FAQ's: What Employers Need to Know About the Families First Coronavirus Response Act Regarding Employee Leaves

by Shannon Middleton & Karen Young

The federal government passed the Families First Coronavirus Response Act (“Act”) on March 18, 2020 with an effective date of April 1, 2020.  The Act requires employers with fewer than 500 employees to provide paid leave to employees under an amendment to the Family and Medical Leave Act known as the Emergency Family and Medical Leave Expansion Act, as well as the Emergency Paid Sick Leave Act.  This leave is available for employees through December 31, 2020.

The Department of Labor issued FAQs on March 24, 2020 (“DOL FAQs”), which are updated frequently and provide answers to a vast number of topics.  See https://www.dol.gov/agencies/whd/pandemic/ffcra-questions. Note that even previously answered questions are sometimes modified later. A good practice is to check back daily to the Department of Labor Coronavirus Resources website (https://www.dol.gov/coronavirus) for further information and updates.

The Department of Labor has also issued regulations pursuant to the Act, which can be found at https://www.dol.gov/newsroom/releases/whd/whd20200401 or https://www.federalregister.gov/documents/2020/04/06/2020-07237/paid-leave-under-the-families-first-coronavirus-response-act (the text of the regulations begins at page 83).

Basic questions on the Emergency Paid Sick Leave Act as well as the Emergency Family and Medical Leave Expansion Act are answered below.  Please contact Gutwein Law for further information, to request policies, or to discuss your company’s specific circumstances.


 

Emergency Paid Sick Leave Act

 

To what employers does the Emergency Paid Sick Leave Act apply? (updated 4/03/20)

  • It affects private employers engaged in commerce with fewer than 500 employees, as well as most public employers.

A small businesses with fewer than 50 employees may seek an exemption when the imposition of Emergency Paid Sick Leave would jeopardize the viability of the business as a going concern but only for the reason that an employee is caring for a son or daughter if the school or place of care has been closed or the child care provider is unavailable due to COVID-19 (i.e. reason #5 in the answer to the question “What are the reasons that employees may use Emergency Paid Sick Leave?” below).  The Department of Labor has issued regulations which explain the small business exemption and the DOL website states:

A small business may claim this exemption if an authorized officer of the business has determined that:

  1. The provision of paid sick leave [related to school closure or unavailability of child care provider] or expanded family and medical leave would result in the small business’s expenses and financial obligations exceeding available business revenues and cause the small business to cease operating at a minimal capacity;  
  2. The absence of the employee or employees requesting paid sick leave [related to school closure or unavailability of child care provider] or expanded family and medical leave would entail a substantial risk to the financial health or operational capabilities of the small business because of their specialized skills, knowledge of the business, or responsibilities; or
  3. 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 or employees requesting paid sick leave[related to school closure or unavailability of child care provider] or expanded family and medical leave, and these labor or services are needed for the small business to operate at a minimal capacity.

https://www.dol.gov/agencies/whd/pandemic/ffcra-questions (question 58);  29 CFR § 826.40.  This is on “or” test meaning that any one of the three reasons is sufficient.  A small business does not have to make a filing for this exemption but should keep sufficient records to justify the exemption if needed, as well as still post notice of these federal leaves as discussed below.

 

How much leave is required for Emergency Paid Sick Leave? (updated 4/03/20)

  • Full-time employees are entitled to 80 hours of paid leave, while part-time employees are entitled to pay for the number of hours the employee is scheduled to work over two workweeks if the employee has a normal weekly schedule. The Department of Labor clarified in its FAQs that a full-time employee is an employee who is normally scheduled to work 40 or more hours per week.  Further guidance for calculating leave for part-time employees who do not follow a normally weekly schedule is found at 29 CFR 826.21.

Leave may be taken intermittently only if the employee and employer agree and if the employee is i) teleworking or ii) taking leave to care for a child whose school or place of care is closed or the child care provider is unavailable.  This is to prevent the spread of COVID-19.

The leave ends beginning with the employee’s next scheduled work shift immediately following the termination of the need for paid sick leave. 

 

How much notice is an employee required to give for Emergency Paid Sick Leave? (updated 4/03/20)

  • For all leaves other than caring for a child whose school or place of care closed, or child care is unavailable, after the first workday an employee receives paid sick time, the employer can require the employee to follow its reasonable notice requirements. For leave to care for a child whose school or place of care closed, or child care is unavailable, the employee must provide notice as soon as practicable. 

If an employee gives insufficient notice, the employee should be allowed a chance to remedy prior to denying leave.  29 CFR § 826.900.

 

What are the reasons that employees may use Emergency Paid Sick Leave? (updated 4/03/20)

  • An employer must provide paid sick leave to the extent the employee is unable to work (or telework) because:
    1. The employee is subject to a federal, state, or local quarantine or isolation order related to COVID-19;
    2. The employee has been advised by a health care provider to self-quarantine due to concerns related to COVID-19;
    3. The employee is experiencing symptoms of COVID-19 and seeking a medical diagnosis;
    4. The employee is caring for an individual* who is subject to a federal, state, or local quarantine or isolation order related to COVID-19 or has been advised by a health care provider to self-quarantine due to concerns related to COVID-19;
    5. The employee is caring for a son or daughter of such employee if the school or place of care of the son or daughter* has been closed, or the child care provider of such son or daughter is unavailable, due to COVID-19 precautions.
    6. 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.

*An individual is “an employee’s immediate family member, a person who regularly resides in the employee’s home, or a similar person with whom the employee has a relationship that creates an expectation that the employee would care for the person if he or she were quarantined or self-quarantined.”  29 CFR § 826.20(a)(5).  Son or daughter has the same definition as the Family and Medical Leave Act (29 USC §2611).

 

What documentation must an employee provide for Emergency Paid Sick Leave? (updated 4/17/20)

  • Employees must provide sufficient documentation to support their request for leave, and employers must retain that information for four years to support the tax credits discussed below. An employee is required to provide the employee’s name, date for which leave is requested, qualifying reason for leave with written support for the reason, and an oral or written statement that the employee is unable to work because of the qualified reason for leave.   29 CFR 826.100.  The IRS documentation requirements for tax credits state that an employer should maintain a written request from the employee with the below information. See https://www.irs.gov/newsroom/covid-19-related-tax-credits-for-required-paid-leave-provided-by-small-and-midsize-businesses-faqs#substantiate_eligibility.  If the information is given orally by the employee, then the employer should create and maintain a written record.

Further information/documentation for each reason for leave is described below:

  1. The employee is subject to a federal, state, or local quarantine or isolation order related to COVID-19;
    • The employee must provide the name of the government entity that issued the quarantine or isolation order.
  2. The employee has been advised by a health care provider to self-quarantine due to concerns related to COVID-19;
    • The employee must provide the name of the health care provider that provided the advice.
  3. The employee is experiencing symptoms of COVID-19 and seeking a medical diagnosis;
  4. The employee is caring for an individual who is subject to a federal, state, or local quarantine or isolation order related to COVID-19 or has been advised by a health care provider to self-quarantine due to concerns related to COVID-19;
    1. The employee must provide the name of the individual who is subject to the quarantine or isolation order, the relation of the individual to the employee, and the name of the government entity that issued the quarantine or isolation order or the name of the health care provider who provided the advice to self-quarantine. See https://www.irs.gov/newsroom/covid-19-related-tax-credits-for-required-paid-leave-provided-by-small-and-midsize-businesses-faqs#substantiate_eligibility (questions 44-46).
  5. The employee is caring for a son or daughter of such employee if the school or place of care of the son or daughter has been closed, or the child care provider of such son or daughter is unavailable, due to COVID-19 precautions. The employee must provide:
6.  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.
    • There is nothing specific in the regulations.

 

The Department of Labor suggests consulting Internal Revenue Service forms, instructions, and information for needed documentation to support tax credits.  For more information, please consult https://www.irs.gov/newsroom/covid-19-related-tax-credits-for-required-paid-leave-providedby-small-and-midsize-businesses-faqs as well as the question below on recordkeeping.

 

How much is an employee paid during Emergency Paid Sick Leave?

  • Pay is at the regular rate of compensation for eligibility reasons (1)-(3) above but capped at $511 per day and $5,110 in the aggregate.

Pay is 2/3 of the regular rate of compensation for eligibility reasons (4)-(6) above but capped at $200 per day and $2,000 in the aggregate.

 

Must an employee find a replacement to cover the hours during which the employee is using Emergency Paid Sick Leave? 

  • No.

 

May an employer require an employee to use other paid leave before the employee uses Emergency Paid Sick Leave?

  • This means the employer cannot require the employee to use paid time off, vacation, or other forms of paid leave first. However, the employee may opt to take such PTO at his/her discretion.

 

Must an employer inform employees of their rights under the Emergency Paid Sick Leave Act?

  • For April 1, 2020, the Department of Labor created a combined model notice for employers for the Emergency Paid Sick Leave Act and the Emergency Family and Medical Leave Expansion Act that must be posted in the workplace where other workplace posters are located. This poster can be found in English and Spanish on the Department of Labor’s website at https://www.dol.gov/agencies/whd/pandemic.
The Department of Labor also issued FAQs on providing employees with notice including in instances where employees are teleworking or on furlough. See:

 

What is an employer prohibited from doing under the Emergency Paid Sick Leave Act? (updated 4/03/20)

  • The employer may not discharge, discipline, or in any other manner discriminate against any employee who takes Emergency Paid Sick Leave, has filed a complaint or proceeding related to Emergency Paid Sick Leave, or has testified or is about to testify in any such proceeding.

 

What are the penalties for employer’s violations of the Emergency Paid Sick Leave Act? (updated 4/03/20)

  • Violations of the Emergency Paid Sick Leave Act are violations of the Fair Labor Standards Act and can result in liability for emergency paid sick leave that should have been paid, liquidated damages, interest, attorney’s fees and costs. In addition, employees can seek equitable remedies, such as reinstatement. 
  • The Department of Labor has announced that it will not bring enforcement actions in the first 30-days of enactment so long as employers act reasonably and can show good faith compliance efforts. The Department of Labor issued a Field Assistance Bulletin 2020-1 discussing this temporary non-enforcement period which provides that the non-enforcement period only runs through April 17, 2020. See: https://www.dol.gov/agencies/whd/field-assistance-bulletins/2020-1.

 

How is the government helping employers who pay for Emergency Paid Sick Leave (updated 4/03/20)

  • Employers will receive tax credits for sick leave payments. The IRS describes it as follows:
    • Eligible Employers that pay qualified leave wages will be able to retain an amount of all federal employment taxes equal to the amount of the qualified leave wages paid, plus the allocable qualified health plan expenses and the amount of the employer’s share of Medicare tax imposed on those wages, rather than depositing them with the IRS. 
    • The federal employment taxes that are available for retention by Eligible Employers include federal income taxes withheld from employees, the employees’ share of social security and Medicare taxes, and the employer’s share of social security and Medicare taxes with respect to all employees.
    • https://www.irs.gov/newsroom/covid-19-related-tax-credits-for-required-paid-leave-provided-by-small-and-midsize-businesses-faqs.

If the withholdings are insufficient to cover the sick leave payments, employers can request an accelerated refund from the IRS.

The tax credits and advancements will be available through December 31, 2020.

Information on the IRS tax credits and documentation can be found at https://www.irs.gov/newsroom/covid-19-related-tax-credits-for-required-paid-leave-provided-by-small-and-midsize-businesses-faqs.

 

What records should employers maintain to substantiate eligibility for paid sick leave credit? (added 4/03/20)

  • An employer must keep the information described above regarding the employee’s request for leave as well as records that include the following information:
    • Documentation to show how the employer determined the amount of qualified sick and family leave wages paid to employees that are eligible for the credit, including records of work, telework and qualified sick leave and qualified family leave.
    • Documentation to show how the employer determined the amount of qualified health plan expenses that the employer allocated to wages. See IRS FAQ 31 (“Determining the Amount of Allocable Qualified Health Plan Expenses”) for methods to compute this allocation.
    • Copies of any completed Forms 7200, Advance of Employer Credits Due To COVID-19, that the employer submitted to the IRS.
    • Copies of the completed Forms 941, Employer’s Quarterly Federal Tax Return, that the employer submitted to the IRS (or, for employers that use third party payers to meet their employment tax obligations, records of information provided to the third party payer regarding the employer’s entitlement to the credit claimed on Form 941).

https://www.irs.gov/newsroom/covid-19-related-tax-credits-for-required-paid-leave-provided-by-small-and-midsize-businesses-faqs (question 45). 

These records should be maintained for “at least 4 years after the date the tax becomes due or is paid, whichever comes later.” 

https://www.irs.gov/newsroom/covid-19-related-tax-credits-for-required-paid-leave-provided-by-small-and-midsize-businesses-faqs (question 46).

 

What should employers do now?

  • Employers need to notify employees of their rights, update or create policies, and create a system to track paid leave for tax credits, as well as obtain and save supporting documentation.

 

 

Emergency Family and Medical Leave Expansion Act (EFMLEA)

 

To what employers does the EFMLEA apply? (updated 4/03/20)

  • Before enactment of EFMLEA, the Family and Medical Leave Act (FMLA) applied to employers with 500 or more employees for each working day during each of 20 or more calendar workweeks in the current or preceding calendar year. Now, due to the public health emergency of COVID-19, this expansion of leave enacted under EFMLEA applies to employers with fewer than 500 employees. The Department of Labor’s FAQs provide guidance on how to calculate the number of employees as well as information on joint employment and integrated employers at https://www.dol.gov/agencies/whd/pandemic/ffcra-questions (question 2).   This information is further described in the definition of “employer” in the regulations (29 CFR 826.10) as well as the regulation on required employer coverage at 29 CFR § 826.40.

The Department of Labor has issued regulations to exempt small businesses with fewer than 50 employees when the imposition of EFMLEA would jeopardize the viability of the business as a going concern, and the DOL website states:

A small business may claim this exemption if an authorized officer of the business has determined that:

  1. The provision of paid sick leave [related to school closure or unavailability of child care provider] or expanded family and medical leave would result in the small business’s expenses and financial obligations exceeding available business revenues and cause the small business to cease operating at a minimal capacity;  
  2. The absence of the employee or employees requesting paid sick leave [related to school closure or unavailability of child care provider] or expanded family and medical leave would entail a substantial risk to the financial health or operational capabilities of the small business because of their specialized skills, knowledge of the business, or responsibilities; or
  3. 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 or employees requesting paid sick leave [related to school closure or unavailability of child care provider] or expanded family and medical leave, and these labor or services are needed for the small business to operate at a minimal capacity.

https://www.dol.gov/agencies/whd/pandemic/ffcra-questions (question 58); 29 CFR § 826.40.  This is on “or” test meaning that any one of the three reasons is sufficient.  A small business does not have to make a filing for this exemption but should keep sufficient records to justify the exemption if needed, as well as still post notice of these federal leaves as discussed below.

 

What employees qualify for leave under the EFMLEA? (updated 4/02/20)

  • Employees who have worked at the company for at least 30 days are eligible to for leave under EFMLEA. (This is substantially shorter than the existing FMLA requirement that does not extend eligibility for an employee until they have worked for their employer for 12 months and met certain hours requirements.)

Certain health care providers and emergency responders can be excluded from the definition of an eligible employee under EFMLEA. The Department of Labor FAQs discuss who qualifies as a health care provider and emergency responder in questions 55-57 at https://www.dol.gov/agencies/whd/pandemic/ffcra-questions as well as in the regulations (29 CFR § 826.30(c)).

 

What “need” qualifies an eligible employee to take EFMLEA leave?

  • Eligibility for EFMLEA leave is restricted to employees who are working parents:
    • An employer must provide EFMLEA leave for an employee with a “qualifying need related to a public health emergency.” This means an employee is unable to work (or telework) due to a need for leave to care for the son or daughter of such employee if the school (elementary or secondary) or place of care has been closed, or the child care provider of such son or daughter is unavailable, due to a public health emergency related to COV-19.

 

How much EFMLEA leave is required? (updated 4/03/20)

  • Twelve weeks of EFMLEA leave is available to eligible employees through December 31, 2020.
This does not create 24 weeks of FMLA leave – EFMLEA is not added on top of FMLA leave. This leave does not extend an employee’s entitlement to FMLA leave overall meaning that if an employee has exhausted their 12 weeks of available FMLA leave previously within the last year (based on the calculation period used by the employer) for other FMLA reasons, the employee will not have any time left for EFMLEA leave.

 

Can EFMLEA leave be taken intermittently by employees? (updated 4/03/20)

  • Leave may be taken intermittently only if the employee and employer agree and if the employee is i) teleworking or ii) taking leave to care for a child whose school or place of care is closed or the child care provider is unavailable. This is to prevent the spread of COVID-19.

 

How much notice is an employee required to give to use EFMLEA leave? (updated 4/03/20)

  • For leave to care for a child whose school or place of care closed, or child care is unavailable, the employee must provide notice as soon as practicable.

If an employee gives insufficient notice, the employee should be allowed a chance to remedy prior to denying leave. 29 CFR § 826.900.

 

What documentation must an employee provide for EFMLEA leave? (updated 4/17/20)

  • The employee must provide:
  1. the name and age of the son or daughter being cared for,
  2. the name of the school, place of care, or child care provider that has closed or become unavailable,
  3. a representation that no other suitable person will be caring for the son or daughter during the period for which the employee is taking leave, and;
  4. with respect to the employee’s inability to work or telework because of a need to provide care for a child over 14 years old during daylight hours, a statement that special circumstances exist requiring the employee to provide care.

See https://www.irs.gov/newsroom/covid-19-related-tax-credits-for-required-paid-leave-provided-by-small-and-midsize-businesses-faqs#substantiate_eligibility (question 44).

The Department of Labor suggests consulting Internal Revenue Service forms, instructions, and information for needed documentation to support tax credits.  For more information, please consult https://www.irs.gov/newsroom/covid-19-related-tax-credits-for-required-paid-leave-providedby-small-and-midsize-businesses-faqs as well as the question below on recordkeeping.

 

How much is an employee paid during EFMLEA leave? (updated 4/03/20)

  1. The first 10 days for EFMLEA leave may consist of unpaid leave; however, an employee may elect to substitute any accrued vacation leave, personal leave, or medical or sick leave he/she has for unpaid leave under EFMLEA. This election may include leave available under the Emergency Paid Sick Leave Act discussed above.  Employers must not require an employee to substitute any accrued vacation leave, personal leave, or medical or sick leave for unpaid leave under EFMLEA.
  2. Paid leave is required for each day of leave after the first 10-days of unpaid leave. Pay must be no less than 2/3 of the employee’s regular rate of pay for the number of hours the employee would otherwise be normally scheduled to work (or the number of hours calculated using the varying schedule hours calculations described below) but not to exceed $200 per day and $10,000 in the aggregate.

If an employee has a schedule that varies from week to week so much that an employer is unable to determine with certainty the number of hours the employee would have worked if such employee had not taken EFMLEA leave, the employer shall use:

  1. a number equal to the average number of hours the employee was scheduled per day over the 6-month period ending on the date on which the employee takes such leave, including hours for which the employee took leave of any type; and
  2. If the employee did not work over such period, the reasonable expectation of the employee at the time of hiring, as agreed by the employer, of the average number of hours per day that the employee would normally be scheduled to work.

Further information on pay during EFMLEA leave can be found in 29 CFR § 826.24.

 

Does an employer have to hold a job for an employee taking EFMLEA leave?

  • The leave is job-protected. Upon the return of the employee from leave, the EFMLEA is consistent with current FMLA leave rules. The employer must return the employee to the same or equivalent position upon his/her return with equivalent employment benefits, pay, and other terms and conditions of employment.
Small Business Exception: However, for employers of less than 25 employees, a limited exception exists. Where the employee’s position no longer exists due to economic conditions or other changes caused by the coronavirus emergency, and the employer has made reasonable efforts to restore the employee to an equivalent position, the employer does not have to retain the employee who was on leave. If the employee is terminated under such circumstances, the employer is obligated for 1 year (beginning either on the date of the need due to the public health emergency ends or the date that is 12 weeks after the employee's leave commenced, whichever is earlier) to use reasonable efforts to contact the employee if an equivalent position becomes available. 

 

Must an employer inform employees of their rights under the EFMLEA?

  • For April 1, 2020, the Department of Labor created a combined model notice for employers for the Emergency Paid Sick Leave Act and the Emergency Family and Medical Leave Expansion Act that must be posted in the workplace where other workplace posters are located. This poster can be found in English and Spanish on the Department of Labor’s website at https://www.dol.gov/agencies/whd/pandemic

The Department of Labor also issued FAQs on providing employees with notice including in instances where employees are teleworking or on furlough.

See:https://www.dol.gov/agencies/whd/pandemic/ffcra-poster-questions.  Employers should review this information and provide notice to employees on or before April 1.

 

How is the government helping employers who pay for EFMLEA leave?

  • Employers get a tax credit for sick leave payments. The IRS describes it as follows:

Eligible Employers that pay qualified leave wages will be able to retain an amount of all federal employment taxes equal to the amount of the qualified leave wages paid, plus the allocable qualified health plan expenses and the amount of the employer’s share of Medicare tax imposed on those wages, rather than depositing them with the IRS.  The federal employment taxes that are available for retention by Eligible Employers include federal income taxes withheld from employees, the employees’ share of social security and Medicare taxes, and the employer’s share of social security and Medicare taxes with respect to all employees.

https://www.irs.gov/newsroom/covid-19-related-tax-credits-for-required-paid-leave-provided-by-small-and-midsize-businesses-faqs. If the withholdings are insufficient to cover the sick leave payments, employers can request an accelerated refund from the IRS.  The tax credits and advancements will be available through December 31, 2020.  IRS information on tax credits and documentation can be found at https://www.irs.gov/newsroom/covid-19-related-tax-credits-for-required-paid-leave-provided-by-small-and-midsize-businesses-faqs. The tax credits and advancements will be available through December 31, 2020.

 

What records should employers maintain to substantiate eligibility for paid sick leave credit? (added 4/03/20)

  • An employer must keep the information described above regarding the employee’s request for leave as well as records that include the following information:
    • Documentation to show how the employer determined the amount of qualified sick and family leave wages paid to employees that are eligible for the credit, including records of work, telework and qualified sick leave and qualified family leave.
    • Documentation to show how the employer determined the amount of qualified health plan expenses that the employer allocated to wages. See [IRS] FAQ 31 (“Determining the Amount of Allocable Qualified Health Plan Expenses”) for methods to compute this allocation.
    • Copies of any completed Forms 7200, Advance of Employer Credits Due To COVID-19, that the employer submitted to the IRS.
    • Copies of the completed Forms 941, Employer’s Quarterly Federal Tax Return, that the employer submitted to the IRS (or, for employers that use third party payers to meet their employment tax obligations, records of information provided to the third party payer regarding the employer’s entitlement to the credit claimed on Form 941).

https://www.irs.gov/newsroom/covid-19-related-tax-credits-for-required-paid-leave-provided-by-small-and-midsize-businesses-faqs (question 45).

These records should be maintained for “at least 4 years after the date the tax becomes due or is paid, whichever comes later.” https://www.irs.gov/newsroom/covid-19-related-tax-credits-for-required-paid-leave-provided-by-small-and-midsize-businesses-faqs (question 46).

 

What should employers do now?

  • Employers previously subject to FMLA should amend their policies to provide for EFMLEA leave. Employers not previously subject to FMLA because they had less than 50 employees should create a new policy for EFMLEA leave and become familiar with the notice and other obligations of FMLA leave.
In addition, employers should create a system to track paid leave for tax credits, as well as obtain and save supporting documentation. Employers should be mindful of saving health-related information as confidential, medical information in separate files.

In conclusion, please contact Gutwein Law if you need assistance in understanding and implementing the Families First Coronavirus Response Act.

 

COVID-19 Response Team

Karen Young                                                               Shannon Middleton Karen.Young@gutweinlaw.com                              Shannon.Middleton@gutweinlaw.com 317.777.7920                                                             765.423.7900