26 Mar Changes to Federal Family Medical Leave and Paid Sick Leave in the Wake of COVID-19
Most employers are familiar with the Family and Medical Leave Act (the “FMLA”), 29 U.S.C. § 2601, et seq.. Pursuant to FMLA, an eligible employee is entitled to take unpaid leave for up to 12 weeks for specified family and medical reasons without fear of termination. The FMLA only applies to employers with fifty (50) or more employees.
In the wake of the COVID-19 pandemic, Congress passed and President Trump signed into law the Families First Coronavirus Response Act (the “FFCRA” or “Act”), which substantially expands FMLA protections during this crisis, both by including smaller employers and by mandating more benefits. The Act also includes short term paid leave provisions that did not exist on the national level before. The FFCRA imposes a mandate on all employers with fewer than 500 employers, and all federal and state government employers, to provide paid time off to certain employees, among other things. The Act amends the FMLA in part by requiring covered employers to provide 10 weeks of partially paid leave in specified circumstances where a child is out of school or a care facility due to COVID-19, and creates additional new obligations discussed below. The Act takes effect on April 1, 2020. The right to take the leave provided under the FFCRA expires on December 31, 2020.
Under the FFCRA, an employee qualifies for paid sick leave if the employee is unable to work (or unable to telework) because the employee:
- is subject to a Federal, State, or local quarantine or isolation order related to COVID-19;
- has been advised by a health care provider to self-quarantine related to COVID-19;
- is experiencing COVID-19 symptoms and is seeking a medical diagnosis;
- is caring for an individual subject to an order described in (1) or self-quarantine as described in (2);
- is caring for a child (under 18 years of age) whose school or place of care is closed (or child care provider is unavailable) for reasons related to COVID-19; or
- is experiencing any other substantially-similar condition specified by the Secretary of Health and Human Services, in consultation with the Secretaries of Labor and Treasury.
See Department of Labor website at https://www.dol.gov/agencies/whd/pandemic/ffcra-employee-paid-leave (last visited March 25, 2020).
Employees are eligible for both short-term paid leave (80 hours) and long-term paid leave (up to an additional 10 weeks) depending on the reasons for leave. However, the only qualifying reason for the long term paid leave provided is if the employee is unable to work or telework because s/he must care for a child under No. 5 above. The amount of paid time off available, and the rates of pay for that time off, differ based on the six reasons provided above for the leave and the duration of employment. Here is a summary:
- An employee is eligible for up to two weeks (up to 80 hours) of paid sick leave at the employee’s regular rate of pay where the employee is unable to work because the employee is quarantined, and/or experiencing COVID-19 symptoms and seeking a medical diagnosis (reason Nos. 1-3 above);[1]
- An employee is eligible for up to two weeks (up to 80 hours) of paid sick leave at two-thirds the employee’s regular rate of pay because the employee is unable to work or telework because of a bona fide need to care for an individual subject to quarantine, or to care for a child whose school or child care provider is closed or unavailable for reasons related to COVID-19, and/or the employee is experiencing a substantially similar condition as specified by the Secretary of Health and Human Services. (reason Nos. 4-6 above).
- Through the expansion of the FMLA, an employee is eligible for an additional 10 weeks of paid expanded family and medical leave at two-thirds the employee’s regular rate of pay where an employee, who has been employed for at least 30 calendar days, is unable to work due to a bona fide need for leave to care for a child whose school or child care provider is closed or unavailable for reasons related to COVID-19 (reason No. 5).[2] It appears that the other portions of the FMLA remain in place i.e. 12 weeks unpaid leave for specified family and medical reasons.
The law applies to both part- and full-time workers, providing them as many hours off as they generally work in two weeks. There are per day and aggregate caps to the amount employers must pay under these paid leave provisions depending on the reason for leave and length of leave. For the two weeks (up to 80 hours) of sick leave due to the employee’s own needs, an employee may receive up to $511 per day and $5,110 in the aggregate. The employee may receive up to $200 per day and $2,000 in the aggregate if the employee uses the two weeks (up to 80 hours) to care for someone else. For long-term payments (i.e., the FMLA expansion), the employee may receive $200 per day and $10,000 in the aggregate.
Employers may be concerned about the liquidity necessary to meet these new paid leave requirements. In this vein, the FFCRA also includes tax credits for small and medium-sized employers for qualified sick and medical leave wages. The tax credit will equal 100% of the money employers spend on the paid leave. The IRS has issued an announcement with information about the tax credit.[3] The IRS is expected to issue additional guidance the week of March 22, 2020 enabling employers to retain the amount of payroll taxes equal to the amount of qualifying leave they have paid rather than deposit the money with the IRS. The deferral of the federal income tax deadline to July 15 may also defray some of liquidity concerns.
Additionally, while the law includes employers with fewer than 50 employees, these employers can petition the Department of Labor for an exemption from the requirement to provide long term leave due to school closings or child care unavailability if these requirements would jeopardize the viability of the business. There is uncertainty surrounding any potential exemption for small businesses. The Act directs the Department of Labor to issue regulations in this regard, which will be forthcoming. The Act also seemingly would not necessarily apply to “gig workers” or on-demand workers, such as Uber and Lyft drivers, which have become an increasing portion of workers overall.
The Wage and Hour Division of the Department of Labor issued guidance on March 24, 2020 including a nearly identical fact sheet for both employees and employers on the FFCRA as well as a Question and Answer document which provides additional details on how the provisions will be implemented.[4] The guidance is just the first round of information and compliance assistance from the Wage and Hour Division. On March 26, 2020, the Department of Labor’s Wage and Hour Division announced more guidance including posters for employers to post to fulfill their notice requirements to inform employees about their rights under the new law. The guidance also includes a question and answer about posting requirements and a field assistance bulletin describing the Division’s 30-day non-enforcement policy.[5] The Department will not bring enforcement actions against employers within 30 days of the enactment, i.e. March 18 through April 17, 2020, provided that the employer has made reasonable, good faith efforts to comply with the Act.
While the paid leave provisions of the FFCRA are a big shift from previous federal requirements – marking the first time that paid sick leave has been mandated nationwide, including for small businesses – California already has a law that provides full time and part time workers at least three days of paid sick leave each year. Workers in Los Angeles are eligible for twice that: at least six paid days annually.
The FFCRA, like the FMLA, is complex, and many employers will find it almost incomprehensible. Attorneys at Brown White & Osborn LLP are keeping up with the changes to the law and can provide help and guidance.
By Brown White & Osborn LLP Special Counsel Andrew Beechko and associate Atoosa Esmali.
[1] For workers whose pay fluctuates, the regular rate of pay is their average weekly pay over the prior six
months, including pay such as wages, tips and commissions, pursuant to the Department of Labor guidance. If the worker has worked less than six months, they must be paid based on their average earnings for the period they have worked.
[2] Under this provision, the first 10 days of leave can be unpaid, while the remaining 10 weeks must be paid. For the first 10 days an employee may use 10 days of paid sick leave provided by the law or use leave otherwise available to the employee (e.g. vacation days or personal days).
[3] See IRS March 20, 2020 Press Release at https://www.irs.gov/newsroom/treasury-irs-and-labor-announce-plan-to-implement-coronavirus-related-paid-leave-for-workers-and-tax-credits-for-small-and-midsize-businesses-to-swiftly-recover-the-cost-of-providing-coronavirus (last visited March 25, 2020).
[4] See Department of Labor March 24 ,2020 Press Release at https://www.dol.gov/newsroom/releases/whd/whd20200324 (last visited March 25, 2020).
[5] See Department of Labor March 26 ,2020 Press Release at https://www.dol.gov/newsroom/releases/whd/whd20200326 (last visited March 26, 2020).