Congress has passed and President Trump has signed a new law that requires small employers to provide paid leave to employees for two weeks of sick leave and as many as 10 weeks of leave to take care of kids whose schools have closed.
This Families First Coronavirus Response Act (“FFCRA”) goes into effect on April 1, 2020. It requires all employers with less than 500 employees, including very small employers and nonprofits, to pay employees whose absences are caused by the COVID-19 epidemic. The DOL has created a fact sheet and an FAQ to help employers understand these laws better.
Here are a few highlights of the FFCRA law:
Paid sick leave for two weeks is available to all full-time, part-time, temporary, seasonal, and other kind of employee if the employee has to miss work for one of the following reasons:
- Employee is subject to government quarantine; or
- Employee has been advised by healthcare provider to self-quarantine; or
- Employee is experiencing symptoms and seeking a diagnosis; or
- Employee is caring for an individual subject to quarantine or self-quarantine as advised by healthcare provider; or
- Employee is caring for children under 18 because schools or “caregivers” are unavailable; or
- Employee is experiencing any other condition that is substantially similar to COVID-19, as specified in HHS regulations to come.
Paid Family and Medical Leave is available for up to 10 more weeks (after using up 2 weeks of unpaid time or 2 weeks of Emergency Paid Sick Leave as spelled out above) to all full-time, part-time, temporary, seasonal or other kind of employee if the employee has worked for the employer for at least 30 days and then has to miss work for this one reason:
- The employee is unavailable to work or telework because the employee is caring for a child under the age of 18 because that child’s school or childcare facility is closed because of the coronavirus.
The paid sick leave has to be paid at the employees’ regular hourly rate (including commissions, tips and piece rates, but not overtime rates) if the employee is absent for reasons #1-3, above. The paid sick leave and the paid family and medical leave have to be paid at 2/3 of the employee’s regular hourly rate if the employee is absent for reasons #4-6, above. There are also daily and total caps on the amounts you have to pay the employees for these absences.
Employers with less than 50 employees are subject to these FFCRA paid leave laws, even though you have never before been required to comply with Family and Medical Leave Act or any paid leave law. There is a provision that the Secretary of Labor can exempt a business when giving the leave would “jeopardize the vitality of the business.” In other words, if granting this paid leave could make your company go out of business, and you can prove that in your financials, you might not have to provide this paid leave. You don’t have to get the Secretary of Labor’s permission for this exemption by filing anything, but you will have to be able to document the correctness of your decision after the fact.
This law is not retroactive, meaning you don’t have to pay for leave taken before April 1, 2020, if it wasn’t your company policy to pay employee absences.
However, you also can’t make employees apply your paid time off policy before using this emergency paid sick leave or family leave. It is the employee’s choice alone on how to coordinate their PTO and these paid leave laws.
The good news for employers is that the employer gets a tax credit on payroll taxes for 100% of these amounts paid to employees for emergency sick leave and paid Family and Medical Leave. On the next Form 941 that will be due by July 31, 2020, the IRS will add a line for the employer to take the tax credit. If the amount you paid out to your employees for these paid leave laws exceeds the payroll taxes that you owe, then you are supposed to be able to get a refund from the IRS within 2 weeks after filing your Form 941.
We are still waiting for the Secretary of Labor to provide more guidance through regulations. He should also be providing us with notices, posters and other explanations to give to your employees.
There are also other employment laws that a company has to consider in this crisis, which are summarized here.