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New Federal Laws Taking Effect April 2, 2020: Require Even Small Employers to Provide Paid Leave for Public Health Emergencies and Illness

A new federal statute, signed by President Trump on March 18, 2020 and titled the Families First Corona Response Act, will take effect on April 2, 2020, and have major implications for most employers.  While the Act provides other benefits, this article discusses its provisions, applicable to even small employers, for (1) an expansion of the federal Family and Medical Leave Act (FMLA) (the FMLA Expansion Act) to require paid leave for public health emergencies, and (2) paid sick leave benefits (the Emergency Paid Sick Leave Act).

Both of these new measures, discussed in detail below, apply to most employers with fewer than five hundred (500) employees, although employers with fewer than fifty (50) employees may later be deemed exempt by the U.S. Secretary of Labor through subsequent regulations, if it is determined the Act will jeopardize a small or mid-size business’s viability.

It remains unclear what procedures the Secretary of Labor will institute to grant any exemptions to these new measures, applicable to mid-size and even small employers.  It is possible the Secretary may grant some industry-wide exemptions or may set a procedure to consider petitions on an employer-by-employer basis for exemption.   At this time, it is also unclear what, if any, similar measures may be implemented to apply to large employers with 500 or more employees.

The new requirements of the Act will expire on December 31, 2020.  Employers will be entitled to take certain payroll tax credits, to the employer’s portion of Social Security taxes, for their payment of these newly required paid FMLA and sick leave benefits.

The FMLA Expansion Act

A new type of leave.  The Act creates a new type of leave that must be offered by covered employers to covered employees – specifically, leave for a qualifying need related to a public health emergency.  A qualifying need related to a public health emergency means the employee is unable to work (or work from home) due to a need for leave to care for a child of such employee under 18 years of age, if the school or daycare provider of the child has been closed or made unavailable due to a public health emergency, which includes emergencies related to COVID-19 declared by the federal, state or local government.

Coverage expanded to even small employers.  The FMLA has previously applied to only those employers with at least fifty (50) employees.  The new Act extends the FMLA to private employers with fewer than five hundred (500) employees for purposes of offering leave for a qualifying need related to a public health emergency.

Covered employees.  The FMLA Expansion Act applies to employees who have been employed by the employer for at least thirty (30) calendar days before the public health emergency leave is requested.

Pay while on leave.  The first ten (10) days of this leave may be unpaid.  (Note, however, that the Emergency Paid Sick Leave Act, discussed below, may provide an eligible employee with paid leave during this period.)  After the 10-day period, the employer must pay the employee at a rate not less than 2/3 the employee’s regular rate of pay for the balance of the FMLA leave (up to twelve (12) weeks), with such pay not to exceed two hundred dollars ($200) per day or a total of ten thousand dollars ($10,000).

Reinstatement after leave.  Employees of employers with twenty-five (25) or more employees will be entitled to be restored to an equivalent position at the end of their leave.

Employees of an employer with less than 25 employees will not be entitled to reinstatement, if the position held by the employee when the leave commenced no longer exists due to economic conditions or other changes in operating conditions of the employer caused by the public health emergency.  In this instance, the employer must still make reasonable efforts to restore the employee to a position equivalent, in terms of pay, benefits and other terms and conditions of employment, to the prior position the employee held when the leave commenced.  If these reasonable efforts to find an equivalent position fail, the employer must continue to make reasonable efforts to contact the employee if an equivalent position becomes available.  The requisite “contact period” will run for one (1) year and begins on the earlier of (i) the date on which the qualifying need related to a public health emergency ends, or (ii) the date that is twelve (12) weeks after the date on which the employee’s leave commenced.

Departure from FMLA’s prior provisions.  These new, temporary provisions are a stark departure from the FMLA’s prior provisions.  Under normal circumstances, the FMLA applies only to employers with fifty (50) or more employees and applies only to employees who have worked for at least twelve (12)  months and who worked at least one thousand two hundred and fifty (1,250) hours during the preceding 12 months.  Also, typically, FMLA leave is unpaid.  On this temporary basis (in 2020), the Emergency FMLA Expansion Act has amended the FMLA to create the new paid leave entitlement for, essentially, time off to care for children without school or daycare due to the current public emergency, and for purposes of this new leave type only, the Act is expanded to include employers with fewer than five hundred (500) employees, and employees who worked for covered employers for only at least thirty (30) days.

Emergency Paid Sick Leave Act

New requirement for paid sick leave for certain COVID-19 related absences.  This Act requires most employers having fewer than five hundred (500) employees to provide up to eighty (80) hours of paid sick leave to full-time employees for certain COVID-19 caused absences (discussed further below).

Part-time employees are entitled to receive pay for the number of hours they worked, on average, during a two (2) week period.  There is a separate method for calculating the benefit for part-time employees whose schedules varied widely from week to week.  The Secretary of Labor is ordered to issue by April 2 guidelines to assist employers in calculating leave benefits.

When an employee is taking leave for a qualifying reason, the employer cannot require the employee to search or find a replacement employee to cover the hours the employee is using as paid sick time.

Covered employees.  Employees are immediately eligible to take paid sick leave under this Act, regardless of how long they have worked for the employee.

Covered COVID-19 related absences.  A covered employer must provide paid sick leave to the extent the employee is unable to work (or work from home) due to a need for leave 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 (note that self-imposed quarantine does not qualify under the Act);
  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 an order as described in subparagraph (1), or has been advised by a health care provider as described in subparagraph (2) (note that “individual” does not appear to be limited to family members, although there is a stray reference to family members elsewhere in the Act);
  5. The employee is caring for a child of such employee if the school or daycare provider of the child has been closed or made unavailable due to concerns related to COVID-19; or
  6. The employee is experiencing any other substantially similar condition specified by the Secretary of Health and Human Services in consultation with the Secretaries of Labor and Treasury.

Amount of pay dependent on normal schedule and capped depending on type of leave.  The amount of paid sick leave is calculated based on the amount of compensation the employee would otherwise have been scheduled to earn.

Additionally, the amount of paid sick leave is capped at five hundred and eleven dollars ($511) per day, and a total of five thousand, one hundred and ten dollars ($5,110) for a qualifying use described in subparagraphs (1), (2), or (3) above.

The amount of paid sick leave for qualifying uses described in subparagraphs (4), (5), or (6) above is capped at two hundred dollars ($200) per day, not to exceed a total of two thousand dollars ($2,000).

Any accrued, but unused sick leave under this statute, will not be carried over into 2021 and is not paid on termination of employment.

Supplements other paid leave.  Employers may not require employees to first use other paid leave provided by the employer before using paid sick leave under this Act, so this leave is in addition to any other paid sick leave or PTO the employer otherwise provides.

Employee notice requirements.  Employers may not require employees to provide advance notice prior to the first workday on which the employee takes paid sick leave under this Act.  Employers may require employees follow their normal, reasonable notice procedures for calling in sick in order to continue receiving paid sick leave after the first missed workday (or partial day) for which the employee received paid sick time under the statute.

Employer posting requirements.  Employers must post, in a conspicuous place where employee notices are customarily posted, a notice of the provisions of this new statute.  The Secretary of Labor is required to publish, by no later than March 25, 2020, a model notice for employers to use for this purpose.

No retaliation.  The Act contains a prohibition against retaliation by employers against employees who took leave qualifying under this statute, or who filed a complaint under the statute.

We wish everyone well during these difficult days.

The foregoing message was for informational purposes only and was not intended to nor should it be construed as legal advice for any particular situation or circumstances.  This discussion was meant as a general overview and cannot replace the guidance of legal counsel.  Employers are encouraged to consult with experienced legal counsel before taking any employment actions that implicate federal, state or local employment laws, including, without limitation, the Family and Medical Leave Act (including its recent expansion), Emergency Paid Sick Leave Act, Fair Labor Standards Act, Americans with Disabilities Act, Title VII, Texas Commission on Human Rights Act, National Labor Relations Act, or Worker Adjustment Retaining Notification Act.

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