COVID-19 and Families First

Coauthored by: Matin Fallahi, Law Clerk

In response to the recent COVID-19 pandemic, which has caused economic distress in a short period of time, the United States House of Representatives passed the Families First Coronavirus Response Act (“FFCRA”). After approval from the Senate, the President officially signed the act on Wednesday March 18, 2020. This Act and its long-term impacts are just as unknown as the virus itself.

The legislation provides free coronavirus testing and paid emergency leave for those diagnosed with COVID-19 or those caring for a family member with the virus. The FFCRA applies to any employer with less than 500 employees in hopes to help mitigate the impact of the pandemic in the United States while also providing a sense of hope and security for employees. As such, the Act will largely impact small to medium businesses who previously did not have to provide paid leave under the Family Medical Leave Act (“FMLA”).

There are two provisions of the Act that will provide paid leave to employees affected by the COVID-19 outbreak: an emergency expansion of the FMLA and a new federally paid sick leave law. We briefly summarize the notable provisions below:

Paid Family Medical Leave:

  • Pay – The Act provides 12 weeks of job-protected paid FMLA leave to any employee who has worked for the employer for at least 30 days. The first 10 days may be unpaid. The remaining time must be paid at two-thirds the employee’s regular rate. The Act limits this pay entitlement to $200 per day and $10,000 in the aggregate per employee.
  • Non-Full-Time Employees – If an employee works part-time or on an irregular schedule, the employee is entitled to be paid based on the average number of hours the employee worked for the 6 months prior to taking the emergency leave.
  • Optional Sick Leave – Employees may use their personal or sick leave during the first 10 days, but employers cannot require employees to do so.
  • Reason for Leave – Employees may go on leave in order to 1) comply with a recommendation or order to quarantine and are unable to perform their job functions while doing so; 2) care for an at-risk family member who is quarantined due to exposure to, or symptoms of, coronavirus; or 3) care for their child if the child’s school or place of care has been closed, or their childcare provider is not available due to a public emergency.
    • SMSM Note: Nationwide school closures may make this option highly utilized.
  • Exemptions – The Secretary of Labor may issue regulations to exempt some small businesses (fewer than 50 employees) and to exclude healthcare providers and emergency responders from the list of those employees qualified for leave.
  • Restoration to Position – Employers with 25 or more employees will have the same obligation they had before to return any employee who has taken Emergency FMLA to the same or equivalent position upon the return to work. However, employers with fewer than 25 employees are generally excluded from this requirement if the employee’s position no longer exists following his or her Emergency FMLA leave due to an economic downturn or other circumstances caused by a public health emergency during the period of Emergency FMLA. This exclusion is subject to the employer making reasonable attempts to return the employee to an equivalent position and requires an employer to make efforts to return the employee to work for up to a year following the employee’s leave.
  • Effective Date and Termination – The Act will go into effect on or about Thursday, April 2, 2020 and remain in place until December 31, 2020.

Emergency Paid Sick Leave Act

  • The Act allows an eligible employee to take paid sick leave because the employee is:
  • subject to government quarantine or isolation order related to COVID-19;
  • advised by a health care provider to self-quarantine due to COVID-19 concerns;
  • experiencing COVID-19 symptoms and seeking a medical diagnosis;
  • caring for an individual subject to government quarantine or isolation order or advised by a health care provider to self-quarantine due to COVID-19 concerns;
  • caring for the employee’s child if the child’s school or place of care is closed or the child’s care provider is unavailable due to public health emergency; or
  • 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.
  • Eligibility –employers with fewer than 500 employees are required to provide full-time employees (regardless of the employee’s duration of employment prior to leave) with 80 hours of paid sick leave at the employee’s regular rate (or two-thirds the employee’s regular rate to care for qualifying reasons 4, 5, or 6 listed above).
    • An important change to this section provides an exception for employers who are healthcare providers or emergency responders at employer’s election.
  • Cap on Paid Sick Leave Wages – Another significant change to this Act places limits on paid sick leave. Specifically, paid sick leave wages are limited to $511 per day up to $5,110 total per employee for their own use and to $200 per day up to $2,000 total to care for others and any other substantially similar condition.
  • Carryover and Interaction with Other Paid Leave – paid sick leave will not carry over to the following year and may be in addition to any paid sick leave currently provided by employers.
  • Rate of Pay – Employees who work a part-time or irregular schedule are entitled to be paid based on the average number of hours the employee worked for the six months prior to taking paid sick leave. Employees who have worked for less than six months prior to leave are entitled to the average number of hours the employee would normally be scheduled to work over a two-week period. A business employing fewer than 500 employees is required, at the request of the employee, to pay a full-time employee for 80 hours of mandated emergency paid sick leave instead of the initial 10 days of unpaid leave permitted by the emergency FMLEA (summarized above).
  • Effective date and termination–This program will become effective on or about Thursday, April 2, 2020 and remain in place until December 31, 2020.

Tax Credits for Employers and Self-Employed Individuals

Employers will be entitled to a tax credit of up to $200 per day and $10,000 for all calendar quarters to provide qualified family leave wages to each employee, along with the employer’s expenses paid or incurred to provide and maintain a group health plan properly allocable to the qualified family leave. The tax credit is allowed against the employer’s payroll taxes, and any excess will be refundable. Employers should consult tax professionals to maximize the extent of the available credits.

Extra Measures:

In addition to the FFCRA, the United States Department of Labor and State leaders are tackling COVID-19 with advisories and state specific executive orders to guide employers and employees in these extraordinary times.

The Occupational and Safety Health Administration (“OSHA”) has prepared a Guidance on Preparing Workplace for COVID-19. Amongst its suggestions, OSHA provides a list of steps all employers can take to reduce workers’ risk of exposure, including:

  • Develop and Infectious Disease Preparedness and Response Plan
  • Prepare to Implement Basic Infection Prevention Measures
  • Develop Policies and Procedures for Prompt Identification and Isolation of Sick People, if Appropriate
  • Develop, Implement, and Communicate about Workplace Flexibilities and Protections
  • Implement Workplace Controls

The OSHA COVID-19 webpage offers a detailed description of suggestions, “next-steps” and more information specifically for workers and employers at www.osha.gov/covid-19.

Michigan Employers:

On Wednesday March 18th, Michigan’s Governor Whitmer signed Executive Order 2020-16 Expanding Capacity for Disaster Relief Child Care Services for Essential Workforce—effective immediately. Under this order, the capacity for childcare services for health care workers, first responders, and other members of the essential workforce providing critical infrastructure to Michiganders during the COVID-19 crisis has been expanded. This order “authorizes the Department of Licensing and Regulatory Affairs (LARA) to issue expedited provisional licenses to expand capacity for childcare services.”[1] Recognizing that hospital employees are providing emergency medical services to those in need during this crisis, the order allows employers, like hospitals, to operate a disaster relief childcare center for their employees. Finally, it “allows both public and nonpublic school facilities to be utilized for the purposes of maintaining a disaster relief childcare center focused on providing services for members of the essential workforce.”[2] In New York, Governor Cuomo issued Executive Order Directing Non-Essential Businesses to Implement Work from Home Policies Effective Friday, March 20th. Under this order, businesses that require in-office personnel must decrease in-office workforce by 50 percent.

Segal McCambridge Singer & Mahoney continues to monitor COVID-19 and its effects in the workplace with efforts to remain transparent with our clients and members. Federal, state, and local law is constantly changing to address this situation and SMSM will be constantly monitoring these changes for its clients.

To learn more about the potential impacts of these evolving laws on employers, or to discuss a particular situation, please reach out to Shareholder David Yates, Senior Associate Stephanie Burnstein, or Associate Thomas Lurie at any time.

[1]The Office of Governor Whitmer, Governor Whitmer Signs Executive Order Expanding Capacity for Disaster Relief Child Care Services for Essential Workforce, 2020,  https://www.michigan.gov/whitmer/0,9309,7-387-90499-522171--,00.html.

[2] Id.

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