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Late Wednesday, March 18, President Trump signed H.R. 6201 - Families First Coronavirus Response Act (FFCRA) into law, effectively ratifying Congress’ second major stimulus bill arising from the COVID-19 (Coronavirus) pandemic. While we await the third stage of the stimulus package, promoted by the president, we can update the effect of the following changes to federal law. The new provisions set forth in the FFCRA become effective within 15 days (e.g. April 2, 2020) and will expire on December 31, 2020.

Emergency Paid Sick Leave

The bill provides for mandatory PAID sick leave for all employees who work for employers with UNDER 500 employees, as follows:

  • 80 hours of paid sick leave for full-time employees
  • Pro-rated average for part-timers (using an average of their two-week work schedule)
  • Paid sick time is available for immediate use regardless of how long the employee has been employed.
  • The leave requirements ONLY apply to employees:

A) Who are subject to a federal, state, or local quarantine or isolation order related to COVID-19;

B) Who have been advised by a health care provider to self-quarantine;

C) Who experience symptoms of COVID-19 and are currently seeking a medical diagnosis;

D) Who are caring for an individual who is subject to either of the points as described above;

E) Who are caring for a son or daughter due to school or day care closures; OR,

F) Who are experiencing “substantially similar conditions” to those of COVID-19.

  • If the employee takes a leave of absence for points A, B or C, s/he is paid at the higher of his or her regular rate of pay (either hourly or salary), the federal minimum wage, or the local minimum wage, with a maximum daily benefit of $511/day (equivalent to $113,000 per year).
  • If the employee is taking the leave based upon points D, E and F, s/he would be paid two-thirds of the regular rate of pay, or a maximum of $200/day. This paid leave is on top of any existing sick leave entitlements that employees may already have accrued.
  • Employers are required to post notices in a conspicuous location in their place of business, notifying employees of their rights under the FFCRA.

Emergency Family and Medical Leave

The Emergency Family and Medical Leave portion of the FFCRA applies to those employees who have been employed for thirty (30) consecutive days, prior to taking leave. Each eligible employee is then eligible for up to twelve (12) weeks of job protected leave (inclusive of the first two weeks being covered under the Emergency Paid Sick Leave, as discussed above) when employees cannot work (or telework) because their minor child's school or child care service is closed due to a public health emergency.

The first 10 days of this leave may be unpaid, however, after the waiting period, the employer must pay the employee no less than two-thirds of the employee’s regular rate of pay, not to exceed $200 per day and $10,000 in the aggregate, for the time s/he is off work. Employees may elect to use any accrued, but unused sick leave, vacation leave, or paid time off, but please note that an employer cannot require employees to exhaust paid leave, during the first ten (10) days of the leave period.

The bill specifically indicates that smaller employers (under 50 employees) may be entitled to apply for an exemption from the new provisions. However, the employer carries the burden of proof to establish “the imposition of such requirements would jeopardize the viability of the business as a going concern.” This basically means that a business must be able to show that, if required to provide the paid sick and/or family leave, it would render the business insolvent/bankrupt. We expect further clarification from the United States Secretary of Labor on this exemption in the coming days.

Tax Credits

The bill further provides that employers will be entitled to receive specific tax credits to help off-set the costs of the paid leave requirements. However, the statute limits the amount an employer is able to seek, limiting them to a credit of up to $511 per day for an employee’s own sickness or self-isolation and a credit of up to $200 per day when employees have taken time off work to care for a child after a school or child care closure or an ill family member.

Many smaller employers have complained that the new law only applies to those private businesses with 500 or FEWER employees, and that big businesses are being let off the hook. Speaker of the House, Nancy Pelosi responded to this argument via Twitter saying: "I don't support U.S. taxpayer money subsidizing corporations to provide benefits to workers that they should already be providing," This would, of course, assume that larger companies are already providing similar benefits, or will voluntarily comply with the provisions of the FFCRA without a federal mandate.

Obviously, this is a constantly changing situation. We encourage every business owner to stay on top of these latest changes, and to consult with competent legal counsel, trained to understand the intricacies of these requirements, before taking any actions! We at Poole Shaffery are standing by to help with any questions you may have!