ALERT: Congress Enacts Families First Coronavirus Response Act

Lyons Gaddis COVID-19 Alert

This Alert is one in a collection of articles created by Lyons Gaddis in our effort to get important information to our clients regarding the effect of the novel coronavirus (COVID-19) outbreak in the United States.  This Alert focuses the newly adopted Families First Coronavirus Response Act and its effect on student loans and a recently announced interest waivers.

March 23, 2020
ALERT: Congress Enacts Families First Coronavirus Response Act
by Catherine A. Tallerico, Shareholder

On March 18, 2020, the President signed into law the Families First Coronavirus Response Act (the “Act”), which provides emergency relief to directly address the effects of the COVID-19 pandemic.  The Act will impact employers specifically by requiring emergency paid sick leave and family leave for workers who may need to take time off when they or a family member are infected with the virus. The Act goes into effect April 2, 2020.  There are two parts to this Act, the Emergency Paid Sick Leave Act and the Emergency Family and Medical Leave Expansion Act.

The Emergency Paid Sick Leave Act, provides employees with up to 80 hours of sick leave (or the equivalent of the average number of hours over two weeks for part time employees) paid by their employer at 100% of the employee’s regular pay, up to $511 per day.  “Employees” under this Act include anyone qualified as an employee under the Fair Labor Standards Act which includes private sector and government employees (with fewer than 500 employees). Employees can take this leave if they cannot work because they have contracted COVID-19, if they are seeking treatment for symptoms of COVID-19, or if they are subjected to either a government quarantine order or a health care provider’s recommendation to self-isolate. During this 10 days (80 hours), an employee may choose to substitute paid time off they have accrued under the employer’s policy, but the employer may not require the employee to use their paid leave.

Ten days of leave is also available if the employee is caring for someone subject to a quarantine order, or if their child’s school or daycare has closed and the employee must stay home to care for the child, but in these circumstances, it is paid at 2/3 of the employee’s regular rate, and the maximum daily benefit is $200.

There are several other technical aspects of emergency paid sick time:

• Paid sick time under the Act does not carry over from one year to the next.
• Unused paid sick time under the Act does not need to be paid out on an employee’s termination, resignation, retirement, or separation from the employer.
• The employer may not require the employee to search for or find a replacement in order to receive paid sick time under the Act.
• Paid sick time is available for immediate use regardless of how long the employee has been employed.
• The employee may use paid sick time under the Act before using any other accrued paid time off.
• This Act does not provide leave where an employee is unable to work or telework solely because of a workplace closure.

Emergency paid sick time is in addition to any paid time entitlement under the employer’s existing paid time off policy. The employer may not change its paid leave policies on or after the date of the Act’s enactment to avoid providing the additional two weeks of emergency paid sick time. 

The Emergency Family and Medical Leave Expansion Act, provides an additional ten weeks of paid leave beyond the first two weeks of sick leave if an employee needs additional time off because their child’s school or daycare remains closed because of COVID-19. The leave can be unpaid for the first two weeks, as employees are covered under the sick leave described above. After that, the employer must provide paid leave for each day of leave taken under the Act. The leave for the remaining ten weeks must be paid at no less than 2/3 of the employee’s regular rate for the number of hours worked up to $200 per day. This leave is also only available to employees who have worked for their employer for at least 30 days.

Both leaves are subject to anti-retaliation and reinstatement requirements, meaning that employers cannot retaliate against employees for taking leave under these Acts and must restore employees to their position after they return from leave (although this does not require employers to cancel pre-planned reductions or layoffs).

Employers must post and keep posted in a conspicuous place a notice advising employees of their rights to emergency paid sick time. The Secretary of Labor will make a model notice publicly available within 7 days after the enactment of the Act.

Both leaves allow employers of health care providers and emergency responders to exclude those employees from leave under the Act. It is unclear who specifically would be classified as a health care provider or an emergency responder.

Tax Credits for Paid Sick and Paid Family and Medical Leave

To help employers cover the costs of the new Paid Family and Medical Leave and Paid Sick Time requirements, the legislation includes certain tax credit provisions equal to 100% of the qualifying wages paid under the two programs, subject to certain caps and limitations. The credit is taken against payroll taxes owed. Also, paid sick leave or paid public health emergency leave will not be considered wages for employment tax purposes. The Secretary of the Treasury will be releasing regulations and guidance to help employers navigate these tax credit provisions.

The Act is not retroactive, which means that any paid time currently being granted would not count toward FMLA leave or toward the 80 hours of sick leave, nor be eligible for the credit.

Attorneys in the Employment Law and Litigation Group at Lyons Gaddis are available to advise you in relation to the new Act and its impact on your business, your employees, and other COVID-19 related matters impacting your current and future business operations.