On Wednesday, March 18, 2020, President Donald Trump signed the “Families First Coronavirus Response Act” (the “Act”) into law. As will be detailed in this summary, the Act provides two types of emergency leave to deal with certain absences related to COVID-19: (1) emergency family leave; and (2) emergency paid sick leave. The law will become effective on April 2, 2020, and is presently scheduled to sunset on December 31, 2020. Other legislative measures are expected to pass in the near future to address additional measures necessitated by the COVID-19 pandemic. This summary is intended to set forth the new obligations employers face under the Act, as well as provide a general overview of the refundable tax credits for employers to offset paid leave obligations to employees. This summary will also address the Executive Order issued by Governor Pete Rickets waiving certain requirements for obtaining Nebraska unemployment benefits between the dates of March 22, 2020, and May 2, 2020, in an effort to expand the availability of such benefits for Nebraska employees.
I. Expanded Emergency Family Leave
From the Act’s effective date of April 2, 2020, through December 31, 2020, public employees and employees of private employers with fewer than 500 employees, who have been on the job for at least 30 days, have the right to take up to 12 weeks of job-protected leave for a “Public Health Emergency,” which is defined as an employee who “is unable to work (or telework) due to a need for leave to care for a son or daughter under 18 years of age because the child’s school or place of care has been closed, or the child care provider of such son or daughter is unavailable, due to an emergency with respect to COVID-19 declared by a Federal, State, or local authority.” An exclusion exists for employers of health care providers or emergency responders, but only for its employees who constitute health care providers or emergency responders, which is defined under the Family and Medical Leave Act (“FMLA”).
A. Paid and Unpaid Leave and Pay Caps:
1. The first 10 days of this leave may be unpaid, or an employee may choose to substitute another type of paid leave. However, an employer may not require an employee to substitute paid leave for unpaid leave.
2. The remainder of the expanded emergency family leave (until the 12 weeks of leave is exhausted) must be paid, generally at two-thirds of the employee’s regular rate of pay, for the number of hours the employee would otherwise be normally scheduled to work.
3. However, in no event shall such paid leave exceed $200 per day or $10,000 in the aggregate.
4. Benefits must continue for the entire leave period.
B. Other Requirements and Limitations:
1. The leave is job-protected, which means that the employee must be restored to the same or equivalent position following the expiration of leave.
-However, if an employer has fewer than 25 employees, this is not required if all of the following conditions are met:
-The employee took Public Health Emergency Leave;
-The position held by the employee when the leave commenced no longer exists due to economic conditions or other changes in operating conditions of the employer (i) that affect employment; and (ii) are caused by a public health emergency during the period of leave.
-The employer makes reasonable efforts to restore the employee to a position equivalent to the position the employee held when the leave commenced, with equivalent employment benefits, pay, and other terms and conditions of employment.
-If the reasonable efforts of the employer fail, the employer makes reasonable efforts during the period to contact the employee if an equivalent position becomes available within 1 year from the date on which the qualifying need related to a public health emergency concludes; or the date that is 12 weeks after the date on which the Public Health Emergency Leave begins, whichever is earlier.
2. Private employers with fewer than 50 employees are excluded from civil damages or equitable relief in an employee-initiated lawsuit, although the employer could still be subject to a complaint to the Secretary of Labor and possible action by the Secretary of Labor for injunctive relief.
3. The leave may be used by an employee intermittently.
4. An employee is still only entitled to a total of 12 total weeks of leave under the FMLA. This Act does not add more leave to the FMLA. For example, if an employee has already used 6 weeks of traditional unpaid emergency family leave under the FMLA, that employee would only have 6 weeks of eligible leave under this Act.
5. No employer may retaliate, discharge, or discipline an employee who takes leave under this Act.
6. This Act applies to both for profit and nonprofit organizations.
7. The Act does not apply to leave taken prior to April 2, 2020.
8. The Department of Labor will be issuing more guidance on this Act.
C. Possible Exemption
1. The Act authorizes the Secretary of Labor to issue regulations to exempt small businesses with fewer than 50 employees from the expanded emergency leave obligations when the imposition of such requirements would jeopardize the viability of the business as a going concern. As of this date, no such regulations have been issued.
II. Emergency Paid Sick Leave
In addition to requiring employers to provide their employees with expanded emergency family leave, the Act also requires public and private employers with less than 500 employees to provide their employees with up to 80 hours of emergency paid sick leave to full-time employees and, for part-time employees, the equivalent of the number of hours the part-time employee works (on average over a six month period) over a two-week period. An exclusion exists for employers of health care providers or emergency responders, but only for its employees who constitute health care providers or emergency responders.
A. Entitlement to Emergency Paid Sick Leave: The paid sick leave may be used under the following circumstances:
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 health care 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 (“individual” is not defined or otherwise limited in the Act) who is subject to an order as described in subparagraph (1) or has been advised as described in paragraph (2).
5. The employee is caring for a son or daughter of such employee if the school or place of care of the son or daughter 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.
B. Pay Caps:
1. The emergency paid leave is paid at the employee’s regular rate of pay; however, employers may impose the following pay caps:
-Where leave is taken for reasons related to the employee’s own health, exposure, or quarantine under (1), (2), and (3) noted above, the employee is entitled to paid leave at the employee’s regular rate but no more than $511 per day ($5,110 in the aggregate);
-Where leave is taken for reasons (4), (5), or (6) noted above, the employee is entitled to paid leave at two-thirds of the employee’s regular rate of pay, but not to exceed $200 per day ($2,000 in the aggregate).
C. Other Requirements and Limitations:
1. An employee who can work remotely or “telework” is not entitled to paid sick leave under this Act.
2. Paid sick leave under this Act will not carry over from one year to the next, and, like all sick leave, is not considered an earned benefit that must be paid out upon separation.
3. The paid sick leave is available for immediate use by employees regardless of their length of service.
4. The availability of paid sick leave provided under this provision ceases as soon as the employee returns to work after using this paid sick leave. Stated otherwise, paid sick leave under this Act cannot be used by an employee intermittently.
5. The paid sick leave required under the Act must be provided in addition to whatever the employer already provides.
6. Employers may not require employees to exhaust other employer-provided paid leave benefits before using emergency paid sick leave, and may not amend their paid leave policies to make the benefits run concurrently.
7. Employers must post the notices of this Act in a conspicuous place and the Secretary of Labor will be providing a model notice.
8. No employer may retaliate, discharge, or discipline an employee who takes leave under this Act.
9. This Act applies to both for profit and nonprofit organizations.
10. The Act does not apply to leave taken prior to April 2, 2020.
11. The Department of Labor will be issuing more guidance on this Act.
D. Possible Exemption
1. The Act authorizes the Secretary of Labor to issue regulations to exempt small businesses with fewer than 50 employees from the Public Health Emergency Leave obligations, and the paid leave provisions related to child care outlined in (5) above, when the imposition of such requirements would jeopardize the viability of the business as a going concern. As of this date, no such regulations have been issued.
III. Tax Credits for Paid Sick Leave and Paid Expanded Emergency Family Leave
The Act provides refundable payroll tax credits to private employers with less than 500 employees through the end of the year that would cover wages paid to employees under the Act for up to ten days.
Limits: The tax credit would be equal to 100% of the wages paid to an employee under the Acts, up to $511 per day for personal sick leave, or $200 per day if the sick leave is to care for a family member or child who must remain at home due to school closings. Employer health insurance costs are also entitled to a credit, subject to the caps. The total family leave tax credit an employer may receive is capped at $10,000. The tax credits are issued quarterly. Similar credits are provided to self-employed individuals who are responsible for self-employment taxes. No tax credits for leave paid under either Act will be provided to employers who already receive tax credits for a qualifying leave program under the 2017 Tax Cuts and Jobs Act. Additional guidance on these tax credits is expected from the Department of the Treasury soon.
IV. Governor Ricketts’ Executive Order Eases Requirements for Nebraska Unemployment Benefits
The Act also provided additional funding to states for processing and paying unemployment insurance benefits. However, the current circumstances impose some difficulties for individuals trying to obtain unemployment benefits under pre-COVID-19 law. For example, individuals who are on unpaid leave from employment or are furloughed would not typically qualify for unemployment benefits and Nebraska’s pre-COVID-19 law also required individuals applying for benefits to actively seek work, which is difficult or ill-advised under the current health crisis. To address these limitations, on March 17, 2020, Governor Pete Ricketts issued an executive order which effects a waiver of certain requirements for obtaining Nebraska unemployment benefits between the dates of March 22, 2020, and May 2, 2020. This Executive Order allowed the Nebraska Department of Labor to waive:
a. The one-week wait time for employees to start collecting benefits;
b. The requirements that individuals actively seek work and are willing to take a new job; and
c. Charges incurred by employers whose employees (or former employees) file for unemployment benefits related to COVID-19. Unemployment benefits are typically paid with contributions from employers, but those charges are waived under this Executive Order.
If you have any questions related to the Legislation or Executive Order discussed in this summary or otherwise related to the impact of COVID-19 on your business, please reach out to Justin R. Herrmann, firstname.lastname@example.org, or one of the other attorneys at Jacobsen Orr law firm. www.jacobsenorr.com