On March 18, 2020, FFCRA was signed into law and is effective April 1, 2020 through December 31, 2020. Amongst other things, FFCRA requires certain employers to provide their employees with emergency paid sick leave and emergency paid family and medical leave for specified reasons related to COVID-19. Employers will be made whole by the federal government for providing employees with such leave under FFCRA through a combination of tax credits and refunds.
Emergency Paid Sick Leave: Under FFCRA, “covered employers” (i.e., employers employing fewer than 500 employees) must provide to all covered employees:
- Up to eighty (80) hours of paid sick leave at the employee’s regular rate of pay (capped at $511 per day, and $5,111 in the aggregate per employee) where the employee (i) is unable to work or telework because the employee is quarantined pursuant to Federal, State, or local government order or advice of a health care provider, (ii) has been advised by a health care provider to self-quarantine due to concerns related to COVID-19 and/or (iii) is experiencing COVID-19 symptoms and seeking a medical diagnosis; or
- Up to eighty (80) hours of paid sick leave at two-thirds (2/3) the employee’s regular rate of pay (capped at $200 per day, and $2,000 in aggregate per employee) because the employee (i) is unable to work or telework because of a need to care for an individual subject to quarantine pursuant to Federal, State, or local government order or upon advice of a health care provider, (ii) must care for a child (under 18 years of age) whose school or child care provider is closed or unavailable for reasons related to COVID-19, and/or (iii) is dealing with substantially similar conditions to be more specifically identified in future regulations.
Emergency Paid Family and Medical Leave: Covered employers must also provide up to an additional ten (10) weeks of emergency paid family and medical leave at two-thirds (2/3) the employee’s regular rate of pay (capped at $200 per day, $10,000 in aggregate per employee) when an employee is unable to work due to a need for leave to care for a child whose school or child care provider is closed or unavailable for reasons related to COVID-19. The first ten (10) days an employee takes such leave may be unpaid but an employee may elect to substitute any accrued vacation leave, personal leave, or medical or sick leave for the unpaid ten (10) day leave period, such as the emergency paid sick leave available under FFCRA .
Exemptions for Certain Employers: Employers of employees who are health care providers (e.g., doctors, podiatrists, dentists, chiropractors, clinical psychologists, nurse practitioners, PAs, clinical social workers, etc.) or emergency responders may elect to exclude such employees from emergency paid sick leave or emergency paid family and medical leave under FFCRA. Further, the U.S. Department of Labor may exempt in future regulations certain small businesses with fewer than fifty (50) employees if these requirements would jeopardize the viability of the business as a going concern.
Termination Protections: Employers are prohibited from discharging, disciplining, or in any other manner discriminating against any employee who takes leave under FFCRA. However, employers are not required to restore an employee who takes emergency paid family and medical leave to their previous position if (i) the employer employs fewer than twenty-five (25) employees; (ii) the position held by the employee does not exist due to economic conditions or other changes in operating conditions of the employer that affect employment and are caused by a public health emergency; or (iii) the employer makes reasonable efforts to restore the employee to an equivalent position or notifies the employee of any available equivalent position within the earliest of one (1) year when the emergency family and medical leave was taken or when the public health emergency ends.
Employers are Made Whole under FFCRA: Employers will be made whole for 100% of the paid emergency sick leave or paid emergency family and medical leave provided to employees pursuant to FFCRA, as follows:
- If the employer pays out any emergency paid sick leave or emergency family and medical leave, the employer will first receive a tax credit limited to the amount of payroll taxes paid by the employer (e.g., if salaries are $100,000 and payroll tax paid is $10,000, then the employer will receive a $10,000 tax credit);
- Then, any amounts paid as emergency paid sick leave or emergency paid family and medical leave that exceeds the payroll taxes paid (i.e., the $90,000 difference between the salaries and the payroll tax paid) will be considered an overpayment that either entitles the employer to a refund or a tax credit issued by the Internal Revenue Service against any federal tax liability that the employer may have.
Further, the U.S. Department of Treasury may allow the advance payment of the credits described above and will provide further guidance and forms related to this issue.
Notice to Employees: Employers are required to post in a conspicuous place on their business premises the notice issued by the U.S. Department of Labor at the following link: https://www.dol.gov/sites/dolgov/files/WHD/posters/FFCRA_Poster_WH1422_Non-Federal.pdf
Assistance to Employers under the CARES Act: In addition to FFCRA, the federal government also seeks to provide assistance to employers through the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act“) to incentivize the retention of employees. The CARES Act is intended to, in part, provide various forms of relief for employers in the United States through a variety of emergency grants, forgivable small business loans, and refundable tax credits and incentives in order to assist employers fund their business expenses. For instance, the CARES Act will provide small businesses with loans to fund payroll support, paid sick, medical or family leave, health care benefits, interest on mortgage obligations, rent, utilities, and other limited expenses. However, the CARES Act only provides full or partial loan forgiveness for principal amounts used to fund certain categories of expenditures (e.g., payroll costs, utilities, etc.) depending on if the employer qualifies under various criteria, such as the average number of full-time equivalent employees retained or reductions imposed on employees’ salaries. Emergency sick leave and emergency family and medical leave wages provided to employees pursuant to FFCRA are not eligible for loan forgiveness under the CARES Act since the employer will be made whole through the tax credit and refund mechanisms described above. Accordingly, employers will be faced with a timing issue and will need to determine how they will fund their obligations to their employees who have been retained, including those who subsequently seek emergency paid sick leave or emergency paid family and medical leave under FFCRA.
Important Note: Given the foregoing, employers should review their internal policies, all applicable federal, state and local laws (e.g., (i) federal and state WARN Acts, (ii) New York’s March 18, 2020 Paid Sick Leave Law and Paid Family Leave Act, (iii) New Jersey’s Earned Sick Leave Law and Family Leave Act, and (iv) Connecticut’s Paid Sick Leave Law and Family and Medical Leave Act, along with other family, medical and disability related leave laws) related to employee staffing and leave requests, and consult with counsel to determine the steps that they will take to conduct their business during and after the COVID-19 pandemic.
If you have any questions, please contact the Garfunkel Wild attorney with whom you regularly work, or contact us at email@example.com.
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