Last time we talked, we were settling into the new not-so-normal. Now, one of us is both an accomplished mask-maker and desperately seeking 10 minutes of quiet alone time. It’s evident to the other that her superpower is explaining complicated insurance topics to ADULTS. She is only slightly competent at advising nine-year-olds about “new math” while simultaneously parsing 125 pages of COVID-19 paid leave regulations. Plus now we have answers to some pressing questions about how the COVID-19 paid leave requirements will work for affected employers and employees. In addition to the text of the Families First Coronavirus Response Act (FFCRA), we have temporary rules to enforce its paid leave provisions. To further clarify some of the lacking details in the statute, the Department of Labor (DOL) keeps its updating very detailed FAQs too!
According to the FFCRA, covered employers with fewer than 500 employees have to provide employees unable to work or telework due to reasons related to COVID-19 with up to 10 days/80 hours of paid sick leave as of April 1, 2020. The new law also expands the Family Medical Leave Act (FMLA) for employers with fewer than 500 employees. It adds a new qualifying event for any employee employed for at least 30 days. This new leave also must be available as of April 1, 2020.
Specifically, emergency sick leave must be available to employees required to self-isolate based on the advice of a doctor or affected by a federal, state or local “quarantine order” or “isolation order.” It also can be used to get COVID-19 diagnostic testing and care, to take care of a child whose school or childcare arrangement closes due to coronavirus precautions, or to care for a family member subject to a quarantine or isolation order. The emergency FMLA leave provides 12 weeks of protected leave if an employee is unable to work or telework due to a need to care for a child(ren) who cannot attend school or childcare because of coronavirus-related closures. Ten of these weeks are paid under the FMLA expansion provisions.
For any employee who is seeking emergency sick leave because they are either subject to a government quarantine order, must self-isolate according to a healthcare provider, or seeking care and diagnosis for COVID-19, the statute provides up to 80 hours of 100% paid leave, subject to a $511 per day maximum. For all other COVID-19 paid leave circumstances, including the paid aspects of the emergency FMLA leave, 2/3 of pay is reimbursed up to $200 per day. Notably, part-time employees are also eligible for emergency paid sick leave—in this case, pro-rated based on the individual’s regularly scheduled hours.
The good news for employers is they do not bear the cost of either type of COVID-19 paid leave. Instead, the expenses are reimbursable through a 100% refundable tax credit against each employer’s portion of Social Security taxes, claimed on a payroll-by-payroll basis. If the value of the tax credit exceeds the employer’s aggregate Social Security tax liability for a given pay period, the excess may be refunded directly to the employer. Also, the tax credits will include 100% of the employer’s group health plan costs attributable to the paid leave, to the extent such amounts are excluded from the employees’ gross income.
The new regulation and sub-regulatory guidance provide answers to some critical COVID-19 paid leave questions. Specifically:
Counting to 500: The paid leave provisions of the law apply to businesses with fewer than 500 employees. An important nuance to this requirement is that companies that are close to that threshold need to count their full and part-time employees EACH TIME an employee wishes to take the leave. Another important nuance is that this requirement uses its own counting rules.
Under these rules, all employees working in the United States and its territories must count, including full and part-time workers, employees on leave, day laborers or temporary workers from an agency, and any workers jointly-employed by the company and another entity. Companies within a controlled group are separate employers unless they meet the integrated employer test under the Family and Medical Leave Act of 1993 (FMLA). That’s a different standard than the one for say 5500 reporting or employer mandate applicability. It’s also different than the rules for counting to 500 for purposes of applying for the Paycheck Protection Program Administered through the Small Business Administration—but more on the CARES Act in a future post…
Small Employer Exemption: The possibility of a small employer exemption for businesses with less than 50 employees that can document compliance would “jeopardize the viability of the small business as an ongoing concern” exists. HOWEVER, before you get too excited, there are some “buts” involved. First of all, while the exemption is available for both types of paid leave, it only applies to leave related to a parent who needs to take care of a child that cannot attend school or daycare due to a COVID-19 related closure. Second, while business owners just need to self-certify to qualify, the qualification standard (outlined in detail in FAQ questions 58 and 59) is pretty tough. The bottom line is this exemption does not apply to small businesses that just don’t want to comply or are nervous about compliance. In essence, there needs to be valid evidence that compliance could cause your company to close for good.
Exemption for Emergency Responders and Health Care Providers: If a company employs people classified as emergency responders and health care providers, then they can exempt those people from the new emergency leave on a case-by-case basis. The rule and FAQ questions 56 and 57 provide very expansive definitions of emergency responders and health care providers for exemption purposes. However, to minimize the spread of COVID-19, the DOL encourages employers to be judicious when applying the definitions.
Necessary Records and Documentation: Any time an employee requests the new COVID-19 paid leave, it requires documentation from the DOL’s point-of-view, even if the company ultimately denies the request. Employers need to keep track of the employee’s name, the dates of requested leave, the reason for the leave, and an attestation from the employee that he or she is unable to work because of the reason noted. If it involves an order, the employer needs to document the name of the government entity or healthcare provider issuing the order. For school or daycare closures, the employer needs to keep track of the name of the child(ren) involved and the name of the school or child care provider. They also need to get a statement from the employee that no other suitable person is available to provide childcare.
Emergency Leave and Teleworking: Both types of new COVID-19 paid leave include a qualifying caveat – the employee must not be able to “work” or “telework.” This stipulation begs the question if an employee technically has the ability telework, but still can’t get their job done do they qualify? What if they need to homeschool uncooperative children or care for a toddler who, without constant direct supervision, exhibits what some might classify as maniacal behavior?
The new rules and FAQs make it clear that those unfortunate, but now sadly ordinary life circumstances do qualify, with a few stipulations. First, if another parent or caregiver is available to provide childcare during telework hours, then no paid leave. Even if two working parents feel like they need to go man-to-man to handle COVID-related childcare, there’s no double-dipping. Also, the new rules strongly encourage employers and employees to collaborate on reasonable solutions. Businesses can allow intermittent leave for employees who cannot telework for a full day or on certain days due to childcare issues. Employers and employees can also agree to an adjusted schedule. Finally, while a child generally means a person under age 18, if the dependent is physically or mentally disabled, the leave can apply to care for older children.
What Exactly Is A Federal, State, or Local Quarantine or Isolation Order? The new rule specifies that quarantine or isolation orders include shelter-in-place or stay-at-home orders issued by any Federal, State, or local government authority that causes an employee to be unable to work (or to telework). The tricky part is this qualifying event only applies if an employee cannot get to work due to a government order, AND there is work for them to do if they were able to get there. Employees cannot take paid sick leave if the employer does not have work for them to do because the business is subject to a closure order (like a restaurant that has no take-out capability).
Taking Paid Sick Leave to Care for Someone Else: The law allows eligible employees to take paid sick leave at the 2/3 of their regular rate of pay to take care of an adult family member subject to a COVID-19 quarantine or self-isolation order. However, they can only do it if the individual genuinely needs their help due to COVID-19. The rules clarify this means an immediate family member or someone who regularly resides in their home. It could also be someone where the relationship creates an expectation of care during quarantine or a self-isolation situation. Also, that individual must depend on you for care (such as an elderly parent who lives nearby). So if your healthy spouse can’t go to work due to a local quarantine order, you can’t take emergency sick leave to “care” for them.
Some Other Important Applicability Clarifications: Neither type of COVID-19 paid leave provisions applies if an employee is laid-off or furloughed. Employees getting unemployment benefits also do not qualify. Perhaps the most critical qualification – if a worksite closes (for example, a retail store subject to a closure order that has no telework options), then employee eligibility for the paid leave laws ceases to apply. This stipulation applies to closures both before or after April 1, 2020.
State and Local Paid Laws and the New Federal Requirements: Qualified employees may access both types of emergency COVID-19 paid leave, in addition to any state or local paid leave requirements.
Combining Emergency Paid Leave, Emergency FMLA Leave, and Other FMLA Leave: People who qualify for both types of COVID-19 paid leave can take both, including simultaneously. However, it’s only 12 weeks total of paid emergency leave (up to 10 workdays of emergency sick leave and up to ten weeks of emergency FMLA Leave). Also, employees can take both Emergency FMLA Leave and regular FMLA Leave in 2020 if they qualify for both, but only for 12 weeks TOTAL.
Supplementing FFCRA Paid Leave: If an employer wants to pay an employee on COVID-19 paid leave more than what the law provides, they can. Companies may also let employees use existing paid leave, like vacation days, to supplement while out on either type of leave. However, there are again some caveats. The amount paid to the employee per day cannot exceed the regular wage. Businesses cannot claim the payroll tax credit for any excessive amounts either.
Required Poster: By April 1, every affected employer (even ones that might want to claim a partial exemption) needs to notify employees about their new paid leave rights. The DOL created a poster for employers tack up in a conspicuous place onsite. They’ve also acknowledged that millions of affected employees won’t be able to see a workplace poster due to physical location closures. In those cases, employers can send it to employees via email or direct mail. Or they can post it on an internal or external website designated for employees.
Enforcement: The DOL knows this is new and tricky. So they have graciously decided not to bring enforcement actions against employers that have made reasonable, good faith efforts to comply between March 18 through April 17, 2020. Employers will be liable for all violations that happen after April 17, 2020, though!
The DOL’s content creation efforts over the past week to clarify aspects of the COVID-19 paid leave requirements impresses us. It’s almost like someone over there read our last blog post!
One critical area where we have been anxiously waiting for specifics is how paid leave tax credits will work. It’s almost like someone at the Internal Revenue Service (IRS) reads this blog too. Just when it’s still in unpublished draft mode! The IRS just published 66 new FAQs outlining how the paid leave credits will work for employers. We’re planning to dive into them today, and will be back soon to provide you with our thoughts and analysis. Beyond what the IRS says, we predict a lot will depend on benefits administrators and payroll providers too!
This is a LOT of new law for one blog post—and we didn’t even touch on the CARES Act yet! Benefits professionals, we know you are struggling. That this stuff is hard and made harder still by the unique circumstances we are all facing. To that end, we wanted to take a moment to remind you that the hard work you are doing MATTERS. You are making a difference. And, if you need us, we are here. You’ve got a friend in us.