Client Alert
PH COVID-19 Client Alert Series: FFCRA: Overview
March 18, 2020
By Elena R. Baca, Eric Distelburger, Dina Ellis Rochkind, Kenneth W. Gage, Elizabeth S. Minoofar, & Charles A. Patrizia
Click here to read more from our Coronavirus series.
On Monday evening, March 16th, the House of Representatives, by unanimous consent, passed technical corrections and amendments to the COVID-19 emergency Bill that was passed in the early hours of last Saturday morning. As described below, these changes narrow somewhat the burden on covered employers. The Bill has passed in the Senate, and it is expected to be signed by the President. We summarize below key provisions potentially affecting employers.
The Emergency Family and Medical Leave Expansion Act
The Emergency Family and Medical Leave Expansion Act (“Emergency FMLA Act”) adds language to the FMLA to allow for child care-related leave due to the certain effects of the COVID-19 pandemic. In general:
This provision applies to employers with fewer than 500 employees.1 It covers individuals employed by a covered employer for at least 30 days.
Covered leave is available to those with a “qualifying need related to a public health emergency.” With the recent amendments, this is defined to include employees who are “unable to work (or telework)” because of the need to care for the employees’ child (under the age of 18) if the child’s school or daycare has been closed, or the child’s care provider is unavailable to do so due to a public health emergency. This is much narrower than the prior version of the Bill, which covered time off more broadly due to compliance with public health recommendations or orders.
Eligible employees may receive up to 12 weeks of leave. The initial 10 days is unpaid (unless the employee elects to use accrued vacation, sick, or paid time off).
After the first 10 days, covered employers must pay no less than two-thirds of the employee’s regular rate of pay (which includes all salary, hourly pay, and other non‑discretionary compensation) for the number of hours the employee would typically work during the leave period. As revised this week, the Bill caps paid leave at $200 per day or $10,000 total.
Covered employees who take such a leave are entitled to return to the same or a reasonably equivalent position, under most circumstances.2
These requirements, if passed into law, start no later than 15 days after the Emergency FMLA Act takes effect through December 31, 2020.
The Emergency FMLA Act authorizes the Secretary of Labor to issue regulations outlining exceptions for: (i) health care providers and emergency responders who may opt to exclude employees from this provision; and (ii) employers with fewer than 50 employees if imposition would “jeopardize the viability of the business as a going concern” (subject to the Department of Labor’s finding).
H.R. 6201, Families First Coronavirus Response Act — Emergency Paid Sick Leave Act
Under the current terms of the Bill, which applies to private employers with fewer than 500 employees, an employer must provide to each employee paid sick time—on top of any paid time that the employer already provides—to be used for absences relating to COVID-19. The Act and its provisions expire on December 31, 2020.
Purpose of Paid Sick Time
One of the key changes to the Bill concerns how paid sick time may be used. The Bill broadens the scope from that originally passed by the House, by allowing employees to take sick time to care for any individual, as opposed to just family members who are in quarantine. The Bill also recognizes the fluidity of the current situation; it contemplates that paid sick leave may be taken for reasons not specified in the Bill if the Secretary of Health and Human Services later determines that additional steps must be taken to protect individuals. Specifically, an employer must provide an employee paid sick time for any of the following six reasons:
The employee is subject to a Federal, State, or local quarantine or isolation order related to COVID-19;
The employee has been advised by a health care provider to self-quarantine due to concerns related to COVID-19;
To obtain a medical diagnosis if the employee has symptoms of COVID-19;
The employee is caring for an individual who is subject to an order described in subparagraph 1 or 2 above;
To care for the employee’s child if the child’s school or place of care has been closed, or the child care provider of the child is unavailable to do so, due to COVID-19 precautions; or
The employee is experiencing any other 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.
As with the Emergency FMLA Act, the Paid Sick Leave Act similarly authorizes the Secretary of Labor to issue regulations outlining exceptions for health care providers, emergency responders, and employers with fewer than 50 employees.
Duration and Use of Paid Sick Time
Full-time employees are entitled to 80 hours of paid sick time. Part-time employees are entitled to the number of hours that such employees work, on average, over a two-week period. Paid sick time under this Act is in addition to any paid leave provided under an employer’s existing policy. An employer may not change any existing paid leave policy on or after the date of enactment of the Act to avoid having to provide additional paid sick time.
Employees may use paid sick time immediately for any of the above-listed reasons, regardless of the employee’s length of service. An employer may not require an employee to first use other paid leave provided by the employer, or to search for or find a replacement employee while the employee is using paid sick time. After the first workday (or portion thereof) an employee receives paid sick time, an employer may require the employee to follow “reasonable notice procedures” in order to continue receiving such paid sick time.
Paid sick time ceases beginning with the employee’s next scheduled work shift immediately following the termination of the need for paid sick time.
Unused paid sick time under the Act does not carry over to the next year, and employers are not required to pay unused sick time upon separation of employment.
Compensation for Paid Sick Time
With the changes on Monday, the Bill caps compensation for paid sick time. Sick time for the first three reasons identified above is at the employee’s regular rate of pay, based on the number of hours the employee otherwise would be scheduled to work, capped at $511 per day and $5,110 total. Sick time used for reasons 4, 5, and 6 above, however, is at two-thirds of the employee’s regular rate of pay, capped at $200 per day and $2,000 total.
Employer Notice Requirements, Prohibitions, and Enforcements
An employer must post conspicuously a notice of the requirements under the Act. The Secretary of Labor will make publicly available a model notice no later than 7 days after the date of enactment of this Act.
An employer may not discharge, discipline, or discriminate against an employee who takes leave in accordance with the Act, or who has filed a complaint, instituted or caused to be instituted a proceeding under or related to the Act, or testified or is about to testify in any such proceeding.
Failure to provide paid sick time in accordance with the Act will be a failure to pay minimum wages in violation of the FLSA and be subject to penalties under the FLSA.
H.R. 6201, Families First Coronavirus Response Act - Emergency Unemployment Insurance Stabilization and Access Act of 2020
The Emergency Unemployment Insurance Stabilization and Access Act (“Emergency UI Act”) provides for $1 billion in emergency administration grants in 2020 to eligible states to help process and pay unemployment insurance (“UI”) benefits.
State Eligibility Requirements
The Emergency UI Act divides eligibility requirements into two steps, reserving the first $500 million for immediate relief to states that meet the criteria of Step 1 and the second $500 million for those that also complete Step 2.
Step 1: In order for a state to be eligible for the first 50% of funds, it must:
Require employers to provide notification of the availability of UI compensation to employees at the time of separation from employment;
Ensure that applications for UI compensation and assistance with the application process are available in-person, by phone, and/or online (at least two of three); and
Notify applicants when an application for UI is received and being processed and assist those whose application is unable to be processed.
Upon certification by the Secretary of Labor that a state meets the requirements above, the state will receive the first 50% of aid within 60 days of enactment of the Emergency UI Act.
Step 2: In order to be eligible for the remaining 50% of funds, the state must have seen an increase of UI claims by at least 10% over the same quarter in the previous calendar year. The state must further:
Express its commitment to maintain and strengthen access to the UI compensation system; and
Demonstrate steps it has taken or will take to ease eligibility requirements and access to UI compensation for claimants, including waiving work search requirements and the waiting week, and not charging employers directly impacted by COVID-19 due to an illness or related quarantine.
Reporting Requirements and Emergency Flexibility
Within one year of enactment of the Emergency UI Act, states receiving funding would be required to submit a report that includes data on the number of recipients of UI benefits and a description of the steps it intends to take to increase the number of recipients of UI benefits.
The Act also provides temporary federal flexibility regarding those UI restrictions, which are also in federal law. If a state modifies its UI laws with respect to: (a) work search; (b) waiting week; (c) good cause; or (d) employer experience rating, on an emergency temporary basis as needed to respond to the spread of COVID-19, such modifications shall be disregarded for the purposes of applying section 303 of the Social Security Act and section 3304 of the Internal Revenue Code of 1986 to such state law.
Additional Assistance
The Emergency UI Act also provides states with:
Access to interest-free loans to help pay regular UI benefits through December 31, 2020, if needed;
Technical assistance from the Secretary of Labor to states that want to set up work-sharing programs;3 and
For states that are eligible for the second half of funding (i.e., an increase of 10% or more in their unemployment rate over the previous year), 100% federal funding for Extended Benefits,4 which normally require 50% of funding to come from states.
Conclusion
We will continue to watch this legislation. As of the time of drafting of this alert, members of the Senate are already framing proposed revisions. In the meantime, our Firm’s cross-functional teams will continue to monitor and update you on these issues.
1 Employers with 500 or more employees remain subject to the FMLA and still must provide unpaid leave to employees who suffer from a medical condition or must care for a family member with a medical condition as otherwise provided in the FMLA. Public statements by the Bill sponsors indicate that some 89% of employees of the larger employers (500 employees +) are already covered by paid sick leave, though often for fewer days.
2 Reinstatement rights for employees of employers with fewer than 25 employees are subject to additional conditions.
3 Work-sharing programs allow employers to reduce hours instead of laying off employees, and then employees receive partial UI benefits to offset the wage loss.
4 Extended Benefits are triggered when unemployment is high in a state and provide up to an additional 26 weeks after regular UI benefits (usually 26 weeks) are exhausted.
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