Last Updated 3.27.2020 @ 11:55 am
Emergency Paid Sick Leave Act
What: Requires Employers with fewer than 500 employees and government employers to provide all employees upon hire two weeks of paid sick leave, paid at the employee’s regular rate.
Effective date: The bill becomes effective April 1, 2020 and terminates on December 31, 2020.
Reasons for Sick Leave:
- The employee is subject to a federal, state, or local quarantine or isolation order related to COVID-19;
- The employee has been advised by a health care provider to self-quarantine because of COVID-19;
- The employee is experiencing symptoms of COVID-19 and is seeking a medical diagnosis;
- The employee is caring for an individual subject or advised to quarantine or isolation;
- The employee is caring for a son or daughter whose school or place of care is closed, or child care provider is unavailable, due to COVID-19 precautions; or
- The employee is experiencing substantially similar conditions as specified by the Secretary of Health and Human Services, in consultation with the Secretaries of Labor and Treasury.
- Full-time employees are entitled to 2 weeks (80 hours) of usual pay.
- Part-time employees are entitled to the typical number of hours that they work in a typical two-week period.
Limits of Sick Pay:
- Limits paid leave to $511 per day and $5,110 in total where leave is taken for an employee’s illness or quarantine reasons (1), (2), and (3) noted above.
- Limited to $200 per day and $2,000 in total where leave is taken for care for others and school closure reasons (4), (5), or (6).
- Employees are paid at two-thirds the employee’s regular rate to care for a family member for such purposes or to care for a child whose school has closed, or childcare provider is unavailable, due to the coronavirus.
Requirement to use paid time off: An employer may not require an employee to use other paid leave provided by the employer to the employee before the employee uses the paid sick time.
Carryover: These benefits shall not carry over from 1 year to the next.
- An employer may exclude employees who are health care providers or emergency responders from this coverage.
- The bill also grants the Secretary of Labor the authority to issue regulations to exclude certain health care providers and emergency responders from the definition of employee.
- Small businesses with fewer than 50 employees are also exempt from these requirements if they jeopardize the viability of a business as a going concern.
Retaliation: The bill prohibits retaliating against any employee who takes leave under the new law.
Penalties: The bill further provides that the failure to pay required sick leave will be treated as a failure to pay minimum wages in violation of the Fair Labor Standards Act.
Tax Credits: A refundable tax credit for employers equal to 100 percent of qualified family leave wages required to be paid by the qualified leave that are paid by an employer for each calendar quarter is available.
- The tax credit is allowed against the tax imposed by section 3111(a) (the employer portion of Social Security taxes).
- The amount of qualified family leave wages taken into account for each employee is capped at $200 per day and $10,000 for all calendar quarters.
- If the credit exceeds the employer’s total liability under section 3111(a) for all employees for any calendar quarter, the excess credit is refundable to the employer.
A refundable tax credit equal to 100 percent of a qualified family leave equivalent amount for eligible self-employed individuals.
- The credit is allowed against income taxes and is refundable.
- Eligible self-employed individuals are individuals who would be entitled to receive paid leave pursuant to the Emergency Family and Medical Leave Expansion Act if the individual was the employee of an employer (i.e., not self-employed).
- The qualified family leave equivalent amount is capped at the lesser $200 per day or the average daily self-employment income for the taxable year per day.
- Employers receive 100% reimbursement for paid leave pursuant to the Act.
- Health insurance costs are also included in the credit.
- Employers face no payroll tax liability.
- Self-employed individuals receive an equivalent credit.
When employers pay their employees, they are required to withhold from their employees’ paychecks federal income taxes and the employees’ share of Social Security and Medicare taxes. The employers then are required to deposit these federal taxes, along with their share of Social Security and Medicare taxes, with the IRS and file quarterly payroll tax returns (Form 941 series) with the IRS.
Under guidance that will be released next week, eligible employers who pay qualifying sick or childcare leave will be able to retain an amount of the payroll taxes equal to the amount of qualifying sick and childcare leave that they paid, rather than deposit them with the IRS. The payroll taxes that are available for retention include:
- withheld federal income taxes,
- the employee share of Social Security and Medicare taxes,
- the employer share of Social Security and Medicare taxes with respect to all employees.
- If there are not sufficient payroll taxes to cover the cost of qualified sick and childcare paid leave, employers will be able file a request for an accelerated payment from the IRS. The IRS expects to process these requests in two weeks or less. The details of this new, expedited procedure will be announced next week.
Non-Enforcement Period: The DOL has announced it will not sue employers for violation of the FFCRA through April 17, 2020, provided that the employer has made “reasonable, good faith efforts to comply with the Act.” An employer acts “reasonably” and “in good faith” when:
- the employer remedies any violations, including by making all affected employees whole as soon as practicable.
- The violations of the Act were not “willful.” (i.e. whether the employer either knew or showed reckless disregard for the matter of whether its conduct was prohibited…”)
- The Department receives a written commitment from the employer to comply with the FFCRA in the future.
The department will retain its right to exercise its enforcement and make the violated parties whole if an employer willfully violate the act, fails to provide written commitment to comply with the FFCRA in the future, or fails to remedy the violation.
The FFCRA also requires employers post a workplace poster notifying employees of their rights under the FFCRA in a conspicuous place on the employer’s premises. But what about employees who are working from home? The Department of Labor has made clear employers can meet this requirement by emailing or direct mailing the poster to those employees or posting it on an employee information internal or external website. In a FAQ, the DOL explained employer are not obligated to share the notice with laid-off workers or new applicants, but it must do so for new hires.
- Under this policy, Labor will not bring an enforcement action against any employer for violations of the Act so long as the employer has acted reasonably and in good faith to comply with the Act.
- Labor will instead focus on compliance assistance during the 30-day period.
Q: To calculate usual pay, do I include overtime?
A: Yes. When calculating an employee’s pay under the Emergency Family and Medical Leave Expansion Act, you are required to pay an employee for the hours the employee would have been normally scheduled to work even if that is more than 40 hours in a week. However, under the Emergency Paid Sick Leave Act an employer is required to pay only up to 80 hours over a two week-period.
Q: Will the EFMLEA and Emergency Paid Sick Leave be retroactive if the individual was negatively affected prior to April 1st?
A: No. Based on the plain language of the act itself, it is not retroactive. Before the law is effective, employers could encourage or enforce employees to take a portion of accrued paid time while they are off work. Employers will need to be compliant by April 1, 2020.
Q: Is 10 days (for unpaid leave) counted by consecutive days meaning weekends too, or days worked?
A: Under traditional FMLA, many employers know employees can have intermittent leave and reduced schedules. The same might be true here, but is not discussed in the new law, we are hoping for clarification from the Secretary of Labor.
Q: How far back do we use to calculate “usual pay”?
A: Six (6) months average. If an employee has a varied weekly schedule, or if an employee typically works overtime, the employer must calculate the average number of hours per day over a six-month period, with the ending date the date the employee takes such leave.
Q: Does the Emergency Paid Sick Leave Act apply if the employee is currently laid off due to COVID-19?
A: No. An employee must be qualified due to a reason. Under the FMLA extension, if an employee is unable to work or telework for a qualifying reason, i.e. due to care of a minor child, they would be eligible for benefits. Under the emergency paid sick leave act there are six qualifying reasons. Neither act nor current legislation mentions furlough / temporary layoff or termination during this period, but those employees would not be eligible for these benefits with the current statute. The Secretary of Labor could provide guidance otherwise on any day.
Q: We laid employees off due to lack of work as a result of declining business operations. One of the employees we laid off, is also a single-mom home with a child in elementary school which is closed. Do we retract the layoff and pay her under the new legislation?
A: If the employer called back employees from lay off, and the employee fell under qualifying reasons under either act, the employee is eligible for such benefits. Employers do not have to retract your employees from layoff under this act.
DISCLAIMER: This is a guide, not legal advice. Every situation is different and people should contact us with specific questions.