As businesses cope with dramatic disruption in supply chain and product demand, as well as government-imposed shutdowns for non-essential businesses in various locations, the U.S. government has begun to implement legislative relief and stimulus packages. The federal government has adopted paid time off and job guarantees for employees who are unable to work due to health, childcare or public safety reasons stemming from COVID-19. The financial burden of the paid leave is supported by federal tax credits for affected employers.
For this article, we have invited a guest author, Tracey Levy of Levy Employment Law in New York, to summarize the first U.S. federal paid sick leave and paid family leave acts. Her work is republished here with permission.
NEW FEDERAL PAID LEAVE RULES
The federal government has taken a two-pronged approach to provide paid time off and job protection guarantees for employees who are unable to work due to health, childcare or public safety reasons stemming from COVID-19.
1. Federal Emergency Paid Sick Leave Act (“EPSLA”)
All private employers with 500 or fewer employees and many public employers are required to provide their employees (even new hires) with up to two weeks (80 hours) of paid sick leave if an employee is unable to work due to one of six situations:
The employee is subject to a government-issued quarantine or isolation order due to COVID-19;
A health care provider has advised the employee to self-quarantine due to COVID-19 exposure;
The employee is experiencing COVID-19 symptoms and seeking a medical diagnosis;
The employee is caring for someone subject to a government-issued quarantine or isolation order;
The employee is caring for a child where the school or child care provider has closed or the paid care provider is unavailable due to COVID-19 precautions;
The employee is experiencing any substantially similar condition specified by the Secretary of Health and Human Services in consultation with the Secretary of the Treasury and the Secretary of Labor.
Calculation of Pay: Full-time employees are entitled to 80 hours of paid sick leave, paid at their regular rate of pay up to a maximum of $511 per day for absences based on their personal condition (reasons 1 through 3 above) and two-thirds (2/3) of their regular rate of pay, up to a maximum of $200 per day, for absences based on their care of others (reasons 4 through 6 above). Part-time employees must receive an amount of paid sick leave equal to the number of hours the employee works on average over a two-week period.
No Carry Over: This paid sick time will not carry over into 2021, and unused amounts need not be paid out in the event of an employee’s termination. Rather, all paid sick leave ends immediately following termination of the emergency need.
Other Leaves and Income Sources: Significantly, though, for employers that already offer some amount of paid leave time, an employer cannot require an employee to use other paid leave before claiming paid leave for a qualifying reason under this Emergency Paid Sick Leave Act.
2. Federal Emergency Family and Medical FML Leave Expansion Act (“EFMLEA”)
Employers with 500 or fewer employees must permit employees to request up to twelve (12) weeks of job-protected paid leave under the FEMLEA Emergency Family Medical Leave Expansion Act (“EFMLEA”)
Following the initial two-week period of Emergency Paid Sick Leave, employers with 500 or fewer employees must permit employees to request up to twelve weeks of job-protected paid leave under the Emergency Family Medical Leave Expansion Act (“Emergency EFMLEA”)
Eligible Employees: An employee qualifies for EFMLEA because:
The employee needs to care for the employee’s child under the age of 18 due to the closing of the child’s school or child care center or unavailability of the child’s regular paid child care provider for a COVID-19-related public health emergency as declared by a federal, state or local government authority.
In this limited childcare-related context, the EFMLEA expands the federal FMLA, both in its coverage of every employer with 500 or fewer employees, and in its application to every individual who has been employed by such an employer for at least 30 calendar days.
Calculation of Pay. Employers do not pay employees during the first 10 days of leave under EFMLEA. Employees may choose to use accrued paid time off during that 10-day period or EPSLA, but employers may not require such use. Following the expiration of the initial 10-day period, EFMLEA provides that employees are to receive at least two-thirds of their regular rate of pay, for this time off based on their regular work schedule, to a maximum of $200 per day or $10,000 in aggregate.
Scope. Although the scope of covered employers, employees and qualifying reasons under the EFMLEA, as well as the concept of paid leave, deviate substantially from employers’ existing obligations under the FMLA, other aspects of the FMLA with regard to providing requesting employees with notice of their leave rights, health insurance continuation, and job protection, are fully applicable in this context. Employees cannot be discriminated or retaliated against for requesting or taking qualifying leave.
However, for EFMLEA, employers with fewer than 25 employees can be exempted from the obligation to restore an employee to the same or equivalent job at the end of the leave period if the position no longer exists due to economic conditions or changes in operations that affect the individual’s employment, or as caused by a public health emergency during the period of leave. To claim the benefit of this exception, the employer must have made reasonable efforts to restore the employee to an equivalent position, and for one year thereafter, the employer must continue to make reasonable effort to notify the employee if an equivalent position becomes available.
FEDERAL TAX CREDITS
To pay for these substantial paid leave benefits, the federal law provides that employers may claim credits against taxes owed to the Internal Revenue Service each quarter equal to 100 percent of qualified sick leave wages and 100 percent of qualified family leave wages paid in the calendar quarter, up to the full amount of the taxes owed. If the credit exceeds the taxes owed, then the excess is to be treated as an overpayment to be refunded to the employer. The law also provides that sums paid as emergency paid sick leave or Emergency FMLEA leave are not to be considered “wages” for purposes of the federal tax law section 3221(a). Finally, it should be noted that the tax credits are equally available to self-employed individuals to the extent they are unable to work because of qualifying sick or family leave reasons.
Limited Duration, Exceptions and Penalties Under the Federal Laws
Both Emergency Paid Sick Leave and Emergency FMLEA take effect by April 2, 2020, and end on December 31, 2020. The laws both authorize the Secretary of Labor to issue regulations that exempt businesses with fewer than 50 employees where imposing the laws’ requirements would jeopardize the viability of the business as a going concern. Health care providers and emergency responders also may opt out from the laws’ requirements.