The Families First Coronavirus Response Act is Signed Into Law

On March 18, 2020, President Trump signed into law the Families First Coronavirus Response Act (the “Act”).  Many questions remain, and we’ll be filling in the blanks in the coming weeks, but here’s what employers need to know now.    

Which employers are covered?

The Act applies to employers with 500 or less employees.   Employers with 50 or less employees will be able to apply for an exemption from the Act on grounds that compliance would pose a threat to the viability of the business.

When does the Act take effect, and how long does it last?

The Act goes into effect on April 2, 2020, and will remain in effect at least through the end of the calendar year.

What does the Act provide with respect to leave and pay?

On this front, the Act does two things: (1) It expands the scope of the Family and Medical Leave Act (FMLA); and (2) It provides for mandatory paid sick leave for certain COVID-19 related absences.   The two are discussed in turn, below.

How does the Act affect the FMLA?

The Act creates a new basis for protected FMLA leave – leave by an employee needing to stay home to care for a child whose school or care facility is closed because of the COVID-19 emergency.  

Unlike other types of FMLA leave, employees are eligible for this type of leave if they have worked with the employer for at least 30 days (as opposed to the usual 1 year).  Employer coverage is also different, as all employers with less than 500 employees are covered.  This is the first time employers with less than 50 employees have ever had to take heed of the FMLA.

Eligible employees are entitled to up to 12 weeks of leave to care for their children and are generally entitled to reinstatement to their same position upon their return.  FMLA leave has always been unpaid, but this changes things.  Leave under this new provision is unpaid for the first 10 days, but thereafter the employee must be paid 2/3 of his or her regular rate of pay, capped at $200/day or $10,000 total.*  With regard to the first 10 days of leave, employees can use other available benefits to provide pay during this period, including accrued vacation, PTO or sick leave (including the new paid sick leave as described below.)

In addition to the FMLA expansion as discussed above, what paid leave does the Act provide for?

Starting April 2, full-time employees are entitled to up to 80 hours of paid leave for certain COVID-19 related reasons.  Part-time employees are entitled to paid leave equal to the average number of hours they would typically work in a 2-week period.    All employees are eligible for this paid leave, no matter how long they’ve worked for the employer.  Healthcare providers and emergency responders are excluded from this new paid leave requirement if they so elect.

Employees are eligible for paid leave if they are unable to work for one of the following reasons:

  1. The employee is subject to a federal, state or local quarantine or isolation order related to COVID-19.
  2. The employee has been advised by a health care provider to self-quarantine due to concerns related to COVID-19.
  3. The employee is experiencing symptoms of COVID-19 and seeking medical diagnosis.
  4. The employee is caring for an individual who is subject to the conditions described in paragraph numbers 1 or 2 above.
  5. The employee is caring for a son or daughter whose school or care provider is closed.
  6. The employee is experiencing other substantially similar conditions as described by the Secretary of Health and Human Services

If the employee’s leave is for his or her own condition, then the paid leave is at 100% of the employee’s regular pay, capped at $511/day or $5,110 in aggregate.  If, however, the employee requires leave in order to care for someone else, then the employee’s paid leave is at 2/3 of his or her regular rate, capped at $200/day or $2,000 aggregate.

For those employees who work part-time or do not have a regular schedule, this new sick leave pay is based on the average number of hours worked the six months prior to taking the leave. The pay for those employees who have worked less than six months is the average number of hours the employee is normally scheduled to work in two weeks. 

Do employers get tax credits for paid FMLA or sick leave?

Yes.  Employers are entitled to a credit in 2020 equal to 100% of the wages paid as paid leave pursuant to the Act.  The credit will be taken against employers’ Social Security taxes.  So, while employers must initially bear the cost of unpaid leave, it’s ultimately a government expense. 

*The CARES Act, after being passed by the Senate on March 25, 2020, is set to remove the $200/day and $10,000/aggregate limit on FMLA partially-paid leave.  Though the legislation has not been signed into law, we anticipate it to pass in the coming days and will have another update once it is signed by the President.