Affecting Employers with less than 500 Employees
On Wednesday, March 18, 2020, the Families First Coronavirus Response Act was signed into law. It has MAJOR implications for employers with fewer than 500 employees.
What You Need to Know:
Employers with less than 500 employees must provide 2 weeks of paid Emergency Sick Leave and an additional 10 weeks of paid Family Medical Leave.
When do these measures take effect and when do they expire?
Both the Emergency Paid Sick Leave Act (EPSLA) and the Emergency Paid Family Medical Leave Act (EPFMLA) take effect within 15 days of enactment. The bill was enacted on March 18th and, unless the Secretary of Labor or some other regulatory authority issues a statement to clarify, I am advising my clients to start offering both paid leaves on April 2nd.
Both Paid Leave provisions will expire on December 31, 2020, unless otherwise extended.
There are three main things to consider:
Emergency Paid Sick Leave (EPSLA)
Emergency Paid Family & Medical Leave (EPFMLA)
Tax Relief
1. Emergency Paid Sick Leave (EPSLA)
How does this bill affect or change current paid sick leave policies?
This bill establishes a new program for paid sick leave that calls for employers with less than 500 employees to offer 10 days paid sick leave (two work weeks). These 10 paid days are in addition to all other paid leave policies a company may have.
All employees, regardless of their hire date, are eligible for these 10 paid days.
How much Paid Sick Leave do employees receive?
Full-time employees will receive 80 hours of paid time off.
Part-time employees will receive hours equal to the most recent two-week period. If a part-time employee’s hours tend to fluctuate, determine the average hour total of a normal two-week period within the last 6 months. If a recently-hired employee hasn’t been working long enough to calculate these averages, you should offer hours equal to the hours that employee was anticipated to work under normal conditions.
Why can an employee take Paid Sick Leave?
For the following reasons:
Self-isolating or quarantining after a government order;
Self-isolating or quarantining after a medical provider's recommendation;
Experiencing COVID-19 symptoms and seeking medical treatment or diagnosis;
Caring for a family member with the virus or symptoms;
Taking care of a child following a school closure.
How do employers calculate compensation for this emergency paid sick leave?
Referring to the list in the previous paragraph, if 1, 2, or 3 (generally caring for one’s self), then take the greater amount of:
Employee’s regular rate or;
Applicable Federal, State or local minimum wage
In either case, it will be capped at $511 per day and $5,110 total per employee.
Referring to the same list, if 4 or 5 (caring for another person), then only 2/3 of an employee’s regular rate or applicable minimum wage is required. This is capped at $200 per day and $2,000 per employee.
2. Emergency Paid Family & Medical Leave (EPFMLA)
Which employees can take Emergency Paid Family Leave?
Employees must have worked for at least 30 days to be eligible for this benefit.
The qualifications for EFMLEA benefits are far narrower than the EPSLA, extending only to employees whose son or daughter is experiencing a school closure or childcare unavailability resulting from Coronavirus-related circumstances. If the employee needs to care for the child, and is unable to work, they would qualify for this leave.
How do employers calculate Emergency Family Medical Leave?
Eligible employees receive 12 weeks of EPFMLA, the first two weeks of which are unpaid, 10 weeks of which are paid.
The first 10 days of unpaid EPFMLA can be overlapped with the 10 paid days offered by the EPSLA (qualifying under number 5 for EPSLA time).
The ten paid weeks are calculated as follows: no less than 2/3 of the employee’s regular rate or applicable minimum wage, whichever is greater. This rate is capped at $200 per day, and a total of $10,000 per employee.
What else should employers know?
Employers must restore an employee to the same or equivalent position they held before taking leave. Standard FMLA rules apply to job reinstatement. Employers with less than 25 employees may be allowed for exemptions to this requirement based on extenuating financial circumstances.
There is a notice employers will soon be required to be prominently posted. A model poster is set to be released in the next week by the Secretary of Labor.
Employers with less than 50 employees cannot be sued by their employees under the EPFMLA rules. They are still subject to fines and other sanctions from the Secretary of Labor’s office.
3. Tax Relief
How will employers be reimbursed for these paid days?
The EPSLA will be funded on a dollar-for-dollar Social Security payroll tax credit. That means compensation equal to the calculations per employee listed above, e.g. an employee receiving $511 per day in paid sick leave will result in a $511 per day payroll tax credit.
There is additional language in the EPSLA concerning the maximum credit cap, but it needs clarification. We are expecting the Secretary of Labor to elaborate, expand, and clarify many of these points in the coming weeks. Finally, any excess tax credits will be refunded.
The EFMLEA is similarly funded by a Social Security payroll tax credit, calculated exactly the same as the EPSLA. However, excess tax credits will not be refunded.
Anything Else?
Employees may not be terminated for seeking paid sick leave for COVID-19 related circumstances. Violations will be subject to fines and willful violations will be subject to liquidated damages.
Employers of healthcare providers and emergency first-responders are able to opt out of these regulations.
Conclusion
These are unprecedented changes. They will require an astute HR department to administer and track both leave policies. As there are tax implications, your finance or tax teams will also likely need reports regarding these leaves. It's important that companies administer both leaves properly and have the proper documentation for tax purposes. OutrightHR has developed a tool-kit, coming soon, that can help employers navigate this new challenge.