A lot has happened since the FFCRA and CARES Act passed. You have likely had to deliver hard news to your employees and are worried about what the next few weeks will hold. Here are just a few things that you should be keeping your eye on as we continue into this uncharted territory:
Familes First Coronavirus Response Act
In early March, President Trump signed into law the Families First Coronavirus Response Act (“FFCRA”) to help employees in areas highly affected by the Coronavirus. The two biggest implications for employers were the Emergency Family and Medical Leave Act (“EFMLA”) and the Emergency Paid Sick Leave Act (“EPSLA”). It is important to remember that employers are entitled to a credit in 2020 equal to 100% of the wages paid as paid leave pursuant to the FFCRA. Both of these laws are now in effect, and here is what that means for you:
- Under the EPSLA, an employer is required to provide paid sick leave to an employee if the employee is unable to work or telework due to a need for leave because:
- 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 in subparagraph (1) or has been advised as described in paragraph (2).
- 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.
- 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.
- A full-time employee taking paid leave under the EPSLA is entitled to 80 hours of paid leave, and a part-time employee taking paid leave under the EPSLA is entitled to their two-week equivalent. An employer may not require its employee to take other sick leave before EPSLA leave. Perhaps most notably, employees who are out of work due to Governor Cooper’s Stay at Home Order of March 27, 2020, are entitled to two weeks of paid leave beginning on April 1.
- The EFMLA creates a new basis for FMLA leave and allows an employee to take up to 12 weeks of leave if the employee needs to stay home to care for a child whose school or care facility is closed because of the coronavirus. Under this new expansion, employees are entitled to leave if they have worked for an employer for at least 30-days and the employer employs less than 500 employees.
- Leave under the EFMLA’s new provision is unpaid for the first ten days (which is where EPSLA leave can be used if appropriate) and then is paid at 2/3 of the employee’s regular rate of pay.
- When the CARES Act was passed in late-March, it removed the short-lived $200/day and $10,000/aggregate limit that initially applied to paid leave under the EFMLA.
Unemployment in North Carolina
If you have had to furlough, lay-off, or cut hours for your employees, then you have likely heard sentiments of frustration regarding the cumbersome unemployment application process. Out of all fifty states in the Union, North Carolina ranks dead last (between January and March) on getting timely payments to its applicants. The United States Department of Labor created an interactive website to compare metrics on national unemployment data.
While North Carolinians continue to wait for unemployment benefits, the numbers have remained the same, and the requirements for eligibility continue to be relaxed. Under the CARES Act, the federal government is going to pay an additional $600 per week on top of North Carolina’s $350 weekly benefit through July 31, 2020. The legislation also creates a temporary “pandemic unemployment assistance” program for independent contractors, the self-employed, and others not otherwise eligible for unemployment insurance.
The CARES Act has also allocated additional funds to the States that have “partial unemployment” systems to assist workers whose hours have been reduced. These programs are called “short-time” programs, and North Carolina is included. The website, www.des.nc.gov, indicates that “[i]f your hours are reduced due to a business slowdown or a lack of demand as a result of COVID-19, you may be able to receive unemployment benefits. In order to determine eligibility, you must first apply for unemployment. If you’re temporarily out of work or working reduced hours due to COVID-19, select one of those two separation reasons when filing your claim. You will note that your weekly pay has decreased, and you would be eligible for short-time benefits.” The House of Representatives is currently working through the Take Responsibility for Workers and Families Act which would bolster short-time unemployment in the future, but not much has happened on that yet.
Small Business Loans
As most of you probably know by now, lenders have begun accepting applications for the $349 billion in forgivable loans for small businesses (and other qualified entities) of 500 or fewer employees. Only funds used for payroll costs, mortgage interest, rent, and utilities over an eight-week period are eligible for forgiveness. According to new guidance issued from the Treasury, due “to likely high subscription [to the Payroll Protection Program,] it is anticipated that not more than 25% of the forgiven amount may be for non-payroll costs.” For those entities relying on this forgiveness, be vigilant to spend these loans carefully. Though nothing has been set in stone, this guidance at least hints that businesses should put at least 75% of the loan toward actual payroll costs in order to maintain the best chance of 100% forgiveness.
On April 7, 2020, Secretary of the Treasury Steve Mnuchin formally requested an additional $250 billion for the Payroll Protection Program. In this request, Secretary Mnuchin noted that he had already spoken with President Trump, Speaker Pelosi, and Leader McConnell.
On April 9, 2020, Leader McConnell took to the Senate floor and noted that $100 billion of the $349 billion had already been committed. McConnell requested an increase in funding, without changing any of the policy language in the CARES Act, to $600 billion for small business. Democratic leadership insisted on increased funding for emergency supplies, coronavirus testing, and other emergency-related services. As of the date of this publication, the parties were at a stalemate and are scheduled to return on Monday, April 13, 2020, at 10:00 A.M.
We will continue to keep you updated as we receive more information.