Families First Coronavirus Response Act takes effect on April 1, 2020, Imposes Paid Leave Obligations on Certain Employers
Lindsey & Lacy, PC is following closely business and legal developments related to COVID-19. As a service to our clients, we plan to release brief general summaries of relevant developments as they become available.
On March 18, 2020, President Trump signed the Families First Coronavirus Response Act (the “FFCRA”) into law. The FFCRA takes effect on April 1, 2020 and applies to leave taken between April 1, 2020 and December 31, 2020. The FFCRA does not apply retroactively.
Among other employers covered by the Act, the FFCRA applies to privately owned employers with 500 or fewer employees. The law contains a “small business exception” for employers with 50 or fewer employees who may be exempt from the FFCRA if providing childcare related sick leave would jeopardize the viability of the employer’s business as a going concern. Any business seeking to qualify for the small business exception must satisfy guidelines to be established in the future by the United States Department of Labor (the “DOL”).
The FFCRA contains two main provisions relating to paid leave for employees, the Emergency Paid Sick Leave Act (the “EPSLA”) and the Emergency Family Medical Leave Act (the “EFMLA”). Although there is some overlap between the EPSLA and the EFMLA, a covered employee1 may take leave for any of 6 reasons covered by the FFCRA (all of which must relate in some way to COVID-19):
(1) he or she is subject to a federal, state, or local quarantine or isolation order;
(2) he or she has been advised by a health care provider to self-quarantine;
(3) he or she is experiencing symptoms and is seeking a medical diagnosis;
(4) he or she is caring for an individual subject to (1) or (2) above;
(5) he or she is caring for his or her child whose school or place of care is closed or whose child care provider is unavailable; and/or
(6) he or she is experiencing any other substantially similar condition specified by the United States Department of Health and Human Services.
Depending on the circumstances, an employee who qualifies for paid leave is entitled to the following payments from his or her employer:
(a) Up to 80 hours under the EPSLA at 100% of the employee’s regular rate of pay (or minimum wage, whichever is higher) if leave requested for reason (1), (2), or (3) above, up to a maximum of $511 per day and $5,110 total;
(b) Up to 80 hours under the EPSLA at 2/3 of the employee’s regular rate of pay (or minimum wage, whichever is higher) if leave requested for reason (4) or (6) above, up to a maximum of $200 per day and $2,000 total; and/or
(c) Up to 12 weeks under a combination of leave provided by the EPSLA (for the first 80 hours) and EFMLA (for up to the last 10 weeks) for reason (5) above (i.e., caring for your child whose school or place of care is closed or whose child care provider is unavailable), up to a maximum of $200 per day and $12,000 total.
The employer must document an employee’s request for leave by collecting at least the following information (for purposes of claiming the tax credit discussed below and otherwise): the employee’s name; the reason for the requested leave; a written statement from the employee that he or she cannot work or telework because of the reason for the requested leave; the dates for which leave is requested; and a copy of the applicable federal, state, or local isolation or quarantine order, the name of the health care provider advising isolation or quarantine, or the order closing the relevant school or place of care.2
Although the DOL is responsible for administering most aspects of the FFCRA, the Department of the Treasury, through the Internal Revenue Service (the “IRS”), will administer the employer tax credit aspects of the Act. Information presently available from the IRS indicates that employers granting paid leave are entitled to an “immediate dollar-for-dollar tax offset against payroll taxes,” which may include the cost of the employer’s share of health insurance premiums during leave. This means that employers who pay for qualifying leave will be able to retain an amount of the payroll taxes equal to the amount of qualifying leave that they paid to employees, rather than deposit those payroll taxes with the IRS.
We close by noting three miscellaneous issues raised by the FFCRA. First, all employers must post or send notice to its employees of the paid leave available under the FFCRA. The DOL has provided a model notice that is available online here.
Second, an employee cannot receive paid leave and unemployment compensation at the same time. In other words, the employee is not eligible for paid leave under the FFCRA if the employee’s workplace closed before April 1 (or closed after April 1 but before leave was requested), or if the employee is furloughed, or if the employee’s workplace temporarily closes.
Third, although there is a 30-day non-enforcement period for employers who demonstrate good faith compliance efforts, failure to pay for leave under the EPSLA will be treated as a minimum wage violation under the Fair Labor Standards Act. An employee’s remedies may include unpaid wages, liquidated damages, and costs. Violations of the EFMLA will be treated as a violation of the FMLA, but there is no private right of action for employers with fewer than 50 employees. This means that violations of the EFMLA will generally be enforced by the DOL or other agencies and not through private litigation.
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The contents of this summary are intended to convey general information only and not to provide legal advice or opinions. The contents of this summary should not be construed as, and should not be relied upon for, legal or tax advice in any particular circumstance or fact situation. The information presented in this summary may not reflect the most current legal developments. No action should be taken in reliance on the information contained on this summary and we disclaim all liability in respect to actions taken or not taken based on any or all of the contents of this summary to the fullest extent permitted by law. Because every situation is different, an attorney should be contacted for advice on specific legal issues.