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Proposed New U.S. Employment Laws Amid Coronavirus: Good News for Employees, Not Exactly Ideal for Small Businesses

March 16, 2020

In a rare bipartisan effort, the House of Representatives passed the Emergency Families First Coronavirus Response Act (H.R. 6201) on March 14, 2020. The bill has not passed the Senate or been signed into law by President Trump, but his administration has expressed strong support for it. If the bill becomes law, as expected, it will establish new requirements for employers aimed at protecting workers and alleviating fears that regular paychecks could be in jeopardy as the coronavirus spreads across the nation.

Among other things, the bill would require employers with fewer than 500 employees to continue to pay their employees under a variety of coronavirus-related circumstances, with employers being repaid in the form of tax credits. Some small business owners, however, are concerned — and rightfully so — as they simply cannot afford to continue to pay workers if and when revenue streams come to a halt — regardless of the tax credits.

The employment-related aspects of the bill are essentially divided into 2 components: First, there is an entirely new law — The Emergency Paid Sick Leave Act — that temporarily mandates that workers be paid their full wages for up to 2 weeks when they are unable to report to work for coronavirus-related reasons.

The second component temporarily amends the Family and Medical Leave Act (FMLA) through The Emergency Family and Medical Leave Expansion Act to specifically cover coronavirus-related leave, and requires employers to provide up to 12 weeks of leave for employees depending on the circumstances. Employers may use the new sick leave the bill seeks to mandate to cover the first 2 weeks of such leave, and employers may be obligated to provide pay for the additional leave up to 10 weeks.

Below are answers to common questions regarding both aspects of the legislation.

THE EMERGENCY PAID SICK LEAVE ACT

What is the Emergency Paid Sick Leave Act (EPSLA)? The EPSLA is a proposed temporary law that will apply only to businesses with fewer than 500 employees and will provide up to two weeks of paid leave for full-time and part-time employees that need time off for various coronavirus-related reasons.

When will the EPSLA be effective? Once the President signs the EPSLA into law, it will be effective within no less than 15 days.

If the EPSLA becomes law, how long will it be in effect? Unless it is later extended, the EPSLA will expire on December 31, 2020.

Will the EPSLA apply to all employers? No. The EPSLA will only apply to employers with fewer than 500 employees.

Will the EPSLA apply to all employees? Assuming you have fewer than 500 employees, the EPSLA will apply to all employees — regardless of whether they are full-time or part-time.

What are the types of events that trigger the EPSLA? Generally speaking, the EPLSA will be triggered by any one of the following events:

  1. The employee is required to self-isolate because they have been diagnosed with coronavirus.
  2. The employee wants to go to the doctor because they are experiencing symptoms of coronavirus.
  3. The employee is ordered to stay home by a doctor or a government official on the basis that the presence of the employee at work would jeopardize the health of others because the employee was exposed to the coronavirus or the employee is symptomatic.
  4. The employee needs to care for any of the following family members who are either self-isolating or need to see a doctor because they are experiencing symptoms: parent, spouse, children under 18, pregnant daughters, pregnant next of kin, grandparents, a disabled grandchild, or a disabled child (regardless of age).
  5. The employee needs to care for any of the following family members that have been ordered to stay home by a doctor or a governmental official: parent, spouse, children under 18, pregnant daughters, pregnant next of kin, grandparents, a disabled grandchild, or a disabled child (regardless of age).
  6. The employee needs to care for a child because daycare or school is closed, and the babysitter is unavailable due to coronavirus.

How much will employers need to pay employees that need to take leave under the EPSLA? For triggering events 1 through 3 above, the employer will need to pay the employee their regular rate of pay while on leave. For triggering events 4 through 6 above, the employer will need to pay the employee two-thirds their regular rate of pay.

How much EPSLA leave can an employee take? Full-time employees will be entitled to take up to 80 hours (2 weeks) of leave. Part-time employees will be entitled to leave based on the average number of hours they work in a given two week period. If the part-time employee’s hours fluctuate from week to week, employers must determine the average number of hours worked during the prior 6 months and provide leave equal to the number of hours they typically work in a two-week period. If the part-time employee never started working before they became sick, employers must provide the number of hours that it anticipated the employee would have worked in the absence of the triggering event. If EPSLA leave is no longer needed by the employee, benefits cease on the next regularly scheduled payday.

Will employers be repaid for providing these benefits? Yes. Employers will be repaid in the form of certain dollar for dollar tax credits. The legislation allows for refundable tax credits in “an amount equal to 100 percent of the qualified” sick leave paid by the employer for each calendar quarter. The credit can be taken against the employer’s portion of the Social Security taxes. However, there are some caps and limits. Specifically, the refund for sick leave is capped at $511/day for triggering events 1-3 above and at $200/day for triggering events 4-6 above. There will effectively be a two-week cap on the credit for sick leave (which comports with the fact that the statute only provides for two weeks of paid sick leave).

What if I already have an existing sick leave policy? Your existing policies will not matter. You will be legally required to cease utilizing any existing policies and provide benefits under the EPSLA. You will not be allowed to require your employees to utilize existing policies in lieu of EPLSA benefits.

Will I be able to require my employee to find another employee to cover their shift while they are out on EPSLA leave? No. This will be specifically prohibited by the EPSLA.

Will I be able to require my employee to use accrued Paid Time Off (PTO) or Vacation Pay in lieu of benefits under the EPSLA? No. The law is specifically designed to ensure employees will not be required to use PTO or vacation time to deal with coronavirus-related leave.

Will there be required postings that must be displayed? Yes. If the bill becomes law, a model poster will be released soon by the Secretary of Labor, and it will need to be posted in a conspicuous place.

What if I fail to comply with the EPSLA? Employers who fail to comply with the EPSLA will be deemed to have violated the minimum wage requirements of the Fair Labor Standards Act and will be subject to fines and penalties. For those employers that willfully violate the EPSLA, they will be subjected to liquidated damages.

Will I be allowed terminate an employee because they seek leave under the EPSLA? No. The EPSLA specifically contains an anti-retaliation provision.

What if an employee quits or is terminated, but they have not used all available leave under the EPSLA? Will I have to pay them for any accrued EPSLA leave? No. Employers will not be required to pay out unused EPLSA leave upon termination.

Even with the tax credits, what if I cannot afford to do this? What are my options, if any? At this point, the only options appear to be taking advantage of the tax credits and seeking a loan from the Small Business Administration.

THE EMERGENCY FAMILY AND MEDICAL LEAVE EXPANSION ACT

What is the Emergency Family and Medical Leave Expansion Act (EFMLEA)? The EFMLEA is a proposed temporary amendment to the Family and Medical Leave Act (FMLA) that will apply to employers with fewer than 500 employees, and provides 10 weeks of paid leave for employees (the first 14 days are unpaid) — in addition to the 2 weeks of paid leave provided for by the Emergency Paid Sick Leave Act — for certain coronavirus-related issues.

If the EFMLEA becomes law, how long will it be in effect? Unless it is later extended, the EFMLEA will expire on December 31, 2020.

Will the EFMLEA apply to all employers? No, it will only apply to employers with fewer than 500 employees. The Secretary of Labor has the authority to exclude employers with fewer than 50 employees under limited circumstances.

Will the EFMLEA apply to all employees? The EFMLEA will apply to any employee that has been employed for at least 30 days.

What are the types of events that will trigger the EFMLEA? Generally speaking, the EFMLEA will be triggered by any one of the following events:

  1. The employee is ordered to stay home by a doctor or a government official on the basis that the presence of the employee at work would jeopardize the health of others because the employee was exposed to the coronavirus or the employee is symptomatic and the employee is unable to work remotely.
  2. The employee needs to care for any of the following family members that have been ordered to stay home by a doctor or a governmental official: parent, spouse, children under 18, pregnant daughters, pregnant next of kin, grandparents, a disabled grandchild, or a disabled child (regardless of age).
  3. The employee needs to care for a child because daycare or school is closed, and the babysitter is unavailable due to the coronavirus.

Will the leave be unpaid? The first 14 days will be unpaid, but the remaining 10 weeks must be paid. Employees may elect — but cannot be forced — to utilize accrued PTO, vacation or other sick leave during the initial 14-day period. Practically speaking, the employee will be paid for the first 2 weeks under the Emergency Paid Sick Leave Act, and once those benefits cease, the EFMLEA benefits will ensure continued payment of wages beyond the first two weeks.

How much will employers need to pay employees that need to take leave under the EFMLEA? After the initial 14-day period, employers will need to pay employees an amount equal to at least two thirds their regular rate of pay.

Will employers be repaid for providing these benefits? Yes. Employers will be repaid in the form of certain dollar for dollar tax credits. The bill provides for refundable tax credits in “an amount equal to 100 percent of the qualified” FMLA leave paid by the employer for each calendar quarter. The credit can be taken against the employer’s portion of the Social Security taxes. However, there are some caps and limits. Specifically, the refund/credit is capped at $200/day per employee and $10,000 per quarter.

Will I have to hold the employee’s job open for them until they return? With some limited exceptions, yes. The regular rules under the FMLA will apply to job reinstatement.

I cannot afford to do this. What are my options, if any? Aside from taking out a loan from the Small Business Administration, at this point, the only other option would be to petition the Secretary of Labor for an exemption from the new law based on there being a substantial risk that you will go out of business if you are forced to comply with this new law.