Coronavirus Response Act – What Employers Need to Know

March 18, 2020

NOTE: This client alert has been updated to reflect our summary of the finalized Act that was signed into law on March 18, 2020.

On March 18, 2020, President Trump signed into law the Families First Coronavirus Response Act (the “Act”) in response to the anticipated impact of COVID-19. The Act provides a broad group of employees a right to emergency paid sick leave and also expands protections under the Family and Medical Leave Act (“FMLA”). The Act also provides uninsured Americans coverage for COVID-19 testing.

Paid Sick Leave

The Act mandates up to 80 hours of emergency paid leave for employees in certain circumstances associated with coronavirus.

Which Employers Would Be Required to Provide Employees Paid Sick Leave Under the Act and Under What Circumstances?

Somewhat surprisingly, the paid sick leave provisions in the Act apply only to government employers and private employers with fewer than 500 employees (“Covered Employers”). Covered Employers that employ health care providers and emergency responders may elect to exclude such employees from the paid sick leave requirements of the Act. In addition, the Secretary of Labor is authorized by the Act to exempt Covered Employers with fewer than 50 employees from the paid sick leave requirements where the requirements would “jeopardize the viability of the business as a going concern.” The legislation, however, provides no guidance as to how or whether the Secretary would exercise this authority.

Unless otherwise exempted, Covered Employers are required to provide paid leave (“Paid Sick Leave”) to an employee who is unable to work (or telework) for the following reasons:

  1. such employee is subject to a federal, state or local quarantine or isolation order related to COVID-19;
  2. such employee has been advised by a health care provider to self-quarantine due to concerns related to COVID-19;
  3. such employee is experiencing symptoms of COVID-19 and seeking a medical diagnosis;
  4. such employee is caring for an individual who: (a) is subject to a federal, state or local quarantine or isolation order related to COVID-19, or (b) has been advised by a health care provider to self-quarantine due to concerns related to COVID-19;
  5. such employee is caring for his or her son or daughter because the school or place of care for the son or daughter has been closed, or the child care provider of the son or daughter is unavailable, due to COVID-19 precautions; or
  6. such employee is experiencing substantially similar conditions as specified by the Secretary of Health and Human Services, in consultation with the Secretaries of Labor and Treasury.

How Much Paid Sick Leave Must be Provided and for How Long?

For leave under categories 1-3 above, Covered Employers must provide full-time employees up to 80 hours (two weeks) of Paid Sick Leave at the employee’s regular rate. Part-time employees also may receive Paid Sick Leave based upon the amount of hours worked in a normal two-week period.  If Paid Sick Leave is taken by an employee for categories 4, 5 or 6 above, such leave is compensated at 2/3 the employee’s regular rate, and may be taken for up to 80 hours (two weeks).

The amount of Paid Sick Leave taken for categories 1, 2 and 3 above is capped at $511 per day per employee and $5,110 in the aggregate, and the amount of Paid Sick Leave taken for categories 4, 5 and 6 above is capped at $200 per day per employee and $2,000 in the aggregate.

This Paid Sick Leave must be made available to all employees immediately, regardless of how long the employee has been employed.  It remains unclear whether Covered Employers may count sick leave benefits they presently provide their employees toward the Paid Sick Leave required by the Act.

Employees may elect to substitute any accrued, paid leave otherwise available under a Covered Employer’s existing policies, but Covered Employers are prohibited from requiring employees to use other paid leave before they may use the Paid Sick Leave afforded to them by the Act.

Emergency FMLA Expansion

The Act creates an entirely new entitlement to FMLA leave: “Public Health Emergency Leave.” It is tied directly to the coronavirus, and, for the first time, requires paid leave.

Which Employers Are Covered?

As with Paid Sick Leave, only private employers of fewer than 500 employees and government employers are covered. This is a significant departure from the FMLA’s coverage threshold of greater than 50 employees for all other covered leaves. In other words, this emergency benefit must be provided by smaller employers only. While there is a provision that will allow the Department of Labor (DOL) to exempt employers with fewer than 50 employees where the requirements would “jeopardize the viability of the business as a going concern,” the legislation provides no guidance as to how or whether the DOL will exercise this authority.

Which Employees Are Covered?

All employees of covered employers who have been employed for 30 calendar days. The familiar 12-month, 1,250-hour requirements have been eliminated, along with the requirement that the employee work at an establishment that employs 50 employees within 75 miles.

What Are the Qualifying Reasons for Leave?

Leave is only available to an employee who is unable to work (or to telework) due to a need for leave to care for a son or daughter (under 18 years of age) whose school or place of care has been closed, or whose childcare provider is unavailable, due to a public health emergency, which is defined as an emergency with respect to COVID-19 declared by a federal, state or local authority.

What Portion of the Leave must Be Paid?

The first 10 days of any leave will be unpaid, unless the employee (not the employer) chooses to substitute paid leave (including the Paid Sick Leave discussed above). After the 10-day exclusion, employees must be paid at 2/3 of their regular rate for the regular number of hours the employee would have been scheduled to work.

What is the Total Amount of Leave Available?

The Act does not expand the standard 12-week per 12-month FMLA entitlement. So, if employees have used leave for other FMLA-qualifying reasons, they will not be able to go beyond a combined 12 weeks. However, for smaller employers who were not previously covered by FMLA, the full 12-weeks will now be available for all eligible employees.

How Are Employers to Pay for These New Paid Leave Entitlements?

Obviously, the employers that will be impacted will not have planned or budgeted for the expenses that will be imposed on them by the Act, among all the other issues caused by the pandemic. Congress attempts to address this issue in the Act: subject to certain limitations and forthcoming regulations, Employers would receive tax credits for benefits paid pursuant to the Act (a credit against the employer’s portion of Social Security taxes). For additional guidance on these tax credits, see our separate client alert entitled, “New Tax Credits under the Families First Coronavirus Response Act” published on March 17, 2020.

When will the Law Take Effect?

The foregoing paid leave requirements will take effect not later than April 2, 2020, and the Act will sunset on December 31, 2020.

Our Labor & Employment Group will continue to monitor developments throughout this evolving and challenging situation.

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