Employer Guidance on the Coronavirus Stimulus Bill: Mandatory Paid Leave
E-mployment Alert March 20, 2020
On Wednesday, March 18, President Trump signed a bill into law providing relief for those affected by COVID-19. Importantly for employers, the bill requires paid leave for employees in certain qualifying situations. Any leave required under this Act is in addition to employer provided PTO, including sick and vacation time.
The bill contains two separate provisions requiring employers to provide forms of paid leave to their employees:
- an expansion on the FMLA for parents who need to care for children who are at home due to school and daycare closures (“expanded FMLA leave”); and
- a new emergency paid leave provision providing for paid time off for employees who are quarantined, have to care for someone who is quarantined, or have children who are at home due to school and daycare closures (“emergency leave”).
Notably, some employees may qualify for leave under both provisions.
Before we apply the new law to the most common scenarios you’re likely to face, an important note on telework. The following requirements only apply to employees who are unable to work. Importantly, in some circumstances, an employee may be able to continue working if remote options are available. For example, if an otherwise healthy employee must stay home as part of a government-required quarantine, but his or her employer has made telework available, that employee will not qualify for paid leave. Also, if the employee can telework and care for his or her child (e.g. a high school sophomore) that employee would not be entitled to the paid leave. Thus, for those who have not implemented telework, now is the time to do so.
Now on to the most common scenarios.
1. A Sick Employee
If you have an employee who is unable to work (including telework) because he or she is quarantined by the government, advised by the government to self-quarantine, or has symptoms of COVID-19, you must provide that employee with 2 weeks of paid emergency leave. This leave is paid at the employee’s regular rate, but is capped at $511 per day or $5,110 total. Salaried employees are assumed to work 8 hours per day, 40 hours per week for purposes of calculating pay. Part-time employees are to be paid for the number of hours that the employee usually averages over a 2-week period.
2. A Care-Giving Employee Who is Otherwise Healthy
If one of your employees is unable to work (including telework) because he or she must provide care to a family member who is sick or quarantined, you must provide that employee with 2 weeks of paid emergency leave. This leave is paid at two-thirds of the employee’s regular rate, capped at $200 per day or $2,000 total. Salaried employees are assumed to work 8 hours per day, 40 hours per week for purposes of calculating pay. Part-time employees are to be paid for the number of hours that the employee usually averages over a 2-week period.
3. A Healthy Employee with Children at Home
If one of your employees is unable to work (including telework) because he or she has children at home due to school or daycare closure/unavailability, you must provide that employee with up to 12 weeks of paid leave under a combination of the two provisions: 2 weeks of paid emergency leave and 10 weeks of paid expanded FMLA leave. Note, however, that under FMLA leave, the employee is entitled to a total of 12 weeks off, but the first 2 weeks are unpaid. Therefore, employees with childcare obligations may qualify for a maximum of 14 weeks of leave, but only 12 weeks will be paid.
Although the first two weeks of expanded FMLA leave are unpaid, employees can substitute paid leave to cover this time, including employer-provided PTO or paid leave under the emergency leave part of the Act. If an employee substitutes paid emergency leave for the first two unpaid weeks of FMLA leave, the employee is only entitled to 12 weeks of leave total (not 14 weeks).
The majority of this leave is paid at two-thirds of the employee’s regular rate, capped at $200 per day or $12,000 total ($2,000 for emergency leave and $10,000 for expanded FMLA leave). Salaried employees are assumed to work 8 hours per day, 40 hours per week for purposes of calculating pay. Part-time employees are to be paid for the number of hours that the employee usually averages.
4. Other Important Notes
The Act only applies to employers with 500 or fewer employees. These employers will be given a 15-day grace period to comply with the requirements of the new law. Therefore, you must be prepared to provide paid leave on or before Thursday, April 2, 2020. But even though you have 15 days to comply with these new leave requirements, you may find yourself in a situation where leave is necessary before April 2nd. In that case, any leave provided that is over and above PTO should be granted with a reservation that it qualify for paid leave under this new law. In addition, the act is only in effect until December 31, 2020.
The Act also provides qualifying employers with important tax credits which can be claimed to pay for the leave employers extend. The details of that mechanism are still evolving.
5. Employer Action Steps + Unanswered Questions
There are a number of unanswered questions regarding this legislation. Chief among them is whether the paid leave provisions will apply to an employee who was laid off for business reasons prior to the effective date of this Act and/or prior to the onset of the condition entitling the employee to paid leave. We will update employers as these questions are answered.
For now, employers should reevaluate their current PTO policies in light of the new paid leave requirements. Remember, any leave required under this Act is over and above whatever leave an employer already provides, including sick and vacation time. Employers cannot require their employees to substitute paid leave (whether PTO or emergency leave) for the first two unpaid weeks of FMLA, but employees can do so if they wish. This may result in an additional cost to employers. Therefore, reviewing policies with an eye toward potential out-of-pocket costs and total time away from work is important.