Editor’s Note: Based on the most recent guidelines published by the Wage & Hour Division of the Department of Labor, this law will become effective April 1, 2020.
With COVID-19 sweeping the country, the U.S. House of Representatives passed a proposed bill (HR 6201) on March 11, 2020 in an effort to address some of the impact of the pandemic. On March 18, 2020, an updated version of the original House bill was voted on and passed by the U.S. Senate moving the proposed measures related to the emergency expansion of Family and Medical Leave and Paid Sick Leave forward. President Trump signed the bill into law soon thereafter and the Act, along with all leave requirements, is supposed to take effect within, but no later than, 15 days. Employers must be prepared to implement the leave provisions on or before April 1, 2020. The benefits and requirements contained in the Act will remain in effect through December 31, 2020.
DIVISION C: Emergency Family and Medical Leave Expansion Act
The legislation will provide employees with up to 12 weeks of job-protected leave under the Family and Medical Leave Act (FMLA) to be used to care for a child if the child’s school has closed or child-care provider is unavailable due to coronavirus. After ten days of unpaid leave, employees will receive no less than 2/3 of their usual pay with a cap of $200 per day and $10,000 total. Employees may elect to use other paid benefits during the first ten days of leave.
This Act applies only to employers with fewer than 500 employees or government employers. Employees must have been on the job for at least 30 days to be eligible for leave.
An employee must be restored to the same or equivalent position after leave. Employers with fewer than 25 employees are not subject to this requirement if the employee’s position no longer exists due to changes in economic conditions or operations caused by the coronavirus emergency, but such employers must make reasonable efforts to reinstate the employee and to contact the employee if an equivalent position becomes available within one year.
Employees working under a multi-employer collective agreement and whose employers pay into a multi-employer plan are covered. This Act takes effect no later than 15 days after enactment.
The Secretary of Labor may issue regulations (i) excluding certain health care providers and emergency responders from this Act; and (ii) exempting small businesses with fewer than 50 employees from this Act if it would jeopardize the viability of the business. Employers of health care providers and emergency responders may elect to exclude such employees from this Act.
At the time of publication, no regulations have been issued by the Secretary of Labor.
DIVISION E: Emergency Paid Sick Leave Act
Employers with fewer than 500 employees and government employers shall provide the following to their employees:
- Paid sick leave, paid at the employee’s regular rate and capped at $511 per day and $5,110 in the aggregate, to (i) comply with a quarantine or isolation order related to coronavirus; (ii) seek diagnosis for coronavirus; or (iii) self-isolate on the advice of a health care provider due to coronavirus; and
- Paid sick leave, paid at 2/3 the employee’s regular rate and capped at $200 per day and $2,000 in the aggregate, (i) to care for an individual who, due to coronavirus, is complying with a quarantine or isolation order, seeking diagnosis, or self-isolating on the advice of a health care provider; (ii) to care for a child whose school is closed or child-care provider is unavailable due to coronavirus; or (iii) if the employee is experiencing any other substantially similar condition specified by the Secretary of Health and Human Services in consultation with the Secretary of the Treasury and Secretary of Labor.
Full time employees are entitled to two weeks (80 hours) and part time employees are entitled to the typical number of hours worked in a two-week period. The leave provided under this Act shall be in addition to any other paid leave provided by an employer prior to the date of this Act, and employers may not require employees use other paid leave provided by the employer before using the paid sick leave under the Act. Employers also may not require that employees find a replacement.
Paid sick time under this Act shall be available immediately regardless of how long the employee has been employed. Employees working under a multi-employer collective agreement and whose employers pay into a multi-employer plan are covered. This Act and its requirements expire on December 31, 2020.
The Secretary of Labor may issue regulations (i) excluding certain health care providers and emergency responders from this Act; and (ii) exempting small businesses with fewer than 50 employees from this Act if it would jeopardize the viability of the business.
At the time of publication, no regulations have been issued by the Secretary of Labor.
Employers who do not provide paid sick leave are considered to have failed to pay such employees minimum wage under the Fair Labor Standards Act and may be subject to the penalties provided therein.
Prohibited Acts. The Act also makes is unlawful for any employer to discharge, discipline or discriminate against any employee who either (1) takes leave; or (2) has filed any complaint or proceeding or testified in any proceeding to enforce the Act.
Division G – Tax Credits for Paid Sick, Family and Medical Leave
Payroll Credit for Required Paid Sick Leave: Employers shall receive a refundable tax credit equal to 100% of the qualified paid sick leave wages paid during each calendar quarter under the Emergency Paid Sick Leave Act. This is a credit against the employer portion of social security and railroad retirement taxes. Certain qualified health plan expenses allocated to sick leave wages are included in the credit.
The amount of qualified paid sick leave wages taken into account for each employee is capped at either:
- $511 per day for amounts paid to employees under quarantine or obtaining a diagnosis for coronavirus; or
- $211 per day for amounts paid to employees caring for a family member or child.
The aggregate number of days taken into account per employee may not exceed the excess of 10 over the aggregate number of days taken into account for all previous calendar quarters. Employers may elect to not apply this credit. No deduction is allowed for the amount of the credit. No credit is allowed for wages for which a credit is allowed under Sec. 45S.
Credit for Self-Employed Sick Leave: Eligible self-employed individuals shall receive a refundable tax credit equal to either:
- 100% of a qualified sick leave equivalent amount if the self-employed individual is under quarantine or obtaining a diagnosis for coronavirus (capped at the lesser of $511 per day or the average daily self-employment income for the taxable year); or
- 67% of a qualified sick leave equivalent amount if the eligible self-employed individual is caring for a family member or child (capped at the lesser of $200 per day or the average daily self-employment income for the taxable year).
This credit applies against income taxes. Eligible self-employed individuals are individuals who would be entitled to receive paid leave under the Emergency Paid Sick Leave Act if employed by an employer. Eligible self-employed individuals may only include days that they are unable to work for reasons that would qualify for paid leave under the Emergency Paid Leave Act. Self-employed individuals must maintain documentation prescribed by the Treasury Secretary to establish eligibility. Any qualified sick leave equivalent amount must be reduced proportionately for any days the individual also receives paid leave under the Emergency Paid Sick Leave Act.
Payroll Credit for Required Family Leave: An employer shall receive a refundable tax credit equal to 100% of qualified family leave wages paid for each calendar quarter under the Emergency Family and Medical Leave Expansion Act. This is a credit against the employer portion of social security and railroad retirement taxes. Certain qualified health plan expenses allocated to family leave wages are included in the credit.
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. Employers may elect to not apply this credit. No deduction is allowed for the amount of the credit. No credit is allowed for wages for which a credit is allowed under Sec. 45S.
Credit for Self-Employed Family Leave: An eligible self-employed individual shall receive a refundable tax credit equal to 100% of a qualified family leave equivalent amount if the self-employed individual would be eligible for paid leave under the Emergency Family and Medical Leave Expansion Act if employed by an employer. This amount is capped at the lesser of $200 per day or the average daily self-employment income for the taxable year.
This credit applies against income taxes. Eligible self-employed individuals may only include days that they are unable to work for reasons that would qualify for paid leave under the Emergency Family and Medical Leave Expansion Act. Self-employed individuals must maintain documentation prescribed by the Treasury Secretary to establish eligibility. Any qualified family leave equivalent amount must be reduced proportionately for any days the individual also receives qualified family leave wages from an employer.
Additional Tax Credit: Both of the payroll tax credits granted to employers will be increased by the payroll tax imposed on qualified sick leave or family leave wages under IRC Sec. 3111(b) for Medicare hospital insurance.
Each credit only applies beginning on a date set by the Treasury Secretary (within 15 days of enactment) and ending December 31, 2020.
Please note this information is current as of the date and time of publication based on the available data. However, because updates and changes related to this topic are ongoing, you must review the most current information on this topic and/or any COVID-19 information distributed by the CDC and/or federal, state and local officials.
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