Casner & Edwards

Client Alert: COVID-19-Related Paid Leaves Under the FFCRA



By Renee Inomata and Stéphanie Smith

As employers focus on taking the best steps to protect their workforce and their organization in light of the continued pandemic, the federal government has enacted two new laws imposing paid leave obligations on employers. The Families First Coronavirus Response Act, signed into law by President Trump on March 18, 2020 and effective April 1, 2020 (“FFCRA”), includes two paid leave provisions – the Emergency Family and Medical Leave Expansion Act and the Emergency Paid Sick Leave Act – which apply to employers with fewer than 500 employees (including non-profit organizations). Employers are not required to pay under both leaves at the same time, and are not required to allow employees to supplement paid leave under FFCRA with other paid leave programs, but may elect to do so.

Employers should distribute to all employees and/or post the DOL's notice of employee rights under the FFCRA promptly. The DOL has also provided Questions and Answers to help clarify some aspects of the FFCRA.

Emergency Family and Medical Leave Expansion Act (“EFMLA”)

Starting April 1, 2020, any employee who has worked at least 30 calendar days for an employer with fewer than 500 employees will be entitled to the rights and protections in the federal Family and Medical Leave Act of 1993 (“FMLA”) if the employee is unable to work or telework resulting from the need to care for a son or daughter (under 18 years old) because the child’s school or place of care has closed or child care provider is unavailable, due to a public health emergency.

EFMLA is not intended to increase the total amount of FMLA leave time otherwise available. Thus, it will be counted toward the total of 12 weeks (or 26 weeks if service member leave applies) permitted under the regular FMLA.

EFMLA may be taken intermittently or on a reduced leave basis only with employer permission and agreement between the employer and employee on a set schedule.

The eligible employee is entitled to pay at a rate of 2/3 of the employee’s regular rate of pay, capped at $200 per day and $10,000 in the aggregate, after the first 10 days of EFMLA leave. Employees may elect, but may not be required, to substitute other accrued vacation, personal or medical or sick leave pay to the first 10 days of EFMLA leave. Emergency Paid Sick Leave described below may be used during the first 10 days of EFMLA if the employee’s absence is due to a school or daycare closing.

If an employer will be using the payroll tax credit associated with the FFCRA (noted below), then an employer must require an employee to provide the following information:

 
  • the employee’s name,
  • qualifying reason for requesting leave,
  • statement that the employee is unable to work, including telework, for that reason,
  • the date(s) for which leave is requested; and
  • documentation of the reason for the leave, such as a quarantine or isolation order, the name of the healthcare provider that advised the employee to self-quarantine, or a notice of closure from a school, place of care or child care provider.
EFMLA does not change existing documentation obligations under the FMLA for other FMLA reasons.

EFMLA leave is treated like any other form of FMLA. Therefore, while an absence qualifying for EFMLA before April 1 will not reduce the amount of leave for which an employee becomes eligible as of that date, any other type of leave used by an employee under the regular FMLA used before April 1 will reduce that employee’s 12-week entitlement for the applicable FMLA benefit year.

An employer cannot discriminate or retaliate against an employee taking EFMLA leave. The job restoration requirements under the regular FMLA apply to employees taking FMLA leave. However, for employers with fewer than 25 employees, the job restoration requirements may be excused under certain circumstances. A violation of EFMLA will be treated in the same manner as a violation of the regular FMLA and will carry the same penalties and personal liability associated with a violation of the regular FMLA.

Emergency Paid Sick Leave (“EPSL”)

Employers with fewer than 500 employees must provide eligible full-time employees up to 80 hours of paid sick leave and a pro-rated amount for part-time employees, between April 1, 2020 and December 31, 2020, if the employee is unable to work or telework because the employee is:

(1) subject to a Federal, State or local quarantine or isolation order; or

(2) advised by a healthcare provider to self-quarantine due to concerns related to COVID-19; or

(3) experiencing symptoms of COVID-19 and is seeking a medical diagnosis; or

(4) caring for an individual who is subject to a Federal, State or local quarantine or isolation order; or has been advised by a healthcare provider to self-quarantine due to concerns related to COVID-19; or

(5) caring for a son or daughter if the school or place of care is closed or the child care provider is unavailable due to COVID-19 precautions; or

(6) experiencing any other substantially similar condition specific by the US Department of Health and Human Services, the US Department of Treasury or the US Department of Labor.

If EPSL is being taken for reasons (1), (2) or (3) above, then the employee is eligible to be paid the employee’s regular rate of pay, up to a cap of $511 a day and $5, 110 in the aggregate. If EPSL is being taken for reasons (4), (5) or (6), then the employee is eligible to be paid two-thirds of the employee’s regular rate of pay up to a cap of $200 a day and $2,000 in the aggregate.

An employer may not require an employee to use other accrued paid time before using EPSL. Employees also cannot be forced to take more EPSL than they need. However, EPSL is to be taken in full-day increments. After the first work day that is taken as EPSL, an employer may require an employee to comply with reasonable notice requirements to receive EPSL. Employers should be clear when applying paid sick time under applicable state laws, which often require paid sick time to be used in increments of less than one full day, and applying EPSL which is intended to be taken in full day increments.

EPSL may be taken intermittently or on a reduced leave basis only when the reason for taking EPSL is due to caring for a son or daughter if the school or place of care is closed or the child care provider is unavailable due to COVID-19 precautions. Intermittent or reduced leave use of EPSL requires employer permission and agreement between the employer and employee on a set schedule, just as with EFMLA.

Unused EPSL does not need to be paid out upon termination of employment. The new law also states that unused EPSL will not be carried over into next year.

Employers are prohibited from discrimination or retaliating against an employee who (a) has taken EPSL and (b) has filed a complaint or instituted an action for a violation of the EPSL or has testified in such a proceeding. A violation of EPSL will be treated as a violation of the minimum wage requirement of the Fair Labor Standards Act (FLSA) and will carry the same penalties and personal liability associated with a minimum wage violation of the FLSA.

How do we pay for this benefit?

Employers must make FFCRA payments to their employees directly. However, those employers who make such payments are entitled to an immediate refund, by retaining the same dollar amount paid for FFCRS payments from payroll taxes in the that the employer would have remitted to the IRS. Although the IRS will be issuing regulations shortly for clarification, as the website explains at this writing, employers making FFCRA payments may retain “withheld federal income taxes, the employee share of Social Security and Medicare taxes, and the employer share of Social Security and Medicare taxes with respect to all employees.” The IRS provided the following example:

If an eligible employer paid $5,000 in sick leave and is otherwise required to deposit $8,000 in payroll taxes, including taxes withheld from all its employees, the employer could use up to $5,000 of the $8,000 of taxes it was going to deposit for making qualified leave payments. The employer would only be required under the law to deposit the remaining $3,000 on its next regular deposit date.

If an eligible employer paid $10,000 in sick leave and was required to deposit $8,000 in taxes, the employer could use the entire $8,000 of taxes in order to make qualified leave payments and file a request for an accelerated credit for the remaining $2,000.

If an employer allows employees to use other accrued paid leave to supplement EFMLA and/or PSL, those amounts are not subject to the tax credit.

Exceptions

Employers with fewer than 50 employees may be exempted from providing paid sick or expanded FMLA to an employee who needs leave to care for a son or daughter whose school or place of care is closed or the child care provider is unavailable due to COVID-19 and providing the pay required would jeopardize the viability of the business as a going concern. The US Department of Labor (“DOL”) does not require (or allow) employers to apply for an exemption.  However, a small business may claim protection of this exemption  if an authorized officer of the business has determined that the employer meets one of the following conditions:

 
  • providing EFMLA or EPSL would result in the business’s expenses and financial obligations exceeding available business revenues and cause the small business to cease operating at a minimal capacity; or
  • the absence of the employee(s) requesting the EFMLA or EPSL  (to care for a son or daughter whose school or child care is closed or unavailable due to COVID) would entail a substantial risk to the financial health or operational capabilities of the business because of the employee’s(s’) specialized skills, knowledge of the business, or responsibilities; or
  • there are not sufficient workers who are able, willing, and qualified, and who will be available at the time and place needed, to perform the labor or services provided by the employee(s) requesting EFMLA or EPSL, and those services are needed for the business to operate at a minimal capacity.

This determination should be carefully documented.

Enforcement

Although the DOL has announced that, until April 17, 2020, it will not sue employers who make a good faith effort to comply with the law, covered employers should be prepared for requests from their employees to provide paid leave starting April 1.  An employer who fails to provide paid sick leave will be considered to have failed to pay minimum wage under the federal Fair Labor Standards Act, thereby subjecting the employer to the penalties under the Act.

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