On March 18, 2020, the U.S. Senate passed the Families First Coronavirus Response Act, following U.S. House of Representatives action on the legislation several days earlier. President signed the bill into law immediately.
The legislation focuses on the anticipated economic toll of the COVID-19 pandemic on workers and includes paid leave guarantees for certain workers, expanded food assistance and unemployment insurance benefits, and employer tax credits, among other measures. The version, however, offers fewer worker benefits and exempts more companies from paid sick leave obligations than the original version passed by the House.
The legislation is the second in what is likely to be a series of bills that aim to stimulate economic activity and strengthen the country’s response to, and recovery from, the COVID-19 pandemic.
The first law that passed on March 6, 2020, appropriated $8.3 billion, largely for emergency health and medical supplies/equipment. Even before the ink is dry on the Families First Coronavirus Response Act, the Senate is taking the lead in crafting another large stimulus proposal designed to aid industries and workers during the coronavirus outbreak. The third coronavirus bill is expected to cost approximately $1.8 trillion and will likely include direct payments to individuals, along with targeted relief to businesses.
This alert outlines key provisions that directly impact employers included in the legislation. It also summarizes adjustments made to federal benefits programs to aid certain populations directly affected by the pandemic.Leave-Related Provisions in the Families First Coronavirus Response ActPublic Health Emergency Leave
Division C of the law is known as the Emergency Family and Medical Leave Expansion Act and uses the existing Family and Medical Leave Act (FMLA) as a framework to provide certain employees with the right to take up to 12 weeks of job-protected leave.
Under the bill, eligible employees may take leave if the employee is unable to work (or telework) because they must care for a child (under 18 years of age) whose school or care provider is closed or unavailable due to a coronavirus emergency as declared by a Federal, State, or local authority.Covered Employees and Employers:
For purposes of this leave the act amends the FMLA definitions of covered employees and employers. Eligible employees include those who work for employers with fewer than 500 employees and government employers who have been on the job for at least 30 days. The legislation further gives the Secretary of Labor the authority to exempt small businesses with fewer than 50 employees from the bill’s paid leave requirements if those requirements would jeopardize the viability of the business. Exception for Health Care Providers and Emergency Responders.
Employers who are health care providers or emergency responders may elect to exclude their employees from the public health emergency leave provisions of the bill.First 10 Days of Leave:
Under the bill, the first 10 days in which an employee takes emergency leave may be unpaid. An employee may elect, or an employer may require the employee, to substitute any accrued paid vacation leave, personal leave, or medical or sick leave for unpaid leave.Paid Leave Rate for Subsequent Days:
After 10 days of unpaid leave, an employer is required to provide paid leave at an amount not less than two-thirds of an employee’s regular rate of pay up to $200 per day or $10,000 in the aggregate.
The act also addresses hourly employees whose schedules vary to the extent than an employer cannot determine the exact number of hours the employee would have worked. For those employees, the employee’s paid leave rate should equal the average number of hours that the employee was scheduled per day over the six-month period prior to the leave. If the employee did not work in the preceding six-month period, the paid leave rate should equal the “reasonable expectation” of the employee at the time of hiring with respect to the average number of hours per day that the employee would be scheduled to work.Job Restoration:
Generally, eligible employees who take emergency paid leave are entitled to be restored to the position they held when the leave commenced or to obtain an equivalent position with their employer. The act limits this rule for employers with fewer than 25 employees. In such circumstances, if an employee takes emergency leave, then the employer does not need to return the employee to their position if:
- The position does not exist due to changes in the employer’s economic or operating condition that affect employment and were caused by the coronavirus emergency;
- The employer makes “reasonable efforts” to restore the employee to an equivalent position; and
- If these efforts fail, the employer makes an additional reasonable effort to contact the employee if an equivalent position becomes available. The “contact period” is the one-year window beginning on the earlier of (a) the date on which the employee no longer needs to take leave to care for the child or (b) 12 weeks after the employee’s paid leave commences.
Multiemployer Bargaining Agreements:
Provides that employees who work under a multiemployer collective agreement and whose employers pay into a multiemployer plan may access emergency paid leave.Effective Date and Expiration:
The requirements set forth under Division C are in effect 15 days after the enactment of the legislation through December 31, 2020.Emergency Paid Sick Leave
The Emergency Paid Sick Leave Act is contained in Division E of the legislation and requires certain employers to provide employees with two weeks of paid sick time if the employee is unable to work (or telework) for the following coronavirus-related reasons:
- The employee is subject to a Federal, State, or local quarantine or isolation order related to the coronavirus;
- The employee has been advised by a health care provider to self-quarantine due to concerns related to the coronavirus;
- The employee is experiencing symptoms of coronavirus and is seeking a medical diagnosis;
- The employee is caring for an individual who is subject to a quarantine or isolation order or advised to self-quarantine by a health care provider;
- The employee is caring for a child whose school or care provider is closed or unavailable due to coronavirus precautions; and
- The employee is experiencing any other condition substantially similar to the coronavirus, as specified by the U.S. Department of Health and Human Services (HHS).
Covered Employees and Employers:
Private sector employers with fewer than 500 employees, government employers, and all other non-private entity employers with more than one employee are required to provide their employees with paid sick leave. The bill entitles employees of covered employers to paid sick leave regardless of how long the employee has worked for the employer. The legislation further gives the Secretary of Labor the authority to exempt small businesses with fewer than 50 employees from the bill’s paid leave requirements if those requirements would jeopardize the viability of the business.
Exception for Health Care Providers and Emergency Responders. Employers who are health care providers or emergency responders may elect to exclude their employees from the public health emergency leave provisions of the bill.Paid Sick Time:
Full-time employees are entitled to 80 hours of paid sick leave. Part-time employees are entitled to the number of hours that the employee works, on average, over a two-week period.
For hourly employees whose schedules vary, the employee’s paid leave rate should equal the average number of hours that the employee was scheduled per day over the six-month period prior to the leave. If the employee did not work in the preceding six-month period, the paid leave rate should equal the “reasonable expectation” of the employee at the time of hiring with respect to the average number of hours per day that the employee would be scheduled to work.
Once an employee’s coronavirus-related need for using the emergency paid sick leave ends, then the employer may terminate the paid sick time. Further, paid sick time provided under H.R. 6201 shall not carry over from one year to the next.Paid Leave Rate:
Employees who take paid sick leave because they are subject to a quarantine or isolation order, have been advised by a health care provider to self-quarantine, or are experiencing coronavirus symptoms and seeking medical diagnosis are entitled to be paid at their regular pay rate or at the federal, state or local minimum wage, whichever is greater. In these circumstances, the paid sick leave rate may not exceed $511 per day, or $5,110 in aggregate.
Employees who take paid sick leave to care for another individual or child or because they are experiencing another substantially similar illness (as specified by HHS) are entitled to be paid at two-thirds their regular rate. In these circumstances, the paid sick leave rate may not exceed $200 per day, or $2,000 in aggregate.
The bill requires the Secretary of Labor to issue guidelines to assist employers in calculating paid sick time within 15 days of the bill’s enactment.Effect on Existing Paid Leave Agreements:
An employer may not require an employee to use other paid leave provided by the employer before using the paid sick time provided under the legislation.Employee Notice Requirement:
After the first workday (or portion of a day) an employee receives paid sick time, an employer may require the employee to follow “reasonable notice procedures” in order to continue receiving paid sick time.Employer Notice Requirement:
Employers shall post and keep posted, in conspicuous places, notice of the emergency paid sick leave requirements made available under the legislation. Within seven days of the enactment of the act, the Secretary of Labor will provide a model notice for use by employers.Multiemployer Bargaining Agreements:
Provides that employees who work under a multiemployer collective agreement and whose employers pay into a multiemployer plan are provided with leave for coronavirus-related reasons.Prohibitions and Enforcement:
Employers may not discharge, discipline, or discriminate against any employee who (a) takes paid sick leave or (b) has filed a complaint or proceeding or testified in any such proceeding related to the benefits and protections provided by the legislation. Further, employers may not require, as a condition of providing paid sick time, that an employee search for a find a replacement employee to cover the hours during which the employee is using paid sick time.
Employers who violate the paid sick leave requirements or retaliation prohibitions of the legislation shall be subject to civil penalties under the Fair Labor Standards Act.Effective Date and Expiration:
The requirements set forth under Division E are in effect 15 days after the enactment of the legislation through December 31, 2020.Employer Tax Credits
The law provides for employer tax credits to offset the costs associated with the paid public health emergency leave and sick leave required for employees under Divisions C and E of the bill.Payroll Tax Credit:
The law provides a refundable tax credit worth 100 percent of qualified public health emergency leave wages (as provided by Division C) and qualified paid sick leave wages (as provided by Division E) paid by an employer for each calendar quarter through the end of 2020. The tax credit is allowed against the tax imposed under the employer portion of Social Security and Railroad Retirement payroll taxes.Credit Amount:
The bill allows employers to take tax credits for qualified public health emergency leave wages and qualified sick leave wages:Credit Amount for Public Health Emergency Leave Wages.
The amount of qualified public health leave wages taken into account for each employee is capped at $200 per day and $10,000 for all calendar quarters.Credit Amount for Sick Leave Wages.
In instances when an employee receives paid sick leave because they are subject to a quarantine or isolation order, have been advised by a health care provider to self-quarantine, or are experiencing coronavirus symptoms and seeking medical diagnosis, the amount of qualified sick leave wages taken into account for each employee is capped at $511 per day.
In instances when an employee receives paid sick leave because they are caring for another individual or child or because they are experiencing another substantially similar illness (as specified by HHS) the amount of qualified sick leave wages taken into account for each employee is capped at $200 per day.
In determining the total amount of an employer’s qualified sick leave wages paid for a calendar quarter, the total number of days that the employer can take into account with respect to a particular employee for that quarter may not exceed 10 days minus the number of days taken into account for that employee for all previous quarters.Credit for Health Plan Expenses.
Under the bill, the public health emergency leave and paid sick leave credits would be increased to include amounts employers pay for the employee’s health plan coverage while they are on leave. Specifically, the bill allows for the credit amounts to be increased by the amount of the employer’s group health plan expenses that are “properly allocated” to the qualified emergency leave and sick leave wages. Health plan expenses are “properly allocated” to qualified wages if made on a pro rata basis (among covered employees and periods of coverage).Refundability of Excess Credit:
The amount of the paid sick leave credit that is allowed for any calendar quarter cannot exceed the total employer payroll tax obligations on all wages for all employees. If the amount of the credit that would otherwise be allowed is so limited, the amount of the limitation is refundable to the employer.Limitation on Tax Credits:
Employers may not receive the tax credit if they are also receiving a credit for paid family and medical leave under the 2017 Tax Cuts and Jobs Act (P.L. 115-97). Employers would instead have to include the credit in their gross income.
Additional Provisions of the Families First Coronavirus Response Act
Beyond these provisions directly affecting employers, the Families First Coronavirus Response Act also adjusts numerous federal benefits programs affecting health care, food assistance, and worker protections to assist individuals affected by COVID-19:Nutrition and Agriculture Programs:
The bill appropriates hundreds of millions of dollars in new funds for nutrition programs. In particular:
Health Care Worker Protections:
- The act provides funds for the Special Supplemental Nutrition Program for Women, Infants, and Children (WIC) to ensure that low-income pregnant women or mothers with young children who become unemployed as a result of the COVID-19 pandemic have access to nutritious foods. The bill also grants authority for the Secretary of Agriculture to waive certain requirements that could hinder service to WIC participants during the pandemic.
- The act appropriates $400 million in funding for local food banks to meet higher demand for nutritious food for low-income Americans during the pandemic.
- For households with children who would otherwise receive free or reduced-price lunch at school, the bill permits the U.S. Department of Agriculture to approve state efforts to provide emergency Electronic Benefit Transfer food assistance. It also suspends work training requirements for the Supplemental Nutrition Assistance Program (i.e., food stamps) and provides other flexibilities to the program.
- The act also removes certain administrative requirements that will allow for increased access to healthy meals for children who would otherwise depend on school meals for nutrition.
- The legislation further provides $250 million for food for home-bound low-income seniors under the Administration for Community Living.
- The legislation provides for a commodity assistance program of up to $100 million as needed.
The act would direct the Secretary of Labor to promulgate new emergency temporary standards to protect health care workers under OSHA and expand which hospitals and other medical facilities are subject to such standards.Unemployment Insurance:
Provides for the Secretary of Labor to make emergency administration grants to states in the Unemployment Trust Fund. States are directed to demonstrate steps toward easing eligibility requirements and expand access to unemployment compensation for claimants directly impacted by COVID-19. The legislation also appropriates funds for states that aim to establish work-sharing programs that permit employers to reduce employee hours rather than laying them off. Under such programs, employees would receive partial unemployment benefits to offset the wage loss.Coverage for COVID-19 Testing:
Requires health insurance issuers offering group or individual health insurance coverage to provide coverage and not impose any cost sharing (including deductibles and copays) for COVID-19 testing, as well as health care provider office visits, urgent care center visits, and emergency room visits. Requires coverage of testing with no cost sharing under the Medicare Advantage Program, Medicaid and the State Children’s Health Insurance Program. The bill provides laboratory reimbursements for diagnostic testing of COVID-19 for uninsured individuals, clarifies TRICARE coverage rules, and provides for no-cost sharing for testing through the Indian Health Service.Medicaid Funding:
Provides states with a temporary 6.2% increase in federal medical assistance percentages (FMAP). Under this increase, the law would require states to offer coronavirus testing under Medicaid without cost sharing.#Coronavirus