COVID-19: Employee Rights
March 27, 2020
NOTE: Due to the recent enactment of this legislation this guide is subject to modification and/or amendment. Contact Grady & Riley for the most up-to-date information as this situation is subject to further change at any time
I. Families First Coronavirus Response Act (FFCRA)
The Families First Coronavirus Response Act (FFCRA) is a temporary law that requires all business employers with less than 500 employees to provide their employees with expanded family and medical leave (FMLA) for reasons related to the COVID-19 virus pandemic. Any employee who has been employed for at least 30 calendar days is entitled to the expanded eligibility for FMLA under FFCRA.
The first 10 business days (2 calendar weeks) of the FFCRA-FMLA are unpaid leave (Note: see below how this act interfaces with the Emergency Paid Sick Leave Act (EPSLA)). If an employee has accrued PTO, he/she may use it to cover those 10 days. After 10 days, the employer is required to pay 2/3 of regular rate of pay for up to 10 more calendar weeks.
If the employee, however, has already used FMLA within the current calendar year, the obligation only extends up to a total of 12 weeks.
Example: Employee took seven weeks of FMLA in 2020. Now employee says, “I need to stay home indefinitely because my children's school has been canceled for the remainder of the year due to COVID-19.”
The employer’s FMLA obligation to employee is only 5 more weeks, because employee has already used 7 weeks. The first 10 days (2 weeks) are unpaid (but see EPSLA below); after that, employee would receive 2/3 of their salary for the final 3 weeks. If employee cannot return to work after those final 3 weeks, their employment may be lawfully terminated. Employee's job was held for them for FMLA-qualifying reasons for 12 weeks within the 2020 calendar year. Employer is not obligated to hold employee's job for longer than that period of time—unless it wishes to do so voluntarily.
II. Emergency Paid Sick Leave Act (EPSLA)
The Emergency Paid Sick Leave Act (EPSLA) also applies to employers with less than 500 employees. It requires 80 hours of additional paid sick time (in addition to any accrued sick time pursuant to employer’s policies) for all full-time employees (this may be pro-rated for part-time employees).
Employees are eligible for paid sick leave under EPSLA from DAY ONE of employment.
(This means that upon request, an employer MUST permit an employee to use paid sick time to cover those first two calendar weeks (10 business days) under the FFCRA expansion of FMLA.
III. Eligibility of Employees under FFCRA and EPSLA
Employer must provide paid sick time if the employee is unable to work (or telework) due to any of the following reasons:
i. Reasons #1-3: Employer pays 100% of pay
1. Employee is subject to a Federal, State, or local quarantine or isolation order related to COVID-19 (Employee entitled to 100% pay);
2. Employee has been advised by a health care provider to self-quarantine due to concerns related to COVID-19 (employer may ask for medical note taking employee out of work) (Employee entitled to 100% pay);
3. Employee is experiencing symptoms of COVID-19 and seeking a medical diagnosis (Employee entitled to 100% pay);
ii. Reasons #4-6: Employer pays up to 2/3 of pay
4. Employee is caring for an individual who is subject to quarantine or isolation order, or has been advised to self-quarantine by a health care provider due to COVID-19 (Employee entitled to 2/3 pay);
5. Employee is caring for a son or daughter of such employee if school or place of care of son or daughter is closed, or if child care provider of such son or daughter is unavailable due to COVID-19 precautions (Employee entitled to 2/3 pay);
6. Employee is experiencing any other substantially similar condition specified by the Secretary of Health and Human Services in consultation with Secretary of the Treasury and the Secretary of Labor (Employee entitled to 2/3 pay).
Note that both Acts are subject to maximum benefit amounts. If employee’s leave is for reasons #1, 2, or 3, then employer would not be required to pay more than $511 per day.
If employee’s leave is for reasons #4, 5, or 6, then employer would not be required to pay more than $200 per day.
IV. Small Business Relief
Small businesses with fewer than 50 employees may seek an exemption from ALL OF THE ABOVE NEW REQUIREMENTS (FFCRA and EPSLA) if compliance with those laws would jeopardize the viability of the business as a going concern.
1. The Connecticut Department of Labor has encouraged employers who would be in danger of dissolving if required to pay these benefits to document how and why its business may qualify for this exemption (unfortunately, employer must have to gamble that the Connecticut DOL will find its claim credible and exempt the employer retroactively). We would suggest documenting:
a. Balances of company accounts before, at the time, and in the days following an employee’s request to exercise his or her right to FFCRA or EPSLA;
b. Past and current tax returns;
c. Evidence of layoffs or terminations of other employees which occurred at or around the time one or more employees requested FFCRA or EPSLA leave time (this would serve as evidence that the business was truly in jeopardy at the time in question);
d. Pertinent economic market data (did any similarly-situated businesses in the same local area go under at the time employer claimed exemption and denied payment of employee’s requested leave?).
2. Employer probably has an obligation to prove to the DOL that it did *everything* in its power to comply with the new requirements. That would likely include seeking a loan (at a reasonable rate) from traditional sources and also an application for a zero-interest loan from the State of Connecticut which are being given out to help small businesses who are on the brink and need relief immediately to avoid folding.
3. In the meantime, employer should not send the DOL any materials or documentation seeking an exemption. For now, it appears exemptions will only be granted after the fact. Employer should document the imperiled status of its business, with the above-mentioned advice in mind.
V. Small Business Credit to Offset Increased Expenses
Employers required to provide expanded FMLA under FFCRA and/or emergency paid sick leave under EPSLA shall receive 100% reimbursement for paid leave pursuant to the Act.
Covered employers qualify for dollar-for-dollar reimbursement through payroll tax credits for all qualifying wages paid under the FFCRA or EPSLA. Qualifying wages are those paid to an employee who takes leave under the Acts for a qualifying reason, up to the appropriate per diem and aggregate payment caps. Applicable tax credits also extend to amounts paid or incurred to maintain health insurance coverage.
THE GOAL OF THE LEGISLATION IS TO PROVIDE IMMEDIATE HELP TO SMALL BUSINESSES WITH PROMPT PAYMENT FOR COST OF PROVIDING LEAVE
Employers who pay qualifying sick or child care leave will be able to retain an amount of the payroll taxes equal to the amount of qualifying sick and child care 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 an 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 child care leave paid, 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.
EXAMPLES
1. If small business employer paid $5,000 in sick leave and is otherwise required to deposit $8,000 in payroll taxes, including taxes withheld from all its employees, the employer could use up to $5,000 of the $8,000 of taxes it was going to deposit for making qualified leave payments. The employer would only be required under the law to deposit the remaining $3,000 on its next regular deposit date.
2. If an eligible employer paid $10,000 in sick leave and was required to deposit $8,000 in taxes, the employer could use the entire $8,000 of taxes in order to make qualified leave payments and file a request for an accelerated credit for the remaining $2,000.
3. Equivalent child care leave and sick leave credit amounts are available to self-employed individuals under similar circumstances. These credits will be claimed on their income tax return and will reduce estimated tax payments.
For further details, see IRS Guidance issued March 23, 2020:
VI. Enforcement of New Legislation
DOL has announced it will observe a temporary, 30-day “no enforcement” period, but employer is required to act in good faith.
VII. Unemployment
Additional assistance from the State of Connecticut or the federal government may be available depending upon whether or not unemployment levels reach certain regional thresholds. Contact your Grady & Riley attorney for further details.
VIII. WARN Act (i.e., closing business, group layoffs, or suspension of business operations requires notice to employees)
The following exceptions to the notice requirement under the WARN Act are likely to protect the small business employer:
1. Natural disaster (COVID-19 likely could fall under this category)
2. Faltering business
3. Need to close caused by business circumstances that were not reasonably foreseeable as of the time notice would have been required (i.e. in most cases, 60 days).
IX. Employer's Obligations to Notify Employees
Each covered employer must post in a conspicuous place on its premises a notice of FFCRA / EPSLA requirements.
The poster is available through the following link:
https://www.dol.gov/sites/dolgov/files/WHD/posters/FFCRA_Poster_WH1422_Non-Federal.pdf
Please contact us for further information.
