COVID-19: New Federal Leave Requirements Enacted Affecting All Employers with less than 500 Employees

Originally posted March 19, 2020

UPDATED March 25, 2020

On March 18, 2020, President Trump signed emergency legislation providing leave benefits to eligible employees under amendments to the federal Family Medical Leave Act, and newly created paid sick leave requirements.  These laws take effect 15 days after enactment: April 2, 2020.

Amendments to the Family Medical Leave Act

The amendments to the Family Medical Leave Act (FMLA) create a new category of leave, which may be used when an employee is unable to work (or telework) due to a need to care for the employee’s son or daughter because the child’s school has closed (elementary or secondary only) or the child’s child care provider is unavailable to provide care, due to a “qualified” public health emergency.  A qualified public health emergency is one declared by a federal, state, or local authority with respect to COVID-19.

Employers with less than 500 employees are required to provide leave under this new category, which is available to all employees who have completed 30 days of employment, regardless of work location.   As for most FMLA leave categories, public health emergency leave is for up to 12 weeks.

Unlike all the other categories of FMLA leave, this one combines unpaid and paid leave, as follows:  The first 10 days of public health emergency leave are unpaid; the remaining period is paid by the employer at the rate of two-thirds of the employee’s regular rate of pay (not to exceed $200 per day and $10,000 in aggregate).  Employees may use accrued paid leave (vacation, personal, sick, etc.) to offset the unpaid first 10 days of leave, but cannot be required to do so.  Notice of the need for leave must be given as soon as practicable.

Normal FMLA reinstatement rules apply to employers with 25 or more employees.  Exceptions apply for employers with less than 25 employees.  For these smaller employers, reinstatement to the employee’s own or an equivalent position is not required if: (1) the employee’s position no longer exists due to economic conditions or changes in the operating conditions of the employer that affect employment and are caused by a public health emergency during the period of leave; (2) the employer makes reasonable efforts to restore the employee to a position that is equivalent to the position the employee held when the employee’s public health emergency leave began (meaning, equivalent benefits, pay, and other terms and conditions of employment), and (3) if the employer cannot restore the employee to an equivalent position, the employer makes reasonable efforts to contact the employee if an equivalent position becomes available, for one year after the leave ends.  Specifically, the one year “contact period” starts to run on the earlier of the date the need for public health emergency leave ended or the last day of the 12 week leave period.”

The amendment provides that an employer of an employee who is a health care provider or an emergency responder may exclude that employee from taking paid or unpaid public health emergency leave.

An employer may recover 100% of the family leave wages paid in connection with a public health emergency leave on a quarterly basis through a payroll tax credit, provided that the amount paid does not exceed $200 per day or $10,000 in aggregate.  Employers with 500 or more employees who voluntarily provide this benefit will not be eligible for the payroll tax credits. Additional tax-related provisions apply, which are beyond the scope of this alert.

A mandatory posting notice will be issued within seven days of the date of enactment.  This notice is to be posted on the premises.  Given that many employees are currently working remotely, it would be advisable to make this posting available electronically to remote workers.

This amendment authorizes the Secretary of Labor to issue regulations to exempt small businesses with fewer than 50 employees from these new requirements if they would jeopardize the “viability of the business as a going concern.”

Standard FMLA non-discrimination, rights, and remedies provisions apply.

While employers may have many questions about this new requirement, two are:

•           Whether this leave may be used only in a continuous block or intermittently.  Since intermittent use is not explicitly excluded or addressed, assume for now that leave can be taken on an intermittent basis (which would be beneficial to employers).

•           Whether an employee can supplement the unpaid portion of the paid leave (the one-third not covered by the payment, or if the employee’s regular daily pay is greater than $200).  It makes sense than an employee could do this, similar to supplementing short term disability leave benefits during leave for the employee’s own serious health condition.

The amendment will expire on December 31, 2020.

Emergency Paid Sick Leave

The new paid sick leave law, which also takes effect in 15 days, requires employers with less than 500 employees to provide full-time employees with 80 hours of paid leave and, to part time employees, a prorated amount of leave equivalent to hours scheduled to work in a two-week period.  (The law also provides a mechanism for calculating for employees who work variable schedules.)  This is in addition to leave provided under existing employer policies or by other federal, state, or local law, or collective bargaining agreements.

This leave may be used by an employee who is unable to work (or telework) due to a need for leave with respect to COVID-19 because:

1.         The employee is subject to a quarantine or isolation order by federal, state, or local government;

2.         The employee has been advised by a health care provider to self-quarantine;

3.         The employee is experiencing symptoms of COVID-19 and seeking medical diagnosis;

4.         The employee is caring for an individual who falls under category 1 or 2, above;

5.         The employee is caring for a son or daughter because their school has been closed (elementary or secondary only) or the child care provider is unavailable to provide care, due to governmental order.

6.         The employee requires leave under circumstances similar to the above.

Employees who are working from home, and can continue to work from home despite the fact, for example, that they have been placed on a 14-day quarantine by their health care provider, or their children are home because schools have been closed, are not eligible to use this leave benefit.

Payment is limited as follows:  If leave is taken for reasons 1-3, above, payment may not exceed $511 per day or $5,110 per year; if leave is taken for reasons 4-6, payment may not exceed the lesser of two-thirds of the employee’s regular rate of pay (even if paid minimum wage) or $200 per day or, in aggregate, $2,000 per year.  The cost of paid leave may be recouped through quarterly payroll tax credits, as with the FMLA amendments, in amounts not to exceed these limits.  Employers with 500 or more employees who voluntarily provide this benefit will not be eligible for the payroll tax credits.

Leave under this law does not carry over from one year to the next, and need not be paid out at termination.  Leave under this law is available for immediate use (once the law takes effect).  An employer cannot require an employee to exhaust existing accrued paid leave before using this leave. An employer may exclude an employee who is a health care provider or emergency service responder from using this leave.

Notice posting and non-discrimination/non-interference provisions apply.  An employer who fails to provide required paid leave will be considered to have violated the Fair Labor Standards Act minimum wage requirements, and will be subject to enforcement provisions under that law.

Melissa Calhoon Jones, chair of the labor and employment group, counsels companies on employment, labor, and immigration issues.  For more information about these new amendments and other employment concerns, please contact her.

This has been prepared by Tydings for informational purposes only and does not constitute legal advice.