UPDATE: President Trump Signs Families First Coronavirus Response Act

Written by Jeremy Mittman and Stephen Franz

President Donald Trump signed the “Families First Coronavirus Response Act,” (H.R. 6201) on March 18, 2020, shortly after the Senate voted to approve the bill.  The bill will take effect on April 2, 2020.  For those who read our earlier post, the House of Representatives made a number of amendments on March 16, 2020 to the version of the bill it passed two days prior.

The most significant changes that now comprise the final version of the bill are immediately below.  For those readers who do not want to read about the changes, and only wish to know about what the law as enacted provides, skip to “What You Need To Know About the Families First Coronavirus Response Act”.

• Caps on sick pay. Paid coronavirus-related sick time must be compensated at employees’ regular rate of pay, but not to exceed $511 per day (i.e. capped for an individual making approximately $130,000/year) for employees who are sick or quarantined ($5,110 in the aggregate), and not to exceed $200 per day (i.e. capped for an individual making approximately $75,000/year) for those who are caring for a family member ($2,000 in the aggregate).
• Caps on family leave pay. While the first 10 days (down from 14 days in the earlier version) of coronavirus-related family and medical leave may be unpaid, the employee may elect (but is not required) to substitute any accrued vacation, personal, or sick leave during the time.  After these first 10 days, the employer must compensate the employee in an amount that is not less than two-thirds of the employee’s regular rate of pay, but not to exceed $200 per day or an aggregate of $10,000 per employee.
• Narrower basis for family leave pay. The amended bill limits the scope of the “qualifying need to public health emergency” necessary for an employee to take paid family leave.  Now, employees may only take paid family leave if they are unable to work (or telework) due to a need for leave to care for their minor children if the school, caregiver, or place of care is unavailable due to a coronavirus-related emergency.
• Explicit Prohibition on Changing Existing Policies Removed. The amendments remove previous language from the law which stated that paid sick leave is in addition to any existing sick leave under any state law or company policy. The law also no longer states that an employer cannot change their sick, vacation, or PTO policy now to account for the new additional paid sick leave obligations.
• Health care provider/responder exclusion. An employer of an employee who is a health care provider or an emergency responder may elect to exclude such employee from paid sick leave and family and medical leave.
• Possible exemption for small business. The new law provides that the U.S. Department of Labor can grant an exemption from the paid sick leave and/or paid family and medical leave requirements if compliance with the new law would “jeopardize the viability the business” of an employer with fewer than 50 employees. However, the law provides no further indication of how an employer can petition for an exemption, or what the criteria will be to determine such an exemption. Presumably, the Labor department will provide such guidance in the coming weeks (stay tuned for another post as soon as that is announced).

For those who did not read our previous entry (perhaps because you were waiting to see if the law would be passed), here is our March 16 post, fully revised to incorporate all the recent changes:

        What You Need To Know About the Families First Coronavirus Response Act

On March 14, 2020, the U.S. House of Representatives passed the “Families First Coronavirus Response Act,” (H.R. 6201).  After the House made a number of substantive amendments to the bill on March 16, 2020, the bill went to the Senate for approval.  The Senate approved the bill on March 18, 2020 and President Trump signed it the same day.  The law will take effect on April 2, 2020.

The law contains a number of requirements affecting many (but not all) businesses.  Significantly (and rather oddly), the bill contains paid family medical leave and sick leave provisions which only apply to employers with fewer than 500 employees.  Why only fewer than 500 employees, one may ask?  The reason is apparently nothing more than political compromise.  Most larger companies already have existing sick leave policies (though often not as much as what the new law provides for smaller employers).

Furthermore, the language of the law does not suggest that employees who are solely unable to work because of business closures due to government/executive orders (or just decisions by management) are entitled to benefits under the law.  In order to qualify for paid sick leave, an employee must either be quarantined or isolated (due to a health care provider’s recommendation or government order directing the employee to quarantine or isolate), caring for an at-risk individual who is quarantining, or caring for a child whose school or place of care is closed (or caregiver unavailable).  If the employee is unable to report to work and does not fall within one of these reasons, he/she seemingly would not be eligible for these benefits.

Paid Sick Leave 

Under the bill, employers with fewer than 500 employees must provide full-time employees with two weeks (80 hours) of paid sick leave to quarantine/isolate or seek diagnosis for the coronavirus, or to care for individuals directed by a doctor or official to quarantine/isolate.  Again, the paid sick leave is for when an individual has been directed by a doctor or official to quarantine or isolate at home.   Part-time employees are entitled to paid sick leave equal to their average number of hours worked over a two-week period.

Paid sick leave is also available for an employee who must stay at home (but who cannot telework) to care for a child due to school or childcare closure or unavailability.  It does not carry over to a subsequent year (and indeed the law has a sunset provision of December 31, 2020) and unused leave is not paid out at termination.

Paid sick time must be compensated at employees’ regular rate of pay, but not to exceed $511 per day for employees who are sick or quarantined ($5,110 in the aggregate), and not to exceed $200 per day for those who are caring for a family member or child at home ($2,000 in the aggregate).

Paid Family and Medical Leave

This provision also only applies to employers with fewer than 500 employees.  Employees on the job for at least 30 days have the right to take up to twelve weeks of job-protected leave under the Family and Medical Leave Act (“FMLA”) to care for their child if the child’s school or place of care is closed due to the coronavirus.  Employees must have been employed for at least 30 days.  Leave under this law counts towards an employee’s 12 weeks of FMLA leave (e.g. for a non-coronavirus serious health condition), assuming they otherwise qualify.

While the first 10 days of the leave may be unpaid, the employee may elect (but is not required) to substitute any accrued vacation, personal, or sick leave during the time.  After these first 10 days, the employer must compensate the employee in an amount that is not less than two-thirds of the employee’s regular rate of pay, but not to exceed $200 per day or an aggregate of $10,000 per employee.  (One may ask why the first 10 days of paid family and medical leave are unpaid; the reason is because presumably most employees will choose to use their allotted 80 hours (i.e. approximately 10 days) of paid sick leave during this 10 day initial period).

Notice Requirements

Employers must post a notice to inform employees of their rights under the new law.  The Department of Labor will issue a model notice by March 25, 2020.  MSK will provide an update when the notice is available.

Tax Credits Available to Employers Who Provide Paid Sick and Paid Family Leave Under the Law

Helpfully, tax credits are available to employers who now need to provide such paid sick leave and paid family leave. The tax credit for paid sick leave is up to $511 per employee per day and for paid family leave, up to $200 per employee per day (or up to $10,000 per employee in the aggregate).  The tax credit will be applied to the 6.2% tax that companies normally pay on each employee’s salary for Social Security.  If the paid leave ends up costing more than the employer’s Social Security tax bill, the federal government will provide the employer a check to cover the remaining balance, with the logistics of this payment determined by the Treasury and the IRS.

Penalties for Noncompliance

The bill prohibits employers from discriminating against an employee who takes paid sick leave or complains about a violation of the new law.  An employer who does not provide paid sick leave to employees may be liable to the employees for delinquent sick pay and liquidated damages, and may also face statutory penalties of up to a $10,000 fine and/or six months imprisonment.