On March 18, 2020, President Trump signed into law the Emergency Families First Coronavirus Response Act (Families First Law). The bill requires certain employers to provide paid sick and expanded family leave for covered employees in response to the national emergency. The law also provides for tax credits to mitigate the economic impact on covered employers.
You can view the slides and recording from a webinar we presented on Monday, March 23, at 12:00 p.m. for analysis of the law’s provisions and steps necessary for compliance. Below is an initial summary of the Law’s provisions.
How Does the Families First Law Impact Employers?
Among other provisions within the Families First Law, there are three important components employers need to know. These include:
1) Emergency Paid Sick Leave Act
- The Law applies to employers with less than 500 employees and allows employees to take sick leave to care for any individual, not just family members under quarantine.
- Employers must provide full time employees two weeks (80 hours) of paid sick time. This is in addition to any existing paid sick leave already provided. Employers must offer part-time employees two weeks of their average number of hours in paid sick time.
- Employers must provide employees paid sick time if:
- The employee is subject to a government quarantine or isolation order related to COVID-19.
- The employee has been advised to self-quarantine by a health care provider.
- The employee is seeking medical diagnosis for COVID-19.
- The employee is caring for any individual subject to quarantine by government order or advice of a health care provider.
- Employee is caring for their child due to school closure or child care provider unavailability due to COVID-19.
- Substantially similar conditions specified by the Secretary of Health and Human Services.
- The Secretary of Labor is authorized to issue regulations providing exceptions for employers with fewer than 50 employees, health care providers, and emergency responders.
- There is no length of employment minimum for employees to use paid sick leave.
- Reasonable notice provisions may be required, after the first day the employee uses the paid sick leave.
- Unused paid sick leave does not carry over to the next year, nor is it required to be paid out upon termination of employment.
- Employers may not alter existing paid leave policies to avoid providing extended paid sick leave.
- The law places caps on the amount of pay, depending upon the reason for the leave.
- Employers must conspicuously post notice of the bill.
2) Emergency Family and Medical Leave Expansion Act
- Applies to employers with less than 500 employees.
- Covered employees (they must have been on payroll for 30 calendar days) can receive up to twelve weeks of leave. The first 10 days are unpaid.
- Employers must pay at least two-thirds of the employee’s regular rate after the first 10 days. The Law limits the maximum that must be paid to $200/day or $10,000 total.
- Employees must be unable to work because of the need to take care of their children due to school closure or lack of child care providers due to a public health emergency. This is more narrow than originally contemplated.
- Covered employees who take leave can return to the same or a reasonably equivalent position. There is an exception for employers with fewer than 25 employees, if the employee’s position no longer exists after leave because of operational changes caused by the public health emergency.
- These provisions would remain in effect until the end of 2020 and takes effect 15 days after enactment.
- The Secretary of Labor may issue regulations providing exceptions for health care providers, emergency responders, and employers with less than 50 employees if application would threaten “the viability of the business as a going concern.”
3) Tax Credits Available for Paid Sick and Family Leave
Congress’s relief to businesses obligated under the Law is in the form of tax credits that can be applied against payroll taxes for impacted employees. Some important points for employers to know:
- For qualified sick leave, there is a $511/day per employee cap to the credit if the leave is for the employee’s own needs and a $200/day per employee cap if the leave is taken to care for others. As the paid sick leave is limited to 10 days, so is the credit.
- For qualified family medical leave, the credit is limited to $200/day per employee, with an aggregate $10,000 cap per employee.
- The credit must be taken into the employer’s gross income, which eliminates any potential double benefit.
4) Emergency Unemployment Insurance Stabilization and Access Act of 2020
- $1 billion in emergency state grants for providing unemployment insurance benefits. This includes $500 million for staffing and logistical costs for states, and another $500 million reserved for states that see a 10% increase in unemployment.
- To be eligible for the first $500 million in funds, states must require employers to provide notice of UI eligibility to employees.
- Reduces federal restrictions on Unemployment Insurance eligibility and makes interest-free loans available to states in order to pay for benefits.
We are here to help
Businesses with less than 500 employees must take immediate steps to comply with the Law. Please contact Jonathan S. Krause at JKrause@klehr.com or 215.569.4496 for more information.
Read the updated guidance from the DOL’s recently released Questions and Answers.
The Coronavirus Task Force at Klehr Harrison stands ready to assist you in your business and legal needs. We will continue to provide additional information and guidance as the COVID-19 situation develops.