Families First Coronavirus Response Act – Summary of Key Provisions for Employers (UPDATED to include U.S. Department of Labor Guidance)

This Act takes effect on April 1, 2020, is not retroactive, and ends on December 31, 2020. The paid leave structure of the Act requires employers with fewer than 500 employees to provide paid sick and family leave to employees dealing with consequences of COVID-19. But the Act caps the amount to be paid to employees in addition to making the amounts 100% reimbursable via tax credits.

Emergency Family and Medical Leave Expansion Act

What it does. Division C of the Act amends the FMLA to require employers with fewer than 500 employees to provide up to 12 weeks of paid leave to employees who have worked for at least 30 calendar days[1] for a “qualifying need related to a public health emergency.” Such qualifying need means the employee is unable to work or telework due to a need to care for his or her son or daughter under 18 if the school or place of care has been closed or the childcare provider is unavailable due to a public health emergency (COVID-19).

Employee Threshold. You have fewer than 500 employees if, at the time your employee’s leave is to be taken, you employ fewer than 500 full-time and part-time employees within the United States, which includes any State of the United States, the District of Columbia, or any Territory or possession of the United States. In making this determination, you should –

• include employees on leave; temporary employees who are jointly employed by you and another employer (regardless of whether the jointly-employed employees are maintained on only your or another employer’s payroll); and day laborers supplied by a temporary agency (regardless of whether you are the temporary agency or the client firm if there is a continuing employment relationship). Note that workers who are independent contractors under the Fair Labor Standards Act (FLSA), rather than employees, are not considered employees for purposes of the 500-employee threshold.
• include all above-described employees of a corporation (including its separate establishments or divisions) but not the employees of corporations in which your corporation has an ownership interest (unless the two corporations are “joint employers” under the FLSA, in which case all common employees must be counted).
• include employees of all entities that meet the “integrated employer test” under the FMLA.

Rate of Pay.[2] The paid leave works as follows –

The initial 10 days of emergency FMLA leave may be unpaid but the employee may elect to use any accrued vacation leave, personal leave, or medical or sick leave for this period. The employee may also elect to take paid sick leave (see “Emergency Paid Sick Leave Act,” next section) for the first 10 days.

• Leave after the initial 10-day period should be calculated at not less than two-thirds of the employee’s regular rate[3] of pay at the hours the employee would normally be scheduled to work (including overtime hours, but the pay does not need to include a premium for such hours). See footnote 6 re: part-time employees’ hours.
• The amount is capped at $200/day or $12,000 for the 12 weeks that include both paid sick leave and expanded FMLA leave when the employee is on leave to care for their child whose school or place of care is closed, or child care provider is unavailable, due to COVID-19 related reasons.

Tax Credits. Each quarter, employers subject to the requirement are entitled to a fully refundable tax credit equal to 100% of the qualified paid FMLA wages paid by the employer.

Exemptions. The Secretary of Labor has the authority to issue regulations –

• that exempt small businesses with fewer than 50 employees from the paid leave requirements when “the imposition of such requirements would jeopardize the viability of the business as a going concern”[4] and
• that exclude certain health care providers and emergency responders from the definition of eligible employee. (An employer of an employee who is a health care provider or emergency responder may also elect to exclude such employee from the emergency leave requirements.)

<25 Employees. The restoration requirement of the FMLA does not apply to an employer with fewer than 25 employees if the position held by the employee when the leave started does not exist due to economic conditions caused by COVID-19, the employer made reasonable efforts to restore the employee to an equivalent position and the employer continues to make such efforts for one year.

Emergency Paid Sick Leave Act

What it does. Division E requires private employers with fewer than 500 employees[5] and public agencies (or any employer that is not a private employer) with more than one employee to provide two weeks of paid sick leave to employees (regardless of how long the employee has been employed) who are unable to work or telework due to a need for leave because –

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 health care provider to self-quarantine due to 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, due to 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.

Amount of Leave/Rate of Pay. Full-time employees are entitled to 10 days (80 hours) of paid sick leave only (i.e., employees cannot take additional leave due to a new need listed above) and part-time employees are entitled to a number of hours that equal the number of hours that such employees work on average over a two-week period only.[6] And –

• Employees taking paid sick time for needs (1), (2), or (3) noted above should receive the greater of their regular rate of pay, federal minimum wage in effect under the FLSA, or the applicable State or local minimum wage (but such pay shall not exceed $511/day or $5,110 in the aggregate).
• Employees taking paid sick time for needs (4), (5), or (6) noted above should receive the greater of two-thirds their regular rate of pay, federal minimum wage in effect under the FLSA, or the applicable State or local minimum wage (but such pay shall not exceed $200 per day and $2,000 in the aggregate).
• Sick time shall not carry over from one year to the next year.
• Paid sick time shall cease beginning with the employee’s next scheduled work shift immediately following the termination of the need for paid sick time.

Tax Credits. Each quarter, employers subject to the requirement are entitled to a fully refundable tax credit equal to 100% of the qualified paid sick leave wages paid by the employer.

Existing Leave Policies. The paid sick leave is in addition to whatever sick leave is already offered by the employer, and an Employer may not require an employee to use other paid leave provided by the employer before the employee uses the paid sick time under this Act. For clarification, employers cannot deny employees paid sick leave if the employer gave the employee paid leave for a reason identified in the Emergency Paid Sick Leave Act prior to the Act going into effect. The Emergency Paid Sick Leave Act imposes a new leave requirement on employers that is effective beginning on April 1, 2020.

Prohibited Acts. It is unlawful to discharge, discipline, or in any manner discriminate against an employee for taking the sick leave or filing a complaint, instituting suit, or testifying in a proceeding under or related to the Act, and a violation of the Act is considered a failure to pay minimum wages in violation of FLSA.

Exemptions. The Secretary of Labor has the authority to issue regulations –

• that exempt small businesses with fewer than 50 employees from the paid leave requirements when “the imposition of such requirements would jeopardize the viability of the business as a going concern”[7] and
• that exclude certain health care providers and emergency responders from the definition of eligible employee. (An employer of an employee who is a health care provider or emergency responder may also elect to exclude such employee from the emergency leave requirements.)

If you have questions about the Act, developing COVID-19 issues, or any other employment issues, please contact any one of our attorneys.

[1] The 30 days is measured from the day the employee is seeking to take pay leave.  As an example, if the employee asks for leave on April 1, the employee must have been on the employer’s payroll as of March 2, 2020.

[2] This is the only type of FMLA leave that is paid.

[3] For purposes of this Act, the regular rate of pay used to calculate paid leave is the average of the employee’s regular rate over a period of up to six months prior to the date on which they take leave. If the employee has not worked for their current employer for six months, the regular rate used to calculate their paid leave is the average of their regular rate of pay for each week they have worked for the current employer. If the employee is paid with commissions, tips, or piece rates, these wages will be incorporated into the above calculation. The employer can also compute this amount for each employee by adding all compensation that is part of the regular rate over the above period and divide that sum by all hours actually worked in the same period.

[4] To elect this small business exemption, you should document why your business with fewer than 50 employees meets the criteria set forth by the Department, which will be addressed in more detail in forthcoming regulations. You should not send any materials to the Department of Labor when seeking a small business exemption.

[5] The “Employee Threshold” section above applies to the Emergency Paid Sick Leave Act, as well.

[6] A part-time employee is entitled to leave for his or her average number of work hours in a two-week period. Therefore, you calculate hours of leave based on the number of hours the employee is normally scheduled to work. If the normal hours scheduled are unknown, or if the part-time employee’s schedule varies, you may use a six-month average to calculate the average daily hours. Such a part-time employee may take paid sick leave for this number of hours per day for up to a two-week period and may take expanded family and medical leave for the same number of hours per day up to ten weeks after that.

If this calculation cannot be made because the employee has not been employed for at least six months, use the number of hours that you and your employee agreed that the employee would work upon hiring. And if there is no such agreement, you may calculate the appropriate number of hours of leave based on the average hours per day the employee was scheduled to work over the entire term of his or her employment.

[7] To elect this small business exemption, you should document why your business with fewer than 50 employees meets the criteria set forth by the Department, which will be addressed in more detail in forthcoming regulations. You should not send any materials to the Department of Labor when seeking a small business exemption.