On March 27, 2020, the President signed into law a massive two trillion dollar stimulus bill addressing a wide range of challenges to our economy caused by the coronavirus (“COVID-19”) pandemic.  The legislation, entitled The Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”), supplements and modifies prior bills, including the Families First Coronavirus Response Act (“FFCRA”), which we previously blogged about here, here, here, and here.   While the CARES Act is lengthy (800+ pages) and complex, this post highlights in digestible portions a few of the significant provisions that are likely of the most interest to employers.                                    

Modifications to the FFCRA/Immediate Tax Credits for Leave

  • The CARES Act modifies the family and emergency sick leave provisions in the FFCRA, which allow businesses with 500 or fewer employees to claim a tax credit when they provide certain leave to employees impacted by COVID-19. Under the FFCRA, employers are required to bear the costs of paid family and sick leave and await reimbursement in the form of a tax credit from the IRS.  To alleviate cash flow concerns, the CARES Act provides employers an advance tax credit immediately, rather than recovering the money later.
  • Employees who were laid off on March 1, 2020 or later, and subsequently rehired by the same employer, are eligible for emergency paid FMLA leave, so long as the employee was employed for at least 30 of the last 60 calendar days prior to the layoff.

Paycheck Protection Program

  • Businesses with 500 or less employees (or the level set by the Small Business Association for the employer’s industry) may qualify for the Paycheck Protection Program (“PPP”), which provides for forgivable loans of up to 250% of an employer’s average monthly payroll costs (excluding prorated amounts for individuals with compensation greater than $100,000), with a cap of $10 million.  The loans may be used to cover payroll costs, group health benefits, salaries, rent, mortgage interest, utilities and other qualifying expenses.  Standard fees and personal-guarantee requirements are waived and replaced by a certification requirement.  The maximum term of the loan is ten years with an interest rate of four percent or less.  Self-employed, sole proprietors, and freelance workers are eligible to apply.
  • Covered loans under the Paycheck Protection Program are eligible for debt forgiveness during the covered period (the eight week period after the origination of the covered loan) if the employer maintains their workforce and salaries/wages between the date of the loan origination and June 30, 2020, as compared to one of two previous reference periods, though the Treasury Department has advised that at least 75% of the forgiven amount must be used for payroll expenses. If the business reduces its workforce or worker salaries, the loan amount forgiven will be reduced.  Companies that re-hire previously laid-off employees and/or restore previously reduced wages will not be penalized in loan forgiveness calculations so long as they bring these levels back to February 14, 2020 levels by June 30, 2020.  Lender applications for the program are expected to be available starting April 3, 2020.

Employee Retention Tax Credit/Payroll Taxes

  • The CARES Act provides a tax credit, the Employee Retention Credit, for employers who have had their businesses closed or partially-closed because a government order related to the virus or a 50% decline in revenue as compared to the same period in 2019.  The credits reach as high as 50% of qualified wages paid to an employee between March 13, 2020 and December 31, 2020 (capped at $5,000 per employee).  The credits apply to employment taxes (FICA, federal unemployment taxes, and Social Security taxes). They can be taken with other CARES Act benefits, like PPP and the FFCRA credits, but the qualified wages claimed for the retention credit cannot be FFCRA payments or be counted as “payroll costs” for purposes of PPP forgiveness.  Companies with 100 employees or fewer may be eligible for a credit for all qualifying wages, where larger companies can receive credit only for wages paid to employees not working because of a government order or the revenue decline referenced above.
  • Employers may also defer or postpone the employer share of Social Security payroll taxes owed from the date of enactment of the CARES Act through the end of 2020. These deferred payroll taxes must be paid in two installments: 50% due by December 31, 2021, and the remaining 50% due by December 31, 2022.  The deferral can be exercised by any employer, except those that obtain a PPP loan, without any requirement to show impact from COVID-19 or government shutdown.

Unemployment Benefits

  • The CARES Act expands unemployment benefits, adding a maximum of $600 per week to a State’s unemployment benefits for those who qualify (essentially those who are unemployed—even partially—due to COVID-19 and its effects).  Unemployment benefits are extended an additional 13 weeks, from 26 to 39 weeks (ending December 31, 2020) and expanded to encompass independent contractors, self-employed individuals, and individuals with limited work histories.  It permits states to waive the typical seven-day waiting period for benefits, which many states have already done.
  • Unemployment benefits are also available to those who have not been laid off, but could not start a new job, or continue their work, because of COVID-19 (g. their business is closed, they were diagnosed, awaiting diagnosis, caring for a family member who was diagnosed, or they cannot travel to their workplace). Furloughed workers are eligible, as well as individuals whose head of household died from COVID-19.  Individuals with the ability to telework or who are receiving other COVID-19-related benefits (such as paid leave) are ineligible.
  • It also includes funding of “short-time compensation” (i.e. Work Share) programs through December 31, 2020. Such programs, which already existed in many states, allow employers to reduce employee hours by 10 to 60% instead of laying off workers.  Employees with reduced hours can receive prorated unemployment benefits.  Employers pay half the prorated benefits to the state unemployment insurance fund and allow employees to maintain their benefits.

The provisions described above are intended to incentivize employers to avoid furloughs and mass lay-offs where possible, and to assist the unemployed or underemployed during this crisis.  Note that many of these provisions have exceptions, caveats, and additional requirements, and further guidance and regulations will certainly be forthcoming.  The Hogan Lovells Employment Team is staying up-to-date on the latest changes and information regarding the CARES Act (and all employment-related aspects of the COVID-19 response) and we stand ready to assist and advise you as we navigate these uncharted waters together.  Please contact one of the authors of this Alert or other Hogan Lovells employment attorneys with whom you regularly work for additional information related to the CARES Act.

Following two rounds of guidance on the paid leave provisions of the Families First Coronavirus Response Act (“FFCRA” or the “Act”) last week, the Department of Labor (“DOL” or the “Department”) released additional guidance this weekend addressing issues of critical importance to many covered employers:  the scope of the Act’s health care provider and emergency responder exemptions, and the scope of the small business exemption for private employers with fewer than 50 employees, along with answering other questions.  DOL’s most recent guidance is summarized below and can be found here.  DOL has confirmed it will be issuing regulations to implement the FFCRA.

The Health Care Provider and Emergency Responder Exemptions

The FFCRA authorizes employers to exempt employees who are health care providers and emergency responders from the Act’s paid sick leave and paid expanded Family and Medical Leave Act (“FMLA”) requirements.   DOL has defined “health care provider” and “emergency responder” broadly for purposes of these exemptions.

Under the health care provider exemption, employers may exempt:

  • “anyone employed at any doctor’s office, hospital, health care center, clinic, post-secondary educational institution offering health care instruction, medical school, local health department or agency, nursing facility, retirement facility, nursing home, home health care provider, any facility that performs laboratory or medical testing, pharmacy, or any similar institution, employer, or entity,” including “any permanent or temporary institution, facility, location, or site where medical services are provided that are similar to such institutions”;
  • “any individual employed by an entity that contracts with any of the above institutions, employers, or entities . . . to provide services or to maintain the operation of the facility”;
  • “anyone employed by any entity that provides medical services, produces medical products, or is otherwise involved in the making of COVID-19 related medical equipment, tests, drugs, vaccines, diagnostic vehicles, or treatments”; and
  • “any individual that the highest official of a state or territory, including the District of Columbia, determines is a health care provider necessary for that state’s or territory’s or the District of Columbia’s response to COVID-19.”

Under the emergency responder exemption, employers may exempt:

  • “an employee who is necessary for the provision of transport, care, health care, comfort, and nutrition of . . . patients, or whose services are otherwise needed to limit the spread of COVID-19,” including but not limited to “military or national guard, law enforcement officers, correctional institution personnel, fire fighters, emergency medical services personnel, physicians, nurses, public health personnel, emergency medical technicians, paramedics, emergency management personnel, 911 operators, public works personnel, and persons with skills or training in operating specialized equipment or other skills needed to provide aid in a declared emergency as well as individuals who work for such facilities employing these individuals and whose work is necessary to maintain the operation of the facility”; and
  • “any individual that the highest official of a state or territory, including the District of Columbia, determines is an emergency responder necessary for that state’s or territory’s or the District of Columbia’s response to COVID-19.”

The breadth of these exemptions is  underscored by the wide range of entities and services listed, and by the Department’s reference to entities providing “similar” medical  services in the definition of health care provider; inclusion of “other skills needed to provide aid in a declared emergency” in the definition of emergency responder; and delegation of authority to Governors, the Mayor of D.C., and the highest officials of U.S. territories to recognize additional exemptions.

The Small Business Exemption

The FFCRA authorizes DOL to exempt small businesses—defined as private employers with fewer than 50 employees—from the obligation to provide certain paid sick leave and paid expanded FMLA leave when granting such leave “would jeopardize the viability of the business as a going concern.”  The exemption applies only to leave requested because an employee needs to care for a son or daughter whose school is closed or whose child care provider is unavailable, and not for any of the other qualifying COVID-19 related needs under the Act.

DOL’s latest guidance states that small businesses can claim the small business exemption when an authorized official of the business has determined that any one of three conditions is met:

  • provision of the leave “would result in the small business’s expenses and financial obligations exceeding available business revenues and cause the small business to cease operating at a minimal capacity”;
  • “absence of the employee or employees requesting leave would entail a substantial risk to the financial health or operational capabilities of the small business because of their specialized skills, knowledge of the business, or responsibilities”; or
  • “[t]here are not sufficient workers who are able, willing, qualified, and who will be available at the time and place needed, to perform the labor or services provided by the employee or employees requesting” leave, “and these labor or services are needed for the small business to operate at a minimal capacity.”

DOL’s guidance says that small businesses should document why they meet the criteria, but also says that employers should not submit materials to DOL when claiming the exemption.  Additional details may be provided in regulations that the Department is expected to release in April.

Other Matters

DOL’s latest round of guidance addresses several other matters, including

  • job restoration rights (employees are generally entitled to be restored to the same or an equivalent position upon return from both paid sick leave and paid expanded FMLA leave, subject to certain exceptions; however, if an employee would have been laid off or suffered another adverse employment action for a legitimate reason regardless of taking leave, it is not unlawful for the employer to proceed with that action notwithstanding that the employee is on leave under the FFCRA);
  • relationship of paid expanded FMLA leave to other types of FMLA leave (employees are entitled to a maximum of 12 weeks of FMLA leave in a 12-month period for all reasons covered by the statute, including paid expanded FMLA leave; thus, employees previously covered by the FMLA who have recently used FMLA for other reasons will have reduced their FMLA balance for purposes of paid expanded FMLA leave, and employees who take paid expanded FMLA leave will reduce their FMLA balance for purposes of other types of FMLA leave); and
  • coverage of public sector employees (generally covered, subject to the health care provider and emergency responder exemptions, and exceptions for certain federal employees).

For additional information about the FFCRA and DOL’s previously issued guidance, see our initial post about the Act and further posts here, here, and here.  For more information about the FFCRA, employment issues related to COVID-19, or other employment law matters, please contact the authors of this post or the Hogan Lovells lawyer with whom you work.

 

 

As the April 1 effective date for the Families First Coronavirus Response Act (“FFCRA” or the “Act”) paid leave requirements rapidly nears, the Department of Labor (“DOL”) continues to update its compliance guidance for covered employers.  As a reminder, the Act’s leave provisions—which mandate paid sick leave and paid expanded Family and Medical Leave Act (“FMLA”) leave for qualifying needs related to COVID-19—apply to private employers with fewer than 500 employees and to many public sector employers, regardless of size.  More information about the FFCRA is available in our initial post about the Act and in our subsequent posts about DOL’s initial guidance (here) and about the tax credit available to employers who provide FFCRA leave to their employees (here).

Covered employers should take note of two recent developments:

Corrected Poster

First, DOL has issued a corrected poster, which covered private and non-federal public sector employers can use to satisfy the Act’s notice requirements.  DOL has updated the poster to correct an error regarding the amount of pay that will be available to employees taking FFCRA leave due to school closures or the unavailability of a childcare provider.  Employers who downloaded the prior version of the poster should download the updated version, available here, or on DOL’s website, which also includes a poster for federal employers.

As explained in our earlier post, each covered employer must post a notice of FFCRA requirements “in a conspicuous place on its premises,” and employers “may satisfy this requirement by emailing or direct mailing this notice to employees, or posting this notice on an employee information internal or external website.”  Where employees are working remotely, we believe employers should follow one of the stated alternative methods in addition to posting on the premises.

Expanded Q&As

Second, DOL expanded its FFCRA Q&As yesterday to address several important questions about FFCRA leave, including:

  • whether employees on furlough or not working due to office closure are eligible for FFCRA leave (the answer is no, regardless of whether the furlough or closure occurs before, on, or after April 1);
  • when an employee is “able” or “unable” to telework (“able” to telework means the employer has work for the employee to do and permits telework, and the employee can do the work remotely, including when the employer and employee agree that the work can be done outside normal hours; “unable” to telework means the employer has work for the employee and permits telework, but the employee cannot perform the assigned work or work the normal or otherwise agreed upon hours remotely due to a qualifying COVID-19 related reason);
  • whether FFCRA leave may be taken intermittently (yes, in some circumstances, if the employer and employee agree to the schedule); and
  • whether employees can supplement FFCRA leave with other employer-provided paid leave (yes, but only if the employee elects to do so and the employer agrees).

The Q&As also address several other topics, such as the documentation that employers must require when an employee requests FFCRA leave; the interaction of FFCRA leave and unemployment insurance benefits; whether overtime hours are included in calculating leave; and how employers that are part of a multiemployer collective-bargaining agreement can comply with the FFCRA.

DOL may provide additional informal guidance in the upcoming days, and DOL regulations are expected in April.    Stay tuned to both the DOL website and the Hogan Lovells blog, All in a Day’s Work, for further developments, and consult an author of this post or another Hogan Lovells attorney with whom you work for assistance modifying your policies and procedures to comply with the FFCRA.

As discussed in prior blog posts, the Families First Coronavirus Response Act (“FFCRA” or the “Act”) will require covered employers to provide certain levels of paid emergency sick leave and paid Family and Medical Leave Act (“FMLA”) leave to employees for specified coronavirus-related reasons.  In general, as explained in those posts, the minimum number of hours of the paid sick leave that employers must provide is 80 hours for full time employees, with pro-rated amounts for part time employees based on the average number of hours they work over a two week period.  Also, the minimum amount that an employer must pay an employee during that period generally is the lesser of the employee’s regular pay and $511 per day (up to $5,110 in the aggregate), but is the lesser of two-thirds of the employee’s regular pay and $200 per day (up to $2,000 in the aggregate) for an employee who uses the leave to care for a sick family member or a child unable to attend school.  In general, as explained in those posts as well, the minimum amount of the paid FMLA leave that an employer must provide is the lesser of two-thirds of the employee’s regular pay and $200 per day (up to $10,000 in the aggregate).

The cost of the required paid emergency sick leave and paid FMLA leave will be refunded to private employers through payroll tax credits.  Specifically, under the Act, an eligible employer will receive a payroll tax credit equal to 100 percent of the “qualified sick leave” wages and “qualified family leave” wages paid by the employer for each calendar quarter.  The tax credit is allowed against the employer portion of Social Security and Railroad Retirement Tier 1 taxes.  In general, “qualified sick leave” is the same as the minimum amount of paid emergency sick leave required by the Act.  Thus, for each employee who receives the leave it generally is the lesser of the employee’s regular pay and $511 per day (up to $5,110 in the aggregate), but is the lesser of two-thirds of the employee’s regular pay and $200 per day (up to $2,000 in the aggregate) for employees who use paid sick time to care for a sick family member or a child unable to attend school, and in both cases it is limited to the wages paid for no more than 10 days (typically equivalent to the 80 hours or two weeks required for the leave itself).  Similarly, in general, “qualified family leave” is the same as the minimum amount of paid FMLA leave required by the Act.  Thus, for each employee who receives the leave it generally is the lesser of two-thirds of the employee’s regular pay and $200 per day (up to $10,000 in the aggregate).  Although employers will not necessarily be required to provide health insurance to employees on leave, if they do, the value of the leave will be included in the wages on which the credits are based even though, being nontaxable, they generally would not be included in wages for Social Security or Railroad Retirement tax purposes.

The Act specifies that the credits are refundable, meaning that an employer that has insufficient Social Security or Railroad Retirement taxes still will be able to benefit from them.  Furthermore, IR 2020-57, issued on March 20th 2020, announces that guidance expected to be issued soon will permit eligible employers who pay qualified sick or qualified family leave simply to retain an amount of payroll taxes equal to the amount of qualifying sick and child care leave that they paid, rather than deposit them with the IRS and receive a refund or credit later.  It also announced that procedures will be established soon for a prompt refund for any qualified sick or qualified family leave in excess of any payroll taxes retained.

Yesterday, March 24, 2020, the Wage and Hour Division of the Department of Labor (“DOL”) published a news release and three guidance documents on the Families First Coronavirus Response Act (“FFCRA” or the “Act”).  As we explained in our recent post, the FFCRA will require covered employers to provide certain levels of paid emergency sick leave and paid Family and Medical Leave Act (“FMLA”) leave to employees for specified coronavirus-related reasons, the  cost of which will be refunded to private employers through tax credits.  As DOL recognized in a Field Assistance Bulletin also issued yesterday, the tax credits are unavailable to public sector employers.

Today, March 25, DOL published posters, which covered employers can use to satisfy the FFCRA’s notice requirement.  The  FFCRA Employee Rights Poster is for private sector employers and certain public employers; the FFCRA Federal Employee Rights Poster is for federal employers.  DOL also announced today that it will be conducting an “online dialogue” about the FFCRA through Sunday, March 29, which will provide “an opportunity for employers and workers to play a key role in shaping the development of the Department of Labor’s compliance assistance materials and outreach strategies related to implementation of FFCRA.”

The three guidance documents released yesterday —a Fact Sheet for Employers, a Fact Sheet for Employees, and a Questions and Answers document (collectively, the “Guidance”)—answer some questions about the FFCRA but leave other important questions unanswered.  According to DOL, additional fact sheets and FAQs will be released soon, and regulations (originally expected this week) are now expected sometime in April.

Key issues addressed in yesterday’s Guidance documents include:

The Act’s Effective Date.  The FFCRA provides that it will become effective “not later than 15 days” from the Act’s March 18 enactment, meaning April 2.  The Guidance states that the leave provisions of the FFCRA will be effective April 1.

Notice Requirement.  The Guidance states that “[e]ach covered employer must post in a conspicuous place on its premises a notice of FFCRA requirements.”  DOL’s model  FFCRA Employee Rights Poster (for private sector employers and certain public employers) and FFCRA Federal Employee Rights Poster (for federal employers) can be used to meet this requirement.  A Notice FAQs released yesterday also states that employers may satisfy the requirement “by emailing or direct mailing this notice to employees, or posting this notice on an employee information internal or external website.”              

Counting Employees to Determine Coverage.      Unlike public sector employers covered by the FFCRA’s leave provisions, private employers are required to provide the new leave only if they have fewer than 500 employees.  The Guidance states that in counting employees to determine coverage, employers should consider all full- and part-time employees in the United States, its possessions, and territories, including employees on leave; temporary employees “jointly employed” with another employer (even if the employee is not on the employer’s own payroll); and “day laborers” (who must be counted both by the temporary agency that supplies them and the client firm “if there is a continuing employment relationship”).  Independent contractors are not counted.  According to the Guidance, related entities should count all of their employees together if they meet the FLSA joint employer test, for purposes of determining coverage under both the FFCRA’s sick leave and FMLA leave provisions.  Additionally, entities that meet the FMLA integrated employer test (set forth in 29 C.F.R.
§ 825.104(c)(2)) should count their combined employees for purposes of determining coverage under the FMLA leave provision (but not the sick leave provision).

Pre-Act Leave and Retroactivity.  The Guidance makes clear that covered employers who have already provided paid leave to employees prior to April 1 (including for coronavirus-related reasons) are not exempt from the Act’s coverage.  These employers still must provide all of the paid leave required under the Act.  Also, the Guidance states that the Act’s leave requirements are not retroactive.

Small Business Exemption.  The FFCRA authorizes the Secretary of Labor to exempt small businesses with fewer than 50 employees from the Act’s requirements for leave related to school closures or the unavailability of a child care provider when the requirements “would jeopardize the viability of the business as a going concern.”  The Guidance states that criteria for applying this exemption will be announced in forthcoming regulations.  For now, DOL recommends that small employers should document why their businesses would meet the criteria but should not send any supporting materials to DOL.

30-Day “Good Faith” Grace Period.  In the Guidance and the above-mentioned Field Assistance Bulletin, DOL states that it will observe a “temporary period of non-enforcement” of the FFCRA sick leave and FMLA leave requirements for the first 30 days after the Act takes effect (that is, from March 18 through April 17), but only for employers who act “reasonably and in good faith” to comply, including by remedying any violations and making employees whole as soon as practicable.

Tax Credits.  The Guidance states that for private employers, “every dollar” of FFCRA leave, including the cost of employees’ health insurance premiums during leave, “will be 100% covered by a dollar-for-dollar refundable tax credit available to the employer,” and directs employers to the Department of Treasury website for more details.  Note that the FFCRA provides that the tax credits are unavailable to “the Government of the United States, the government of any State or political subdivision thereof, or any agency or instrumentality of any of the foregoing.”

Other Matters. The Guidance also addresses several practical matters, such as how to count an employee’s hours and how to determine an employee’s “regular rate of pay” for purposes of calculating the amount of paid leave owed; and how the FFCRA’s sick leave and FMLA leave requirements interact with one another.

Unresolved Questions.  Several important questions under the FFCRA remain unanswered, in addition to the scope of the small business exemption discussed above.  For example:

  • Although the FFCRA authorizes both the Secretary of Labor and employers to exempt “health care providers” and “emergency responders” from the Act’s leave requirements, the meaning of those terms is an issue. The Act adopts the FMLA definition of “health care provider” (set forth at 29 U.S.C. 2611(6) and 29 C.F.R. § 825.102), which was developed in a different context, and the Act does not define “emergency responder” at all.  It remains to be seen how broadly DOL will define these terms to ensure continuity of services necessary to the country’s coronavirus relief efforts.
  • In yesterday’s Guidance, DOL promised additional FAQs on the application of the FFCRA to public sector employers.
  • The Guidance does not address whether the Act’s leave provisions apply to employees who are on a furlough or layoff status.
  • The Guidance does not address whether a state or local “stay home” or shutdown order qualifies as a “local quarantine or isolation order” entitling an employee to FFCRA paid sick leave.
  • The Guidance does not address whether employees who take twelve weeks of coronavirus-related FMLA leave are eligible to use FMLA for other reasons within a twelve-month period, or whether those who have already exhausted their FMLA benefits for other reasons are eligible for coronavirus-related FMLA leave.

For more information on the Guidance, the FFCRA, or other employment law issues, please contact the authors of this blog post or another Hogan Lovells lawyer with whom you work.  Subscribe to Hogan Lovells’ blog, All in a Day’s Work, for the latest information about the FFCRA and other coronavirus-related issues that matter to employers.

Our U.S. employment team continues to stay at the forefront of the COVID-19 pandemic, including the most recent guidance from government officials, new legislation and regulations, and the problems our clients are facing and practical and legal responses to these problems. In this webinar, the second in our COVID-19 employment series, we have amassed our findings and developed practical guidance to help you successfully navigate the current regulatory and legislative landscape. The webinar will be hosted on Monday, March 30th at 11:00am EDT.

We will discuss best practices for the following topics/situations:

  • Employee inquiries
  • Positive tests, exposures, or symptoms
  • Workplace safety
  • “Shelter in place” and classification as an essential business
  • New laws and updated regulations, including regulations on the Families First Coronavirus Response Act
  • Furloughs, lay-offs,  and salary reductions
  • Employee notices – WARN Act
  • Discussion of recent EEOC announcements on COVID-19

We hope you will join us. To register please click here.

Hogan Lovells is committed to helping you during this time and we have a variety of resources available. Please click here to visit our global topic center. You can also register your interest in other topics by clicking here.

President Trump signed the Families First Coronavirus Response Act (the Act) into law on March 18, 2020, the same day that it passed the Senate.  Among other emergency measures intended to address the coronavirus pandemic, the Act requires covered employers to provide employees with two distinct types of leave for coronavirus-related reasons—up to 2 weeks of paid sick leave, and job-protected leave under the Federal Family and Medical Leave Act (FMLA), the first 10 days of which may be unpaid and the remainder of which must be paid.  Pay may be full pay or partial pay depending on the specific reason for the leave and is subject to caps.

The Act is a modified version of a bill passed March 14 by the House, which we posted about here.  The biggest change from the House bill for employers is that the Act requires coronavirus-related FMLA leave only for childcare reasons such as school closures, and not for health reasons related to the pandemic.  Like the original bill, the Act provides paid sick leave for both childcare and health reasons.  Another change is that the Act clarifies that the leave benefits are unavailable to employees who are able to work, including telework, during the leave period.

Following are highlights of the key features of the Act’s leave requirements.  Note that these requirements go into effect April 2, 2020, which means that employers need to move quickly to prepare to implement them.  If you have questions about the Act or need assistance updating your leave policies, please contact one of the authors of this blog post or the Hogan Lovells attorney with whom you regularly work.

  • Covered Employers: Private employers with 500 or more employees are exempt from the Act’s leave requirements.  Additionally, the Secretary of Labor is authorized to exempt businesses with fewer than 50 employees, but only when the leave requirements “would jeopardize the viability of the business as a going concern.”
  • Covered Employees: Generally, all employees of covered employers are eligible for the Act’s paid sick leave benefits, and employees are eligible for the coronavirus-related FMLA leave if the employee has worked for the employer for at least 30 calendar daysThere are special provisions for health care providers and emergency responders, under which the Secretary of Labor may exempt such employees “for good cause,” and employers also may choose to opt out of providing these employees with the leave benefits.
  • Qualifying needs:
    • Paid Sick Leave is available for the following reasons, provided that the employee is unable to work or telework during the leave period:
  • the employee is subject to a governmental quarantine or isolation order related to COVID-19 (the disease caused by the coronavirus);
  • 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;

4)    the employee is caring for an individual in quarantine or isolation as described above (note this is a change from the House bill, which required the individual to be a family member);

5)    the employee is caring for a son or daughter because the son’s or daughter’s school or daycare is closed, or the employee’s child care provider is unavailable, due to COVID-19 precautions; or

6)   “[t]he employee is experiencing a substantially similar condition recognized by the Secretary of Health and Human Services in consultation with the Secretary of the Treasury and the Secretary of Labor.”

  • Coronavirus-related FMLA Leave: is available if the employee is unable to work or telework due to the need for leave to care for a son or daughter because of closure of school or daycare, or the unavailability of a regular compensated child care provider, because of a government-declared emergency with respect to COVID-19.
  • Duration, Amount, and Use of Paid Sick Leave Benefits:
    • Employers must provide 80 hours of paid sick leave for qualifying reasons for full-time employees.
    • Part-time employees are entitled to paid sick time equal to the number of hours they work, on average, over a 2-week period.
    • There are special rules for calculating paid leave for employees who work varying schedules.
    • Paid sick leave related to the employee’s own coronavirus-related needs (reasons (1)-(3) above) is paid at 100% of the employee’s usual rate of pay, subject to a cap of $511 per day and $5,110 in the aggregate.
    • Paid sick leave related to the employee’s caring for another individual; due to school closures or the unavailability of a child care provider; or taken for a recognized “substantially similar condition” (reasons (4)-(6) above) is paid at two-thirds of the employee’s usual rate, subject to a cap of $200 per day and $2,000 in the aggregate.
    • Employers may not require employees to find replacements when they are using paid sick leave.
    • Employers may not require employees to exhaust other employer-provided paid leave before using the coronavirus-related paid sick leave, which employees may use first.
  • Duration, Amount, Use of Coronavirus-Related FMLA leave:
    • The first 10 days of FMLA leave for the qualifying coronavirus-related reasons stated above may be unpaid, or an employee may choose to substitute another type of paid leave (e.g., vacation, personal leave, etc.).
    • After the first 10 days, employees must receive at least two-thirds pay for the duration of the FMLA leave, subject to a cap of $200 per day and $10,000 in the aggregate.
    • The maximum FMLA leave for qualifying coronavirus-related reasons, unpaid and paid, is 12 weeks.
    • The FMLA leave is job-protected with certain exceptions for employers with fewer than 25 employees.
  • Tax Credits: The Act provides employers with tax credits to defray the cost of the benefits.
  • Notice to Employees: The Act requires that employers post a notice, to be issued by the Secretary of Labor on or before March 25, 2020, informing employees of their paid sick leave rights. A similar notice is not required for FMLA leave entitlement.  However, in light of employers’ general duty to give employees notice of their FMLA rights, employers should notify employees of their new FMLA rights, as well.
  • Regulations/Expiration: The Act authorizes the Secretary of Labor to issue regulations “as needed” to “to ensure consistency” between the sick leave, FMLA leave, and tax credit provisions.  Thus, employers may be able to expect additional guidance before the leave provisions expire December 31, 2020.
  • Other Provisions: The Act contains various details concerning paid leave not addressed above, such as provisions regarding multi-employer collective bargaining agreements, and many other provisions not related to leave, such as enhanced unemployment compensation.

The U.S. Equal Employment Opportunity Commission (“EEOC”) enforces workplace anti-discrimination laws, including the Americans with Disabilities Act (“ADA”) and the Rehabilitation Act.  This week, the EEOC twice updated its webpage for “What You Should Know About the ADA, the Rehabilitation Act, and COVID-19” to include additional guidance with respect to job applicants and employees. As for employees, the EEOC (relying on its existing “Pandemic Preparedness in the Workplace and the Americans with Disabilities Act” guidance) has now clarified that it is not a violation of the ADA for employers to:

  • Ask employees if they are experiencing symptoms of the pandemic virus, provided all such information is maintained as a confidential medical record in compliance with the ADA;
  • Measure an employee’s body temperature;
  • Require employees to stay home if they exhibit COVID-19 symptoms; and
  • Require doctors’ notes certifying fitness to return to work.

As for applicants, the EEOC now advises that employers may screen applicants for COVID-19 symptoms after making a conditional offer of employment, and may delay an applicant’s start date if he or she displays symptoms or has COVID-19.  The employer may withdraw a job offer for an applicant who has symptoms or tests positive for COVID-19 if the employer needs someone to start in the role immediately.

Whatever policies an employer adopts must apply equally to all similarly situated employees, and employers should consider the practical and logistical issues associated with obtaining information such as employee temperatures—for example, accuracy, confidentiality, and what the employer will do with the information.  The EEOC also reminds employers “that guidance from public health authorities is likely to change as the COVOD-19 pandemic evolves” and to “continue to follow the most current information on maintaining workplace safety.” Importantly, the EEOC has explained that the ADA does not “interfere with or prevent employers from following the guidelines and suggestions made by the CDC or state/local public health authorities about steps employers should take regarding COVID-19.”

Our global Employment team has actively been assessing global, regional, and local government guidance in response to COVID-19 as well as preparing strategies for how you can best comply with emerging guidance and relevant employment law. We understand that change is happening rapidly, and we wanted to share our current findings on how best to protect your employees, and your business, with you. We will be hosting a webinar on Thursday, 19 March 2020, 15:00 (GMT) 10am ET. The webinar will cover:

  • Global observations on employment issues facing our clients
  • Highlighting the specific impacts of coronavirus on employers in
    • The United States;
    • Italy; and
    • Germany
  • Underscore data privacy and cyber security considerations

We hope you will join us. To register please click here.

This webinar is part of a series to help our clients responding to the impact of the global coronavirus pandemic on their businesses. You can register your interest in other topics here.

The “Families First Coronavirus Response Act” (the “Bill”), a broad response to the COVID-19 coronavirus pandemic, has passed the House of Representatives by a vote of 363-40 and is expected to pass in the Senate and be signed into law by President Trump.  The Bill would impose significant obligations on covered employers, including requiring covered employers to provide employees who have a qualifying coronavirus-related need with up to 2 weeks of paid sick leave and up to 12 weeks of FMLA leave, most of which is partially paid.  Although subject to change, the most recent iteration of the Bill has the following key provisions:

  • Covered Employers: Private employers with 500 or more employees are exempt from the Bill’s paid sick leave and FMLA leave requirements.  The Secretary of Labor may issue regulations exempting businesses with fewer than 50 employees from the FMLA leave requirements, but only when those requirements “would jeopardize the viability of the business as a going concern.”
  • Covered Employees: An employee is eligible for coronavirus-related FMLA leave if he or she has worked for the employer for at least 30 calendar daysAll employees are eligible for the Bill’s paid sick leave benefits, which may be accessed immediately.
  • Qualifying needs: The Bill’s FMLA leave and paid sick leave benefits are available for a variety of reasons, including (but not limited to):
    • in the case of paid sick leave only, self-isolating due to a diagnosis of coronavirus, or obtaining medical diagnosis or care due to the symptoms of coronavirus;
    • complying with a public official or health care provider’s recommendation to self-quarantine because the employee has been exposed to the coronavirus or exhibits symptoms of the coronavirus (notably, in the case of FMLA leave, the employee must be unable to perform his or her job as a result of being quarantined);
    • caring for a family member who is quarantined; and
    • caring for a child under 18 due to school or daycare closings or unavailability of the child’s child care provider.
  • FMLA leave: Eligible employees may take up to 12 weeks of FMLA leave for a qualifying need.
    • The first 2 weeks of leave may be unpaid, or an employee may choose to substitute another type of paid leave (e.g., vacation, personal leave, etc.), although employers may not require them to do so.
    • After the first 2 weeks, employees must receive two-thirds of their usual pay for the duration of the leave.
    • The leave is job-protected with certain limited exceptions for employers with fewer than 25 employees.
  • Paid Sick Leave: The Bill provides the following paid sick leave benefits.
    • Employers must provide 80 hours of paid leave for full-time employees.
    • Part-time employees are entitled to paid sick time equal to the number of hours they work, on average, over a 2-week period.
    • Leave related to the employee’s own coronavirus-related needs is paid at 100-percent of the employee’s usual rate of pay.
    • Leave related to care for a family member or a child whose school has closed or whose child care provider is unavailable due to the coronavirus is paid at two-thirds of the employee’s regular rate.
    • Coronavirus-related paid sick leave is in addition to employer’s existing paid leave policies. Employers may not require employees to exhaust other employer-provided paid leave benefits before using coronavirus-related paid sick leave, and may not amend their paid leave policies to make the benefits run concurrently.
  • Notice: The Bill requires that employers post a notice, to be prepared by the Secretary of Labor, informing employees of their leave rights under the Bill.
  • Tax Credits: The Bill provides employers with certain tax credits in order to help defray the cost of the benefits.

The Bill is subject to change as it moves through the Senate in the upcoming days, so stay tuned for further developments.  Employers with questions are encouraged to contact the authors of this post, or the lawyer with whom you normally work at Hogan Lovells.