Many Businesses Must Offer Paid Leave Under Coronavirus Relief Law

March 24, 2020

A new federal law signed by President Donald Trump will provide paid leave to employees who miss work for certain coronavirus-related reasons.

The Families First Coronavirus Response Act (H.R. 6201), which goes into effect no later than April 2 and will continue through Dec. 31, 2020, provides paid emergency family leave in limited circumstances, as well as paid sick leave for people affected by COVID-19.

In general, the emergency paid-leave provisions in the legislation apply to businesses with fewer than 500 employees, but there may be some exceptions available for small businesses. Roughly two-thirds of ALTA’s membership is considered small business.

Expanded FMLA

The legislation temporarily expands Family and Medical Leave Act (FMLA) protections and benefits to employees who have been employed 30 calendar days and need leave as a result of a school closure or closure of a childcare provider due to the public health emergency related to COVID-19. Employees are not required to meet the usual FMLA requirements, including working for 12 months, working for 1.25 hours or working in a location with at least 50 employees in a 75-mile radius. The final legislation narrowed the available leave and removed leave protections associated with an employee’s own exposure or symptoms related to COVID-19 or that of a family member. Note, however, that traditional FMLA remains available, so employees can still take unpaid leave for their own serious health condition or that of a family member.

This new expanded FMLA leave includes both unpaid and employer paid leave. The first 10 days of the COVID-19 FMLA leave are unpaid. During this period of unpaid leave, an employee may elect to substitute any accrued vacation leave, personal leave, or medical or sick leave. After the 10-

day unpaid leave period, Covered Employers must pay employees at two-thirds of the employee’s regular rate of pay. The final legislation provides that the amount of such paid leave should not exceed $200 per day and $10,000 in the aggregate.

While the job restoration provisions of FMLA generally apply with respect to this new COVID-19-related leave, there is relief afforded to Covered Employers with fewer than 25 employees. Specifically, such employers need not restore an affected employee to his or her position if the position ceases to exist, though such an employer will be subject to other requirements, including reinstatement to an equivalent position if one becomes available within a one-year period.

Paid Sick Leave

Under the bill, many employers will have to provide up to 80 hours of paid-sick-leave benefits if an employee:

  • Has been ordered by the government to quarantine or isolate because of COVID-19.
  • Has been advised by a health care provider to self-quarantine because of COVID-19.
  • Has symptoms of COVID-19 and is seeking a medical diagnosis.
  • Is caring for someone who is subject to a government quarantine or isolation order or has been advised by a health care provider to quarantine or self-isolate.
  • Needs to care for a son or daughter whose school or child care service is closed due to COVID-19 precautions.
  • Is experiencing substantially similar conditions as specified by the secretary of health and human services, in consultation with the secretaries of labor and treasury.

The amount an employee is paid during this sick leave is based on the employee’s required compensation and the employees’ number of hours normally scheduled to work. Generally, this means paid sick time is paid at the employee’s regular rate of pay (or minimum wage, whichever is greater). However, the final legislation added a special rule permitting employers to use two-thirds of the employee’s required compensation with respect to sick leave associated with family members.

Potential Tax Credits

The bill allows refundable payroll tax credits for employers providing paid family leave or paid sick leave wages required under the CRA due to COVID-19. The rule includes credit for an employer’s qualified health plan expenses allocable to wages associated with the respective leaves.

A refundable payroll tax credit is allowed for 100 percent of wage payments made under expanded FMLA, which, subject to further guidance, may include “qualified health plan expenses” allocable to such wages. However, for each employee, the credit is capped at $200 per day and $10,000 in the aggregate (or 50-day total limit).

A refundable payroll tax credit is also allowed for private employers for 100% of payments made for qualified paid sick leave wages, which, subject to further guidance, may include “qualified health plan expenses” allocable to such wages. However, this credit is limited in several ways:

  • Wages taken into account are generally capped at $511 per day per employee.
  • Wages taken into account are capped at $200 per day per employee for employees caring for a family member or for a child whose school or place of care has been closed.
  • Only 10 days, in aggregate, may be taken into account.

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