannot require it. In addition, employees will likely be able to utilize the new sick leave benefits, as described below, for the first 14 days.

After the first 14 days, paid leave will be calculated at a rate not less than two-thirds the employee’s “regular rate of pay” (as defined by the Fair Labor Standards Act), based on the hours the employee would otherwise be scheduled to work. If the employee has a schedule that varies week to week, the rate of pay will be based on the average hours worked per day for the six month period preceding the leave, or the reasonable expected schedule, if the employee did not work for that time period.

Expanded Definitions Under the FMLA

The definition of “Family Member” under the FMLA will be expanded to include others not previously covered, including in-law, parent of domestic partner, legal guardian and certain other family members with special needs.

Reinstatement of Employment After Public Health Emergency Leave

Reinstatement of employment after Public Health Emergency Leave is required for employers with at least 25 employees. For employers with fewer than 25 employees, the requirement to reinstate employees does not apply when certain conditions are met.

The Emergency Paid Sick Leave Act (“EPSLA”), part of the Bill, applies only to government employers and private employers with fewer than 500 employees. The EPSLA provides covered employees with up to 80 hours (two weeks) of paid sick leave for reasons related to the Coronavirus pandemic. As with the FMLA amendments, employers will be entitled to a tax credit to reimburse for the costs of the leave.

An employee would be entitled to use EPSLA leave if:

• The employee has been diagnosed with COVID-19 and needs to self-isolate;

• The employee is experiencing the symptoms of Coronavirus and needs to obtain a medical diagnosis or care;

• An authorized public official or health care provider has determined that the employee’s presence on the job would jeopardize the health of others because the employee has been exposed to, or shows symptoms of, the Coronavirus;

• To care for or assist a family member for any of the above reasons; or

• To care for the employee’s child because the child’s school or place of care has been closed, or the child’s care provider is unavailable due to Coronavirus.

Full-time employees would be entitled to up to 80 hours of paid sick time for a covered purpose, regardless of how long the employee has been employed by the employer. Part-time employees would receive a number of hours equal to the number of hours that the employee works, on average, over a two-week period.

Rate of Pay

Under the Bill, employees will be compensated at either their regular rate of pay, the federal minimum wage, or the local minimum wage, whichever is greater. However, if the employee is absent to care for a sick family member or a child who is unable to attend school or stay with a childcare provider, the employee shall be compensated at two-thirds of the rate they would otherwise receive. The Bill indicates that additional guidance regarding required pay under EPSLA leave will be forthcoming from the U.S. Department of Labor.

Employers With Existing Paid Leave Policies

EPSLA leave is in addition to any paid leave program a covered employer may already have in place, as well as any paid sick leave benefits an employee may be entitled to under any other federal, state, or local law. Moreover, an employer may not require an employee to use other paid leave provided by the employer before the employee takes EPSLA leave, though an employee may choose to do so.

III. EFFECTIVE DATES

The Bill's amendments to the FMLA and the provisions of EPSLA will become effective no more than 15 days after the Bill is enacted, and expire on December 31, 2020.

IV. TAX CREDITS

Employers will be entitled to a tax credit equal to 100 percent of the EPSLA leave and Public Health Emergency Leave under the FMLA paid by the employer, subject to a cap based on factors such as wage amounts, numbers of days taken and reasons for leave. For example, to care for a family member under EPSLA, the amount is capped at $200 per day. For other uses of EPSLA leave, such as self-isolation because of diagnosis, the cap is $511 per day. Tax credits for paid Public Health Emergency Leave are subject to caps as well.

The Emergency Unemployment Insurance Stabilization and Access Act of 2020 (“UI Act”), another portion of the Bill, would allow states greater access to emergency grants to provide unemployment compensation to employees who lose their jobs due to the coronavirus pandemic, subject to certain conditions. The UI Act would add a total of one billion dollars in funds for state unemployment programs.

As noted above, the Bill is headed to the Senate, where it is quite possible (perhaps likely) that there will be modifications to some of the provisions before it is presented to the President for signature. Action is expected fairly quickly. We will be monitoring developments closely, and will post updates as they become available.

In the meantime, employers should review the provisions of the Bill, along with their existing leave policies, with a view towards how their individual businesses may be impacted by the Bill.

For more information on how the Coronavirus outbreak may impact your business, contact Ron Rolleri at ron@rollerilaw.com.