Congress Passes New Coronavirus Law – What it Means for Employers

Mar 19, 2020
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By the K|W|W Team

Late yesterday, the Senate followed the House’s lead by overwhelmingly passing the Families First Coronavirus Response Act by a vote of 90-8. President Trump quickly signed the bill into law Wednesday evening. The Act will now take effect in fifteen days. It will expire on December 31, 2020.

Of the Act’s provisions, most relevant to employers are its temporary guarantees of Emergency Paid Family Leave and Emergency Paid Sick Leave. These provisions ONLY pertain to employers with fewer than 500 employees, though the Secretary of Labor is authorized to exclude from coverage certain healthcare providers and first responders from the definition of eligible employees. The Secretary of Labor can also exempt small businesses with fewer than 50 employees if the Act’s provisions would “jeopardize the viability of the business.”

The Act makes clear that the “paid” components of both provisions will ultimately be funded by the federal government. Although employers will be initially fronting this money to workers who claim these benefits, ALL expenses will be fully reimbursed by the federal government in the form of a refundable tax credit that counts against the employer’s quarterly payroll tax. Those whose costs more than offset their tax liability will receive a full refund of the difference from the IRS.

Emergency Paid Family Leave:

To address the current health emergency, the Act amends the FMLA to include employers and employees who would not otherwise be covered. It also expands the reasons employees can seek job-protected leave to include care for minor children whose school or care facility closed due to the public health emergency.

Whereas the FMLA has exempted employers with fewer than 50 employees, the new Act eliminates this threshold for purposes of leave due to the public health emergency. The definition of “eligible employees” under FMLA was also expanded. Employees who have worked for an employer for 30 calendar days or more are now eligible for leave related to the public health emergency, but not for other forms of FMLA leave.

For the first time, the Act requires a portion of FMLA leave be paid. The first 10 days of FMLA leave related to the public health emergency is unpaid, though employees may elect to substitute accrued paid leave for the unpaid statutory leave. Thereafter, employees are entitled to two-thirds of their normal wages for the remainder of the leave. These payments are capped at $200 per day or $10,000 in the aggregate.

Emergency Paid Sick Leave:

The Act also requires all employers with 500 or fewer employees to provide a minimum of 80 hours of paid coronavirus-related sick leave, immediately available for all full-time employees to use. If an employer already has a policy providing more than 80 hours of paid sick leave to all employees, the Act does not require employers to provide additional paid leave. However, the Act confirms that an employer cannot compel an employee to use other accrued paid leave (e.g. vacation) before the employee uses this new emergency paid sick leave. In the coming days, we expect greater clarity on how employers can best integrate this new, statutory emergency paid sick leave and expanded FMLA leave with their existing paid leave policies.

The emergency paid sick leave can only be used for a preapproved coronavirus-related reason. These preapproved reasons cover employees who (1) cannot work because of a federal, state or local quarantine or isolation order, (2) have been advised by a health care provider to self-quarantine, (3) are experiencing symptoms of coronavirus, (4) must care for an individual who has been exposed to coronavirus or is experiencing its symptoms, or (5) must care for a child under eighteen-years-old whose school or daycare was closed because of coronavirus.

The amount of pay to which an employee is entitled depends on the coronavirus-related reason for the leave. Employees are entitled to full pay (not to exceed $511 per day) when they take the leave for reasons (1), (2) or (3) as they are listed above. However, employees invoking this sick leave for reasons (4) or (5) are only guaranteed two-thirds pay (not to exceed $200 per day).

After combining whatever sick leave they already have with this new coronavirus-related sick leave, full-time employees must now have 80 hours of paid sick leave immediately available to use for the coronavirus-related reasons. Part-time employees’ totals should be equal to the typical number of hours they work in a normal two-week period. Unlike the FMLA portion of the Act, which only covers those who have been employed for 30+ days, this emergency sick leave must be made equally available to every employee, regardless of length of service.

Unemployment Compensation:

In addition to these two big changes, the Act also protects those employees who are laid-off or furloughed as businesses begin shutting down or reducing hours. The Act allocates $1 billion to states’ unemployment insurance funds. Employers are required to notify laid-off workers of their potential unemployment insurance eligibility.

Within seven days, the Department of Labor will issue a notice detailing these rights that employers must display at each worksite. As soon as this notice is published, we will update this post and provide a link to the notice, which you will be able to access at KWWlaborlaw.com/news-resources.

Moving Forward:

For employers, coping with the COVID-19 pandemic has been a daunting task. While the Act is designed to provide relief to both employers and workers, incorporating the provisions of the Act into your planning process is the next great challenge. As employers across all sectors of the economy contemplate reduced work hours, furloughs and layoff, and shift to work-from-home arrangements, the need to understand all the options and the financial implications of each will be of paramount importance. KWW’s attorneys are available to answer any legal or HR questions you may have during these unprecedented and fluid circumstances. As always, your workforce is our priority.

The K|W|W Team

Tom Green 330-697-0815 tgreen@kwwlaborlaw.com
Scot Harvey 330-212-5208 sharvey@kwwlaborlaw.com
Olivia Hochschwender 330-338-9114 ohochschwender@kwwlaborlaw.com
Michael Karst 260-519-1311 mkarst@kwwlaborlaw.com
Meg Matejkovic 330-524-4546 mmatejkovic@kwwlaborlaw.com
John McKenzie 330-714-5459 jmckenzie@kwwlaborlaw.com
Amanda Smith 716-450-4745 asmith@kwwlaborlaw.com
Ken Stump 330-416-3641 kstump@kwwlaborlaw.com
Julie Trout 330-618-0639 jtrout@kwwlaborlaw.com
Jim Wilkins 330-714-2186 jwilkins@kwwlaborlaw.com