The Families First Coronavirus Response Act (“FFCRA”) was passed by Congress and signed into law on March 18, 2020 in response to rapidly changing employment law conditions related to the COVID-19 pandemic. The Act takes effect on April 1, 2020 and lasts until December 31, 2020. The U.S. Department of Labor has already issued some guidance on the new law. The FFCRA also has a poster requirement.
There are several related subject matters covered by the new law, including an expansion of the Family and Medical Leave Act (“FMLA”), requirements for emergency paid sick leave, financial support for stabilization of state unemployment programs, and new tax credits for employers to offset the costs of new mandatory paid family leave and paid sick leave, as well as other provision such as free testing for COVID-19. At the state level, Minnesota Governor Tim Walz has also issued a number of executive orders related to the pandemic, including accelerated unemployment benefits, so the legal landscape for Minnesota employers has changed quickly.
The Emergency Family and Medical Leave Expansion Act
The Emergency Family and Medical Leave Expansion Act (“EFMLEA”) is a temporary amendment of the FMLA, 29 U.S.C. Section 2601 et seq. The EFMLEA provides a new leave entitlement for an “employee [who] is unable to work (or telework) due to a need for leave to care for the son or daughter under 18 years of age of such employee if the school or place of care has been closed, or the child care provider of such son or daughter is unavailable, due to a public health emergency.”
The EFMLEA amendments are counter-intuitive for those already familiar with the FMLA. The original FMLA provides up to 12 weeks of unpaid leave for employees with a serious medical condition who have worked at least 12 months for an employer with 50 or more employees. For the limited purpose of leave related to a public health emergency, the EFMLEA applies only to any employer with “fewer” than 500 employees, making it perhaps the first employment law in the history of the United States to impose more burdensome requirements on small employers as compared to larger employers. In order to be eligible for public health emergency leave, an employee need only have worked for the employer for 30 calendar days, which is a significant contrast to the 12-month requirement under the FMLA. The first ten days of public health emergency leave are unpaid, just as under the FMLA. After that, however, the employee is entitled to be paid two-thirds of his or her regular rate of pay, capped at $200 per day and $10,000 total. The Act allows an employee to “substitute” any accrued vacation leave, personal leave, or medical or sick leave for unpaid leave. Under the FMLA, employees may use these types of paid leave concurrently with FMLA leave. Whether “substitution” is different than concurrent may need to be clarified through regulatory interpretation.
The primary purpose of the original FMLA is to ensure that an employee out on leave is restored to his or her position upon return. The EFMLEA modifies the scope of this protection for employees on public health emergency leave. Employers with fewer than 25 employees are exempt if the position that the employee held has been eliminated as a result of the public health emergency and the employer makes reasonable efforts to find an equivalent position. Of course, if a position has truly been eliminated no employer of any size is required to retain an employee in that position under the FMLA, so the exemption seems unnecessary. The Act also allows the Department of Labor to exclude certain health care providers and emergency responders from the definition of eligible employee.
The Emergency Paid Sick Leave Act
The Emergency Paid Sick Leave Act (“EPSLA”) is another provision of the FFCRA and is the first federal law ever to require paid sick leave for private sector employees. Like the EFMLEA, the EPLSA only applies to employers with fewer than 500 employees. The EPLSA requires covered employers to provide employees with up to 80 hours of paid sick leave if the employee is unable to work or telework for any 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 healthcare provider to self-quarantine due to concerns related to COVID-19.
(3) The employee is experiencing symptoms of COVID-19 and seeking a medical diagnosis.
(4) The employee is caring for an individual who is subject to an order as described in (1) or has been described in (2).
(5) The employee is caring for the employee’s son or daughter if the son or daughter’s school or place of care has been closed, or the child care provider of such son or daughter is unavailable, due to COVID-19 precautions.
(6) 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.
The rate that employees may receive as sick pay depends on the reason. Employees eligible under reasons (1), (2) or (3) receive their regular rate of pay, capped at $511 per day and $5,110 total. Employees eligible under reasons (4), (5) or (6) are eligible for two-thirds of their regular rate of pay, capped at $200 per day and $2,000 total.
Full-time employees are entitled to 80 hours of paid sick time. Part-time employees are entitled to the number of hours that the employee works, on average, over a 2-week period. Paid sick leave is available regardless of how long the employee has been employed by the employer. Employers are not allowed to require an employee to use other paid leave before using paid sick leave under the EPLSA. A violation of the EPLSA is treated as a violation of the Fair Labor Standards Act.
How Does the EFMLEA Overlap with the EPLSA?
Both the EFMLEA and the EPLSA are potentially triggered if an employee cannot work because his or her child’s school or day care center is closed, although the EPLSA applies in other circumstances as well. An employee unable to work or telecommute for this reason may therefore receive up to 12 weeks of leave as follows: paid sick leave (at 2/3 pay) for two weeks, and then ten more weeks of paid family leave (at 2/3 pay).
Tax Credits for Employers
Congress intended the FFCRA to be cost neutral for employers. Employers will receive a credit equal to any amount of paid sick leave or family leave paid under the Act. Even if the cost is greater than the payroll tax, the difference is treated as a refundable over payment.
The FFCRA allocates federal grants for states that strengthen access to their unemployment compensation systems by (A) waiving the initial waiting week, (B) waiving work search requirements, and (C) not charging employers for unemployment benefits resulting from layoffs caused by COVID-19.
Minnesota has met the requirements for obtaining this federal grant pursuant to Governor Tim Walz’s Emergency Executive Order 20-05. The Governor’s Executive Order suspends strict compliance with Minnesota’s unemployment law. Among other things, it suspends the non-payable week requirement; provides that benefits paid as a result of COVID-19 will not be used in computing the employer’s future unemployment tax rate; orders that a leave of absence will be presumed involuntary if related to COVID-19; and waives the five-week benefit limitation for business owners.
Takeaways for Minnesota Employers
Many Minnesota businesses, such as shuttered bars and restaurants as well as theaters, spas, gyms, and tattoo parlors have already had to reduce their workforce quickly as a result of the pandemic and standing emergency executive orders. Employees who are terminated before April 2, 2020 are not protected by the new federal legislation. Businesses that furlough employees may wish to continue their health insurance until they are allowed to return. Check with your benefits broker or administrator first, however, as many health insurance plans and policies have requirements that employees actually work to be eligible for coverage.
All employers will need to be prepared to respond to employees who are sick, who need to care for family members who are sick, or who need to care for children when school is closed. Employers should:
- Understand the new federal legislation;
- Get the poster (when available);
- Encourage healthy employees to work remotely whenever possible;
- Require sick employees to stay home;
- Apply federal sick leave first (if applicable) and then normal sick leave;
- Not be concerned about the cost of mandated sick leave or the impact on their unemployment insurance premiums;
- Encourage furloughed or terminated employees to apply for unemployment and list COVID-19 as the reason (if true);
- Make sure your payroll provider is engaged in compliance with new rules;
- Keep track of paid sick leave for tax credit purposes;
- Monitor the Center for Disease Control and the Minnesota Department of Health for updates on the pandemic; and
- Communicate with employees, be responsive, and stay flexible.
If you have further questions about the impact of COVID-19 or coronavirus on your business or workforce, contact the employment law attorneys at Trepanier MacGillis Battina P.A.
V. John Ella is a Minnesota employment law attorney. He can be reached at 612.455.6237 or at email@example.com.