Federal Coronavirus Legislation
A coronavirus relief law with numerous varied provisions is now in effect. There are significant revisions from the bill issued by the House last weekend (H.R. 6201). Yesterday afternoon, the Senate approved the revised bill by a vote of 90-8. Last evening, the President signed the relief bill (H.R. 6201) into law. Called the “Families First Coronavirus Response Act,” it contains numerous provisions dealing with the COVID-19 pandemic. We know these are of great importance to you, particularly impacting many employment decisions you face in working through the effects of this pandemic. We provide you the following summary and description of this law, focusing on its employment aspects, along with a brief update on state law unemployment issues.
This law covers numerous areas, as listed below. Please be aware that there is a lot of confusion about this statute, and the information is not all up-to-date (e.g., the Congressional website’s summary of this Act last evening and this morning includes provisions dropped form the bill in the last day or two). In light of this, the following information, taken from various information sources, may contain inaccuracies. In the interests of time, we consider it important to get this update to you promptly. The main provisions of this new law are:
- requiring many employers to provide paid sick leave in designated situations,
- providing employer tax credits to cover costs of this paid sick leave,
- providing funds to states for handling unemployment compensation claims,
- additional federal funding for nutrition and food assistance programs,
- providing coronavirus diagnostic testing at no cost to consumers,
- providing certain liability protections for personal respiratory protective devices, and
- temporarily increasing Medicaid federal funding.
The provisions directly dealing with employment matters are summarized here and described more fully below. Along with funding state unemployment compensation administration, the key employment provisions require employers to provide two weeks of sick pay for full-time employees (proportionately less for part-time employees) who, as a result of COVID-19, take off from work due to a governmental order or health care provider’s direction (or are seeking a doctor’s direction), or because of a school or child care closure. Employers must also provide an additional ten (10) weeks of paid sick pay for employees when taking off work to care for a child whose school or day care has closed by governmental order. Federal tax credits are provided for employers to address the costs of this paid sick leave.
Employer Paid Sick Time for COVID-19 Reasons
Employers with less than 500 employees are required for the rest of this year to provide 80 hours of paid sick time to full-time employees, with less for part-time employees (who get paid sick time for the average number of hours they work over a two-week period), when unable to work (or telework) because:
“(1) the employee is subject to a Federal, State, or local quarantine or isolation order related to COVID-19,
(2) the employee has been advised by a health care provider to self-quarantine due to concerns related to COVID-19,
(3) the employee is experiencing symptoms of COVID-19 and seeking a medical diagnosis,
(4) the employee is caring for an individual who is subject to an order as described in (1) above or has been advised as described in (2) above,
(5) the employee is caring for a son or daughter of such employee if the school or place of care of the son or daughter has been closed, or the child care provider of such son or daughter is unavailable, due to COVID-19 precautions, or
(6) the employee is experiencing any other substantially similar condition specified by the Secretary of Health and Human Services in consultation with the Secretary of the Treasury and the Secretary of Labor.”
This paid sick time for a use described in (1), (2), or (3) above is paid at the employee’s regular rate of pay and capped at $511 per day and $5,110 in the aggregate. When given for a use described in (4), (5), or (6) above it is paid at 2/3 of the employee’s regular rate and capped at $200 per day and $2,000 in the aggregate. There is no minimum service time for eligibility for this sick pay. It is required regardless how recently an employee was hired. However, employers may exclude from this paid sick time an employee who is a health care provider or an emergency responder.
The law states “[a]n employer may not require an employee to use paid leave provided by the employer before the employee uses the paid sick time provided under [this provision].” This wording is unclear as to whether the above sick time is in addition to whatever paid time off an employer already provides or whether an employer may treat its already existing sick pay or paid time off (applicable to the above circumstances) as satisfying this new sick pay requirement. The primary author of this update (Craig Brooks) considers it more likely that this provision means the above benefits are in addition to, and not satisfied by, an employer’s already existing paid time leave (as “paid leave provided by the employer” seems to cover all of an employer’s paid time off). No doubt litigation over this will ensue.
Employers do not have to pay employees at separation for unused portions of this sick time. Violations of these sick pay requirements are enforceable on the same terms as violations of the Fair Labor Standards Act, which include losing employers paying winning employees’ reasonable attorneys’ fees, double back pay for “willful” violations, U.S. Department of Labor penalty payments, injunctions, etc. Retaliation, including discipline or discharge, is prohibited against employees for taking this leave, filing a complaint, or testifying in a proceeding regarding this benefit.
The Act permits the U.S. Secretary of Labor the authority to issue regulations for good cause to exempt small businesses with less than 50 employees from item (5) above-covering an employee taking off work to care for a child whose school or day care has closed) when the imposition of this coronavirus leave would “jeopardize the viability of the business as a going concern.” The Secretary of Labor is also to issue regulations identifying, for good cause, which health care providers and first responders are excluded from this sick pay. Employers are required to post a notice regarding these benefits, with the U.S. Department of Labor required to issue a model notice within seven days (i.e., by March 25). This sick time pay requirement is effective in 15 days (that is, on April 2, 2020) and it expires December 31, 2020.
Employers get a tax credit for their share of the social security compensation tax for the sick pay provided under this provision. These credits are capped at the maximum sick pay amounts listed above ($511/day per employee for leave taken under items 1-3 above or $200/day per employee for leave taken under items 4-6 above). The amount of tax credit increases if the employer’s group health plan costs go up as a result of this paid leave (by the amount of the increased group health plan expense increase). This credit does not apply to the U.S. government or any state governments, and it begins to apply on the effective date of the Act and ends on December 31, 2020. Self-employed individuals also get similar income tax credits as defined in the statute. The income tax credits begin on the effective date of the Act and end on December 31, 2020.
While employers get the above tax credit for their share of the social security tax on compensation, employees are not subject to social security tax on this sick pay.
Paid Child Care Leave – FMLA Expansion
The legislation adds a coronavirus paid leave requirement for an employee unable to work (or telework) due to a need to care for a son or daughter under 18 years of age if the child’s school or place of care has been closed, or the child care provider/program is unavailable, due to an emergency regarding COVID-19 declared by a Federal, State, or local government authority. This paid leave requirement only remains in effect through the rest of this year, as a temporary amendment to the Family & Medical Leave Act (“FMLA”). The first ten days of this COVID-19 child care leave (which will be two calendar weeks for most employees) is unpaid, although employees may use any accrued employer paid time off available under their employer’s policies during this time. The next ten weeks of this leave (i.e., weeks three through twelve) must be paid for by the employer at a rate of at least two-thirds of the employee’s regular rate of pay for the hours the employee would otherwise usually be scheduled to work, with a maximum limit on this pay of $200/day and $10,000 in total.
This pay overlaps item (5) of the other paid sick time requirement of the statute (80 hours sick pay for full-time employees off due to a child’s school or day care closure), described above. The differences are this added FMLA paid sick leave applies when the school is closed or child care provider/program is unavailable due to governmental order regarding COVID-19 and its pay, while capped at the same $200/day, goes up to a maximum of $10,000 in the aggregate, while the paid sick time (80 hours for full-time employees) has a lower aggregate maximum of $2,000 and is paid when the school is closed or child care provider/program is unavailable “due to COVID-19 precautions”-that is, the 80 hours paid sick leave for full-time employees in the other section of this law covers any school or child care closures due to COVID-19 concerns, not just those resulting from a governmental order. This overlap is an obvious political compromise. Because the statute doesn’t address the question of whether a payment under one of these sick leave provisions counts towards a payment under the other, we presume they do.
These paid leave requirements take effect in 15 days from enactment-that is on April 2, 2020. It appears that this new leave may not be taken intermittently. This is not stated in the new Act, but the provisions of the FMLA that this new law amends only mention intermittent leave for other types of leave, rather than all FMLA leave.
This new leave category applies to employers of less than 500 employees (while the rest of the FMLA applies only to employers of 50 or more) and covers employees with at least 30 days of service (rather than the one year of service requirement and 1,250 hours of work in the most recent twelve months that applies to the rest of the FMLA). The Act permits the U.S. Secretary of Labor to issue regulations for good cause that exempt (a) health care providers and emergency responders from the definition of eligible employees for this child care ten weeks of paid leave, and (b) small businesses with less than 50 employees when the imposition of this coronavirus leave would “jeopardize the viability of the business as a going concern.” We will have to wait to see which small businesses are exempted (and how quickly).
Employers of less than 25 employees are exempt from the FMLA’s requirement to reinstate employees to their prior position if they return to work within twelve weeks of the start of this leave. Specifically, this small employer exemption from the requirement to reinstate the employee to the same position applies where the position the employee held at the start of this leave does not exist due to economic conditions or other changes in the employer’s operating conditions caused by the COVID-19 public health emergency declared by a Federal, State, or local authority. To claim this reinstatement exemption, the employer must make reasonable efforts to reinstate the employee to an equivalent position when an employee seeks to return to work within twelve weeks of leave; and, if there is no such position then, to provide such an equivalent position if one becomes available in a year (with this one year measured from the earlier of (a) the end of the public health emergency restrictions on the school or child care program/provider availability, or (b) one year and twelve weeks after the employee’s leave started). As a comment, this exemption seems to add to, rather than lessen, the pre-existing FMLA requirements, as the FMLA already provides that employers don’t have to reinstate covered employees at the end of their leave if their position was eliminated for reasons that would have occurred regardless whether the employee took leave (that is, for business reasons unrelated to the particular employee taking leave). Other than this new temporary provision, the FMLA does not require employers to offer future openings to employees on leave when their position is eliminated for reasons not caused by the employee taking leave.
The Act lessens some litigation options over this new leave. The Act does not permit private lawsuits against employers of less than 50 employees regarding this 10 week paid child care coronavirus leave. Private lawsuits are otherwise permitted under the FMLA. Employers with less than 50 employees are still subject to investigation and lawsuit by the U.S. Department of Labor for violations of these new paid leave requirements. Employers in a multi-employer collective bargaining agreement may fund this leave pay through contributions to a multi-employer fund or program.
This Act gives employers a tax credit against the employer’s share of social security compensation tax for the sick pay provided under this provision. These credits are capped at the maximum sick pay amounts listed above ($200/day per employee or $10,000 total per employee). The amount of tax credit increases if the employer’s group health plan costs go up as a result of the qualified family leave pay required under this statute (by the amount of the increased group health plan expense increase). This credit does not apply to the U.S. government or any state governments, and it begins to apply on the effective date of the Act and ends on December 31, 2020. Self-employed individuals also get similar income tax credits as defined in the statute. The income tax credits begin on the effective date of the Act and end on December 31, 2020. While employers get the above tax credit for their share of the social security tax on compensation, employees are not subject to social security tax on this sick pay.
The bill also provides up to $1 billion to states for emergency unemployment insurance administrative costs, provided the states relax their unemployment compensation benefit eligibility requirements in areas such as waiting periods and work search requirements.
State Unemployment Compensation Update
Pennsylvania and Ohio have relaxed their unemployment compensation benefit requirements to remove the one-week waiting period for benefits and the requirement for the individual to be actively seeking employment. It is anticipated West Virginia will do the same. The descriptions of these changes by both PA and Ohio governments imply (but do not state) that their unemployment compensation benefits would not be available where an employee decides on his/her own to remain off work as a result of the coronavirus if the employee has not been told by to do so by his/her health care provider, employer, or state or local public health or governing official. This too will be an area likely challenged before unemployment compensation Referees and in the courts.
There is much to analyze in the above federal statute. Disagreements are sure to arise over the policy reasons or wisdom of various provisions. I purposefully do not address such points here. Litigation will likely follow on numerous aspects of the law.
The federal government’s authority to pass laws regulating employment only extends to employers engaged in interstate commerce. The reach of this power is very broad and deep. But employers who are very small and have few out-of-state contacts may claim exemption. This typically excludes (with many details not mentioned here) employers with annual revenues less than $500,000 and who purchase less than $50,000 in goods or services from out-of-state.
The employer and employee exclusions under these sick pay provisions will take time to sort out through federal regulation and likely litigation. We look to help you achieve your organizational goals while minimizing the risk and cost of such litigation.
Our firm stands ready to assist you in working through these employment law changes and your other issues in working through the challenges of the COVID-19 pandemic. Feel welcome to contact the below employment law attorneys of our firm with any questions.
We appreciate and support the efforts of our clients to deal effectively with the coronavirus pandemic. We wish each of you, your employees, and your families a successful transition through this difficult time.