March 24, 2020

Families First Coronavirus Response Act, Impact on Employers

In response to the coronavirus disease (COVID-19), the Families First Coronavirus Response Act (the Act or FFCRA) was passed by Congress and signed into law on March 18, 2020. This blog discusses the expansion of the Family and Medical Leave Act (FMLA), emergency paid sick leave, tax relief, and mandated coverage provisions of the Act. The requirements discussed below will take effect on April 1, 2020, and will remain in place until December 31, 2020.

The Department of Labor (DOL) published its first round of guidance on the FFCRA, which includes a Fact Sheet for Employees, a Fact Sheet for Employers, and a Questions and Answers document.

FMLA Expanded

The Act expanded the FMLA to now allow an eligible employee of an employer to take leave if an employee is unable to work (or telework) due to a need for leave to care of a son or daughter under 18 years of age of such employee if the school (elementary or secondary) or place of care has been closed, or the child care provider or such son or daughter is unavailable, due to a public health emergency.

Let’s break this down – the Act amended the FMLA’s definitions and substituted them with the following:

  • An “eligible employee” now means an employee who has been employed for at least 30 days by the employer (instead of the previous FMLA requirements that employee had to have been employed for a year, worked for 1,250 hours, and works in a location where there are 50 employees within a 75-mile radius).
  • The amended “employer” definition now applies to employers that have fewer than 500 employees (the previous definition applied to an employer with 50 or more employees for each working day during each of 20 or more calendar workweeks in the current or preceding calendar year).
  • Under the Act, a “public health emergency” means an emergency with respect to COVID-19 declared by a Federal, State, or local authority.

With respect to these expanded provisions, the Act excludes certain healthcare providers and emergency responders from the definition of eligible employee. It also exempts small businesses with fewer than 50 employees when it would jeopardize the viability of the business as a going concern and employers with less than 25 employees if certain conditions apply.

If leave is needed under the expanded FMLA provisions, the employer may provide the first 10 days of leave unpaid and employees may elect to substitute their accrued vacation leave, personal leave, or medical or sick leave. After 10 days, employers must compensate employees for the remainder of FMLA-leave taken at no less than 2/3 of their regular rate of pay.

Paid Sick Leave

The Act also mandates employers with fewer than 500 employees (and public agencies regardless of size) to make available 80 hours of paid sick leave for full-time employees who are unable to work or telework. Part-time employees are entitled to paid sick leave at their regular rate of pay for the average number of hours that such employees work in a two-week period. Employees who are unable to work are eligible for emergency paid sick leave for the following reasons:

  1. The employee is subject to 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 who is subject to an order as described in subparagraph (1) or has been advised 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 childcare 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 Treasury and the Secretary of Labor.

Tax Credits

The Act also includes tax credit relief for employers that are required to make these payments in relation to the FMLA expansion and emergency paid sick leave provisions above. Employers are entitled to a refundable tax credit equal to 100% of the expanded FMLA wages paid by employers on a quarterly basis. The cap is $200 per day and up to $10,000 per employee. In addition, employers will be entitled to a refundable tax credit equal to 100% of the emergency sick leave wages paid by employers for each calendar quarter:

  • $511 per day ($5,110 in the aggregate), if the employee is taking paid sick time to care for themselves under paragraph (1), (2), or (3) above; or
  • $200 per day ($2,000 in the aggregate), if the employee is taking time off to care for another under paragraph (4), (5), or (6) above.

Mandated Coverage

The Act also mandates a group health plan and a health insurance issuer (including grandfathered health plans) offering group or individual health insurance coverage to provide coverage for COVID-19 diagnostic testing (e.g., vitro diagnostic testing (nasal swab)) and related services without cost sharing (e.g., no deductible, copays, coinsurance, or any other form of out-of-pocket expense). This coverage must include services furnished during in-person (or telehealth) health care provider office visits, urgent care center visits, or emergency room visits that result in an order for or administration of a covered diagnostic test.

Impact on Employers

Even though there will be a temporary non-enforcement period for 30 days after the enactment of the Act (i.e., March 18 through April 17, 2020), employers should promptly:

  • Read and understand the Act’s requirements to determine what provisions will apply to their business;
  • Evaluate employer’s paid leave policies to address the Act’s requirements of absences related to COVID-19;
  • Post the FFCRA Notice in a conspicuous place on employer’s premises or by emailing or direct mailing this notice to its employees. FAQs about the notice requirements can be found here.
  • Stay up-to-date with Federal, State, and local activity surrounding the coronavirus and COVID-19-related legislation.

The information and content contained in this blog post are for general information purposes only, and does not, and is not intended to, constitute legal advice.

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