On March 18, 2020 President Trump signed the Families First Coronavirus Response Act which contains measures designed to provide assistance to employees and employers directly impacted by the Coronavirus (COVID-19). While the bill contains a number of important provisions including appropriations for Food and Nutrition Service and health plan coverage requirements, there are two components which directly impact employers and employees.
The effective date of this Act is 15 days after the date of enactment and which will be April 2, 2020. Notifications to employees regarding the Act will be required in advance of the effective date.
Emergency Paid Sick Leave Act
The Emergency Paid Sick Leave Act requires companies with less than 500 employees to provide sick leave to employees who are unable to work as a result of any of the following conditions:
- Employee is subject to a Federal, State or local quarantine or isolation order related to COVID-19;
- Employee has been advised by a healthcare provider to self-quarantine due to concerns related to COVID-19;
- Employee is experiencing symptoms of COVID-19 and is seeking a medical diagnosis;
- Employee is caring for a quarantined individual;
- Employee is caring for a son or daughter whose school has been closed or the child care provider of such son or daughter is unavailable due to COVID-19 precautions; or
- Employee is experiencing any substantially similar condition
The requirement does not apply to employers which are health care providers or emergency responders.
The Act does not provide definitive definitions of "health care providers" or "emergency responders." However, under the Family Medical Leave Act of 1993 and applicable regulations, a "health care provider" is defined as:
- A doctor of medicine or osteopathy who is authorized to practice medicine or surgery (as appropriate) by the State in which the doctor practices; or
- Any other person determined by the Secretary to be capable of providing health care services.
Others “capable of providing health care services” include only:
- Podiatrists, dentists, clinical psychologists, optometrists, and chiropractors (limited to treatment consisting of manual manipulation of the spine to correct a subluxation as demonstrated by X ray to exist) authorized to practice in the State and performing within the scope of their practice as defined under State law;
- Nurse practitioners, nurse midwives, clinical social workers and physician assistants who are authorized to practice under State law and who are performing within the scope of their practice as defined under State law;
- Christian Science Practitioners listed with the First Church of Christ, Scientist in Boston, Massachusetts;
- Any health care provider from whom an employer or the employer’s group health plan’s benefits manager will accept certification of the existence of a serious health condition to substantiate a claim for benefits; and
- Health care provider listed above who practices in a country other than the United States, who is authorized to practice in accordance with the law of that country, and who is performing within the scope of his or her practice as defined under such law.
The phrase “authorized to practice in the State” as used in this section means that the provider must be authorized to diagnose and treat physical or mental health conditions.
These definitions seemingly fail to cover non-clinic staff as well as certain nursing staff. However, given the impact these definitions have on the ability of physician practices to provide patient care, it is expected that further guidance from the Department of Labor could revise these definitions.
In addition, the Secretary of Labor has the authority to issue regulations to exempt small businesses with fewer than 50 employees when imposition of these requirements would jeopardize the viability of the business as a going concern.
Under the Act, full-time employees are entitled to 80 hours of sick leave and part-time employees are entitled to a number of hours equal to the number of hours that such employee works, on average, over a 2-week period. All employees are eligible, regardless of duration of employment.
The sick leave is to be paid at the employee's normal rate of pay up to $511 per day and $5,110 in total if the absence is due to items 1, 2 or 3 above. If the absence is due to 4, 5 or 6 above, the sick leave is to be paid at the rate of 2/3 of the employee's normal pay rate up to $200 per day and $2,000 in total.
Emergency Family and Medical Leave Act Expansion Act
The Emergency Family and Medical Leave Act Expansion Act expands application of the Family and Medical Leave Act of 1993 to all employers with less than 500 employees. Under this Act, employees who have been employed for at least 30 calendar days are entitled to leave if the employee is unable to work as a result of caring for a son or daughter under the age of 18 years of age if the school or place of care for the child is closed. This also applies if the child care provider of the son or daughter is unavailable due to a public health emergency associated with COVID-19.
As with the Emergency Paid Sick Leave Act, the requirement also does not apply to employers which are health care providers or emergency responders (see discussion above regarding definitions) and the Secretary of Labor has the authority to issue regulations to exempt small businesses with fewer than 50 employees when imposition of these requirements would jeopardize the viability of the business as a going concern.
Under this Act, employees are first entitled to 10 days of unpaid leave. After the first 10 days of unpaid leave, the employee is entitled to paid leave at a rate that is no less than 2/3 of the employee's regular rate of pay times the hours the employee would otherwise be scheduled to work up to a maximum of $200 per day and $10,000 in the aggregate per employee.
For employees with a varying hour schedule, the calculation is based on the number of hours that the employee was scheduled to work per day for the 6-month period ending on the date on which the employee takes such leave. If the employee did not work over such period, the hours are based on the reasonable expectation of the employee at the time of hiring of the average number of hours per day the employee would normally be scheduled to work.
An employee may elect to substitute accrued vacation leave, personal leave or medical or sick leave for unpaid leave in lieu of the 10 days of unpaid leave.
Tax Credits for Paid Sick and Paid Family and Medical Leave
In order to assist employers with the cost of providing the paid sick and paid family and medical leave, tax credits are available in an amount equal to 100 percent of the qualified sick leave wages paid by such employer with respect for such calendar quarter. The credit mirrors the wages paid under each provision.
The credit for sick leave is either $511 per day, per employee or $200 per day, per employee depending on the applicable provision triggering the sick leave (as described above). The credit for paid family and medical leave is $200 per day up to a maximum of $10,000 per employee.
The credit is refundable to the extent the credit exceeds the employer tax liability and the credit is claimed on the employer's payroll tax return.
Credits are also provided for employer's qualified health plan expenses allocable to qualified sick leave wages.
In the case of self-employed individuals, credits are allowed based on the number of days the individual is unable to perform his or her trade or business.
Lastly, the wages paid to employees under the Emergency Paid Sick Leave Act and the Emergency Family and Medical Leave Expansion Act are not subject to the employer portion of the Social Security tax component of FICA (6.2%).