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Employer Obligations Under the Anticipated Families First Coronavirus Response Act (HR 6201)

Posted by Alvin Lee | Mar 16, 2020 | 0 Comments

Families First Coronavirus Response Act

During the twilight hours of Saturday morning, the House of Representatives passed H.R. 6201, titled the "Families First Coronavirus Response Act", which will be put before the Senate on Monday. The bill is expected to pass and could pass either in its current form or with changes. In fact, there are several variations of the bill, which appear to have been altered during negotiations last week.

In its current form, the bill only directly applies to employers of fewer than 500 employees. Although the bill also encompasses legislation relating to coronavirus testing, SNAP, unemployment insurance coverage, and other health provisions, employers will be primarily impacted by two large components: (1) the anticipated enact of the Emergency Paid Sick Leave Act; and (2) the amendment to the Family and Medical Leave Act of 1993.

Emergency Paid Sick Leave Act

Under the Emergency Paid Sick Leave Act ("EPSLA"), which expires on December 31, 2020, employers with fewer than 500 employees ("Qualified Employers") must provide two weeks of paid sick leave to certain affected employees as follows:

  1. Qualified Employers must provide paid sick leave, at the employee's regular rate of pay, for employees that:

         (i) quarantine themselves because of a diagnosis with coronavirus;

         (ii) seek a diagnosis or care relating to symptoms of coronavirus; or

         (iii) employees complying with a recommendation by a healthcare provider or public official to not go to work due to the possibility of exposing coworkers with coronavirus or symptoms of coronavirus. 

  1. Qualified Employers must provide paid sick leave, at two-thirds (2/3) the employee's regular rate of pay, to employees that must:

         (i) care for a family member who is self-isolating because of a diagnosis of coronavirus or experiencing symptoms of coronavirus and requires medical diagnosis or care; or

         (ii) provide care for a child (under age 18) whose school is closed or childcare provider is unavailable due to the coronavirus.

Note: For full-time employees, the two-week period is equal to two full weeks. For part-time employees, the two-week period is equal to the number of hours that the employee normally works in a typical two-week period. 

Note: The two-week period will be immediately available to all employees and not subject to accrual requirements.

Refundable Tax Credit

Employers will be entitled to a refundable tax credit equal to "100% of qualified paid sick leave" wages paid by an employer under this Act. This credit applies towards the wages paid to an employee under EPSLA and for the social security portion of the employment taxes. However, the language is somewhat misleading, as the tax credit is subject to daily caps per employee. The caps include a daily cap of $511 per day for employees that quarantine themselves pursuant to EPSLA, and a daily cap of $200 per day for employees who take leave to care for another or for their child under EPSLA. If the tax credit exceeds the employer's taxable liability, the amount in excess will be treated as an overpayment and will be refunded to the employer. However, if the daily rate of pay to an employee exceeds $511 (or the aggregate of the rate of pay, together with applicable employment taxes), the implication is that the excess will not be credited to the employer.

Amendment to Family and Medical Leave Act of 1993 (FMLA)

The Family Medical Leave Act of 1993 ("FMLA") will also be expanded to permit employees who have been on the job for more than 30 days to be entitled to take up to 12 weeks of job-protected leave under the FMLA to be used for any of the following reasons relating to the EPSLA:

  1. Compliance with a recommendation or order by a health authority or a health care provider that the physical presence of the employee on the job would jeopardize the health of others because of (i) an exposure of the employee to coronavirus, (b) exhibition of symptoms of Coronavirus by the employee, where the employee is unable to perform the functions of the job and still comply with the recommendation/order; 
  2. Care for a family member with respect to whom a public official or healthcare provider makes a determination that the presence of the family member in the community would jeopardize the health of other individuals in the community because of the exposure of such person to coronavirus or exhibition of symptoms of coronavirus by such family member; or
  3. Care for a child (under the age of 18) of an employee if the child's school or place of care has been closed, or the child-care provider is unavailable, due to coronavirus.

The initial two weeks for the leave period may be unpaid. However, employees may exercise other paid benefits for this period. The remaining time must be paid to the employee at two-thirds (2/3) of the employee's usual pay during the remainder of the FMLA leave time.

Refundable Tax Credit

Similar to the EPSLA, employers subject to the above will be entitled to a refundable tax credit equal to "100% of qualified family leave wages" paid by an employer. The daily cap is $200 for each employee, with an additional cap of $10,000 for each calendar quarter. Excess tax credit will be treated as an overpayment and refunded to the employer. However, any sum in excess of the daily or quarterly caps do not appear to be subject to a tax credit. 

Questions & Answers

Is paid sick leave or family leave available if employees must provide care to children on spring break?

The answer appears to be “no” at the moment. The language of the bill is inclusive, where it describes circumstances that must exist in order for an employee to benefit. Normal closures of schools, such as for spring break, does not appear to fall within the meaning of the bill. However, if the spring break period was extended or continued for a period of time, the period of extension could call within the scope of the bill.

Who is responsible for paying the leave time?

Employers will certainly be responsible for paying the paid sick leave time under the EPSLA. Although not expressly clear, based on a literal reading of the legislation and inferences from the tax credits, Employers also appear to be responsible for paying the family leave portion as well. However, there also appear to be possibility of exemption permitted for small businesses with fewer than 50 employees "when the imposition of such requirements would jeopardize the viability of the business as a going concern."

About the Author

Alvin Lee

Location: Dublin, California Phone: 925-338-9882 Email: Email Me Areas of Practice Estate Planning Business Law Estate Administration Trusts Wills Bar Admissions California U.S. District Court Northern District of California Education Thomas M. Cooley Law School, Lansing, ...


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