Update Regarding Families First Coronavirus Response Act

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On March 18, 2020, the Senate approved H.R.6201 – The Families First Coronavirus Response Act and sent it to President Trump for his signature. The expectation is that the bill will be quickly signed into law. The ramifications for employers are significant.1

The Families First Coronavirus Response Act can be broken down into two key components: Changes to “FMLA” and new sick leave laws.2

1.     Changes to “FMLA” Law

The Family Medical Leave Act of 1993 was intended to provide certain workers with up to 12 weeks of leave from work WITHOUT PAY, but with continuing benefits and an assured opportunity to return to work after FLMA leave. This new law creates a new type of FMLA leave – FMLA WITH PAY. This new paid benefit is called Public Health Emergency Leave (PHEL).

PHEL uses most of the definitions and terms of the FMLA, with several notable exceptions. Here are some key definition and rules for the new PHEL:

  • The PHEL applies to applies to all employees who were on the job for 30 days or more with the employer from whom leave is sought.
  • The law only applies to employers with less than 500 employees.
  • The act applies in the event of  “a QUALIFYING NEED RELATED TO A PUBLIC HEALTH EMERGENCY.—The term ‘qualifying need related to a public health emergency’, with respect to leave, means the employee is unable to work (or telework) due to a need for leave to care for the son or daughter under 18 years of age of such employee if the school or place of care has been closed, or the child care provider of such son or daughter is unavailable, due to a public health emergency.
  • “(B) PUBLIC HEALTH EMERGENCY.—The term ‘public health emergency’ means an emergency with respect to COVID-19 declared by a Federal, State, or local authority.
  • If an employer has less than 50 employees, it can petition the Secretary of Labor seeking relief from the law if “the imposition of such requirements would jeopardize the viability of the business as a going concern.”

Here are the benefits available under the PHEL:

  • During the first 10 days of leave, the employer does NOT have to pay the employee.
  • During these first 10 days of leave, an employee may elect to substitute any accrued vacation leave, personal leave, medical or sick leave for unpaid leave for the 10 unpaid days.
  • After the first 10 days of leave, the employer must pay the employee 2/3rds of the employee’s regular pay for each day of leave taken (with some specific provisions for new, part time, and intermittent workers).
  • However—payment to the employee is limited to $200 per day and $10,000 in the aggregate.  

With some exceptions, the employer must make reasonable efforts to restore the employee to a position equivalent to the position the employee held when the leave commenced, with equivalent employment benefits, pay, and other terms and conditions of employment. The leave can last until the end of 2020 under some circumstances.

What This Means For You

There will no doubt be disputes over the phrase “is unable to work (or telework) due to a need for leave to care for the son or daughter under 18.” How will inability to work from home, for example, be distinguished from “really unpleasant” or “very difficult”? Can both parents in a two-parent household claim “inability” to work from home even if there is only one child, and the child is 17 years old? Which of two parents can claim inability to work from home when there is shared custody of a child? Since the statute applies to “sons and daughters,” what happens in the huge number of households in which the caregiver is a grandparent or other relative? What proofs will be required in determining that a parent is “unable” to work from home?  Does this law eliminate the ability of the employer to lay off a worker during the 12 weeks of leave? What if the employee is laid off before the Act becomes effective?  

A business of 499 employees, with half of those who have kids at home—and with half of those with kids at home claiming inability to work due to caring for the kids at home—they could face up to $10,000 of liability each for 125 employees, or a total of $1.25 million dollars for circumstances out of their control, which might have nothing at all to do with employment. Employers will be picking up the tab for a situation caused by government entities and non-employment related events.  Because most experts predict school closings that could last for quite a while, and perhaps through the end of the school year, there is enormous potential for exposure for employers, for which these employers are uninsured and for which they never anticipated the need to reverse cash.

2.     The New Sick Leave Law

The new law adds a stunning requirement that employers provide employees with paid sick leave, even if they are not sick and even if they were just hired. The newly defined type of sick leave applies ON TOP of any existing employer provided sick leave benefits:

1. An employer must provide to each employee paid sick time to the extent that the employee is unable to work (or telework) due to a need for leave because:

  • The employee is subject to a Federal, State, or local quarantine or isolation order related to COVID-19.
  • The employee has been advised by a health care provider to self-quarantine due to concerns related to COVID-19.
  • The employee is experiencing symptoms of COVID-19 and seeking a medical diagnosis.
  • The employee is caring for an individual who is subject to an order as described in subparagraph (1) or has been advised as described in paragraph (2).
  • 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.
  • 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.

2. Full-time employees get 80 hours; part-time employees get hours equal to the number of hours that such employee works, on average, over a 2-week period.

3. The employer CANNOT deplete the worker’s other sick time bank – this new sick time is on top of whatever else he/she has.

4. The amount to be paid depends on why the sick time is taken:

  • If the time is taken to care for a family member or to care for a son or daughter whose school or day care was closed due to the virus, sick time is paid at 2/3rds of the employee’s usual pay, but is capped at $200 per day and $2000 in the aggregate.
  • If the time is taken due because the employee is subject to a Federal, State, or local quarantine or isolation order related to COVID-19, or the employee has been advised by a health care provider to self-quarantine due to concerns related to COVID-19, or the employee is experiencing symptoms of COVID-19 and seeking a medical diagnosis, sick time pay is at full salary, but capped at $511 per day and $5,110 in the aggregate.
  • Rules are specified for short term and part time employees, all of whom are entitled to some amount of paid sick time.

What This Means For You:

Again, employers are being asked to pay the costs for non-employment related issues. Presumably, a high-paid employee can take 10 days of paid sick leave and receive $5,110, then take 10 weeks of paid PHEL leave which adds another $10,000, and still retain all available regular sick and vacation-time otherwise in his/her accrued account. As of now, our hypothetical employer with 499 employees could be responsible for more than $3 million in payments to workers without any fault, without any insurance to cover the costs, and without any chance to anticipate and reserve cash for these purposes.

It is unclear what is meant the statement: “the employee has been advised by a health care provider to self-quarantine due to concerns related to COVID-19.” Hasn’t every American been advised countless times by doctors on the news, at the White House, and all over the Internet? There is apparently no restriction on what type of health care provider is needed, whether a personal or broad advisory is needed, and what type of proof is required before the employer can commence payments.

Key Take-Aways

Employers need to brace for potentially large and long-term payouts to workers including those who are not sick and are not under government ordered quarantine. The country’s biggest employers are not being asked to make similar sacrifices. There are still major holes in what an employee must prove before he/she can start collecting money. The financial impact on a business with 50 to 500 employees can easily reach multiple millions of dollars. There is no guidance available yet as to how the new sick leave and PHEL benefits relate to the employer’s ability to use of lay-offs as an alternative. There will be some offsetting tax credits to employers making payment under these new laws, but credits going forward will not relieve present obligations to pay. Further legislation and regulations will determine the nature, extent and availability of offsetting or partially offsetting federal employment tax or other tax credits. We will provide further updates as the situation evolves and post updates on our website, www.chartwelllaw.com.

[1] This summary and commentary was authored by Cliff Goldstein of Chartwell Law. It may not be reproduced or distributed without the permission of Chartwell Law. Requests for reproduction and reader questions can be directed to Robert Baker, Esq. at rbaker@chartwelllaw.com. Additional relevant information about the impact of COVID-19 can be found on the Chartwell Law website, www.chartwelllaw.com.

This article is not intended as legal advice to any reader. Reading this article does not create an attorney-client relationship. Every factual situation is different, and employers should contact counsel before making decisions in any legal matter. The opinions expressed herein are those of the author and not necessarily those of the firm as a whole or of other members of the firm.

[2] Other sections of the law deal with funding and support for state unemployment programs and changes that do not have direct impact on employers. The changes in unemployment law will be the subject of a separate article.