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What Employers Need to Know About the COVID-19 Federal Paid Leave Acts

In an effort to confront the economic effects of COVID-19, the United States Senate passed on March 18 a multi-billion dollar emergency aid package.

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The Families First Coronavirus Response Act, which goes into effect April 1, includes a paid leave mandate for small to medium-sized businesses. WorldatWork recently held an Expert Insight on the topic to shed more light on what the law entails. The following is a breakdown of the session, which was hosted by Justin Boron, a labor & employment law attorney for Freeman, Mathis & Gary, LLP.

Two Laws and Two New Bases for Leave

The act consists of two different laws: the Emergency Family and Medical Leave Expansion Act and the Emergency Paid Sick Leave Act.

 The Emergency Family and Medical Leave Expansion Act:

  • Adds a basis for 12-week FMLA leave related to childcare from school closures during the COVID-19 crisis.
  • Results in limited paid leave for 10 weeks.
  • Provides tax credits.
  • Expires on Dec. 31, 2020.
  • Applies to certain public agencies and private employers with fewer than 500 employees.
    • Exception: If you have fewer than 50 employees, you must comply but cannot be liable to an employee for failing to do so. Employers with fewer than 50 employees may seek a hardship exemption from the Department of Labor (DOL)
    • Counted employees include all U.S. full-time, temp workers, part-time, day-laborers, but not independent contractors (employees outside the U.S. are excluded from the count).
    • Any employee whose name appears on the employer’s payroll will be considered employed each working day of the calendar week and must be counted whether or not any compensation is received for the week.

The Emergency Paid Sick Leave Act:

  • Is a new law related to COVID-19 related absences.
  • Results in 10 days limited paid leave.
  • Has a broader number of reasons for paid leave than the FML Expansion Act.
  • Provides tax credits.
  • Expires on Dec. 31, 2020.
  • Applies to certain public agencies and private employers with fewer than 500 employees, following the same covered employer and counting rules as the FML Expansion Act.

Determining Eligibility

The Emergency Family and Medical Leave Expansion Act
Employees eligible for leave must meet the following elements:

  • Has been employed for 30 days;
  • Can’t work or telework;
  • Has a childcare need; and
  • The child’s school or daycare is closed due to an emergency declared by federal, state, or local authority for COVID-19, or the child-care provider is unavailable.
  • Exception: If you are an employer of a “health-care provider” or “emergency responder,” then you may elect to exclude an employee.

A covered employer is required to provide an eligible employee:

  • An initial 10 days of unpaid leave during which the employee may elect to use PTO or sick pay provided under the Emergency Paid Sick Leave Act.
  • After the initial 10 days, 10 weeks of paid leave at 2/3 of employee’s regular rate of pay and the number of hours the employee is regularly scheduled to work, but this paid leave will be no more than $200 per day and $10,000 in the aggregate.

Emergency Paid Sick Leave Act
An employee is eligible if they are unable to work or telework because:

  • They’re subject to a federal, state or local quarantine or isolation order related to COVID-19;
  • They’ve been advised by a health-care provider to self-quarantine due to concerns related to COVID-19;
  • They’re experiencing symptoms of COVID-19 and seeking a medical diagnosis;
  • They’re caring for an individual who is subject to a government quarantine order or who has been advised by a health-care provider to self-quarantine;
  • They’re caring for a child whose school or place of care has been closed, or the child-care provider of such child is unavailable, due to COVID-19 precautions; or
  • They’re experiencing any other substantial similar condition specified by the Secretary of Health and Human Services in consultation with the Secretary of the Treasury and the Secretary of Labor.
  • Exception: If you are an employer of a “health-care provider” or “emergency responder,” then you may elect to exclude an employee.

How to Calculate Sick Pay

Employers should calculate 80 hours for full-time workers and the average hours for a two-week period for part-time workers. The pay will be the greater of the employee’s full regular rate of pay or minimum wage if the employee:

  • Is subject to a federal, state, or local quarantine or isolation order related to COVID-19;
  • Has been advised by a health-care provider to self-quarantine due to concerns related to COVID-19; or
  • Is experiencing symptoms of COVID-19 and seeking a medical diagnosis.

The pay, however, will never be more than $510 per day or $5,110 in the aggregate.

The pay will be two-thirds of the greater of the employee’s full regular rate of pay or minimum wage if the employee:

  • Is caring for an individual who is subject to a governmental quarantine order or who has been advised by a health-care provider to self-quarantine;
  • Is caring for a child whose school or place of care has been closed, or the child-care provider of such son or daughter is unavailable, due to COVID-19 precautions; or
  • 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.

The pay, however, will never be more than $200 per day and $2,000 in the aggregate. 

Variable Work Schedules
For a part-time employee with an inconsistent work schedule, calculate paid sick leave at:

  • A number equal to the average number of hours that the employee was scheduled per day over the six-month period, ending on the date the employee takes the paid sick time, including hours for which the employee took leave of any type.
  • If the employee did not work over such period, the reasonable expectation of the employee at the time of hiring of the average number of hours per day that the employee would normally be scheduled to work.

What About Certification?
Typically, FMLA and sick leave policies require some level of certification. This act does not address certification but the DOL has now advised that documentation to support the paid family leave may be required to the extent permitted under the certification rules of traditional FMLA leave requests

In addition, it will be important to maintain appropriate documentation for each leave type in order to support tax credit claims for the leave payments.

Restoration Rights Under FMLA
The central feature of FMLA is job-protected status when on leave and the same is true under the new law, except for employers with fewer than 25 employees that meet certain economic hardship requirements in section 110(d) of the FMLA. Under that provision, the employee would get paid, but could still be laid off.

Tax Credits
For each calendar quarter, an employer is entitled to apply a tax credit against the employer-paid excise taxes on payroll for 100% of the amounts required to be paid under the FML Expansion Act or the Emergency Paid Sick Leave Act.  Normally, an employer must withhold and deposit payroll taxes in a quarterly return with the IRS. Under tax credits, employers will be able to retain an amount of the payroll taxes equal to the amount of qualifying sick and child-care leave that they paid, rather than deposit them with the IRS.

This enables employers to subsidize their payroll for qualifying reasons. The Treasury Department is moving to expedite reimbursements so employers can retain cash flow while paying sick leave.

Existing FMLA leave remains unpaid, as there are no paid leave requirements for:

  • Birth
  • Adoption
  • Serious health condition.

The normal employment policies and PTO rules apply. Granting paid leave under these provisions is not eligible for reimbursement under the tax credits afforded by the new paid leave legislation.

The Treasury Department will supply procedures for reimbursement and expedited reimbursement and expedited re-payment will be available.

  • Example: If an eligible employer paid $5,000 in sick leave and is otherwise required to deposit $8,000 in payroll taxes, including taxes withheld from all its employees, the employer could use up to $5,000 of the $8,000 of taxes it was going to deposit for making qualified leave payments. The employer would only be required under the law to deposit the remaining $3,000 on its next regular deposit date.

Legal Consequences and Enforcement
If an employer fails to provide the emergency sick or family leave required by the new laws or terminates an employee for taking such leave, the employer is subject to civil liability and penalties under federal law. The DOL has granted reprieve on enforcement until 30 days after the act.

Visit WorldatWork’s resource page for more info and planning on COVID-19.

About the Author

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Brett Christie is the managing editor of Workspan Daily.


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