New Paid Leave Obligations under the Families First Coronavirus Response Act
March 20, 2020 by
What Employers Need to Know About H.R. 6201
Yesterday, both the Senate and the President approved HR 6201, the Families First Coronavirus Response Act (“FFCRA”). The Act embodies a remarkable bipartisan effort aimed at empowering our communities to fight the spread of COVID-19 and to ease the financial impact of social distancing. In addition to over $1 billion in direct subsidies to various food and assistance programs, the bill includes two significant paid leave obligations for employers: an expansion of the FMLA and a new mandatory paid sick leave (“PSL”). Both of the FFCRA paid leave laws are scheduled to take effect 15 days from enactment, or April 1, 2020.
There is considerable confusion and misinformation on this bill, likely the result of several modifications by the House following its initial approval (and after many news and law sources published summaries of the original bill). I have summarized the most important provisions, below. Please note that this is a streamlined summary to facilitate a basic, overall understanding and is not intended to cover every detail of this nearly 100-page bill. Please direct specific questions about your situation to your favorite Brown Fox attorney.
Coverage. Both laws in the FFCRA cover only employers of 500 or fewer employees. This is a surprising and unexplained departure from historic employment regulations—which typically exempt employers below a minimum size.
Eligibility. All employees are eligible for PSL immediately upon hire and for FMLA leave after 30 days of employment (including days spent on PSL).
Qualifying Conditions for FMLA Leave. Contrary to popular internet opinion, the FMLA expansion adds only one new qualifying condition to the five existing FMLA conditions: the employee is needed to care for his/her minor child because of a school or daycare closure necessitated by the COVID-19 public health emergency. All other FMLA leave requests would need to qualify under the existing FMLA framework. COVID-19 would likely qualify as a serious health condition and employers should consider relaxing any existing medical certification requirements.
Qualifying Conditions for PSL. Employees qualify for PSL when unable to work (or telework) under any of the following circumstances:
- Employee is subject to government quarantine or social distancing order;
- Employee has been advised by health care provider to self-quarantine;
- Employee is seeking a diagnosis for COVID-19 symptoms;
- Employee is caring for someone affected by condition (1) or (2), above;
- Employee is caring for a child whose school is closed or daycare provider is unavailable; or
- Other substantially similar conditions specified by the HHS Secretary.
Compensation obligations under FMLA and PSL. The descriptions of the various wage obligations under both the FMLA and the PSL are quite complicated and confusing. It’s simplest to describe them in two parts: (1) the first two weeks (i.e., first 10 workdays) and (2) weeks 3-12:
- Weeks 1-2 (PSL):
- For PSL conditions (1)-(3) (see above): 100% pay, capped at $511/day ($5,100 total)
- For PSL conditions (4)-(6): 66.6% pay, capped at $200/day ($2,000 total)
- Weeks 3-12 (FMLA):
- For the new FMLA condition: 66.6% pay, capped at $200/day ($10,000 total)
- For all other FMLA conditions: No required compensation
Telework. Both laws take into account the availability of “telework” when describing situations where leave is appropriate. While this term is not defined or otherwise described, the implication is that employees are not eligible for paid leave if they can perform their work from home. Employers should exercise caution in applying this exception, including seeking counsel in advance.
Tax Credits. Both paid leave laws under FFCRA provide tax credits that should offset most or all of the out-of-pocket cost. The credits are to be applied against quarterly FICA taxes, with any shortfalls treated as overpayments subject to cash refunds. In other words, employers can reduce their quarterly FICA contribution obligation by an amount equal to any compensation paid in compliance of either of these new laws during that quarter. If the amount of paid leave exceeds the FICA obligation for any calendar quarter, the difference should be “refunded” to the employer. Thus, it appears that most of the cost of this leave will be shifted to our already insolvent social security system; and the ultimate financial burden on employers will be the increased cost of accounting and the cost of what will effectively become a short-term, government-backed, interest-free payroll loan to employees affected by COVID-19.
Consequences of Non-Compliance. Both laws treat violations as a failure “to pay minimum wages” under section 6 of the FLSA. This suggests that damages would be 200% of actual pay, plus interest and attorney fees. In addition, failure to pay minimum wage carries personal liability for those responsible for employee compensation.
Exemptions. The Secretary of Labor is expected to issue regulations to interpret and apply these new laws within the coming weeks. Among others, these regulations could include exemptions for healthcare providers, first responders, and employers of fewer than 50 employees where compliance “would jeopardize the viability of the business as a going concern.”
Credit for Previous Leave Compensation. Any paid leave already provided to employees will be credited against the obligations of these two laws, provided such leave complied with or exceeded the minimum requirements.
Workplace Closure. Both of these laws cover only situations where employees cannot work for one of the reasons described above. As a result employees who are unable to work due to worksite closures are not covered, even worksite closures that occur following the initiation of leave for a covered reason.
Sunset Provisions. Both the PSL and the FMLA expansion include sunset clauses, effectively repealing them in their entirety on December 31, 2020.