UPDATED 3/25/20 TO REFLECT NEW EFFECTIVE DATE OF 4/1/20 PER DOL GUIDANCE ISSUED 3/25/20, and NEW DOL GUIDANCE.

Here is the latest in our series of posts on employment law issues related to the CoronaVirus / COVID – 19 crisis.  This one is a brief analysis of the federal Families First Coronavirus Response Act, which you can read here.

NEW  U.S. DOL GUIDANCE. On March 25, 2020, the U.S. DOL issued guidance on the Families First Coronavirus Response Act, or FFCRA.  We posted about that here.  Our analysis below is helpful too. But the DOL guidance is more current and may answer additional questions. It also includes FAQs and notice posting requirements.

 

Effective Date: It takes effect April 1, 2020, “not later than 15 days after its enactment.” [Updated effective date, formerly 4/2/20]

What does it do?  The principal issues applicable to employers are:  FMLA expansion and paid sick leave.  Even small employers may have to provide up to 12 weeks of a new “Public Health Emergency” leave for certain employees, at least until December 31, 2020.  And many employers will have to provide up to 80 hours’ paid sick leave as well. But there will be tax credits for the financial outlays.

Emergency FMLA Expansion Act

• The law creates a temporary “Public Health Emergency Leave” under the Family and Medical Leave Act of 1993, which expires on December 31, 2020.  In essence, this law expands FMLA to many small employers, but only for certain types of leave related to child care that arose due to COVID-19 emergency school closings and shelter-in-place orders.   Here are some details:
• Leave
  • “Public Health Emergency Leave” allows an eligible employee of an eligible employer to take up to 12 weeks of leave from April 2 until December 31, 2020, During the period beginning on the date the Emergency Family and Medical Leave Expansion Act takes effect, and ending on December 31, 2020, “because of a qualifying need related to a public health emergency . . .”
  • The term ‘qualifying need related to a public health emergency’, with respect to leave, means the employee is unable to work (or telework) due to a need for leave to care for the son or daughter under 18 years of age of such employee if the school 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.
  • Public health emergency’ means an emergency with respect to COVID–19 declared by a Federal, State, or local authority.
  • So, in a nutshell, an “eligible employee” (discussed below) can take up to 12 weeks of FMLA leave because (1) s/he cannot work or telecommute and (2) that employee has to care for a minor child  and (3) the child’s elementary or secondary school is closed or the child’s normal child care provider is unavailable and (4) #3 is because of a COVID-19-related emergency.

Now that we have that out of the way, who’s an “eligible employee” and “eligible employer” are specially defined under this law.

• Eligible Employee. An eligible employee has to have just 30 days of service. So, unlike “normal” FMLA, the employee does not have to work at a worksite with 50 or more employees.  The employee does not have to have a year of service / 1250 hours.
  • Exempt Employees.   The Secretary of Labor can issue regulations to exempt “certain health care providers and emergency responders from the definition of eligible employee …”

• Covered Employers.  Instead of employers of 50 or greater employees (normal FMLA), this law applies only to employers with 500 or fewer employees.  Therefore, unless exempt, small employers must comply.  Large employers though appear to be exempt.
  • Exempt Employers.  The Secretary of Labor can issue regulations to exempt “small businesses with fewer than 50 employees from the [paid leave requirements ]when the imposition of such requirements would jeopardize the viability of the business as a going concern.”   How the Secretary’s going to do that before 12/31 is another mystery.
  • Section 3105 of the Act permits  “An employer of an employee who is a health care provider or an emergency responder may elect to exclude such employee from the application of the provisions in the amendments made under of section 3102 of this Act.”  that seems to suggest that “health care providers” and “emergency responders” can simply exempt their employees from this entire law?

So, if you have a covered employer and an eligible employee who needs leave, is there pay for this leave?

• Pay
  • The first 10 days of the leave are unpaid.  However, the employee obviously may be able to use whatever benefits the employer or state law may provide.
  • After the first 10-days, the employee’s leave is paid, subject to a cap.  Paid leave is calculated as
    • an amount that is not less than two-thirds of an employee’s regular rate of pay (as determined under section 7(e) of the Fair Labor Standards Act…..; and
    • ‘‘(II) the number of hours the employee would otherwise be normally scheduled to work (or the number of hours calculated under subparagraph (C)).
    • Regarding “subparagraph (C ),” it provides a calculation for employees who work variable hours.  You can see it at Section 110(b)(1)(C ) of the law.
    • About that cap –  “…In no event shall such paid leave exceed $200 per day and $10,000 in the aggregate.
    • Employers party to multi-employer bargaining agreements may contribute to an applicable fund instead of paying employees directly, per section 3103 of the Families First law.

First, there’s a 10-day elimination period for paid leave. Then, leave is paid by the employer for the period of leave after 10 days.  The employer has to calculate the paid leave by first calculating the regular rate of pay, and then multiplying that regular rate by the hours that the employee would otherwise be scheduled to work (or an alternative calculation).  HOWEVER, the cap on pay is $200 / day and $10,000.00 total.

• Notice of the need for “foreseeable” leave is as soon as practicable.  30 days’ notice is not required as with regular FMLA.
• Reinstatement –  Typically, FMLA leave requires reinstatement to the original or equivalent position. However, this law provides small employers  – with fewer than 25 employees-  a defense, and the opportunity to deny reinstatement under certain conditions contained in section 110(d).
• Liability – Small employers (Under 50 employees) cannot be sued directly by employees for violations of this new law.  Presumably, the Secretary of Labor can bring an administrative action.  Other employers are subject to the FMLA’s enforcement provisions.

To sum up, until December 31, 2020, certain eligible employees of covered employers may take up to 12 weeks’ leave to care for their children who cannot go to school or are without their regular care, because of a COVID-19 shutdown of the schools or unavailability of the child’s normal caregiver.  This law covers smaller employers than FMLA, and more broadly covers employees in the workforce of the eligible employers. But it does not cover large employers of > 500 workers for some reason.   There is a paid leave provision after a 10-day elimination period. But the paid leave does not apply to “regular” FMLA; only to this special childcare leave FMLA.

Paid Sick Leave

As stated, the pay provision under the FMLA modifications are for leave taken to care for children as a result of COVID-19 emergencies.  What about people who themselves are ill, or who must quarantine, or who must care for someone who is ill?  That is the Paid Sick Leave provision of the Families First law.   (It may be that this new Paid Sick Leave will be due during a period of “regular” FMLA for an employee’s serious health condition.  However, this Paid Sick Leave law does not appear to add additional time to the leave law.)

Covered Employers and Employees

The Paid Sick Leave portion of the Families First Act is in a different section of the law from the FMLA portion.  So, the definitions somewhat differ.  With respect to private sector employers, this law applies to employers with fewer than 500 employees, and the employer must be engaged in “interstate commerce” to the same extent as is necessary to be covered by the Labor Management Relations Act. So that’s a broad definition of “commerce.”

As far as “employee” is concerned, the term is defined mainly in conformity with the Fair Labor Standards Act.  That means that most workers will be covered.  However, the FLSA excludes certain agriculture workers, certain volunteers, and others.  So, check with counsel if there’s a doubt.

The public sector employers and employees also are defined differently.   Many public sector employers will be covered, but there are care-outs.  Review the law linked above, at section 5110, page 21 of the pdf.

Circumstances Under Which Employees May Claim Sick Leave

Employers must pay sick pay for the time an employee is unable to work or telecommute / 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 quarantine or isolation order or has been advised to self-quarantine;
• 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.Exceptions:
• Except that an employer of an employee who is a health care provider or an emergency responder may elect to exclude such employee from the application of this subsection.
• Also, the Secretary of Labor may exempt by regulation small employers of under 50 employees from # 5 above if it threatens the economic viability of the business in the Secretary’s judgment.

 

How Much Pay 

The calculation of pay for paid sick leave is positively Byzantine. It reads like it was written by the IRS. There are different pay rates, depending on the reason for the sick leave (set out in 1-6 above). There are caps on the amount of pay as well.I will set the entire provision out here.  The DOL is expected to issue some helpful guidance shortly. Hopefully before April 2.

(5) PAID SICK TIME.—

(A) IN GENERAL.—The term ‘‘paid sick time’’ means an increment of compensated leave that

(i) is provided by an employer for use during an absence from employment for a reason described in any paragraph of section 2(a); and

(ii) is calculated based on the employee’s required compensation under subparagraph (B) and the number of hours the employee would otherwise be normally scheduled to work (or the number of hours calculated

under subparagraph (C)), except that in no event shall such paid sick time exceed—

(I) $511 per day and $5,110 in the aggregate for a use described in paragraph (1), (2), or (3)

of section 5102(a); and

(II) $200 per day and $2,000 in the aggregate for a use described in paragraph (4), (5), or (6) of section 5102(a).

OK, so this means that there’s a cap of $511 per day, up to a total of $5,110 for sick time that is used for reasons numbered 1, 2, or 3 above.  And the sick pay for 4, 5, and 6, above cap out at $200 per day or $2,000 total. It also means that to calculate Paid Sick Leave, you need to know what the employee’s “Required Compensation” is.  Now, how does one calculate a given employee’s “required compensation?”  Well that’s covered in (B) below.

(B) REQUIRED COMPENSATION.—

(i) IN GENERAL.—Subject to subparagraph (A)(ii), the employee’s required compensation under this subparagraph shall be not less than the greater of the following:

(I) The employee’s regular rate of pay (as determined under section 7(e) of the Fair Labor Standards Act of 1938 (29 U.S.C. 207(e)).

(II) The minimum wage rate in effect under section 6(a)(1) of the Fair Labor Standards Act of 1938 (29 U.S.C. 206(a)(1)).

(III) The minimum wage rate in effect for such employee in the applicable State or locality, whichever is greater, in which the employee is employed.

(ii) SPECIAL RULE FOR CARE OF FAMILY MEMBERS.—

Subject to subparagraph (A)(ii), with respect to any paid sick time provided for any use described in paragraph (4), (5), or (6) of section 5102(a), the employee’s

required compensation under this subparagraph shall be two-thirds of the amount described in clause (B)(i).

(C) VARYING SCHEDULE HOURS CALCULATION.—In the case of a part-time employee described in section 5102(b)(2)(B) whose schedule varies from week to week to such an extent that an employer is unable to determine with certainty the number of hours the employee would have worked if such employee had not taken paid sick time under section 2(a), the employer shall use the following in place of such number:

(i) Subject to clause (ii), a number equal to the average number of hours that the employee was scheduled per day over the 6-month period ending on the date on which the employee takes the paid sick time, including hours for which the employee took leave of any type.

(ii) If the employee did not work over such period, the reasonable expectation of the employee at the time of hiring of the average number of hours per day that the employee would normally be scheduled to work.

The hourly rate for sick pay is the greater of 1) the “regular rate” for overtime purposes 2) federal minimum wage 3) state or local minimum wage or 4) the employer’s voluntary rate.  However, the rate is 2/3 of the above minimums if the sick leave is taken for reasons # 4, 5, or 6 above.

Amount of Paid Sick Leave

• Full time employees – 80 hours
• Part-time employees – the number of hours the employee works over a 2-week period on average.

Carry over / Payout at Termination

None.

Also, this law sunsets on December 31, 2020.  So, there wouldn’t be any carry-over anyway.

“Sequencing”

The employer cannot require employees to use up other paid leave before the sick leave provided under this law.  That is, the employer cannot force the use of PTO before this sick leave. Unless the DOL clarifies otherwise, it appears this is an additional benefit.

Notice of Need

The employee must provide reasonable notice of the need for sick time after the first receipt of paid sick time.

Job Protection

Yes,

It shall be unlawful for any employer to discharge, discipline, or in any other manner discriminate against any employee who—

1) takes leave in accordance with this Act; and (2) has filed any complaint or instituted or caused to be instituted any proceeding under or related to this Act (including a proceeding that seeks enforcement of this Act), or has testified or is about to testify in any such proceeding.

So don’t fire people who take sick leave or retaliate against them.

Employees may pursue penalties under the Fair Labor Standards Act as if the employer failed to pay minimum wage in the case of violation of the paid leave provisions, And employers who violate the discharge / discrimination provision will be deemed to have violated section 215 of the Fair Labor Standards Act, exposing them to civil liability.  In California, I imagine a violation will support a claim for wrongful termination in violation of public policy, too.

Poster

Employers must post a notice that the DOL is preparing.

Tax Credits

Division “G” of the Families First Act provides for tax credits for employers. Employers should consult with tax professionals about the tax credits allowed for paid sick leave and paid FMLA outlays.

 * * * * *

Well, that’s it for Part 4 of our series.   We will update our resources post soon.  In Part 5 we’ll touch on some other issues that clients have asked about.

Please stay safe and be careful out there.