COVID-19 UPDATE: Families First Coronavirus Response Act – What is required of businesses? March 20,2020

Yesterday, phase two of the federal government's coronavirus response cleared the U.S. Senate and was signed by President Trump. This bill was aimed at providing workers with relief, and it included a mandate for businesses to pay for Emergency Family and Medical Leave and Emergency Paid Sick Leave related to a diagnosis of COVID-19. We know this may be daunting -- we'll be addressing your questions on this topic in our virtual town hall tomorrow. Moreover, please know that the Federal government is now focusing its effort on a substantial relief package for businesses, including to help with cash flow. We expect to see that package finalized in the next few days. To sign up for our virtual town hall, click here. These mandates are for employers with less than 500 employees.

  • Businesses will be required to offer FMLA leave benefits to all employees. To qualify, workers must have been on the employer’s payroll for 30 days.
  • The first two weeks of leave are unpaid, thereafter employers must continue to offer FMLA paid leave for ten-week compensated at two-thirds of the employee’s regular rate of pay. 
  • Pay entitlement is capped at $200 per day and $10,000 in the aggregate per employee
  • Businesses are responsible for proving this paid leave for employees.
  • The leave can be used for an employee’s CDC suggested quarantine or treatment of COVID-19, care of a family member, or care for a child due to schools closing or childcare disruption. 
  • All employees must be returned to the same or equivalent job position.
    • The bill outlines an exception for employers with less than 25 employees if the employee’s job no longer exists due to coronavirus, and requires employers to make reasonable efforts to restore the employee to an equivalent position over one year.
  • The U.S. Secretary of Labor has the authority to exempt a small business with fewer than 50 employees from this section “when the imposition of such requirements would jeopardize the viability of a business as a going concern.”
Can I require that my employees use their accrued PTO/vacation time or other employee benefits during this time?
The employee may choose to substitute PTO or other medical/sick leave during the initial two week period, but an employer cannot require them to do so. After the first two weeks of unpaid leave, employers must continue paid FMLA leave at a rate of no less than two-thirds the employee’s usual rate of pay.

How am I going to be reimbursed for this?
  • Employers will receive a 100% refundable tax credit for the federal government for qualified family leave wages paid by an employer for each calendar quarter, capped at $200 per day and $10,000 for all calendar quarters. This tax credit is allowed against payroll taxes.
  • This applies to all wages paid by an employer under both sections of this bill for each calendar quarter through the end of 2020.
  • If the credit exceeds the employer’s total liability for payroll taxes, the excess credit is refundable to the employer.
  • The tax credit benefit expires on December 31, 2020.
What is the Emergency Paid Sick Leave Act?
  • Similar to the state mandatory paid sick leave, these funds act as insurance to employees to quarantine or seek a diagnosis or preventative care for COVID-19. Employees do not have to receive testing to qualify for this benefit.
  • Employers are responsible for paying for this leave.
  • Businesses with less than 500 employees will be required to offer full-time employees 10 days (80 hours) paid leave. 
  • Part-time employees are entitled to the number of hours of paid sick time equal to the number of the number of hours they work, on average, over 2 weeks. 
  • Employees are entitled to receive this benefit in addition to the FMLA benefit listed above.
  • If the employee is taking this leave to care for an individual subject to quarantine, a family member or child, they receive this leave at two-thirds the rates given above.
  • This sick leave is available for immediate use by employees, regardless of the length of employment.
  • Paid sick leave wages are limited to $511 per day up to $5,110 total per employee for their own use and to $200 per day up to $2,000 total to care for others and any other substantially similar condition.
How am I going to be reimbursed for this?
  • Employers will receive a 100% tax credit for all wages that are paid, capped at $511 per day and $5,110 altogether for each employee.
  • The credit is allowed against the payroll tax.
  • This applies to all wages paid by an employer under both sections of this bill for each calendar quarter through the end of 2020.
  • If the credit exceeds the employer’s total liability for payroll taxes, the excess credit is refundable to the employer.
  • The benefit expires on December 31, 2020
When does this start?
15 days after the enactment of the legislation through December 31, 2020. We are anticipating the mandates of the legislation to be in effect April 2, 2020, through December 31, 2020.

How do I know how to calculate the paid leave?
The bill requires the Secretary of Labor to issues rules about the implementation of these requirements within the next 15 days. As of today, these rules have not been issued, but we will update our members with information as quickly as possible.

If an employer has laid off their employees, either permanently or just through the closures, are they required to pay this new paid leave?
If employees are terminated or laid off, then this new paid leave does not apply to them.

Does an employer need to factor in tips for tipped employees when calculating their paid leave?
The bill does not address this issue.  Until we get further guidance, we recommend using minimum wage as used in the Colorado sick leave regulations.

This law applies to companies under 500 employees. If the parent company has more than 500 employees, but their franchises have fewer than 500 at their franchiser locations, does the law apply to them?
Only if they constitute joint employers, which likely would be determined by the test applied under such statutes as the Fair Labor Standards Act and Family and Medical Leave Act. The factors the U.S. Department of Labor relies on are: (1) common ownership, (2) common directors/or officers, (3) de facto exercise of control, (4) unity of personnel policies emanating from a common source, and (5) dependency or interrelationship of operations.

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