UPDATE: What Will the "Families First Coronavirus Response Act" Mean for Employers?

** NOTE - the following is an important update to our Working Together blog post on this topic published on March 16, 2020.

On March 18, 2020 the Senate passed and the President signed the “Families First Coronavirus Response Act.” The Act, originally the product of lengthy negotiations between House Majority Leader Nancy Pelosi and Secretary of the Treasury Steven Mnuchin, was passed by the House on March 14, revised by that body on March 16, and then passed the Senate without further modification. 

The law will take effect within 15 days of enactment (April 1). Will it be applied retroactively to impact employees laid off before the effective date?  The law is silent on that question, but when a law is silent on retroactive application then it usually is effective as of its effective date, and not before.

Here is a brief summary of what two of its provisions – the Emergency Paid Sick Leave Act, and the Emergency Family and Medical Leave Expansion Act – will mean for employers.

What employers are covered?

Covered employers include private sector employers with at least one, but fewer than 500 employees, as well as government entities.  

• The Secretary of Labor is authorized to issue regulations that will exempt businesses with fewer than 50 employees from the mandatory paid sick leave and paid FMLA leave provisions of the act, at least where the requirements would jeopardize the viability of the business.
• The Secretary may also issue regulations excluding health care providers and emergency responders from coverage.
• When or if those regulations will be issued is unknown at this time.
• In determining whether affiliated entities may count as a single employer for purposes of the 500-employee threshold, it appears that the approach delineated in the federal FMLA regulations will likely apply.

The Emergency Paid Sick Leave Act

The statute requires covered employers to provide employees with two weeks of paid sick time -- 80 hours for full-time employees, and normally-scheduled hours for part-timers -- if they are unable to work or telework, in order for the employee to:

• quarantine or isolate themselves because they have been or may have been exposed to the COVID-19 virus;
• obtain diagnosis or care and treatment for COVID-19 for themselves;
• care for a family member who has been diagnosed or is in quarantine;
• care for a minor child whose school or day care has closed due to the coronavirus. 

Employees who receive emergency paid sick leave due to their own conditions must be paid their normal pay, up to a cap of $511 per day / $5,110 in total. 

Employees receiving emergency paid sick leave in order to act as a caregiver must be paid two-thirds of their normal pay, up to a cap of $200 per day /$2,000 in total.  Employers may not require employees to use other available paid leave for emergency sick leave. 

Employees of covered employers are entitled to emergency paid sick leave without regard to how long they have worked for the employer. 

Emergency paid sick leave must be provided in addition to any other paid leave offered by the employer – this includes sick, personal or vacation time or any other Paid Time Off.

Employers who are signatories to multiemployer collective bargaining agreements may, consistent with their bargaining obligations and their obligations under the agreements, fulfill their obligations under this Act by making contributions to a multiemployer fund, plan, or program.

The Emergency Family and Medical Leave Expansion Act

• The statute creates a new type of “public health emergency” leave under the federal Family and Medical Leave Act.  
• Covered employers will be required to provide up to 12 weeks of job-protected leave to employees who are unable to work or telework because they must provide care for a child under 18 whose school or day care has closed because of the coronavirus.
• The first 10 days of this leave can be unpaid; but employees will have a right to use other available paid time off for this period. 
• After the first ten (10) days, employees will be entitled to receive at least two-thirds of their normal pay during the remaining 10-week leave period, subject to a cap of $200 per day / $10,000 in total.
• As passed, the Emergency FMLA Expansion Act does not provide paid leave to an employee who is unable to work or telework due to his or her own serious health condition.  Such an employee may be eligible for the usual unpaid FMLA leave if the employer employs 50 or more employees. 
• An employee must have worked for the employer for at least 30 days to be eligible for Emergency FMLA leave.

The combined effect of the two paid leave programs contained in this Act will be that eligible employees who are unable to work or telework because they must provide care for a child under 18 whose school or day care has closed because of the coronavirus will be entitled to use “emergency paid sick leave” for the first two weeks of leave, followed by (if necessary) another 10 weeks of “public health emergency leave” under the FMLA at two-thirds pay, as described above.

Employers whose employees are represented by unions should, of course, consider whether their collective bargaining agreements impose any additional obligations.

Tax Credits, Notice, Penalties

• Employers will be entitled to refundable tax credits, which may be taken on a quarterly basis against the employer portion of Social Security taxes, to cover the full cost of the wage payments mandated by the Act.
• Employers will be required to post notices to their employees of the availability of the paid leave mandated by the statute.  There will be civil penalties for covered employers who fail to provide the leaves required by the Act, or who discriminate or retaliate against employees who seek to use the benefits provided under the law. 
• Both the Emergency Paid Sick Leave and the Emergency Family and Medical Leave Expansion provisions expire December 31, 2020.

Other provisions of the Families First Coronavirus Response Act include federal subsidies and other assistance for state unemployment compensation systems, and for nutrition programs. 

The Act does not, so far as we know, impose obligations on employers who elect to lay off employees for non-discriminatory or non-retaliatory reasons, but that may prove to be an issue for litigation and/or enforcement action.  We are recommending that employers who lay off employees pay out all accrued Paid Time Off benefits.  Any employer contemplating lay offs should evaluate, on a case by case basis, whether this law may be applicable to the laid-off employee.

Employers who have shut down significant portions of their operations are cautioned to consider whether they have notice or other obligations under the federal WARN Act, or applicable state laws.

Please note that the above summary is based on published reports concerning the provisions of the bill after it was revised by the House of Representatives on March 16, 2020.  We will update this information if necessary when copies of the legislation as enacted become available.