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March 19, 2020

OVERVIEW

Late yesterday evening, the President signed into law a coronavirus relief package that will extend additional assistance to individuals affected by the COVID-19 outbreak. Labeled the Families First Coronavirus Response Act (H.R. 6201), the law includes the following components, which are explained in further detail throughout this document. Keep in mind, this is our current interpretation of the new law, that things are fluid and may change.

 

  • Requires employers with fewer than 500 employees to provide up to 12 weeks of job-protected leave related to caring for a child via an expansion of the Family and Medical Leave Act (FMLA) (with the first 10 days unpaid).
  • Requires employers with fewer than 500 employees to provide up to 80 hours (generally two weeks) of emergency paid “sick” leave to full-time employees (with special rules for part-time employees).
  • Provides tax credits for required paid sick leave, paid family and medical leave, and certain health plan expenses.
  • Requires group health plans, health insurers, and government programs to provide free coronavirus testing.

TEMPORARY EXPANSION OF FAMILY & MEDICAL LEAVE ACT (FMLA)

Overview: Requires employers with fewer than 500 employees to provide up to 12 weeks of job-protected leave, ten weeks of which would be paid.

Covered Employers: Employers with fewer than 500 employees. The bill gives the Secretary of Labor the regulatory authority to exempt employers with fewer than 50 employees if the provision of paid FMLA leave “would jeopardize the viability of the business as a going concern.”

Eligible Employees: Any full-time or part-time employee that has been on the employer’s payroll for 30 days. This is a significant departure from the FMLA’s usual requirement that the employee work for the employer for 12 months and 1,250 hours in the 12 months prior to taking leave.

Effective Date: No later than 15 days after the law is enacted (April 2, 2020).

Details:

  • The leave must be for a “qualifying need related to a public health emergency.”
    • A qualifying need is defined as “the employee is unable to work (or telework) due to a need for leave to care for the son or daughter under 18 years of age of such employee if the school [meaning a primary or secondary school only] or place of care has been closed, or the child care provider of such son or daughter is unavailable, due to a public health emergency.”
    • A “public health emergency” is defined to mean “an emergency with respect to COVID-19 declared by a Federal, State, or local authority.”
  • The first ten days for which an employee takes leave may be unpaid leave, or the employee may choose to substitute any accrued vacation leave, personal leave, or other medical or sick leave during this period (including in certain instances the emergency paid “sick” leave described below). After the initial ten days of unpaid leave, the employer is required to provide paid leave at a rate of no less than two-thirds of an employee’s regular rate of pay and the number of hours the employee would otherwise be normally scheduled to work.
  • Employers with 25 or more employees are required to reinstate employees after their FMLA leave period ends. Employers with fewer than 25 employers do not have to reinstate an employee if they are experiencing significant economic hardship.
  • The bill caps the amount of the paid leave, per employee, to no more than $200 per day or $10,000 in the aggregate.

TEMPORARY EMERGENCY PAID “SICK” LEAVE ACT

Overview: Requires employers to provide full-time employees with 80 hours of certain emergency paid “sick” leave (with special rules for part-time employees), paid at the employee’s regular rate of pay, to quarantine or seek a diagnosis for coronavirus. Leave is paid at two-thirds the employee’s regular rate of pay if taken to care for a family member for the same reasons or to care for a child whose school has closed, or childcare provider is unavailable, due to the coronavirus.

Covered Employers: Employers subject to expanded FMLA and emergency paid “sick” leave requirements.

Eligible Employees: All full-time and part-time employees; however, part-time employees will receive a pro-rated benefit.

Effective Date: No later than 15 days after the law is enacted (April 2, 2020). This provision of the legislation will expire on December 31, 2020.

Details:

  • The paid sick leave will apply in any of the following circumstances:
    1. The employee is subject to a federal, state, or local quarantine or isolation order related to COVID-19.
    2. The employee has been advised by a healthcare provider to self-quarantine due to concerns related to COVID-19.
    3. The employee is experiencing symptoms of COVID-19 and seeking a medical diagnosis.
    4. The employee is caring for an individual who (1) is subject to a federal, state or local quarantine or isolation order related to COVID-19, OR (2) has been advised by a health care provider to self-quarantine due to concerns related to COVID-19.
    5. The employee is caring for a son or daughter where the school or place of care of the son or daughter has been closed or the child care provider of such son or daughter is unavailable, due to COVID-19 precautions.
    6. The employee is experiencing any other substantially similar condition specified by the Secretary of HHS in consultation with the Secretary of the Treasury and the Secretary of Labor.
  • Full-time employees would be entitled to 80 hours of paid leave. Part-time employees are entitled to “a number of hours equal to the number of hours that such employee works, on average, over a 2-week period.” For part-time employees whose schedule varies from week to week, special rules apply to calculate the average number of hours.
  • The new law requires that the employer allow the employee to first use sick leave provided for under this sick leave law, then decide to use any remaining accrued paid leave under an employer’s policy. The employer cannot require the employee to use accrued leave under an employer policy first.
  • Any paid leave generously provided by an employer before the law is effective cannot be credited against the employee’s paid leave entitlement. However, hours cannot be carried over after December 31, 2020 (when the legislation sunsets), and based on the language of the bill, an employee’s right to take paid sick leave ends after they return from their leave.
  • The required paid leave ends with the employee’s next scheduled work shift following the end of the qualifying need.
  • The required sick pay is calculated based on the employee’s regular rate of pay or, if higher, the applicable minimum wage rate. In the case of leave to care for a family member or child, however, the required sick pay is based on two-thirds of the regular rate of pay (for reasons 4, 5, and 6 above).
  • The maximum amount of required sick pay per employee is $511 per day and $5,110 in the aggregate (for reasons 1, 2, and 3 above). In the case of leaves to care for a family member of child, however, the maximum amount of required sick pay per employee is $200 per day and $2,000 in the aggregate (for reasons 4, 5, and 6 above).
  • The bill imposes notice requirements and prohibits employers from discharging, disciplining, or discriminating against employees who take paid sick leave. The Secretary of Labor is instructed to provide a model notice within seven days after enactment.
  • An employer is also prohibited from requiring employees to look for or find replacement employees to cover the hours during which the employee is using the paid sick time.
  • Violations are punishable under the FLSA.

TAX CREDITS FOR EMERGENCY PAID SICK LEAVE AND FAMILY AND MEDICAL LEAVE

Overview: Provides a series of refundable tax credits to those employers subject to expanded FMLA and emergency paid “sick” leave requirements. Additional details include:

  • The employer-related credits, which are refundable, would be applied against the employer portion of Social Security taxes for each quarter equal to the “qualifying” paid leave wages paid by the employer.
  • The tax credits would apply with respect to both the FMLA-expanded paid leave, as well as the emergency paid “sick” leave.
  • The amount of the tax credits varies based on the type of leave.

Tax Credit for Expanded FMLA Leave:

  • Provides employers with a refundable tax credit equal to 100 percent of the “qualified family leave wages” that the employer is required to pay for a given quarter under the Expanded FMLA Leave.
  • The amount of the qualified family leave wages that would be taken into account for purposes of the credit per employee is $200 for any day for which the employer pays the employee qualified family leave wages, up to a maximum amount for all calendar quarters of $10,000 per employee.
  • The tax credit is allowed against the tax imposed by section 3111(a) (the employer portion of Social Security taxes). If the credit exceeds the employer’s total liability under section 3111(a) for all employees for any calendar quarter, the excess credit is refundable to the employer.

Tax Credit for Emergency Paid “Sick” Leave:

  • Provides employers with a refundable tax credit equal to 100 percent of “qualified sick leave wages” that the employer is required to pay for a given quarter under the Emergency Paid Sick Leave Act.
  • The amount of qualified sick leave wages for purposes of the credit would vary depending upon the reason for the leave.
  • For employees who must self-isolate, obtain a coronavirus diagnosis, or comply with a self-isolation recommendation from a public official or health care provider, the amount of qualified sick leave wages taken into account is capped at $511 per day.
  • The tax credit is allowed against the tax imposed by section 3111(a) of the Internal Revenue Code (the employer portion of Social Security taxes).
  • The law also allows for an increase in the amount of the tax credit equal to the amount “of the employer’s qualified health plan expenses as are properly allocable to the qualified family [or sick] leave wages for which such credit is allowed.”
  • The tax credit would apply to wages the employer pays between (1) a date that the Secretary of the Treasury must specify within 15 days after the date of enactment and (2) December 31, 2020.

FREE CORONAVIRUS TESTING

Overview: Requires group health plans, health insurers, and government programs to provide free coronavirus testing.

Details:

  • Requires that group health plans and health insurance issuers of group to cover FDA-approved COVID-19 diagnostic testing products.
  • Cost covered include the items and services furnished during a provider visit (office, telehealth, urgent care and emergency room) to the extent those items and services relate to the furnishing or administration of the testing product or the evaluation of the individual’s need for the testing product.
  • The mandated coverage must be provided without “any cost sharing (including deductibles, copayments and coinsurance) requirements or prior authorization or other medical management requirements.”
  • The requirement to cover COVID-19 testing costs starts from the date of enactment until the Secretary of HHS determines that the public health emergency has expired.

The information in this blog post is provided without any warranty, expressed or implied, as to its legal effect and completeness. In the instance of navigating these evolving and complicated laws being passed in the midst of this pandemic, we recommend connecting with your legal counsel, should you require legal assistance. Please view the full bill here: https://www.congress.gov/bill/116th-congress/house-bill/6201/text