From left: 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 (FFCRA), signed into law by President Trump on March 18, 2020, and effective April 1, 2020, includes two paid leave provisions — the Emergency Family and Medical Leave Expansion Act (EFMLEA) and the Emergency Paid Sick Leave Act (EPSLA) — which apply to employers with fewer than 500 employees (including nonprofit 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 the FFCRA with other paid leave programs, but may elect to do so.
Employers should promptly distribute to all employees and/or post the federal Department of Labor’s (DOL) notice of employee rights under the FFCRA. The DOL has also provided Questions and Answers to help clarify some aspects of the FFCRA. The DOL released its Final Rule, which was published in the Federal Register on April 6, 2020.
Emergency Family and Medical Leave Expansion Act
Effective 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) whose school or place of care has closed or whose child care provider is unavailable due to a public health emergency.
The EFMLEA 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.
EFMLEA 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 two-thirds 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 EFMLEA leave. Employees may elect, but cannot be required, to substitute other accrued vacation, personal or medical or sick leave pay to the first 10 days of EFMLEA leave. Emergency paid sick leave, described below, may be used during the first 10 days of EFMLEA if the employee’s absence is due to a school or day care 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 health care provider who advised the employee to self-quarantine, or a notice of closure from a school, place of care or child care provider.
The DOL’s Final Rule also stipulates that, when leave is requested due to a COVID-19-related school or child care closure, the employee must represent that “no other suitable person will be caring for” the child during the EFMLEA/EPSLA period. The IRS further requires that, where the reason for the leave is a COVID-19-related school or child care closure and the son or daughter is over the age of 14, the employee provide a statement that special circumstances exist requiring the employee to provide care. The EFMLEA does not change existing documentation obligations under the FMLA for other FMLA reasons.
EFMLEA leave is treated like any other form of FMLA. Therefore, while an absence qualifying for EFMLEA 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 EFMLEA 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 the EFMLEA 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
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 Dec. 31, 2020, if the employee is unable to work or telework because the employee is:
- Subject to a federal, state or local quarantine or isolation order; or
- Advised by a health care provider to self-quarantine due to concerns related to COVID-19; or
- Experiencing symptoms of COVID-19 and is seeking a medical diagnosis; or
- Caring for an individual who is subject to a federal, state or local quarantine or isolation order; or has been advised by a health care provider to self-quarantine due to concerns related to COVID-19; or
- 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
- Experiencing any other substantially similar condition specified by the U.S. Department of Health and Human Services, the U.S. Department of Treasury or the U.S. Department of Labor.
If EPSLA 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 EPSLA 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 cannot require an employee to use other accrued paid time before using EPSLA. Employees also cannot be forced to take more EPSLA than they need. However, EPSLA is to be taken in full-day increments. After the first workday that is taken as EPSLA, an employer may require an employee to comply with reasonable notice requirements to receive EPSLA. 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 EPSLA that is intended to be taken in full-day increments.
EPSLA may be taken intermittently or on a reduced-leave basis only when the reason for taking EPSLA 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 EPSLA requires employer permission and agreement between the employer and employee on a set schedule, just as with EFMLEA.
Unused EPSLA does not need to be paid out upon termination of employment. The new law also states that unused EPSLA will not be carried over into 2021.
Employers are prohibited from discrimination or retaliating against an employee who (a) has taken EPSLA and (b) has filed a complaint or instituted an action for a violation of the EPSLA or has testified in such a proceeding. A violation of EPSLA 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 that the employer would have remitted to the IRS. The DOL’s Final Rule provides information related to the appropriate documentation to support the payroll tax credit. The IRS explained on its website that 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 EFMLEA and/or PSL, those amounts are not subject to the tax credit. The IRS has issued guidance related to the payroll tax credits for required paid leaves, which outlines how to calculate the credits and which payroll tax payments may be retained by the employer based on the paid leave credits it has incurred.
Exceptions
Employers with fewer than 50 employees may be exempted from providing paid sick leave 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 whose child care provider is unavailable due to COVID-19, if providing the pay required would jeopardize the viability of the business as a going concern. The 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 EFMLEA or EPSLA 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 EFMLEA or EPSLA (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 EFMLEA or EPSLA, and those services are needed for the business to operate at a minimal capacity.
This determination should be carefully documented.
Renee Inomata is a partner in Casner & Edwards’ Employment Law department. She helps companies and executives navigate complex employment laws so they can successfully achieve their employment goals and mitigate risks associated with employment issues. Inomata advises clients on a wide range of high-level, complex employment-related matters, and solves sensitive employment situations with an understanding of the client’s culture, risk adversity and business goals. Contact Inomata here.
Stéphanie Smith is a partner in Casner & Edwards’ Employment Law department. She counsels employers on a wide range of employment matters, including hirings and firings, performance management and disciplinary action, reductions in force, leaves of absence and other workplace accommodations, enforcement of restrictive covenants and protection of intellectual property. She also helps employers comply with federal and state employment laws, including wage and hour laws, leave laws and background checks, and represents clients in litigation and administrative matters. Contact Smith here.