Client Memorandum – COVID-19 Paid Leave
April 9, 2020
As the federal and state government work to enact measures to address the impact of the COVID-19 virus on businesses and workers, the federal government has already enacted one law creating new obligations on some employers to provide paid leave to employees who are affected by the virus. The Families First Coronavirus Response Act (“FFCRA”) contains two separate paid leave provisions—the Emergency Family and Medical Leave Expansion Act (“EFMLEA”) and the Emergency Paid Sick Leave Act (“EPSLA”). Both laws require employers to provide paid leave that is subsequently fully reimbursed by the federal government in the form of tax credits. The FFCRA was signed on March 18, 2020, and the EFMLEA and EPSLA provisions go into effect on April 2, 2020. Both the EFMLEA and EPSLA expire on December 31, 2020. The federal laws are interpreted and implemented co-existent with any state law dealing with the virus. In other words, the federal laws are in addition to any state law dealing with the same issue.
Who do the EFMLEA and EPSLA apply to?
The EFMLEA and EPSLA apply to employers with fewer than 500 employees. Employers of fewer than 50 employees may claim an exemption under certain circumstances, as described below. Further, the leave requirements only apply to employees who have work available to them. Therefore, if an employer has stopped operating or does not have work available for an employee, the employer does not need to provide leave under the EFMLEA or EPSLA. The employee would likely be eligible for unemployment benefits under those circumstances.
What are the requirements of the EFMLEA?
The EFMLEA requires subject employers to provide employees with up to 12 weeks of leave for a qualifying need related to COVID-19. A qualifying need exists if the employee is unable to work (or telework) due to a need for leave to care for a minor child whose school or place of care has closed due to COVID-19, or if the child’s usual care provider is unavailable due to COVID-19. The first 10 days of such leave may be unpaid and the employee may choose to use any accrued paid leave during that time. After the first 10 days, the employer must pay the employee for the hours the employee would have usually been scheduled to work at a rate of two-thirds the employee’s regular rate of pay. Each employee’s pay entitlement is limited to $200 per day and $10,000 in the aggregate.
What are the requirements of the EPSLA?
The EPSLA requires subject employers to allow employees to take paid sick leave if the employee is (1) subject to a federal, state or local quarantine or isolation order related to COVID-19; (2) advised by a health care provider to self-quarantine due to COVID-19 concerns; (3) experiencing COVID-19 symptoms and seeking medical diagnosis; (4) caring for an individual 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; (5) 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 (6) 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.
Full-time employees are entitled to 80 hours of paid sick leave. Part-time employees are entitled to as many hours of sick leave as the employee would work during an average two-week period. The paid sick leave required by the EPSLA is in addition to any other paid leave plans already offered by employers and an employer may not require an employee to use another type of leave before using the paid sick leave provided by the EPSLA. For leave related to the employee’s own illness (i.e. reasons 1 through 3 above), paid sick leave wages are paid at the employee’s regular rate of pay, subject to a limitation of $511 per day at $5,110 total per employee. For leave taken to care for others (i.e. reasons 4 through 6 above), paid sick leave wages are paid at two-thirds the employee’s regular rate of pay, subject to a limitation of $200 per day and $2,000 total.
When is an employer exempt from providing paid leave?
Employers with fewer than 50 employees may be exempt from providing paid leave under certain circumstances. This exemption only applies to leave taken to provide care for a child whose school or place of care has closed (i.e. all leave under the EFMLEA and leave under reason (5) of the EPSLA). The exemption applies when one of the following three requirements is met: (1) allowing leave would cause the small employer’s expenses and financial obligations to exceed available business revenue and cause the small employer to cease operating at a minimal capacity; (2) the absence of the employee or employees requesting such leave would pose a substantial risk to the financial health or operational capacity of the small employer because of their specialized skills, knowledge of the business, or responsibilities; or (3) the small employer cannot find enough other workers who are able, willing, and qualified, and who will be available at the time and place needed, to perform the labor or services the employee or employees requesting leave provide, and these labor or services are needed for the small
employer to operate at a minimal capacity.
An employer can only deny leave to specific employees who meet one of these requirements, meaning some employees may be exempt and others may not be. If an employer denies leave based on this exemption, it needs to document the facts and circumstances supporting the denial. The employer does not need to send this documentation to any government agency, but rather retains the records in its own files.
Will employers be reimbursed for payments made under the EFMLEA and the EPSLA?
Yes, employers are entitled to a refundable tax credit for 100% of payments made to employees for leave taken under the EFMLEA and the EPSLA. The tax credits are taken against the employer’s share of social security taxes. The tax credits are capped at $200 per day per employee for leave taken under the EFMLEA and $511 per day per employee for leave taken under the EPSLA. Under this arrangement, employers are fully reimbursed for all costs associated with leave taken under the EFMLEA or EPSLA regardless of how much payroll tax liability they have. Additionally, employers can claim this credit when they file their quarterly payroll tax returns and do not need to wait until the end of the year.
We’re happy to work with you to implement policies reflecting these new laws or to answer any questions you have about how they will apply to your specific situation. Please call or email us if you would like more information about your rights or obligations under these new laws. We know these are difficult times – we’re here to help in any way we can.
Take care and stay safe.