What is the effective date for the Act?
We believe the Act will be in effect from April 1, 2020, through Dec. 31, 2020.
Are employers with fewer than 50 employees subject to the Act?
Yes. The provisions of the Act, including the Emergency Family and Medical Leave Expansion Act and emergency paid sick leave, must be made available to employees as necessary unless the employer intends to pursue an exemption from the Department of Labor. We are still awaiting regulatory guidance on the exemption issue.
Does the Act offer job protection to employees on leave?
Yes, the Act offers job protection. However, the FMLA’s requirement that an employee be restored to the same or equivalent position after leave does not apply to an employer with fewer than 25 employees if the employee’s position no longer exists due to economic conditions or other changes in the employer’s operations that affect employment and are caused by the public health crisis during the period of leave.
The employer must make reasonable efforts to restore the employee to the same or an equivalent position and, if the "reasonable efforts" fail, the employer must make efforts to contact the employee and reinstate the employee if an equivalent position becomes available within a one-year period beginning on the earlier of: (a) the date on which the qualifying need related to a public health emergency concludes; or (b) the date that is 12 weeks after the date the employee’s leave started.
At what rate do employees accrue paid sick leave?
There is no accrual rate or period. The entire 80 hours (or pro-rated for part-time workers) of paid sick leave is available immediately.
Which employees are eligible for these benefits?
The new FMLA provisions would apply to employees who have been employed for at least 30 calendar days. This is different from the original FMLA requirements that the employee has been employed for a year, worked for at least 1,250 hours, and works in a location where there are 50 employees within a 75-mile radius. This stipulation would not apply.
The paid sick leave provisions are immediately available to all employees of eligible employers.
What notice must an employee provide for leave?
The FMLA provisions require employees to provide the employer with “notice of leave as is practicable.”
The paid sick leave provisions state that after the first workday (or some portion thereof) that an employee receives paid sick leave, an employer may require the employee to follow reasonable notice procedures in order to continue receiving the paid sick leave.
Is carryover required for unused emergency paid sick leave?
No. Unused emergency paid sick leave does not carry over from one year to the next.
Can an employer require an employee who takes emergency paid sick leave to find a replacement worker?
No. An employer may not require an employee to find a replacement worker when the employee takes emergency paid sick leave.
Does an employer have to pay out unused emergency paid sick leave if the employee separates from employment?
No. An employer is not required to pay unused emergency paid sick leave if an employee separates from employment.
Are employers with 500 or more employees obligated to provide paid sick leave or other time-off benefits under the Act?
No. However, they must still must comply with obligations under state or local paid sick leave or paid family and medical leave laws and administer sick or paid time off or paid leave provided under existing company policies or collective bargaining agreements.
Does the 500-employee threshold apply to a single location or companywide?
The company must have fewer than 500 employees companywide not just a single location.
Are employees who work under multiemployer bargaining agreements eligible for the benefits of these leave provisions?
Yes. Both the FMLA and paid sick leave provisions state that an employer who is a signatory to a multiemployer collective bargaining agreement may fulfill its obligations by making contributions to a multiemployer fund, plan or program based on what paid leave each of its employees is entitled to while working under the agreement. The fund, plan or program must enable employees to receive pay for the FMLA leave.
If an employer with more than 500 employees has an employee who contracts COVID-19, can the employer require the employee to use sick time and/or other PTO?
Possibly. Whether an employer can require an employee to use sick time and/or other PTO depends on the employer’s existing policies. For employers subject to FMLA, an employee suffering from the virus is likely experiencing a serious health condition. In this case, the FMLA policy would govern. If the FMLA policy requires employees to use PTO for serious health conditions, the employer could require it. However, the FMLA policy may give the employee, rather than the employer, the option to decide whether to use PTO or unpaid leave for a serious health condition.
For employers not subject to FMLA, employer policies regarding sick time and/or PTO will govern, including employer policies addressing state and locally required PTO.
If an employee of an employer with more than 500 employees is out of work caring for a family member who is suffering from COVID-19, can an employer require the employee to use sick time and/or other PTO?
Possibly. It depends on the employer’s existing policies. For employers subject to FMLA, a family member suffering from the virus is likely experiencing a serious health condition. In this case, the FMLA policy would govern. If the FMLA policy requires employees to use PTO to care for a family member, the employer could require it. However, the FMLA policy may give the employee, rather than the employer, the option to decide whether to use PTO or unpaid leave for a serious health condition.
For employers not subject to FMLA, employer policies regarding the use of PTO to care for a family member, if any, will govern. In the absence of a policy, employers could require employees to use PTO to care for a family member. However, the CDC is suggesting that employers consider flexibility regarding PTO policies, which could include making exceptions to existing policies by allowing employees to take unpaid leave before paid leave is exhausted and/or providing additional paid leave.
If an employee is currently on FMLA, prior to the enactment of the Families First Coronavirus Response Act, how will the Act affect that individual?
If an employee is currently eligible and using FMLA, there are no changes to the policy. However, if an employee is using FMLA and their place of work has been subject to closure, the closed days will not be deducted against the employee’s FMLA balance.
If an employer already has a generous paid sick leave policy, does the employer have to make employees exhaust these paid benefits before it is eligible for the payroll tax credit under the Act?
No. Employers must allow employees to use the hours available to them through the emergency paid sick leave before requiring them to use any other paid leave benefits. Payroll tax credits will then be applied accordingly.
Are tax credits available to help offset the cost of providing paid sick leave?
Each quarter, private sector employers that are subject to the requirement are entitled to a fully refundable tax credit equal to 100% of the qualified sick leave wages paid by the employer. Employees are eligible to receive qualified sick leave wages under the Act for up to 10 days. Qualified sick leave wages are capped at $511 per day, or $200 per day if the leave is for caring for a family member. The tax credit is applied against employer Social Security taxes, but employers are reimbursed if their costs for qualified sick leave exceed the taxes they would owe. The Treasury secretary is provided with regulatory authority intended to help with cash flow issues, for example, by waiving penalties for employers that fail to deposit payroll taxes in anticipation of the credit. We are awaiting final guidance to be issued on the mechanics of the payroll credit and refund process.
Are tax credits available to help offset the cost of providing the paid FMLA?
Each quarter, private sector employers that are subject to the requirement are entitled to a fully refundable tax credit equal to 100% of the qualified paid FMLA wages paid by the employer. Employees may be eligible for up to 12 weeks of emergency FMLA and may receive qualified, paid FMLA wages for up to 10 weeks. Qualified paid FMLA wages are capped at $200 per day and $10,000 overall. The tax credit is applied against employer Social Security taxes, but employers are reimbursed if their costs for qualified paid FMLA exceed the taxes they would owe. The Treasury secretary is provided with regulatory authority intended to help with cash flow issues, for example, by waiving penalties for employers that fail to deposit payroll taxes in anticipation of the credit. We are awaiting final guidance to be issued on the mechanics of the payroll credit and refund process.
Should businesses lay off employees now or pay them two weeks of sick pay at 100% and get the payroll tax credit?
Businesses will have to decide if the Act impacts or delays their decision to lay off employees and when. There are many factors to consider when making this decision. Baker Tilly can help perform a high-level analysis to include cash flow and the employee populations using both the emergency paid sick leave and the emergency FMLA expansion versus layoffs. To help your business make these decisions, contact us.
What amounts will be considered allocable “qualified health plan expenses” for purposes of the payroll tax credits?
We are awaiting final regulations from the Department of Labor to define the cost and the calculation in determining for these credits.
Is the payroll tax credit for paid sick leave and/or emergency family medical leave under this Act only applicable to amounts paid and payable 15 days after enactment, or will these credits apply to sick leave paid and payable before this date?
Current guidance suggests no retroactivity. We believe the Act will only be effective for the period of April 1, 2020, to Dec. 31, 2020.
