This Act made its way through the House and Senate over the past two weeks and will become effective on April 1, 2020. It has a number of provisions that will impact employers; among them are a provision expanding FMLA benefits and a second provision providing for two weeks of emergency paid sick leave.
Please note: one portion of this Act that is unclear is what is planned for small businesses with fewer than 50 employees. The Act provides that such small businesses may be excluded from the Act, under guidelines or regulations to be issued by the Department of Labor at some point in the near future, if the imposition of these requirements on such small businesses would “jeopardize the viability of the business as a going concern”.
The impact of these provisions is hard to interpret from the face of the legislation alone. The Department of Labor has indicated that regulations regarding this potential exemption are expected in April of 2020. In the meantime, according to guidance provided by the Department of Labor, these employers should pull together documentation regarding why their business meets the criteria above so that they are prepared when the regulations come out.
The new guidance from the DOL can be found here:
Based on guidance published on the Department of Labor’s website, the new FMLA provisions run concurrently with the emergency sick leave provisions. An employee who is caring for a child whose school or place of care is closed, or whose childcare provider is unavailable due to coronavirus precautions, “is eligible for up to 12 weeks of leave (two weeks of paid sick leave followed by up to 10 weeks of paid expanded family & medical leave)”.
The new required payments under FMLA and sick leave are funded through tax credits with respect to the employer portion of social security tax withholdings (see below for a brief description of the tax credits).
There may be subsequent emergency Acts that amend this Act at a later date and/or impact employers in other ways, but the basic provisions as currently enacted are as follows:
FMLA Amendments (Section 3102)
These emergency amendments are in place from April 1, 2020 to December 31, 2020.
Employers with less than 500 employees will have to provide employees who have worked for the employer for 30 days with 12 weeks of FMLA leave paid time off if the employee is unable to work or tele-work due to caring for a child under 18 if the school or place of care has been closed or the child care provider is unavailable due to the Public Health Emergency. Other relevant provisions:
- While the Act provides for 12 weeks of leave, the first 10 days may be unpaid and the worker has the option to take PTO for the first 10 days if that is available, but the employer cannot force the worker to take PTO. Please note, however, that sick leave (see below) will generally apply.
- After the first 10 days, the worker will receive a benefit from the employer equal to at least 2/3 of their normal pay rate (capped at $200 per day and $10,000 in the aggregate).
- The Department of Labor is authorized to issue regulations with regard to (i) the exclusion of certain health care providers and emergency responders from paid leave benefits, (ii) the exemption of 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” (as referred to above), and (iii) ensuring consistency between the emergency sick leave provisions and emergency family leave provisions. The regulations are expected in April of 2020.
- Even though the applicable regulations are not completed, an employer of an employee who is a healthcare provider or an emergency responder may elect now to exclude such employee from the FMLA amendments in section 3102 of this Act.
Emergency Sick Leave (Section 5101)
Again, this emergency act is in place from April 1, 2020 to December 31, 2020. Employers with under 500 employees will need to provide two-weeks of paid sick leave to an employee, regardless of how long they have been working for the employer, who cannot work or tele-work because the employee:
- is subject to a coronavirus quarantine or isolation order;
- has been advised by a healthcare provider to self-quarantine due to coronavirus concerns;
- is experiencing coronavirus symptoms, and is seeking a medical diagnosis;
- is caring for an individual described in 1-2 above;
- is caring for a child whose school or place of care is closed, or the child care provider is unavailable, due to coronavirus precautions; or
- is experiencing any other substantially similar conditions specified by HHS in consultation with Treasury and the Labor Department.
The Department of Labor is authorized to issue regulations with regard to, (i)the exclusion of certain health care providers and emergency responders from paid leave benefits (as referred to above), (ii) the exemption of small businesses with fewer than 50 employees from the paid sick leave requirements “when the imposition of such requirements would jeopardize the viability of the business as a going concern” (as referred to above)and (iii) ensuring consistency between the emergency sick leave provisions and emergency family leave provisions. The regulations are expected in April of 2020. Even though the regulations are not completed, an employer of an employee who is a health care provider or an emergency responder, may elect now to exclude such employee from the application of the emergency sick leave provisions.
Under this Section, full-time employees are to receive 80 hours of sick- leave, and part-time workers are granted leave equivalent to their average hours worked in a two-week period regardless of tenure.
Payments are not subject to the social security tax normally paid by employers on employees’ wages.
Workers taking leave for themselves will have to be paid at least their normal wage or the applicable federal, state, or local minimum wage, whichever is greater. Workers taking time off to care for family members must be paid at two-thirds of the foregoing rate. Sick leave is capped at $511 per day and $5,110 in the aggregate for leave taken in categories (i) through (iii) above on their own behalf, and capped at $200 per day and $2,000 in the aggregate for leave taken in categories (4) through (6) to care for others
As soon as the need for leave ceases, the sick leave ceases as of the employee’s next shift.
The employer cannot force the employee to find a replacement.
The employer cannot make the employee use any other available leave time first. This leave must be used first if applicable.
This sick leave will not carry over from year to year.
This law will not diminish other leave currently provided by the employer.
On or before April 9, the Secretary of Labor will make a Poster available that must be posted in places of employment describing the new Act.
This sick leave need not be paid out at time of separation if unused.
You can’t discipline, discharge, or discriminate against an employee because they have taken time under this section or have filed a complaint to enforce this Act.
Violations under this Section for failure to pay sick leave or for discrimination will be violations of the Fair Labor Standards Act (FLSA). The Department of Labor has indicated that it will observe a temporary period of non-enforcement for the first 30 days after the Act takes effect so long as the employer has acted in good faith to comply with the Act. That means that any violations have been remedied and the employee is made whole as soon as practicable by the employer, the violation was not willful, and the Department receives written commitment from the employer that it will comply in the future.
Employer Tax Credits
(While we have provided a summary of our best understanding of these provisions below, WE ARE NOT TAX ATTORNEYS. We strongly recommend that you consult your accounting services provider/tax advisor and/or payroll services provider regarding these credits and how they may apply in your particular situation):
These provisions are in effect from April 1, 2020 to December 31, 2020.
Refundable credits for the employer portion of the Social Security tax will be provided to employers to cover wages paid to employees for time off under the FMLA and emergency sick leave provisions above.
This FMLA credit is for wages, including qualified health plan expenses related to those wages, of as much as $200 per employee per day, and $10,000 in the aggregate for all calendar quarters.
The sick leave credit will be for wages, of up to $511 per day while the employee receives paid sick leave to care for himself or herself or $200 per day if caring for a family member or child whose school has closed. The sick leave credit is limited to 10 days per employee per quarter (and may be less depending upon the interpretation of a difficult to decipher aggregating rule in the legislation).
The amount of each of the credits allowed above will be increased by so much of the employer’s qualified health plan expenses as are properly allocable to the qualified family leave and/or sick leave wages for which the credit is allowed. This is subject to allocation rules to be set by the Secretary of the Treasury.
To prevent double dipping, employers will need to include the amount of the benefit in their gross income.
Wages taken into account in determining the credit allowed under these emergency provisions will reduce the Code Section 458 paid family and medical leave credit established by the 2017 tax reform act available to the employer.
An employer can elect not to take the credit for a given quarter.
The Treasury Department will issue regulations and guidelines. Regulations are to include regulations providing for waiver of penalties for failure to deposit amounts in anticipation of the allowance of the credit (this should provide relief from having to deposit monies before getting them credited back),
Money from the general fund will be transferred to the SSDI fund to cover these amounts.
We hope this explanation is helpful, these are difficult times and these may be difficult measures for you to implement. As always, if you have questions regarding any of the employment provisions or other questions about this difficult situation, please don’t hesitate to call or shoot an email to Anne Millham at firstname.lastname@example.org for employment questions or Mark Aurand at email@example.com for other questions.