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What Employers Should Know About 2nd COVID-19 Relief Law

By Susan Sholinsky, Lauri Rasnick, Nancy Popper and Ann Mahoney · March 23, 2020, 6:26 PM EDT

Susan Sholinsky
Susan Sholinsky
Lauri Rasnick
Lauri Rasnick
Nancy Popper
Nancy Popper
Ann Mahoney
Ann Mahoney
On March 18, President Donald Trump signed H.R. 6201, the Families First Coronavirus Response Act, or FFCRA, into law. The FFCRA, the second coronavirus aid package, is intended to provide relief to workers and provide other economic benefits in response to the 2019 novel coronavirus.

For employers, the two key elements of the FFCRA are the Emergency Paid Sick Leave Act, or EPSLA, and the Public Health Emergency Leave, or PHEL, under amendments to the Family and Medical Leave Act. Both of these provisions provide for paid job-protected leave for workers missing work due to COVID-19-related reasons.

Effective Date and Applicability

The FFCRA will go into effect no later than April 2, which is 15 days following the act’s enactment. While there has been no indication that the law will become effective prior to this date, the U.S. Department of Labor is expected to release emergency regulations that may clarify or alter the implementation of the law, including its effective date. The act currently sunsets on Dec. 31, 2020.

The EPSLA and PHEL apply to private employers with fewer than 500 employees, as well as all public employers.

Accounting for Employees

With its forthcoming regulations, we hope the DOL will clarify how employees are counted when determining coverage under the FFCRA, but at this time we believe that the number of employees as of the date of the FFCRA’s enactment will be determinative. In working with employers to help determine applicability and count employees, we will be looking to the definitions, regulations and case law pursuant to the Fair Labor Standards Act and the FMLA.

Related Entities 

Distinct employing entities are generally treated as separate employers; however, the entities may be sufficiently integrated to be considered a single employer under the FLSA and the FMLA. For example, under the FLSA, an employer is considered a single enterprise based on:

related activities performed (either through unified operation or common control) by any person or persons for a common business purpose, and includes all such activities whether performed in one or more establishments or by one or more corporate or other organizational units including departments of an establishment operated through leasing arrangements.[1]

Further, under existing FMLA regulations, an employer would count employees across affiliated entities if they meet the integrated employer test (as explained in Title 29 of the Code of Federal Regulations Section 825.104).

The factors analyzed under the test include (1) whether there is common management; (2) interrelation between operations; (3) centralized control of labor relations; and (4) the degree of common ownership/financial control. While no single factor is decisive, centralized control of labor relations is often critical to the determination.

Exemptions for Small Employers

Both the EPSLA and the PHEL allow the DOL to create regulations to exempt businesses with fewer than 50 employees, "when the imposition of such requirements would jeopardize the viability of the business as a going concern." Thus, at this time, it appears that such employers would need to affirmatively seek exemptions.

Further, the job-restoration requirements for the PHEL apply to employers with 25 or more employees, with a carveout for smaller employers, if certain conditions are met (including the position being eliminated due to economic reasons and the employer making reasonable attempts to recall the employee within the year following the leave).

Reasons for Leave

Employees may take EPSLA leave for six reasons, one of which overlaps with the PHEL (see number 5, below). An employee is eligible for these leaves only if the employee is also unable to work or telework:

1. The employee is subject to a federal, state, or local quarantine or isolation order related to COVID-19;

2. The employee has been advised by a health care provider to self-quarantine due to concerns related to COVID-19;

3. The employee is experiencing the symptoms of coronavirus and seeking a medical diagnosis;

4. The employee is caring for an individual (need not be a family member) who is subject to an order described in number 1, above, or has been advised to self-quarantine, as described in number 2, above;

5. The employee is caring for a son or daughter under the age of 18 because such son or daughter’s school or place of care has been closed, or such son or daughter’s care provider is unavailable due to the coronavirus; or

6. The employee is experiencing any other "substantially similar condition" specified by the secretary of the U.S. Department of Health and Human Services in consultation with the secretaries of the U.S. Department of the Treasury and DOL.

How EPSLA Is Paid

An employee is eligible for two weeks of paid leave under the EPSLA. Employers must pay full-time employees for up to 80 hours of work, and those working a variable schedule for the number of hours worked during their average work schedule across a two-week period.

The EPSLA for the employee’s own care (reasons 1 through 3, above) is payable at an employee’s regular rate (as defined under the FLSA), up to a maximum of $511 per day ($5,110 in the aggregate). The EPSLA for the employee’s care for another person (reasons 4 through 5, above) or reasons to be determined by future regulations (reason 6, above) is payable at an employee’s regular rate, up to a maximum of $200 per day ($2,000 in the aggregate).

How PHEL Is Paid

The first two weeks of leave are unpaid. Presumably, an employee would use the EPSLA leave to receive compensation during this time, but employers cannot require employees to use the EPSLA, paid time off or other paid leave during the first two weeks. If the employee remains eligible for the additional 10 weeks of PHEL, the employer must pay two-thirds of an employee’s wages, up to a maximum of $200 per day ($10,000 in the aggregate).

Full-Time Employees Transitioned To Part-Time 

The EPSLA and the PHEL both apply to full-time and part-time employees, but the amount of paid leave will differ depending on the employee’s schedule. The FFCRA does not include a retroactive review of an employee’s status, and it appears that the employee’s full-time or part-time status will therefore be determined as of the date the leave begins. This may change with the DOL regulations.

Carryover and Unused Sick Leave 

The EPSLA leave does not carry over to 2021, and it is not required to be paid out upon termination if it is not used.

Already-Existing  Sick Leave or PTO Policies

The paid leave under the EPSLA and the PHEL is in addition to leave provided under an existing policy. Both laws provide that an employer cannot require employees to use their existing accrued leave first, indicating that this is intended to be a separate bank of time available. That being said, an employee could potentially use sick leave, vacation or PTO to top up their paid leave under these laws or during a period of unpaid leave.

Paying for Leave

Employers are required to pay employees who take EPSLA or PHEL, directly. However, employers should keep track of the leave for which they have paid under these laws, as well as health insurance provided during such leave, because the FFCRA provides for tax credits, up to the daily maximums listed above ($511 per day for the employee’s own leave, or $200 per day for the employee’s care for another) as well as tax credits related to health insurance payments. Employers will be eligible for tax credits in connection with their quarterly employee payroll tax filings.

As of now, if an employer cannot afford to pay employees immediately there is no method to request an advance of money to cover the payments required under this law. This may be something that will be addressed in the third phase of federal COVID-19 legislation.

Pre-FFCRA Layoffs and Furloughs

As of now, employees are only eligible for paid leave as of the effective date of the FFCRA. In other words, the FFCRA does not appear to have retroactive effect. Accordingly, employees who have been laid off or put on furlough will likely not be eligible for such payments but will likely be eligible for unemployment insurance benefits, which are also being enhanced through the FFCRA.

Whether employers can still terminate an employee or place an employee on furlough when the employee is on leave under the EPSLA or PHEL is something that may be clarified under the DOL’s forthcoming regulations. The PHEL specifically requires job restoration following a leave for employers with 25 or more employees.

The FMLA has long allowed an exception to reinstatement if an employee has been laid off during the course of leave for reasons unrelated to the leave; the FMLA does not grant a greater right to reinstatement "than if the employee had been continuously employed during the FMLA leave period."[2] The FFCRA has not specifically amended the FMLA to remove the applicability of this section in respect of the PHEL.

Notification Requirements

The DOL is preparing a notice about the EPSLA, which employers must post conspicuously in the workplace. The DOL is supposed to release the notice by March 25. If your employees are working remotely, as many are right now, we would recommend also placing the poster on an intranet site and directing employees to view it there (though this is not required by the EPSLA).

Noncompliance Penalties

An employer that fails to provide the mandated leave or unlawfully terminates an employee will be treated as if it failed to pay the required minimum wage or unlawfully discharged an employee under the FLSA, and will be subject to the penalties set forth in the FLSA. The Treasury secretary is provided with regulatory authority to issue regulations and guidance, including to waive penalties for employers while they are anticipating their tax credit, but we will have to see what this provides. 

The DOL announced that it would not be enforcing noncompliance for the first 30 days after the effective date, so long as the employer has acted reasonably and in good faith. The DOL stated "good faith … exists when violations are remedied and the employee is made whole as soon as practicable by the employer, the violations were not willful, and the [DOL] receives a written commitment from the employer to comply with the Act in the future."

Unemployment Insurance

Among other things, the FFCRA allows states flexibility on (1) waiting periods (such that benefits might begin right away, and not after a waiting period), and (2) work search requirements (so that employees need not search for work during periods of unemployment).

Conclusion

Employers should also be mindful of how their own policies, as well as new or expanding state and local leave laws, may interact with the paid leave requirements of the FFCRA. As we await further guidance from the DOL, employers should consider whether they are covered by the FFCRA and, if so, prepare to implement the new law.



Susan Gross Sholinsky is a member at Epstein Becker Green.

Lauri F. Rasnick is a member at the firm. She co-leads the financial services strategic industry group. 

Nancy Gunzenhauser Popper and Ann Knuckles Mahoney are associates at the firm.


The opinions expressed are those of the author(s) and do not necessarily reflect the views of the firm, its clients, or Portfolio Media Inc., or any of its or their respective affiliates. This article is for general information purposes and is not intended to be and should not be taken as legal advice.

[1] 29 U.S.C. §201(r)(1).

[2] See 29 C.F.R. §825.216.

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