The following information is provided by Adams and Reese LLP
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This week, the House of Representatives went back to the drawing board and made “corrections” to its Emergency Family First Response Act.
The revised bill somewhat decreases the financial burden on small businesses and changes the circumstances under which employers are required to continue to pay their employees for COVID-19 related reasons.
On March 18, the Bill was passed in the Senate without modification, and the President subsequently signed the Bill into law.
Below are our REVISED answers to common questions regarding two important aspects of the legislation that small business owners need to know.
THE EMERGENCY PAID SICK LEAVE ACT
What is the Emergency Paid Sick Leave Act (EPSLA)? The EPSLA is a temporary law that applies only to businesses with fewer than 500 employees and mandates up to 10 days of paid leave for full-time and part-time employees that need time off for various coronavirus-related reasons.
How long will the EPSLA be in effect? Unless it is later extended, the EPSLA will expire on December 31, 2020.
Does the EPSLA apply to all employers? No. The EPSLA only applies to employers with fewer than 500 employees.
Does the EPSLA apply to all employees? Assuming you have fewer than 500 employees, the EPSLA applies to all employees — regardless of whether they are full-time or part-time.
What are the types of events that trigger the EPSLA? Under the revised Bill, the EPSLA requires employers with fewer than 500 employees to provide each employee up to 10 days of paid sick leave — but only if the employee is unable to work or telework — due to one of the following triggering events:
- The employee is subject to a federal, state, or local quarantine or isolation order related to COVID-19. Generally, payments are capped at $511 per day and $5,110 per employee.
- The employee has been advised by a health care provider to self-quarantine due to concerns related to COVID-19. Generally, payments are capped at $511 per day and $5,110 per employee.
- The employee is experiencing symptoms of COVID-19 and needs to seek a medical diagnosis. Generally, payments are capped at $511 per day and $5,110 per employee.
- The employee is caring for an individual who is subject to an order similar to those set forth in paragraphs 1 and 2 above. Generally, payments are capped at $200 per day and $2,000 per employee.
- The employee is caring for a son or daughter because school is closed and the usual child care provider is unavailable due to COVID-19 precautions. Generally, payments are capped at $200 per day and $2,000 per employee.
- The employee experiences a substantially similar condition as specified by the government. Generally, payments are capped at $200 per day and $2,000 per employee.
Practically speaking, what this means is that the revised Bill now contemplates a situation where employees are forced to stay at home by order of the federal, state or local government — even if they are not sick and provided they lack the ability to work from home.
Thus, if the government orders a “shutdown” or a “lockdown” of your area, employees must be paid their wages for up to 10 days — regardless of whether or not they are sick or have tested positive for COVID-19 — if they are unable to work remotely.
How much EPSLA leave can an employee take? Full-time employees will be entitled to take up to 10 days of paid leave. Part-time employees will be entitled to leave based on the average number of hours they work in a given two week period. If the part-time employee’s hours fluctuate from week to week, employers must determine the average number of hours worked during the prior 6 months and provide leave equal to the number of hours they typically work in a two-week period.
If the part-time employee never started working before they became sick, employers must provide the number of hours that it anticipated the employee would have worked in the absence of the triggering event.
If EPSLA leave is no longer needed by the employee, benefits cease on the next regularly scheduled payday.
Will employers be repaid for providing these benefits? Yes. Employers will be repaid in the form of certain dollar-for-dollar tax credits. However, there are some caps and limits. Specifically, the refund for sick leave is capped at $511/day for triggering events 1-3 above and at $200/day for triggering events 4-6 above.
What if I already have an existing sick leave policy? Your existing policies do not matter. You are legally required to cease utilizing any existing policies and provide benefits under the EPSLA. You are not allowed to require your employees to utilize existing policies in lieu of EPSLA benefits.
Can I require my employee to find another employee to cover their shift while they are out on EPSLA leave? No. This is specifically prohibited by the EPSLA.
Will I be able to require my employee to use accrued Paid Time Off (PTO) or Vacation Pay in lieu of benefits under the EPSLA? No. The law is specifically designed to ensure employees will not be required to use PTO or vacation time in lieu of EPSLA leave.
Will there be required postings that must be displayed? Yes. A model poster will be released within 7 days by the Secretary of Labor, and it will need to be posted in a conspicuous place.
What if I fail to comply with the EPSLA? Employers who fail to comply with the EPSLA will be deemed to have violated the minimum wage requirements of the Fair Labor Standards Act and will be subject to fines and penalties. For those employers that willfully violate the EPSLA, they will be subjected to liquidated damages.
Can I terminate an employee because they seek leave under the EPSLA? No. The EPSLA specifically contains an anti-retaliation provision.
What if an employee quits or is terminated, but they have not used all available leave under the EPSLA? Will I have to pay them for any accrued EPSLA leave? No. Employers are not required to pay out unused EPSLA leave upon termination.
Even with the tax credits, what if I cannot afford to do this? What are my options, if any? At this point, the only options appear to be taking advantage of the tax credits and seeking a loan from the Small Business Administration.
THE EMERGENCY FAMILY AND MEDICAL LEAVE EXPANSION ACT
What is the Emergency Family and Medical Leave Expansion Act (EFMLEA)? The EFMLEA is a temporary amendment to the Family and Medical Leave Act (FMLA) that will apply to employers with fewer than 500 employees, and provides 12 weeks of leave for employees (the first 10 days are unpaid) — in addition to the 10 days of paid leave provided for by the Emergency Paid Sick Leave Act — for coronavirus-related issues, but only as it relates to school closures.
How long will the EFMLEA be in effect? Unless it is later extended, the EFMLEA will expire on December 31, 2020.
Does the EFMLEA apply to all employers? No, it only applies to employers with fewer than 500 employees. The Secretary of Labor has the authority to exclude employers with fewer than 50 employees under limited circumstances.
Does the EFMLEA apply to all employees? The EFMLEA applies to any employee that has been employed for at least 30 days.
What are the types of events that trigger the EFMLEA? The House significantly scaled back the qualifying events that would trigger coverage under the Emergency Family and Medical Leave Expansion Act. Now, the only qualifying event relates to child care issues caused by COVID-19. Specifically, up to 12 weeks of leave is now available if the employee is unable to work (or telework) because they must care for their child while school is closed or the usual childcare provider/babysitter is unavailable due to a COVID-19 emergency declared by federal, state or local authorities.
Unlike the original Bill, the latest version does not expand coverage for COVID-19 related illness or the need to care for individuals that are sick.
The first 10 days of this leave is unpaid, but the employee can overlap this with the 10 days of paid sick leave provided for by the Emergency Paid Sick Leave Act. The amount of paid leave remains at two-thirds the employee’s base pay up to a maximum of $200 per day and no more than $10,000 per employee. Credits will offset 100% of employer costs for providing mandated paid family leave. The credit also offsets, uncapped, the employer contribution for health insurance premiums for the employee for the period of leave.
Will employers be repaid for providing these benefits? Yes. Employers will be repaid in the form of certain dollar-for-dollar tax credits. However, there are some caps and limits. Specifically, the refund/credit is capped at $200/day per employee and $10,000 per quarter.
Will I have to hold the employee’s job open for them until they return? With some limited exceptions, yes. The regular rules under the FMLA apply to job reinstatement.
I cannot afford to do this. What are my options, if any? Aside from taking out a loan from the Small Business Administration, at this point, the only other option would be to petition the Secretary of Labor for an exemption from the new law based on there being a substantial risk that you will go out of business if you are forced to comply with this new law.
WHAT IT MEANS IN A NUTSHELL
Employees who are sick with COVID-19 or need to care for someone who is sick with COVID-19 must be paid for up to 10 days.
Employees that must stay home because their kids’ school is closed — and they cannot work remotely — must be granted leave for up to 12 weeks (the first 10 days would be paid under the Emergency Paid Sick Leave Act), with up to 10 weeks being paid under the expanded provisions of the Family and Medical Leave Act.
If the government orders a “lockdown” such that employees can no longer report to work, employees who cannot work remotely will be entitled to pay for up to 10 days. If their child’s school is closed beyond the initial 10 days and they must remain home and are unable to work remotely, then the employee will be entitled to up to 10 weeks of additional paid leave.
We will continue to monitor the situation and provide periodic updates as new information is made available.
Adams and Reese is conducting twice weekly webinars.
Here is the schedule:
Adams/Reese March Webinar Schedule
- Watch On-Demand: Covid-19 and Business Continuity – Keeping Your Operations Up and Running in a Crisis
- Register for Thursday: COVID-19: Employment Law Changes and Challenges
- 3/24 – Contract and Construction Issues
- 3/26 – Education Law and the Coronavirus
- 3/31 – Supply Chain Issues and the Coronavirus