On March 18, 2020, the Families First Coronavirus Response Act (the “Coronavirus Response Act”) was signed into law in response to the challenges our country is facing as a result of the Coronavirus that causes COVID-19. The Coronavirus Response Act provides for, among other things, emergency paid leave and paid sick days. It went into effect on April 1, 2020. The Secretary of Labor also recently released temporary regulations, which may be found here.

Given the rapid spread of the Coronavirus throughout the United States, employers will be facing increasing requests for paid leave necessitated by the wide-ranging impacts of the virus. Below is a summary of the material provisions of the Coronavirus Response Act relating to paid family and medical leave and paid sick time.

Emergency Family and Medical Leave Expansion Act (EFMLEA)

The EFMLEA creates a new emergency federal paid leave benefits program that expands coverage under the Family and Medical Leave Act (FMLA). Employees must have worked for a covered employer for at least 30 days to be entitled to emergency family and medical leave. Covered employers include employers with fewer than 500 employees. However, employers with less than 50 employees may qualify for an exemption if such payment obligations would jeopardize the viability of the business as a going concern. Moreover, employers of health care providers or emergency responders may choose to exclude their employees from the benefits of this new law. See Section IV for more information.

Under this new law, leave is permitted where the employee is unable to work (or telework) due to a need for leave to care for the employee’s “son or daughter” if: (i) the employee’s son or daughter’s school or place of care has been closed because of the Coronavirus, or (ii) the employee’s son or daughter’s caretaker is unavailable because of the same. The FAQs now clarify that an employee’s “son or daughter” includes the employee’s biological child, adopted or foster child, stepchild, and legal ward, as well as a child for whom the employee is standing in loco parentis (i.e., the employee has day-to-day responsibilities to care for or financially support the child) and a child who is 18 years or older who (1) has a mental or physical disability and (2) is not capable of self-care because of that disability. For more information pertaining to coverage for care of adult children, consult this fact sheet.

Eligible employees are entitled to take up to 12 weeks of emergency family and medical leave, which would run concurrently with their typical FMLA leave. The first 10 days of emergency family and medical leave are unpaid, but employees have the option to substitute paid vacation, personal leave, or sick leave during this period. For each day of emergency family and medical leave taken after the initial 10 days are exhausted, employers are generally required to pay employees at least two-thirds of their regular rate of pay for the number of hours normally worked. If the employee’s schedule changes from week to week such that the employer cannot determine what hours would be normally worked, the employer is required to provide compensation for the average number of hours the employee was scheduled to work per day (including hours for which the employee took leave of any type) over the six-month period immediately before the employee takes leave. If the employee has not worked for six months prior to taking leave, the employer is required to pay the employee based on the employee’s reasonable expectation at the time of hire of the average number of hours per day that the employee would normally be scheduled to work. Notably, employers are not required to provide paid leave to a given employee in excess of $200 per day, or $10,000 in the aggregate.

Employers with 25 employees or more are required to provide job-protected EFMLEA leave. However, employers with fewer than 25 employees may not be required to provide job protection to employees if they meet certain criteria:

1. the employee took leave pursuant to the EFMLEA;
2. the employee’s position no longer exists due to economic conditions or other changes in the employer’s operations that affect employment and are caused by COVID-19;
3. the employer makes reasonable efforts to restore the employee to an equivalent position with equivalent compensation, benefits, and other terms and conditions of employment; and
4. if the employer’s reasonable efforts fail, the employer makes reasonable efforts to contact the employee if an equivalent position becomes available within one (1) year beginning on the earlier of two dates:
      a. the date on which the employee’s need for EFMLEA leave concludes, or
      b. the date that is 12 weeks after the date on which the employee’s EFMLEA leave commences.

Employees who foresee the need for leave are required to provide their employers with as much notice as is practicable. The EFMLEA will remain in effect until December 31, 2020.

Emergency Paid Sick Leave Act (EPSLA)

The EPSLA implements new paid sick leave requirements for private employers with fewer than 500 employees and public agencies or other public entities with at least one employee. Sick leave is available for immediate use and without regard to how long employees have been employed by their employer. However, employers of health care providers or emergency responders may choose to exclude their employees from the benefits of this law. Additionally, employers with less than 50 employees may qualify for an exemption if such payment obligations would jeopardize the viability of the business as a going concern. See Section IV for more information.

Leave under the EPSLA is available where an employee is unable to work (or telework) due to a need for leave for one of the following reasons:

1. An employee’s COVID-19 related self-isolation or quarantine if ordered by federal, state, or local authorities.
2. An employee’s COVID-19 related self-quarantine if advised by a health care provider.
3. An employee is experiencing symptoms of COVID-19 and is seeking a medical diagnosis.
4. An employee is caring for an individual who has been ordered to self-isolate or quarantine by a federal, state, or local authority, or has been advised by a health care provider to self-quarantine because of COVID-19 concerns.
5. An employee is caring for the employee’s child if the child’s school or place of care has been closed, or the child’s care provider is unavailable due to COVID-19 precautions.
6. An 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.

When taking leave for reasons 1, 2, or 3 set forth above, full-time employees are eligible for up to 80 hours of paid leave at their regular rate of pay, and part-time employees are eligible for leave at their regular rate of pay for the average number of hours they work over a two-week period. When taking leave for reasons 4, 5, or 6, as set forth above, employees are eligible for the same amount of paid sick leave under reasons 1 through 3, except that they will be compensated at two-thirds of their regular rate of pay. The amount of paid sick leave an employee with varying weekly schedules receives is calculated in the same way as under the EFMLEA: if the employee’s schedule changes from week to week such that the employer cannot determine what hours would be normally worked, the employer is required to provide compensation for the average number of hours the employee was scheduled to work per day (including hours for which the employee took leave of any type) over the six-month period immediately before the employee takes leave; and if the employee has not worked for six months prior to taking leave, the employer is required to pay the employee based on the employee’s reasonable expectation at the time of hire of the average number of hours per day that the employee would normally be scheduled to work.

There are caps on the amount employees can receive under this new law as follows: if an employee takes leave for reasons 1, 2, or 3 set forth above, payment cannot exceed $511 per day and $5,110 in the aggregate; and if an employee takes leave for reasons 4, 5, or 6 set forth above, payment cannot exceed $200 per day and $2,000 in the aggregate.

Employers may not require that their employees use other paid leave before using leave provided by this law. Additionally, if an employer-provided an employee with leave prior to the Act going into effect, the employer cannot deny the employee leave under the EPSLA if the employee is seeking leave for one of the six reasons discussed above.

The EPSLA will remain in effect until December 31, 2020.

Tax Credits for Employers Providing Leave under the EFMLEA and EPSLA

The Coronavirus Response Act provides tax credits for employers that are intended to offset the costs of providing leave and sick time as set forth above. For example, employers may be entitled to a tax credit equal to 100% of the qualified wages they are required to pay under the EFMLEA and EPSLA for each calendar quarter. Employers should consult with counsel for further information on the applicability of the available tax credits to their particular situations. See Section IV for more information.

Additional Information Concerning the Overlap Between the EFMLEA and EPSLA

Business closures/layoffs/furloughs: While employees are protected from discriminatory or retaliatory employment actions as a result of taking leave, employees are not protected from employment actions that would have affected them regardless of whether they would have taken leave. For example, an employer may lay off its employees for legitimate business reasons, such as the closure of the employer’s worksite.

• Before April 1, 2020: If employees are out of work because an employer closed, or laid off or furloughed employees, before the Coronavirus Response Act was passed, employees are generally not entitled to leave under either the EFMLEA or EPSLA.
• After April 1, 2020: The employer is required to pay for EPSLA/EFMLEA benefits up to the date of the closure/layoff/furlough. As of that date, the employee is no longer eligible for EFMLEA/EPSLA benefits. This is true even if the employer expects to reopen the business at some future date.
• Rehired employees: However, an employee may qualify for leave under the EFMLEA if the employee was laid off or otherwise terminated by their employer on or after March 1, 2020, and is subsequently rehired by the same employer before December 31, 2020. To be eligible, the employee must have been employed for at least 30 of the last 60 calendar days prior to the layoff or termination. For example, an employee who was originally hired by an employer on January 15, 2020, but laid off on March 14, 2020, would be eligible for leave under the EFMLEA (and the EPSLA), if the same employer rehired the employee on October 1, 2020.
  • Such employees would also be eligible for EPSLA because this law applies without regard to the length of employment.

Concurrent leave benefits:

• The intersection between the EFMLEA and EPSLA:
  • If employees are eligible for both EFMLEA and EPSLA leave, then leave under both laws would run concurrently. For example, an employee could take two weeks of EPSLA for any of the six reasons explained above, and could then be eligible for up to an additional 10 weeks of EFMLEA paid leave due to a need for leave to care for a child because of COVID-19-related school closings or unavailability of the child’s childcare provider.
• Intersection with existing accrued leave: 
  • EFMLEA: During the first two weeks of leave, an employee may not take the employee’s accrued paid time off and paid leave under the EPSLA at the same time unless the employer agrees to allow the employee to supplement their EFMLEA/EPSLA leave in order to reach the employee’s normal earnings.  After the first two weeks, employees may elect or be required by their employers to take the remaining EFMLEA benefits concurrently with any accrued paid time off that can be used in those circumstances.
  • EPSLA: If an employer and employee agree, the employee may use accrued pay time off to supplement the amount the employee receives from EPSLA leave, up to the employee’s normal earnings. However, employers may not require employees to exhaust their accrued paid time off before taking EPSLA leave, or that employees use their accrued paid time off and EPSLA leave concurrently.

Employees covered: The FAQs clarify that the EFMLEA and EPSLA use the definition of “employee” provided by the Fair Labor Standards Act (see this fact sheet). Thus, all U.S. employees (including employees in any State, the District of Columbia, or any Territory or possession of the U.S., regardless of their status as full-time, part-time, or “joint employee” working on-site temporarily or through a temp agency) are eligible.

Employers covered: As noted above, both the EFMLEA and EPSLA apply to employers with fewer than 500 employees. In other words, EFMLEA and EPSLA do not cover private employers with 500 or more employees. Employers should use the number of employees on the day the employee’s leave would start to determine whether the employer meets the threshold. All employees within the U.S. must be counted toward the 500-employee threshold, including employees in any State, the District of Columbia, or any Territory or possession of the U.S. Full-time and part-time employees, employees on leave, temporary employees who are jointly employed by the employer and another employer, and day laborers supplied by a temporary agency count towards the threshold. However, independent contractors and employees who have been laid off or furloughed but have not been subsequently reemployed do not count towards the threshold.

• For example, if an employer has 450 employees on April 20, 2020, and an employee is unable to work starting on that date because a health care provider has advised that employee to self-quarantine because of concerns related to COVID-19, the employer must provide paid sick leave to that employee. If, however, the employer hires 75 new employees between April 21, 2020, and August 3, 2020, such that the employer employs 525 employees as of August 3, 2020, the employer would not be required to provide paid sick leave to a different employee who is unable to work for the same reason beginning on August 3, 2020.
• For information about public sector employers, please see the FAQs.

Exemption for small businesses (fewer than 50 employees): Businesses with fewer than 50 employees may qualify for an exemption where an employee seeks leave under the EPSLA and/or EFMLEA to care for a child due to the COVID-19 related closing of the child’s school or place of care, or the unavailability of the child care provider if such payment obligations would jeopardize the viability of the business as a going concern. A small business may claim this exemption if an authorized officer of the business determines that at least one of the following three conditions are satisfied:

(1) paying benefits under the EFMLEA or EPSLA would “result in the small business’s expenses/financial obligations exceeding available business revenues and cause the business to cease operating at a minimal capacity”; or

(2) the absence of the employee requesting leave under the EFMLEA or EPSLA 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) the business does not have 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(s) requesting leave under the EFMLEA or EPSLA, “and these labor or services are needed for the small business to operate at a minimal capacity.”

This exemption applies only with respect to those employees whose absence would cause any of the three circumstances above. Small businesses that intend to rely on this exemption should make sure to document the facts and circumstances that meet the criteria above in order to justify the denial and keep those records for their files.

Grace period for enforcement: According to this bulletin, the Department of Labor will refrain from bringing enforcement actions against employers who have made “reasonable, good faith efforts” to comply with the Coronavirus Response Act through April 17, 2020. Efforts are reasonable and in good faith where:

• Employers remedy any violations by making all affected employees whole as soon as practicable;
• The violations were not “willful” pursuant to the criteria set forth in McLaughlin v. Richland Shoe, 486 U.S. 128, 133 (1988) (meaning “that the employer either knew or showed reckless disregard for the matter of whether its conduct was prohibited by the statute”); and
• The Department of Labor receives a written commitment from the employer to comply with the Coronavirus Response Act in the future.

“Health Care Provider”/“Emergency Responder:” The FAQs now clarify who a “health care provider” and an “emergency responder” are for purposes of excluding individuals from coverage under the EFMLEA/EPSLA:

• "Health Care Provider: "anyone employed at any doctor’s office, hospital, health care center, clinic, the post-secondary educational institution offering health care instruction, medical school, local health department or agency, nursing facility, retirement facility, nursing home, home health care provider, any facility that performs laboratory or medical testing, pharmacy, or any similar institution, employer, or entity,” including “any permanent or temporary institution, facility, location, or site where medical services are provided that are similar to such institutions.”
  • The FAQs also clarify that the definition above includes anyone employed by an entity that contracts with any of the above institutions, employers, or entities to provide services to facilities and/or to maintain their operation.
  • Also included in this definition are any individuals “employed by any entity that provides medical services, produces medical products, or is otherwise involved in the making of COVID-19 related medical equipment, tests, drugs, vaccines, diagnostic vehicles, or treatments.”
  • The highest official of any State or Territory, including the District of Columbia, may also determine additional “health care providers” as is necessary in the State/Territory/District of Columbia’s response to COVID-19.
• "Emergency Responder:""an employee who is necessary for the provision of transport, care, health care, comfort, and nutrition of such patients, or whose services are otherwise needed to limit the spread of COVID-19.” 
  • The FAQs state that these include: “military or national guard, law enforcement officers, correctional institution personnel, firefighters, emergency medical services personnel, physicians, nurses, public health personnel, emergency medical technicians, paramedics, emergency management personnel, 911 operators, public works personnel, and persons with skills or training in operating specialized equipment or other skills needed to provide aid in a declared emergency as well as individuals who work for such facilities employing these individuals and whose work is necessary to maintain the operation of the facility.”
  • Like with health care providers, the highest official of any State or Territory, including the District of Columbia, may also determine additional “emergency responders” as is necessary for the State/Territory/District of Columbia’s response to COVID-19.

Inability to work/telework: The FAQs clarify that being unable to work or telework means that “your employer has work for you and one of the COVID-19 qualifying reasons set forth in the [EFMLEA/EPSLA] prevents you from being able to perform that work.”

• However, if an employer and its employee agree that the employee will work the employee’s normal number of hours but outside of the normal schedule (i.e., earlier in the morning or later at night), then the employee is able to work unless a COVID-19 qualifying reason prevents the employee from working that new schedule.

Intermittent leave:

• Telework: The FAQs make clear that if employees are unable to telework their normal schedule because of a qualifying COVID-19 reason and the employer allows it, the employer and employees may agree to the employees taking intermittent leave. Leave under both the EPSLA and EFMLEA may be taken in any increment subject to an agreement between the employer and employee.
• Work at the worksite:
  • EFMLEA: Subject to an agreement between the employer and employee, an employee may take intermittent leave to care for the employee’s child whose school or place of care is closed, or whose caretaker is unavailable, due to COVID-19. If the employer and employee agree, leave under these circumstances may be taken in increments of less than a full workday.
  • EPSLA: If employees are taking leave for reasons 1 through 4 and 6, as set forth above, employees may not take intermittent leave – instead, leave must be taken in consecutive full-day increments until (1) the full amount of leave is exhausted, or (2) the employee no longer has a qualifying need for leave. The FAQs make clear that this measure is to help prevent the spread of the Coronavirus to others.
• Where intermittent leave is taken, only the amount of leave actually taken may be counted toward the employee’s leave entitlement.

Posting requirements: Employers are required to post a notice explaining the available benefits under the EFMLEA and the EPSLA by April 1, 2020. The notice may be found here, along with a translation in Spanish here. There are also separate FAQs available concerning the posting requirement.

Record-keeping: Employers who intend to claim a tax credit for wages paid pursuant to the EFMLEA and/or EPSLA should retain appropriate documentation. The FAQs state that employers should consult any IRS applicable forms, instructions, and information concerning the procedure the employer must follow to claim the credit. When employees take leave under the EFMLEA, employers may require documentation in support of the leave to the extent allowed under the certification rules for traditional FMLA requests.

Reimbursement: The FAQs state that employers “are not required to provide leave if materials sufficient to support the applicable tax credit have not been provided.” Moreover, employers are not entitled to a tax credit for any leave provided under the EFMLEA or EPSLA that was not required to be paid or that exceeds the limits set forth in the EFMLEA and the EPSLA. Employers will also not be reimbursed for any supplementation of the employee’s leave benefits (i.e. if the employer allows employees to use existing accrued leave to supplement their benefits under the EFMLEA or EPSLA).

Retroactivity: Leave under the EFMLEA and EPSLA is not retroactive – these laws cover leave beginning on April 1, 2020.

Recommendations

We recommend that employers take the following steps to ensure compliance with the Coronavirus Response Act: (i) review their existing leave policies and revise them accordingly; (ii) consult Pryor Cashman’s coronavirus library/resource center for additional legal updates and guidance regarding the Coronavirus Response Act and COVID-19, and (iii) consult Pryor Cashman for further information and/or with any questions.