The federal government has now passed the Families First Coronavirus Response Act (the “Act”) to help employees and businesses facing challenges related to the coronavirus. The bill was passed with a bipartisan vote of 363 to 40 in the House of Representatives and with a 90 to 8 vote in the Senate. The law becomes effective 15 days after its enactment, which is presumed to be no later than April 2, 2020 (subject to when the President signs the bill into law), and contains numerous provisions aimed at addressing the impacts of the coronavirus on Americans’ personal safety and financial security. The Families First Coronavirus Response Act guarantees free coronavirus testing, secures paid emergency leave, enhances Unemployment Insurance, strengthens food security initiatives, and increases federal Medicaid funding to states. Here are some of the key provisions:
Expanded Family and Medical Leave
As of today, employees of employers with fewer than 500 employees and government employers, who have been on the job for at least 30 days, are provided with 12 weeks of paid family and medical leave for employees unable to work (or telework), due to a need for leave to care for a child of an employee if the child’s school or place of care has been closed or if the child care provider is unavailable, due to the coronavirus. This is much more limited than the version initially approved by the House and widely reported in the media.
The first 10 days of the leave may be unpaid under FMLA (but the paid sick leave described below would be available, if not already taken). Employees may choose to use any accrued paid time off, including vacation and sick leave, to cover this initial 10-day period. To the extent an employee needs leave beyond the initial 10-day period and continues to meet the requirements for paid leave under the FMLA, the employee will be paid not less than two-thirds of the employee’s regular rate of pay for the regular hours worked. In no event, however, shall the paid leave exceed $200.00 per day and $10,000.00 in the aggregate.
The current FMLA regulations used for calculating the employee threshold for coverage purposes will apply in determining whether interrelated entities are examined together under the Act. As set forth in § 825.104, “[w]here one corporation has an ownership interest in another corporation, it is a separate employer unless it meets the joint-employment test discussed in § 825.106, or the integrated-employer test contained in paragraph (c)(2) of this section.” Employers ordinarily resist classifying separate entities as a single employer for virtually every other labor and employment issue and should proceed cautiously in taking a different position just to reach an employee count to avoid coverage, as that would likely have a significant impact if the same issue arises in other contexts.
Employers will receive a payroll tax credit for the qualified sick leave wages paid out by the employer, subject to caps based on the reason for the leave and daily maximums.
Employers are required to restore employees to their same or similar position unless the following conditions are met:
- The employer has fewer than 25 employees;
- The position held by the employee no longer exists due to economic or other operating conditions that affect employment and are caused by the public health condition;
- The employer attempts to restore the employee to a similar position;
- The attempts to restore to a similar position fail, and the employer contacts the employee if such a position becomes available.
The Act authorizes the Secretary of Labor to exclude certain health care providers and emergency responders from providing extended Family and Medical Leave as well as small businesses with fewer than 50 employees if providing the leave “would jeopardize the viability of the business.” It remains unclear when and how these exclusions will be promulgated.
Paid Sick Leave
Employers with fewer than 500 employees and government employers are required to provide two weeks of paid sick leave to their employees. Paid sick leave can be used for the following reasons:
- (1) The employee is subject to a Federal, State, or local quarantine or isolation order related to coronavirus;
- (2) The employee has been advised by a health care provider to self-quarantine due to concerns related to coronavirus;
- (3) The employee is experiencing coronavirus symptoms and seeking a medical diagnosis;
- (4) The employee is caring for an individual who is subject to an order as described in reason (1) or has been advised as described in reason (2).
- (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 childcare provider of such son or daughter is unavailable, due to the coronavirus.
- (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.
Employees who go on paid sick leave for reasons (1), (2), or (3) will be paid at their regular rate of pay. Employees who use their leave for reasons (4), (5), or (6) will be paid at two-thirds the employee’s regular rate of pay. In no event, however, shall the paid sick leave exceed $511.00 per day and $5,110.00 in the aggregate for reasons (1), (2), or (3), or $200.00 per day and $2,000.00 in the aggregate for reasons (4), (5), or (6).
Full-time employees are entitled to two weeks (80 hours) and part-time employees are entitled to the typical number of hours they work in a typical two-week period.
Employers cannot require employees to use other paid leave provided by the employer before using Paid Sick Leave under the Families First Coronavirus Response Act. Employers with existing sick leave policies must provide paid sick leave under the Families First Coronavirus Response Act in addition to the existing leave available.
Employers can receive a payroll tax credit for the qualified sick leave wages paid out by the employer, subject to caps based on the reason for the leave and both daily and quarterly maximums.
The Families First Coronavirus Response Act requires all private health plans to provide coverage for COVID-19 diagnostic testing, including the cost of a provider, urgent care, and emergency room visits in order to receive testing. Coverage for testing must be provided at no cost to the consumer.
The Families First Coronavirus Response Act also contains provisions to ensure that children and low-income seniors have access to meals and that there is adequate funding for unemployment compensation for eligible individuals. The one-week waiting period for unemployment compensation will remain up to the states, but the Act will provide for temporary federal matching for the first week for those states with no waiting week.
A number of questions remain unanswered related to the Families First Coronavirus Response Act, which may be clarified by the regulations or a technical correction, including:
- What certification can be required for leave, to care for a child if a child’s school has been closed or alternative childcare provider is unavailable, to address potential abuse of the new paid leave.
- Notice requirements and whether employers need to revise their current FMLA policies to incorporate these temporary new benefits.
- How payments under an employer’s Short-term Disability Policy can be coordinated with payments required under the expanded FMLA leave.
- Whether employees are eligible for payment due to otherwise qualifying unpaid employee absences prior to the effective date of the Act.
- Whether employees who are laid off before the effective date of the Act are entitled to the expanded FMLA leave pay and job restoration rights.
As with all aspects of COVID-19, this is a fluid and rapidly changing environment and employers should closely monitor developments.