What Employers Need to Know about the Families First Coronavirus Response Act

Donna K. McElroy

Dykema Member, Board Certified, Labor & Employment Law, Texas Board of Legal Specialization

On March 18, 2020, President Trump signed the Families First Coronavirus Response Act (“FFCRA”) a few hours after the Senate approved the bill. Among other things, the new law, with which all employers must comply by April 2, 2020, requires employers with fewer than 500 employees to provide two weeks’ paid leave to employees who need to take time off because of an actual or potential illness related to COVID-19, to care for family members who are home ill or quarantined because of COVID-19 exposure or to care for children who are home because of school or care provider closures linked to the ongoing global pandemic. The new law also requires employers to provide employees up to 12 weeks’ leave, with 10 weeks paid, for employees who have to take time off to care for children who are home because of school or daycare closure. Notably, in a substantial change from the bill passed by the House of Representatives on March 14, 2020 (discussed here), the law does NOT require paid leave for a longer period for employees home sick or self-quarantining because of potential COVID-19 exposure.

Paid Sick Time Obligations

The FFCRA, as signed by President Trump, requires all public and private employers with fewer than 500 employees to provide those employees two weeks of paid sick time—regardless of how long the employee has worked for them, and regardless of whether the employee is full or part-time. Under the FFCRA, “two weeks leave” means 80 hours for full-time employees and the typical number of hours over two weeks for part-time employees. Any FFCRA paid sick leave is in addition to any sick leave already offered by the employer.

Paid sick time would be available to any employee absent for:

1. 1. 1. Self-isolation because they have the coronavirus disease;
      2. Obtaining a diagnosis because they are exhibiting symptoms of COVID-19;
      3. Complying with an order from a health-care provider requiring them to stay away from work;
      4. Caring for a family member who is facing any of the above;
      5. Caring for children if schools are closed or because a caregiver is unavailable because of the ongoing public health emergency; or
      6. To address any other “substantially similar condition” identified by the Secretary of Health and Human Services in consultation with the Secretary of the Treasury and the Secretary of Labor.

Employees receiving paid sick time required by the FFCRA for reasons (1) through (3) above are paid at 100 percent of employee’s regular rate of pay or applicable minimum wage, whichever is greater, while other paid sick absences based on covered reasons in (4) through (6) can be paid at an amount not less than two-thirds of the employee’s regular rate of pay. The total compensation for covered reasons (1) through (3) is capped, however, at $511 per day (or $5,110 total for the duration of the covered leave). For absences related to the covered reasons described in (4) through (6) above, the paid sick time compensation is capped at $200 per day or $2,000 in the total leave.

This federally mandated Paid Sick Time is in addition to all other vacation, sick, PTO, or other leaves that an employer typically grants employees, and an employer may not require an employee to use other paid sick time or leave before giving access to the new federally mandated paid sick time. An employer must allow an employee to use this paid sick time first, and only after that federal paid sick time is exhausted require an employee who needs more time off to utilize their company offered sick banks.

The FFCRA also requires the Secretary of Labor to publish a poster for employers to inform employees of their rights under the Act, which is supposed to be made available in the next seven days, and which must be posted along with the other federally mandated posters relating to federal labor and employment issues.

The Secretary of Labor has been empowered to issue regulations to exempt health care providers and emergency responders from the definition of “employer” under the FFCRA. The Secretary also can exempt small businesses with fewer than 50 employees from the requirement to offer leave for a child when a school is closed when the imposition of that paid sick time would jeopardize the viability of the business as an ongoing concern. When (and whether) the Secretary will issue those regulations is unknown.

Employers who pay employees under the FFCRA’s paid sick time provisions are entitled to a refundable tax credit equal to 100 percent of the “qualified sick leave wages” paid. “Qualified sick leave wages” for purposes of the tax credit are capped at $511 per day (or $200 per day if the paid sick leave was to care for a family member) and 10 days and are applied against the employer’s Social Security taxes. Because of the caps imposed upon the payments to employees, this credit will offset the full amount of the paid sick time required to be paid by the FFCRA.

Paid Family Leave

In addition to the Paid Sick Time hours required by the FFCRA, the bill extends and amends the Family and Medical Leave Act to obligate most employers with 500 or fewer employees to provide employees with up to 12 weeks of leave (10 of which are paid family leave).

To be eligible, an employee must have been employed for at least 30 days at the time they begin the paid family leave (rather than the one year of employment required to become eligible for protection under the FMLA). Once they have been employed for 30 days, they can take a paid family leave if they are unable to work or telework because of the need to care for children if schools are closed or daycare is unavailable because of a declaration of a public health emergency. This paid leave is NOT available for an employee to recover from a COVID-19 diagnosis, or to self-quarantine, as was required by the original bill—a significant change that will reduce the burden of this law on many employers.

For the first 10 days of Paid Family Leave, there is no compensation required under this portion of the law (though an employee can take other paid leaves, including paid sick time, to receive compensation). Once those 10 days are exhausted, the employee is compensated at two-thirds of their regular rate for the duration of the leave capped at a payment of $200 per day, or $10,000 in the aggregate.

While this portion of the law amends the federal Family and Medical Leave Act, unlike that Act there is no blanket exemption for employers of less than 50 employees. Instead, the Secretary of Labor is empowered to exempt health care providers, emergency responders, and small businesses with fewer than 50 employees if the leave requirement would jeopardize the business as an ongoing concern. Furthermore, in some cases, an employer with fewer than 25 employees would be exempted from restoring an employee to their pre-leave position if the position no longer exists because of the health emergency. Finally, employers with less than 50 employees would not be subject to a civil action from an employee for an alleged violation of this portion of the Act (although the Department of Labor still would be able to commence an enforcement action against an employer who had failed to comply).

Like the paid sick time provisions of the FFCRA, the government compensates employers for the paid family leave required by the law in the form of a tax credit against the employer’s Social Security tax obligation. That credit is equal to 100 percent of the qualified paid family leave wages paid by the employer—capped at $200 per day and $10,000 overall per employee.