On March 18, 2020, President Trump signed into law the Families First Coronavirus Response Act (H.R. 6201), which requires employers with 500 or fewer employees to provide emergency paid sick leave and family leave to certain employees impacted by COVID-19. If you have more than 500 employees, the new law does not apply to you.  If you have fewer  than 50 employees, you might be eligible for an exemption.  The new law goes into effect on April 1, 2020.  Here’s what employers need to know:

              The Act attempts to soften the blow to covered employers by capping the amount to be paid to employees and providing employers with a 100 percent refundable payroll tax credit on wages paid for leave.  Those tax credits sunset on December 31, 2020, the same date the leave provisions expire under the Act.

              The Emergency Family and Medical Leave Expansion Act provides 12 weeks of job-protected paid leave for employees who are unable to work or telework because the employee is caring for their child because the school is closed or the childcare provider is unavailable due to a public health emergency.  The leave is not available for any other reason.  An employee is only eligible if they have been employed by the employer for at least 30 calendar days.

              Employers are not required to pay employees for the first 10 days of family leave, but employees may opt to use accrued vacation, personal or sick leave to cover those unpaid days. After the initial 10-day period, employees are entitled to pay at a rate not less than two-thirds of the employee’s regular rate, but that amount is capped at $200 per day and $10,000 in the aggregate.

              While the family leave is generally job-protected, employers with 25 employees or fewer  are not required to restore an employee if the employee’s position has been eliminated due to economic or operating conditions caused by the public health emergency, and no other equivalent position is available.

              Employers who are health care providers or emergency responders may elect to exclude employees from this family leave.  The Department of Labor also has the authority to grant exemptions to employers with fewer than 50 employees if the family leave requirements would jeopardize the viability of the business.

              The Emergency Paid Sick Leave Act provides 80 hours of paid sick leave to full-time employees, regardless of the employee’s length of employment, when the employee cannot work or telework for the following reasons:

• Government issued order of quarantine or isolation due to COVID-19;
• Self-quarantine as advised by healthcare provider due to COVID-19;
• Symptoms of COVID-19;
• Caring for an individual who is subject to a government order to quarantine or isolate or who has been advised by a healthcare provider to self-quarantine;
• Caring for their child because the child’s school or childcare provider is closed or unavailable due to COVID-19; or
• Experiencing a similar condition as specified by the Secretary of Health and Human Services.

This paid sick leave is in addition to any other existing paid leave provided by the employer.  Additionally, this paid sick leave can run concurrently with the expanded FMLA discussed above.  This means that if an employee qualifies, they may elect to use their 80 hours of paid sick leave during the first unpaid 10 days of expanded FMLA leave.

              Employers are required to pay employees their full wages, not to exceed $511 per day and $5,110 in the aggregate, for sick leave due to government ordered quarantine or isolation, self-quarantine advised by a healthcare provider, or COVID-19 symptoms. 

              Employers are only required to pay employees two-thirds of their wages, not to exceed $200 per day and $2,000 in the aggregate, for sick leave used to care for a child unable to go to school/childcare provider or to care for a quarantined or sick individual..

              Again, employers who are health care providers or emergency responders may elect to exclude employees from this sick leave.  The Department of Labor also has the authority to grant exemptions to employers with fewer than 50 employees if the sick leave requirements would jeopardize the viability of the business.

            An employer’s failure to pay the required sick leave will be considered a violation of the Fair Labor Standards Act for failure to pay minimum wages.  Retaliation against employees who take the allowed sick leave is prohibited.

The new Act also provides Tax Credits for Paid Sick and Paid Family Medical Leave.  This means that an employer would qualify for payroll tax credits for qualified sick leave wages and family leave paid by an employer in the amount of the benefits paid until December 31, 2020. The Act also offers individual tax credits for qualified wages for self-employed individuals.

[Update - March 22, 2020] On March 20, 2020, the U.S. Treasury Department, Internal Revenue Service (IRS), and the U.S. Department of Labor (DOL) issued a joint statement previewing how employers may implement the paid family and paid sick leave made available in the Act.

• The DOL has stated that regulations relating to the Families First Coronavirus Response Act will be ready in April.
• In the meantime, the DOL and IRS explained that employers may now begin taking advantage of the tax credits which are "designed to immediately and fully reimburse [employers], dollar-for-dollar, for the cost of providing Coronavirus-related leave to their employees."
• To be clear, as of now, covered employers may provide paid family and paid sick leave provided by the Act and take advantage of the tax credits; as of April 2, they will be required to do so unless exempted.
• The IRS provided that it will be issuing guidance on how to handle the tax credits within the week.
• The DOL stated that it would issue emergency guidance regarding the exemption for small businesses (less than 50 employees) from the leave requirements related to school closings or childcare unavailability where the Act’s requirements would jeopardize the viability of the business.
• The DOL also provided that there was clear ambiguity in the Act and that it will be issuing a temporary non-enforcement policy for a 30-day period. During that time, the DOL will not commence enforcement action against a noncompliant employer as long as the employer has acted reasonably and in good faith to comply with the Act’s obligations.
• During this 30-day period, the DOL states that it is committed to “focusing on compliance assistance.”