Updated April 3, 2020
Everyday more and more information continues to come out about the federal government’s response to the COVID-19 pandemic. On March 24, 2020, the U.S. Department of Labor (“DOL”) issued guidance on the new federal Families First Coronavirus Response Act (“COVID-19 Act”). As a result, we have updated the legal alert that was sent to our clients and friends on March 20, 2020, to reflect the updated guidance. We expect that more guidance will be issued by the DOL in the near future, and we will provide additional updates as necessary.
So that we don’t inundate your inbox with frequent updates, we plan to update the online version of this article with significant changes and, at the end of the article, links to significant new guidance documents issued by the DOL, the U.S. Department of Treasury (“Treasury”), and the IRS.
For other legal updates regarding the coronavirus, be sure to visit our COVID-19 Nonprofit Resources.
For an excellent resource on a wide variety of COVID-related HR issues, we recommend the comprehensive FAQs (https://www.fisherphillips.com/resources-alerts-comprehensive-faqs-for-employers-on-the-covid) prepared by the Fisher Phillips law firm. These FAQs are being regularly updated. In addition, Fisher Phillips issued a legal alert specifically on the DOL guidance. You can find that here: https://www.fisherphillips.com/resources-alerts-labor-department-offers-guidance-on-families-first.
For New Jersey employers, note that on March 25, 2020, the Earned/Paid Sick Leave Act, the Family Leave Act, and temporary disability insurance (“TDI”) and family leave insurance benefit laws were amended to provide that (1) the benefits provided by these laws apply when employees or their family members have been directed to quarantine or stay in isolation and (2) the once-week waiting period for TDI benefits is waived with respect to public health emergencies.
These changes to New Jersey law are summarized by the Jackson Lewis law firm at https://www.jacksonlewis.com/publication/new-jersey-eliminates-7-day-wait-period-temporary-disability-benefits-expands-leave-rights. We expect the New Jersey Department of Labor and Workforce Development will update its resource pages relating to the coronavirus to reflect these changes.
On Wednesday, March 18, the COVID-19 Act became law. It goes into effect on April 1, 2020, and will expire on December 31, 2020. Please note that it was believed that the law would go into effect on April 2, 2020. The DOL guidance clarifies that it will instead go into effect on April 1, 2020.
In broad terms, the COVID-19 Response Act provides eligible employees leaves of absence and/or paid sick leave with respect to the coronavirus. These new provisions apply to most employers that employ fewer than 500 employees. This law does not apply to employers who employ 500 or more employees.
The DOL has issued guidance on how to calculate whether or not an employer has 500 employees: https://www.dol.gov/agencies/whd/pandemic/ffcra-questions.
Federal tax credits will be available for employers who make the payments to employees required by this new law. Although employers can pay more than the dollar limits discussed below, the credits will be limited to the dollar caps set forth below. Nonprofits should consult with their accountants and payroll providers.
The DOL has provided some guidance on the tax credits: https://www.dol.gov/agencies/whd/pandemic/ffcra-employer-paid-leave.
The Treasury has also issued some information on the tax credits: https://www.irs.gov/newsroom/treasury-irs-and-labor-announce-plan-to-implement-coronavirus-related-paid-leave-for-workers-and-tax-credits-for-small-and-midsize-businesses-to-swiftly-recover-the-cost-of-providing-coronavirus.
We expect that Treasury will issue additional guidance shortly.
PROVIDES PAID SICK LEAVE FOR COVID-19 RELATED ILLNESS (“PSL”)
- This new provision applies to all employees, without regard to how long they have been employed.
- The law provides for 80 hours of paid sick time for full time employees and prorated paid sick time based on an average of part time employees’ hours worked in the six months prior to taking leave for the employer for the following reasons:
- the employee is subject to a federal, state, or local quarantine or isolation order related to COVID-19;
- the employee has been advised by a health care provider to self-quarantine due to concerns related to COVID-19;
- the employee is experiencing symptoms of COVID-19 and seeking a medical diagnosis;
- the employee is caring for an individual who is subject to an order as described (1) above or has been advised as described in (2) above;
- the employee is caring for a son or daughter of such employee if the school or place of care of the son or daughter has been closed, or the child care provider of such son or daughter is unavailable, due to COVID-19 precautions; or
- the 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.
- The employee must be paid 100% of their regular rate of pay or the applicable minimum wage, whichever is greater. However, employers are only required to pay employees two-thirds of their regular rate of pay if they are using leave for reasons (4), (5), or (6) above.
The amount of payment for sick leave for reasons (1), (2), or (3) above can be capped at $511 per day and $5,110 in the aggregate. If an employee is using leave to care for reasons (4), (5), or (6) above, then the amount of sick leave pay can be capped at $200 per day and $2,000 in the aggregate.
- Employees cannot be retaliated against for the use this leave.
- The Secretary of Labor is authorized to issue regulations to:
- Exclude certain health-care providers and emergency responders from receiving this new PSL benefit.
- Exempt small businesses with fewer than 50 employees from providing PSL for the fifth reason set forth above when providing such PSL would jeopardize the viability of the business as a going concern. DOL briefly addressed the criteria for a small business exemption in its FAQs (https://www.dol.gov/agencies/whd/pandemic/ffcra-questions). More guidance is expected.
- In addition, employers of employees who are health care providers (as that term is defined in the FMLA) or emergency responders may elect to exclude these employees from receiving this new PSL benefit.
ESTABLISHES CHANGES TO THE FAMILY AND MEDICAL LEAVE ACT (“FMLA”)
- The changes to FMLA establish a new category of leave under the FMLA: a leave for “a qualifying need related to a public health emergency related to COVID-19,” defined as when an employee is unable to work (or telework) due to a need for leave to care for the employee’s son or daughter who is under 18 years of age if the child’s school or place of care has been closed, or the child care provider of the child is unavailable, due to a public health emergency.
- Employees only need to have been employed with the employer for 30 calendar days before they become eligible for a leave related to a public health emergency, instead of the usual FMLA requirements (that require an employee to have worked for the employer for at least 1 year, worked for 1250 hours in the year before FMLA leave is taken, and worked at a location where at least 50 employees are employed at the location or within 75 miles of the location).
The DOL provided the following example: if an employee wants to take leave on April 1, 2020, the employee would need to have been on the employer’s payroll as of March 2, 2020.
Note: On March 25, 2020, the U.S. Senate approved an amendment to COVID-19 Act that adds a new twist on the 30-day rule for rehired employees. It is presently anticipated that the House or Representatives will agree to this change. A rehired employee will be deemed to have met the 30-day requirement if the employee was laid off on or after March 1, 2020, and had worked for the same employer for not less than 30 of the last 60 calendar days prior to the employee’s layoff.
- The first 10 days of the leave are unpaid, though an employee may elect to substitute any accrued vacation leave, personal leave, or medical or sick leave for unpaid leave.
- After the initial 10 days of leave, the employer must pay the employee for up to 10 weeks of leave at a rate no less than two-thirds of the employee’s regular rate of pay. The amount of paid leave can be capped at $200 per day and $10,000 in the aggregate.
- Employees of employers with 25 or more employees are subject to the same job protections regularly provided in the FMLA, thus, generally speaking, an employer will need to return the employee to the same job or a substantially similar job upon return from leave. However, employers with fewer than 25 employees are excluded from this requirement if the employee’s job no longer exists due to an economic down turn caused by a public health emergency. However, the employer would be required to try to return the employee to work if circumstances improved during a defined one-year period.
More information about the emergency provision of the FMLA issued in the DOL’s guidance can be found here: https://www.dol.gov/agencies/whd/pandemic/ffcra-questions and here: https://www.dol.gov/agencies/whd/pandemic/ffcra-employer-paid-leave.
- The Secretary of Labor is authorized to issue regulations to:
- Exclude certain health-care providers and emergency responders from receiving these new FMLA benefits.
- Exempt small businesses with fewer than 50 employees from these new FMLA requirements when the imposition of such requirements would jeopardize the viability of the business as a going concern.
- In addition, employers of employees who are health care providers (as that term is defined in the FMLA) or emergency responders may elect to exclude these employees from receiving these new FMLA benefits.
REQUIRES POSTING AND POSSIBLY DISTRIBUTION OF NEW NOTICE TO EMPLOYEES
The DOL has issued a new “notice” that all employers must post in their workplaces. If employees are working remotely, then an employer must also either (1) email or direct mail the notice to employees or, if the employer has an online portal for employees, (2) post this notice on the portal. If some employees do not have access to the portal, then the e-mail/direct mail method must be used.
The DOL has issued guidance on the posting and distribution requirement: https://www.dol.gov/agencies/whd/pandemic/ffcra-poster-questions.
OTHER DOL, TREASURY, AND IRS RESOURCES
- Department of Labor
- Department of the Treasury and IRS
- Coronavirus Tax Relief resource page: https://www.irs.gov/coronavirus – link added 3/26/20
If you have further questions, please contact your local Pro Bono Partnership office.