New Coronavirus Legislation and its Impact on Employers and Employees

I. The Families First Coronavirus Response Act.

On Wednesday evening, March 18, 2020, President Trump signed into law the Families First Coronavirus Response Act (“the Act”). The Act is one part of the larger strategy by the federal government to help Americans deal with COVID-19.

The Act is divided into eight divisions, two of which have particular relevance to employers and employees. Division C of the Act is known as the “Emergency Family and Medical Leave Expansion Act” while Division E is known as the “Emergency Paid Sick Leave Act.” This article is written to broadly review the key elements of the FMLA Expansion Act and the Paid Sick Leave Act.

A. Effective Date.

Both the FMLA Expansion Act and the Paid Sick Leave Act provide that they will “take effect not later than 15 days after” the Families First Coronavirus Response Act is signed. President Trump signed the Act on March 18 meaning that both the FMLA Expansion Act and Paid Sick Leave Act will take effect “not later than” April 2. Although both of the acts allow for an earlier “effective date,” as of March 23, neither the U.S. Department of Labor nor any other agency of the federal government has indicated that either of the two acts will take effect prior to April 2. LCOJ will continue to monitor any developments concerning the effective date issue.

B. The FMLA Expansion Act.

Much like the original FMLA, the Expansion Act provides qualifying employees with FMLA leave of up to 12 weeks. That, however, is where most of the similarities between the original FMLA statute and the Expansion Act end. For instance, unlike the original FMLA, the Expansion Act provides that ten of the twelve weeks of leave must be paid. Also, every employee in the country qualifies under the Expansion Act (i) if he or she is employed by an employer with fewer than 500 employees, and (ii) if he or she has been employed by that employer for at least 30 days. There are no other qualifications. These new definitions mean that many employers and many employees who are not covered by the original FMLA are covered by the Expansion Act.

At its core, the Expansion Act provides up to twelve weeks of FMLA leave to any qualifying employee who needs leave to care for his or her child under age 18 where such need has arisen because the child’s school or place of care has closed or where a childcare provider is unavailable as a result of the coronavirus. The Expansion Act applies only to situations where the employee’s normal childcare options are no longer available as a result of the coronavirus. Employees who need leave because they have been exposed to the virus, because they have family members who need care due to the virus, who are in quarantine because of the virus, because they have been diagnosed with the virus, or for any other reason are NOT entitled to the benefits provided by the Expansion Act.

The first ten days of leave under the Expansion Act are unpaid. During this period, employees may elect to use other forms of paid leave offered by their employer. Employees who qualify for leave under the Expansion Act will also necessarily qualify for paid leave under the Paid Sick Leave Act (discussion below), and they may choose to use those benefits during the first two weeks of expanded FMLA leave.

The next ten weeks of FMLA leave under the Expansion Act are paid leave. For each of the ten weeks, employees with regular hours and set wages are entitled to be paid the lesser of $200 per day ($10,000 in the aggregate for each employee) or 66% of their regular earnings. For employees who work irregular hours, the weekly pay to which they are entitled under the Expansion Act is equal to the lesser of $200 per day ($10,000 in the aggregate) or 66% of their average daily pay during the preceding six month period with the employer. If the employee has not worked at least six months with the employer, then the employee is entitled to the lesser of $200 per day ($10,000 in the aggregate) or 66% of the daily pay that the employee reasonably expected to earn at the time of hiring.

Much like the original FMLA, employees who return from expanded FMLA leave have reinstatement rights. An employees must be returned to his or her original or substantially similar positions unless, (i) the employer has fewer than 25 employees; and (ii) the position no longer exists because of the coronavirus; and (iii) the employer makes reasonable efforts to find an alternative position for the employee; and (iv) for a period of one year, the employer makes efforts to contact the employee if an equivalent position becomes available.

C. The Paid Sick Leave Act.

Under the Paid Sick Leave Act, a covered employee of a covered employer is entitled to up to two weeks of paid sick leave. An employee covered by the Sick Leave Act is any employee employed by any employer with fewer than 500 employees. There are no other qualifications.

The Sick Leave Act provides that an employee who needs leave for any one of six different reasons is entitled to paid sick leave. The first three reasons pertain to the employee’s own medical condition while the last three reasons pertain to a need to care for someone else. The six reasons are:

1. The employee is subject to a quarantine order by a government entity or agency. To qualify as a “quarantine order” it is our view that the order must specifically require the employee at issue to stay in a limited space as quarantine. An example would be the CDC Order which obligates some persons entering the country to remain in quarantine for 14 days. A general order from the governor which requires restaurants to close (for example) is an “order,” but requires no person to stay in any particular space at all and is therefore not a “quarantine order.”
2. The employee has been advised by his or her healthcare provider to quarantine.
3. The employee is experiencing symptoms of the virus and is seeking a medical diagnosis.
4. The employee is caring for a person who is subject to an order or has been advised as in points 1 or 2.
5. The employee is caring for a son or daughter under age 18 who needs care because the child’s school or child-care facility has closed or because the childcare provider is unavailable due to the virus.
6. The employee is experiencing “any other substantially similar condition specified by the Secretary of Health and Human Services.”

The amount of sick leave pay to which an employee is entitled is determined as the product of the proper number of hours multiplied by the proper hourly rate. The proper hourly rate depends upon the purpose of the employee’s leave. If the employee’s leave is for any of the reasons set out in paragraphs 1, 2 or 3 of the above list (pertaining generally to the employee’s own medical condition), then the proper hourly rate is 100% of the employee’s regular rate of earnings. If the employee’s leave is for any of the reasons set out in paragraphs 4, 5 or 6 (pertaining generally to other person’s medical condition or a child’s need for care due to closings), then the proper hourly rate is 66% of the employee’s regular rate of earnings.

With regard to the proper number of hours, for full time employees, the number of hours is 80. That is true regardless of how many hours the full time employee actually works each week. For part time employees who have regular schedules, the proper number of hours is the number of hours that the employee works on average over a two week period. For employees with irregular schedules and who have been employed at least six months, the proper number is the average number of hours worked per day over the prior six month period. For such employees who have worked fewer than six months, the proper number is the number of hours that the employee anticipated working per day when he or she was hired.

By multiplying the proper rate by the proper hours the product is the basic sick pay to which the employee is entitled. However, two different statutory caps also apply. If the employee’s need for leave is for any one of the first three reasons in the statute, then the employee is entitled to the lesser of the basic sick pay or the statutory cap of $511 per day ($5,110 in the aggregate.) If the employee’s need for leave is for reasons 4, 5 or 6 from the list, then the employee is entitled to the lesser of the basic sick pay or the statutory cap of $200 per day ($2,000 in the aggregate.)

The benefits provided under the Sick Leave Act are in addition to any other benefits provided by the employer. To that end, the Act provides that an employee is free to use his or her sick leave entitlement before he or she uses any other form of paid leave. In other words, if an employee is entitled to sick leave pay under the Sick Leave Act, then an employer may not require the employee to first exhaust his or her entitlement to sick leave under the employer’s sick leave, vacation, PTO or other policy. Further, an employer may not obligate the employee to find his or her replacement on the work schedule as a precondition to payment under the Sick Leave Act.

D. Elements Applicable to Both Acts.

In the first instance, the Employer bears the burden to pay the benefits provided by both the FMLA Expansion Act and the Paid Sick Leave Act. In these difficult times, that may be a monumental challenge for some employers – small employers in particular. Both Acts provide that, in due course, the employer is entitled to recoup the payments made under the Acts through a tax credit applied against payroll taxes owed by the employer in the future. (The recoverable portion of the payments are limited to the lesser of amounts actually paid to employees or the statutory caps.)

Ostensibly in recognition of the problems that the legislation may pose for some small employers, both the FMLA Expansion Act and the Paid Sick Leave Act invite (but do not require) the Secretary of Labor to issue expedited regulations that would exempt small businesses (defined as those with fewer than 50 employees) from either or both of these new laws. Clearly, both of these statutes are “emergency” statutes meaning that Congress intends for the benefits under both statutes to be paid quickly and to provide immediate relief to employees. Consequently, if the hypothetical regulations are to provide any actual relief to small employers, it would seem that the Secretary of Labor will need to work very quickly.

Both the Expansion Act and the Sick Leave Act have sunset provisions of December 31, 2020. That means that, unless the legislation is renewed or amended, all rights and obligations under both Acts will end on that date.

If the Employment Team of Conway, Olejniczak & Jerry may assist you and your organization in managing these or any issues related to the coronavirus or other employment-related issues or questions, please feel free to contact us.

Written By:
Attorney Ross W. Townsend