March 20, 2020
On March 18, 2020, President Trump signed H.R. 6201, the Families First Coronavirus Response Act (Families First Act). In addition to the expansion of family and medical leave, and the requirement to provide paid leave, the Families First Act also provides for federal grants to state unemployment funds under certain circumstances, and allows employers to apply for refundable tax credits to offset the cost of the paid leave. The provisions of the Act require additional interpretation for which the U.S. Department of Labor and Internal Revenue Service are empowered to issue rules and regulations. Employers should review the following quick reference to understand their potential new obligations.
Emergency Family and Medical Leave Expansion Act
Provision |
Topic |
Employer Coverage |
Applies to private employers with fewer than 500 employees, unless future regulations that may be issued by the DOL allow businesses with fewer than 50 employees to opt out if providing the leave would affect their ability to continue as a “going concern” (i.e. not financially viable). Also applies to employees of governmental agencies of any size. |
Eligibility |
Available to employees employed for at least 30 days. Health care providers and emergency responders are exempt. |
Covered Event |
If the employee is unable to work or telework due to a need to care for a child under 18 years of age because that child’s school (elementary or secondary) or place of care has closed or the child’s child care provider (i.e. provider who receives compensation for providing child care services on a regular basis) is unavailable due to a public health emergency with respect to COVID-19. |
Benefits |
Up to 12 weeks of job-protected leave is available. The first 10 days of leave may be unpaid, after which employee receives pay for the remainder of leave at two-thirds (2/3) of the employee’s regular pay rate up to a maximum paid leave of $200/day ($10,000 in the aggregate over 12 weeks). Amount owed is based on the number of hours the employee would otherwise be normally scheduled to work. |
Possible Pay During First 10 Days of Leave |
During the initial 10-day period, employee may elect to use available paid company leave (i.e., vacation, leave, personal leave, or medical or sick leave). |
Part-Time and Irregularly Scheduled Employee Benefits | Amount owed is based on average number of hours worked each week over the six month period prior to taking leave. Calculation must include deemed hours for which the employee took “leave of any type.” For an employee who works variable hours, but did not work for the employer over that six month period, calculate the average number of hours per day the employee reasonably would have been expected to work at the time of hire. |
Emergency Paid Sick Leave Act
Provision |
Topic |
Employer Coverage |
Applies to private employers with fewer than 500 employees, unless future regulations that may be issued by the DOL allow businesses with fewer than 50 employees to opt out if providing the leave would affect the employer’s ability to continue as a “going concern” (i.e. not financially viable). Also applies to employees of governmental agencies of any size. |
Eligibility |
Available for all employees of covered employers (defined above), regardless of the employee’s length of service. Health care providers and emergency responders are exempt. |
Covered Events |
If the employee is unable to work or telework because:
|
Benefits |
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Prohibition Against Employee Requirement to Use other Paid Sick Time |
Employer may not require employee to use other paid leave under an employer policy before the employee uses the paid sick time under the Act. |
Other Compliance Obligations and Refundable Tax Credits
Provision |
Topic |
Employee Notice Obligation | Under both Acts, the employee must provide as much notice of the need for leave as practicable. |
Job Restoration at End of Leave |
Under the Emergency FMLA, for up to 12 months following earlier of (1) the end of leave or (2) the date when the need related to a public health emergency ends, the employer must make reasonable efforts to restore employee to a position equivalent to the position the employee held when the leave commenced (equivalent employment benefits, pay, and other terms and conditions of employment). No express job restoration provision appears in the Emergency Paid Sick Leave Act. |
Exception to Job Restoration | Employer with fewer than 25 employees may be exempted if (1) the employee was on leave due to a public health emergency or (2) the employee’s position no longer exists due to economic conditions or other changes in the operating conditions of the employer that affect employment. |
Effective Date |
A date specified by the Secretary of Treasury not later than 15 days after enactment (i.e. April 1, 2020) until December 31, 2020. |
Refundable Tax Credits |
Paid leave under the Acts (both paid sick and emergency family) is not subject to Social Security, but is subject to Hospital Insurance taxes. Non-governmental employers that comply with the Acts can apply for tax credits applied against their Social Security taxes in the amount of 100% of the paid leave wages paid pursuant to the Acts and federal income tax withholding. In addition, amounts equal to Hospital Insurance taxes on the paid leave wages and the allocable cost of employer-provided group health plan coverage during the paid leave period can also be claimed as tax credits. See our Tax Credit alert here. |
Employees Covered by Collective Bargaining Agreement |
Employer can make contributions under either Act to a multiemployer plan, provided employees can receive pay from such plan based on hours worked under the multiemployer collective bargaining agreement for paid leave taken under FMLA. |
Notice Posting | Employers must post a conspicuous notice related to employee rights for emergency Paid Sick Leave. The Department of Labor will publish a model notice by next week. The Notice must be posted by April 1. Presumably, notice of Emergency FMLA rights follow normal FMLA rules. |
No Discrimination or Retaliation | Prohibition against discharge, discipline, or any discrimination against employee who takes leave under either Act, files a complaint or institutes or causes to be instituted any legal proceeding under either Act. |
Emergency Unemployment Insurance Stabilization and Access Act of 2020
Provision |
Topic |
Overview |
Allocates $1 billion in emergency administration grants to states in calendar year 2020, for processing and paying unemployment benefit claims:
Eligible states will receive full federal funding, versus states’ previous 50% share of costs, for extended unemployment benefits. Fully-funded extended benefits are increased from 26 to 52 weeks. |
Eligibility |
For category (1), above, states must:
Additional requirements for both (1) and (2) include states:
|
Effective Dates |
A date specified by the Secretary of Treasury not later than 15 days after enactment (i.e. April 1, 2020) until December 31, 2020. |
In addition to the above wage-specific provisions in the Families First Act, employer group health plans are also required to cover certain COVID-19 related costs. See Nelson Mullins Comp & Benefits Brief for more.
The Labor & Employment team is ready to assist with questions or compliance steps. Please contact one of our Employment & Labor attorneys or the Nelson Mullins attorney with whom you work.
These materials have been prepared for informational purposes only and are not legal advice. This information is not intended to create, and receipt of it does not constitute, an attorney-client relationship. Internet subscribers and online readers should not act upon this information without seeking professional counsel.