March 16, 2020
On March 14, 2020, the United States House of Representatives passed House Resolution 6201, the Families First Coronavirus Response Act (the “Act’). While this legislation guarantees free coronavirus testing, enhances unemployment insurance, expands food security initiatives and increases federal Medicaid funding, employers may be most interested in its provisions which establish paid leave, expand the coverage and scope Family and Medical Leave Act of 1993, 29 U.S.C. § 2601 et seq. (“FMLA”) to includes coronavirus related absences, and provide $15 million for the Internal Revenue Service to implement tax credits for paid sick and paid FMLA leave. Currently, the Act applies to employers with fewer than 500 employees. The United State Senate is expected to consider and pass some version of the Act this week. Below is a summary of key provisions in the Act which employer may consider while awaiting final passage of federal legislation.
Emergency Family and Medical Leave Expansion
Employers with fewer than 500 employees and government employers are required to provide expanded FMLA leave to employees who have been employed only for 30 or more days (rather than the standard eligibility requirements of 12 months of employment and 1250 hours worked). Note that while the FMLA currently applies only to employers with 50 or more employees within a certain geographic radius, the Act dramatically expands FMLA coverage to include employers with “1 or more employees.” Expanded FMLA leave is available under the Act for any of the following additional public health emergency related reasons (in addition those qualifying events currently provided by law):
- due to a requirement or recommendation to quarantine due to exposure or symptoms of coronavirus;
- to care for an at-risk family member (including a parent, spouse, sibling, next of kin, grandparent or grandchild) who is adhering to a requirement or recommendation to quarantine due to exposure to or symptoms of coronavirus;
- to care for the child (biological, foster, or adopted child, a stepchild, a child of a domestic partner, a legal ward, or a child of a person standing in loco parentis) of an employee if the child’s school or place of care has been closed, or the child-care provider is unavailable, due to coronavirus.
This expanded FMLA leave begins with two weeks of paid leave. For the remainder of the FMLA leave period, employers must provider employees not less than two-thirds of the employees’ regular pay. An employee may elect to substitute any accrued vacation, personal, medical or sick leave during FMLA leave but an employer may not require an employee to substitute accrued leave for FMLA leave taken under the Act. Limited restoration rights and obligations exist for employers who employ fewer than 25 employees and employees who take leave under the Act. This Act takes effect no later than 15 days after the bill is enacted.
Emergency Paid Sick Leave
This section of the Act requires employers with fewer than 500 employees and government employers to provide employees two weeks of paid sick leave. Paid sick leave must be provided for any of the following reasons:
- when the employee has a current diagnosis of COVID-19 or needs to quarantine or seek a diagnosis or preventative care for coronavirus (paid at the employee’s full regular rate of pay);
- when the employee needs to care for a family member for the reasons listed in bullet point one (paid at two-thirds of the employee’s regular rate);
- when a child’s school has closed or their child care provider is not available due to coronavirus (paid at two-thirds of the employee’s regular rate).
While the Act includes provisions outlining how paid sick time is earned and when it may be used, these guidelines are not applicable in the event of a public health emergency such as the current coronavirus pandemic. Full-time employee are entitled to 80 hours of paid sick leave and part-time employees are entitled to the number of hours that they work in a typical two-week period.
The Act explicitly provides that “any employer with a paid leave policy who makes available an amount of paid leave that is sufficient to meet the requirements” of the Act and “that may be used for the same purposes and under the same conditions” outlined in the Act shall not be required to permit an employee to earn more paid sick time under the Act. In addition, the Act does not require payment of accrued but unused sick leave upon an employee’s termination, resignation, retirement or other separation from employment. Employees are required to make a reasonable effort to schedule sick leave in a manner that does not “unduly disrupt the operations of the employer.”
No certification may be required from a healthcare provider for an employee who utilizes this paid sick leave benefit during any public health emergency. Information an employer obtains about an employee or an employee’s child, parent, spouse, domestic partner, or individual related to the employee shall: 1) be maintained on a separate form and in a separate file from other personnel information; 2) be treated as a confidential medical record; and 3) not be disclosed except to the affected employee or with the permission of the affected employee.
This benefit expires on December 31, 2020.
COVID-19 Testing
Health plans are required to provide coverage at no cost to the consumer for COVID-19 diagnostic testing, including the cost of provider, urgent care center, and emergency room visits to receive testing. The uninsured, veterans, Medicaid recipients, patients of the military and Native American Health systems as well as employees enrolled in employer health plans are covered. Cost sharing is waived under the Medicare Part B program for provider visits during which a COVID-19 diagnostic test is administered or ordered and under Medicare Advantage programs for COVID-19 diagnostic testing, including the associated cost of the visit to receive testing.
Tax Credits
A refundable tax credit equal to 100 percent of qualified paid sick leave wages paid by an employer for each calendar quarter is made available pursuant to the Act. The tax credit is allowed against the tax imposed by section 3111(a) (the employer portion of Social Security taxes). Qualified sick leave wages are those required to be paid by the Act and the benefit available varies upon whether the sick leave wages are paid to the employee due to quarantine or treatment reasons for their own health condition or whether they are paid to the employee due to the need to care for a family member or for a child whose school or place of care has closed due to coronavirus.
A refundable tax credit also is payable in an amount equal to 100 percent of qualified FMLA wages paid by an employer for each calendar quarter. This tax credit also is allowed against the employer portion of Social Security taxes. Employers may elect not to have the credit apply and no deduction is allowed for the amount of the credit.
Finally, wages paid in the form of emergency paid sick leave or expanded FMLA will not be considered wages for purposes of the Social Security Act.
Employer Notice Requirements
Employers must notify all employees and including in any employee handbook information about the Act including the following:
- a description of the paid sick time available to employees under the Act;
- information pertaining to filing an action under the Act (for interference with rights created by the Act, discrimination, or retaliation based upon the Act);
- details of the notice requirement for a foreseeable period of time; and
- information that describes the employees’ right to exercise their rights under the Act and how the employee can contact appropriate authorities if they believe their rights have been violated.
This notice must be posted in conspicuous places on the premises of the employer where notices to employees and applicants are customarily placed.
While many employers will want to wait for the final version of the Act to pass before taking action, now is the time to review applicable company policies and procedures and to consider changes that may be necessitated by the final version of this legislation. The Act also calls upon the Occupational Safety and Health Administration (“OSHA”) to issue an emergency temporary standard to protect healthcare workers and other employees identified as having elevated risk from the ongoing infections and exposure risk created by COVID-19. OSHA will likely issue a COVID-19 emergency temporary standard shortly.
Hancock Daniel’s Labor and Employment team is prepared to assist with any issues or questions related to the coronavirus and H.R. 6201, the Families First Coronavirus Response Act. Our COVID-19 Taskforce will advise and assist providers in working through recommended employment policy and practice changes and all concerns arising from the pandemic.
The information contained in this advisory is for general educational purposes only. It is presented with the understanding that neither the author nor Hancock, Daniel & Johnson, P.C., is offering any legal or other professional services. Since the law in many areas is complex and can change rapidly, this information may not apply to a given factual situation and can become outdated. Individuals desiring legal advice should consult legal counsel for up-to-date and fact-specific advice. Under no circumstances will the author or Hancock, Daniel & Johnson, P.C. be liable for any direct, indirect, or consequential damages resulting from the use of this material.
