COVID-19 Impacts of Recent Legislation on Employers
April 9, 2020
On April 1, 2020, the U.S. Department of Labor (DOL) announced rules detailing how American workers and employers are affected by the Emergency Paid Sick Leave Act and Emergency Family and Medical Leave Expansion Act, (EFMLEA) both of which are a part of the Family First Coronavirus Response Act (FFCRA). The Department's Wage and Hour Division (WHD) issued temporary rule (29 CFR Part 826) setting forth regulations having immediate effect. The full text of the rule can be viewed here.
The FFCRA created the first-ever federal mandate requiring employers to provide workers short-term paid sick time and long-term paid leave to deal with an illness or care for an affected loved one. It requires private sector employers with 500 or fewer employees to provide workers up to two weeks (80 hours) off at full pay - subject to certain caps - if they're directly affected by the virus, and at partial pay to care for affected family members. It also provides workers up to 10 weeks off at partial pay to care for children whose schools or child care centers have closed due to the virus, after two unpaid weeks.
It is important to note that all employees are eligible for the two weeks of paid sick leave regardless of the length of employment. However, employees employed for at least 30 days are eligible for up to an additional 10 weeks of paid family leave under certain COVID-19 circumstances. Additionally, an employer is not allowed to require employees to use paid vacation, personal, medical, or sick leave prior to the paid sick leave.
The economic impact of the FFCRA cannot be overstated since it may apply to up to 6 million small employers and nearly 61 million workers.
Of particular importance is the DOL's guidance as to who may be exempt from having to give workers long-term paid time off to care for children whose schools have closed. The WHD laid out three circumstances where businesses with fewer than 50 workers may be exempt from the law's long-term leave requirement. Boiled down, the exemptions depend on whether absences would disrupt companies' operations.
The long-term leave portion of the law includes a provision exempting employers having fewer than 50 workers when granting leave would "jeopardize the viability of the business as a going concern." Three examples to illustrate how and an employer can qualify for an exemption are: 1) will compliance raise expenses above revenue such that the employer would "cease operating at a minimal capacity"; 2) does the employee's absence "pose a substantial risk" to the employer's financial health or operations because of the requesting worker's skills, knowledge or duties; or 3) whether the employer can't find enough workers to perform the work of the employee requesting an absence. Small employers should be aware; however, they are not exempt from the two-week sick time requirement unless a worker is requesting time off to care for a child whose school has closed. Eligible workers will qualify for the two-week benefit, if they can't work because of a quarantine or isolation order or have COVID-19 symptoms and are seeking a diagnosis.
The temporary rule further explains that workers are eligible for the time off if they're isolated due to "a broad range of governmental orders," due to COVID-19 reasons, which include stay-at-home orders or mandates that "otherwise restrict" their mobility. Workers, however, are not eligible for time off if they are able to telework or if they would otherwise not have work for reasons unrelated to COVID-19 related reasons.
Also, under the expanded FFCRA, workers can use leave intermittently by agreement with employers and employers can make workers take accrued vacation days or other paid time off at the same time they take leave to care for a child. Employees and employers should note that the total EFMLEA payment per employee for the ten-week period is capped at $200 per day and $10,000 in the aggregate, for a total of no more than $12,000 when combined with two weeks of paid leave taken under the EPSLA.
It is not all bad for affected employers, however, since under the FFCRA, employers qualify for reimbursement through refundable tax credits for all qualifying paid sick leave wages and qualifying family and medical leave wages paid to an employee who takes leave under the FFCRA, up to per diem and aggregate caps, and for allocable costs related to the maintenance of health care coverage under any group health plan while the employee is on the leave provided under the FFCRA. A more detailed explanation of how Employers may claim tax credits can be found here.
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