Families First Act

On March 18, 2020, Congress passed and President Trump signed the Families First Coronavirus Response Act (FFCRA or Families First Act).

On April 6, 2020, the U.S. Department of Labor (DOL) issued temporary regulations for the Families First Coronavirus Response Act (FFCRA or Families First Act).

On April 9,2020,the DOL issued amendments and corrections to the regulations issued on April 6.

Update:  See Lauren Smith's latest blog post for a discussion of the effect of Alabama's stay-at-home order on the eligibility for paid sick leave under the Families First Act. Update: See David Canupp’s latest blog post for a discussion of documentation requirements of the Families First Act so that your business will be eligible for tax credits.

In broad summary, the law provides two different types of paid leave to certain employees experiencing a need to care for themselves or others. These two different entitlements are broken down into two separate laws within the act: (1) the Emergency Paid Sick Leave Act (Sick Leave Act) and (2) the Emergency Family Medical Leave Expansion Act (FMLA Expansion Act).

Both of these laws provide for some measure of paid leave, with money fronted by the employer and later reimbursed to the employer through payroll tax credits. The economic impact on covered employers could be substantial.

Emergency Paid Sick Leave Act

The Sick Leave Act requires all governmental employers [FN1.] in America and all private employers with fewer than 500 employees to provide 80 hours of paid sick time for full-time employees (or, for part-time employees, an amount equivalent to their average hours over 2 weeks) under certain defined circumstances. The triggers for paid leave are listed in Section 5102(a) of the law, as follows:

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 healthcare provider to self-quarantine due to concerns related to COVID-19.
3. The employee is experiencing symptoms of COVID-19 and seeking a medical diagnosis.
4. The employee is caring for an individual who is subject to an order as described in paragraph 1 or has been advised as described in paragraph 2.
5. The employee is caring for a son or daughter of such employee if the school or place of care of the son or daughter has been closed, or the childcare provider of such son or daughter is unavailable, due to COVID-19 precautions.
6. The employee is experiencing any other substantially similar condition specified by the Secretary of Health and Human Services in consultation with the Secretary of the Treasury and the Secretary of Labor.

The Sick Leave Act is the easiest to understand, though it’s a whopper in and of itself. It includes exceptions under which employees who are able to telework are ineligible for the paid sick leave. This will comfort many employers who have struggled mightily over the past few weeks to achieve telework solutions for their employees. Those employers can rest assured that if their employees are teleworking (and presumably not themselves overcome with the virus in a way that would prevent telework), the law’s paid-sick-leave provision should not apply.

Potential Exemptions

Under the law, the Secretary of Labor has the authority to issue regulations “for good cause” to exclude certain healthcare providers and emergency responders from the list of those employees eligible for leave. The U.S. Department of Labor (DOL) has issued temporary regulations that define a healthcare provider [FN2.] as—

• Anyone employed at any doctor’s office, hospital, healthcare center, clinic, post-secondary educational institution offering healthcare instruction, medical school, local health department or agency, nursing facility, retirement facility, nursing home, home healthcare provider, any facility that performs laboratory or medical testing, pharmacy, or any similar institution, employer, or entity.
• Any individual employed by an entity that contracts with any of the above institutions, employers, or entities institutions to provide services or to maintain the operation of the facility.
• Anyone employed by any entity that provides medical services, produces medical products, or is otherwise involved in the making of COVID-19 related medical equipment, tests, drugs, vaccines, diagnostic vehicles, or treatments.
• Any individual that the highest official of a state or territory, including the District of Columbia, determines is a healthcare provider necessary for that state’s or territory’s or the District of Columbia’s response to COVID-19.

The regulations define an emergency responder as—

• An employee who is necessary for the provision of transport, care, health-care, comfort, and nutrition of such patients, or whose services are otherwise needed to limit the spread of COVID-19.
• Members of the military or national guard, law enforcement officers, correctional institution personnel, firefighters, emergency medical services personnel, physicians, nurses, public health personnel, emergency medical technicians, paramedics, emergency management personnel, 911 operators, public works personnel, and persons with skills or training in operating specialized equipment or other skills needed to provide aid in a declared emergency.
• Individuals who work for such facilities employing these individuals and whose work is necessary to maintain the operation of the facility.
• Any individual that the highest official of a state or territory, including the District of Columbia, determines is an emergency responder necessary for that state’s or territory’s or the District of Columbia’s response to COVID-19.

The Secretary of Labor also has also issued regulations governing exempting small businesses with fewer than 50 employees where the imposition of these requirements would jeopardize the viability of the business. This exemption only applies to childcare leave. For a small business to be exempt and therefore refuse paid time off or expanded FMLA leave to an employee, the employee must have a child whose school has closed, place of care is closed, or childcare provider is unavailable. The closure or unavailability must be related to COVID-19. Finally, the business owner (or one of its officers) must be able to truthfully certify that at least one of the following conditions is true:

• The provision of paid sick leave or expanded family and medical leave would result in the small business’s expenses and financial obligations exceeding available business revenues and cause the small business to cease operating at a minimal capacity.
• The absence of the employee or employees requesting paid sick leave or expanded FMLA leave would entail a substantial risk to the financial health or operational capabilities of the small business because of their specialized skills, knowledge of the business, or responsibilities.
• There are not sufficient workers who are able, willing, and qualified, and who will be available at the time and place needed, to perform the labor or services provided by the employee or employees requesting paid sick leave or expanded FMLA leave, and these labor or services are needed for the small business to operate at a minimal capacity.

The new regulations also explain how a business is to determine its number of employees and the process is very different from the regular FMLA. As provided by the regulations, for purposes of the Families First Act, the number of employees is determined by counting the number of full-time and part-time employees at the time the employee would take leave. The number of employees also includes employees on leave as well as joint employees and day laborers. The number does not include independent contractors or workers who have previously been laid off or furloughed.

Because of the terms joint employer and independent contractor are not simple to define, we strongly recommend you seek specific legal advice if you think that you might have fewer than 50 employees.

How much do employers have to pay employees?

Divining exactly how much employers are to pay affected workers is painstaking. There is a general rule, but it is subject to several caps and exceptions. The general rule is that employees are entitled to be paid at their “regular rate” as defined by the Fair Labor Standards Act (FLSA) (i.e., their hourly rate or its equivalent for salaried workers) for the duration of the leave. (There are special procedures in the act for calculating the appropriate compensation for part-time employees with irregular schedules.) However, this “regular rate” general rule is subject to multiple different and highly important clarifications.

Section 3602 of the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) identifies limitations on the two types of paid leave provided for by the Families First Coronavirus Response Act.

• First, the act provides that the paid sick leave shall “in no event” exceed $511 per day—i.e., $5,110 in the aggregate—for a use described in paragraph 1, 2, or 3 of section 5102(a). Section 5102 is the lengthy section that describes the various triggers for receiving pay. The reference to the first three sections means that the full amount of the potential compensation is only available for individuals who are—
  
  
  • Subject to a quarantine or isolation order.
  • Advised by a healthcare provider to self-quarantine.
  • Experiencing symptoms of COVID-19 and seeking a medical diagnosis.

• For the remainder of workers who are potentially eligible for paid sick leave under the Sick Leave Act, the total compensation available is not to exceed $200 per day, or $2,000 in the aggregate. Eligible employees are those covered by a circumstance identified in paragraph 4, 5, or 6 of section 5102(a). In other words, those eligible for the $200 maximum are those who are—
  
  
  • Caring for an individual who is subject to a quarantine or isolation order.
  • Caring for a child whose school or place of care has been closed or whose provider is unavailable due to precautions.
  • Experiencing “any other substantially similar condition specified by the Secretary of Health and Human Services in consultation with the Secretary of the Treasury and the Secretary of Labor.”
  
  We do not know at this time just what those “substantially similar conditions” might be, but regulations may be issued in the future.

• Further, where an employee’s required compensation is to be used to care for family members under Section 5102(a), not only is it capped at $200 a day ($2,000 in the aggregate), but the compensation is also limited to no greater than two-thirds of the employee’s regular rate, computed as set out above.

So in summary, those who are directly affected by a health concern or quarantine related to the virus are eligible to earn their regular rate of up to $500 a day for 2 weeks. Parents who lose their childcare are eligible to earn their regular rate of up to $200 a day ($2,000 in the aggregate), subject to a general proviso that their compensation should never exceed two-thirds of their regular rate.

Employers should be forewarned that this law has teeth. The law provides that it shall be a violation of the FLSA (which provides for doubling of damages and attorneys’ fees) to “discharge, discipline, or in any manner discriminate” against any employee who takes leave under the act or engages in any protected activity (defined in the traditional sense of filing a complaint, instituting a proceeding, or cooperating in an investigation under the act).

In terms of how the leave is to be taken and when, the law has a sunset provision of December 31, 2020. Therefore, any leave must be taken this year. Beyond that, it appears to be the employee’s choice, or at least there is nothing in the law providing the employer any discretion or ability to schedule leave to minimize disruptions. But the regulations do allow the employer to control when the employee takes intermittent leave. In general, the law provides that the employer “may not require an employee to use other paid leave provided by the employer to the employee before the employee uses the paid sick time.” The exception is when the employee takes lave to care for a son or daughter. In that case, the regulations do allow the employer to require the employee to use employer-provided leave concurrently with the emergency paid sick leave. In other words, except for leave to take care of a son or daughter, an employer cannot require exhaustion of accrued paid leave. Employees are entitled to immediately take the available sick-pay leave and may then use any accrued leave if they desire.

The entire intent of the law appears to permit employees to take their leave when they need it, provided the relevant triggers are met, with no barrier to taking of that leave. Of course, the law does provide that none of its mandates shall be interpreted to require financial or other reimbursement to employees who simply fail to take the leave allotted to them.

Emergency FMLA Expansion Act

On top of the foregoing requirement of paid leave for 2 weeks, the Families First Act temporarily amends and, for that period, significantly expands, the federal Family Medical Leave Act of 1993. The temporary amendment to the FMLA will provide an additional period of paid and unpaid leave for affected employees, over and above what is provided by the Sick Leave Act. This is the component of the law referred to as the FMLA Expansion Act. This law will also expire on December 31, 2020.

Small employers must pay attention to this law. Until its expiration date, the expanded FMLA will be far more robust than in the past. First and foremost, the law now applies to all government employers and all private employers with fewer than 500 employees (whereas previously, it exempted all employers with less than 50 employees within 75 miles of a worksite). In addition, the traditional FMLA rule under which employees are not eligible for leave until they have completed 12 months of service with their employer—in essence, a waiting period—is suspended. The FMLA provisions now cover all employees who have worked for covered employers for just 30 days.



Carve-out for small businesses

The new law carved out an exemption for “small businesses with fewer than 50 employees” from the requirements of the law, but only where “imposition of such requirements would jeopardize the viability of the business as a going concern.” The requirements for exemption under the FMLA Expansion Act are the same as those for the Sick Leave Act.

Limited reinstatement requirements

However, even without awaiting regulatory guidance, the law does soften the blow for certain very small employers by providing that if an employer has fewer than 25 employees, it still must provide leave but its restoration requirements are limited. Under this provision, if an employee of a very small employer takes the leave but the employee’s job is then eliminated due to the coronavirus emergency, the employer will be off the hook for any reinstatement so long as it continues to reach out to the employee for a defined one-year period if any equivalent position becomes available.

With these introductory matters out of the way, what the law says about the leave entitlement is actually fairly simple. The law amends section 102 of the existing FMLA (which already provides leave entitlements for the birth of a child, a serious health condition of the employee or a close family member, etc.) to tack on an additional leave category.

That additional leave category is entitled “qualifying need related to a public health emergency.” The provision states that this term “means the employee is unable to work (or telework) due to a need for leave to care for the son or daughter under 18 years of age of such employee if the school or place of care has been closed, or the childcare provider of such son or daughter is unavailable, due to a public health emergency.” In turn, the term “public health emergency” simply means “an emergency with respect to COVID-19 declared by a Federal, State, or local authority.”

New category of FMLA leave available to parents only

As explained by the DOL on its web page, the only new category of leave available under the law is for parents who are affected by a school closure or loss of childcare and who are unable to telework. [FN3.] Apparently, being subject to a mandatory quarantine or isolation order or suffering from COVID-19 itself is not sufficient to trigger FMLA leave under this new law, which means employers will simply have to decide whether an employee in such a situation would otherwise qualify for leave under the original FMLA.

Our guess is that an employee who complains of significant COVID-19 symptoms would be regarded as suffering from a serious health condition as defined by the original FMLA, though this would be case by case. An employee merely subject to an isolation order or quarantine may not necessarily qualify for leave under Section 102 of the FMLA, though their job may be protected as a matter of public policy—a complex question that employers should carefully explore if the situation arises.

Returning to the FMLA Expansion Act, for those parents who do qualify for the leave, the potential leave period is the same as the FMLA—up to 12 weeks. Of that 12 weeks, the initial 10 days of leave for the above reasons will be unpaid. (Note that the 10-day elimination period does not extend the total 12 weeks of available leave; it merely distinguishes those first 10 days from the remainder of any leave). During this 10-day period of unpaid leave, employers may require employees to use any accrued leave if they have it, but must pay the employee the full amount the employee is entitled to receive under the employer’s leave policy. [FN4.]

Following the first 10 days of leave, the new law provides that the employer must provide paid leave “for each day of leave . . . that an employee takes,” up to the existing statutory maximum of 12 weeks. However, the law clarifies that the employee’s paid leave can only be “two-thirds of an employee’s regular rate of pay” for the number of hours the employee would otherwise work (for salaried employees, presumably 40 hours a week). Even this two-thirds number is actually subject to a cap. The statute provides that “in no event shall such paid leave exceed $200 per day and $10,000 in the aggregate.”

So in summary, the FMLA Expansion Act is of fairly limited scope. It will apply to parents only, and as to such parents, it will provide for a partial wage replacement of no more than two-thirds salary after a 10-day elimination period, subject then to daily and aggregate caps, all to be reimbursed to the employer later through the tax credits discussed below.

As with the Sick Pay Act, the Secretary of Labor is given the express authority to “exclude certain healthcare providers and emergency responders from the definition of eligible employee.” (See the earlier definitions of these terms.)

Violations of the FMLA Expansion Act will be enforceable in the same manner as the original FMLA—enforcement actions by the Department of Labor and private lawsuits for back pay and attorneys’ fees. In addition to mandatory leave provisions, the FMLA contains anti-interference and anti-retaliation provisions that employers should bear in mind.



Tax credits for certain employers and individuals

The Families First Act will reimburse private employers for the above-described paid-leave entitlements (both under the Sick Leave Act and under the FMLA Expansion Act) through a quarterly tax credit to employers.

Because the reimbursement is a tax credit, the reimbursement will not be immediate. But because the credit comes in the form of a Social Security payroll tax credit, employers will see the benefit of it in upcoming paychecks (through reduced payroll taxes) and will not have to wait until next year. Regardless, an initial financial outlay by small businesses appears likely as a result of this law.

The news is worse for government employers. The act specifically states that Federal, State, and local governments and agencies are not entitled to the tax credit, meaning there is no anticipated reimbursement for the mandated wages.

However, there is some good news for those who are self-employed. The tax credit portion of the law (Sections 7002 and 7004) provides that in the case of an eligible self-employed individual, a tax credit is available in an amount equal to the qualified sick-leave entitlement and qualified FMLA sick-leave entitlement of the individual, to the same extent as if the person worked for a covered employer.

Summary and Effective Date

The big takeaway from this huge piece of legislation is that between the Emergency Paid Sick Leave Act and the Emergency FMLA Expansion Act, many if not most employees in America will be entitled to 80 hours of paid leave, and some parents will receive additional allotment of up approximately 10 weeks of additional partially paid leave (at two-thirds of regular wages).

The law went into effect on April 1. The DOL made a required notice available for posting as required by the law, and it can be downloaded here.

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FN1:  Governmental employers include the U.S. Government, state governments, political subdivisions of state governments, which include both county governments and municipal governments.

FN2:  Also see answers to questions 56 and 57 of the DOL’s question-and-answer web page about the First Families Act. To minimize the spread of the virus associated with COVID-19, the DOL has encouraged employers to be judicious when using this definition to exempt healthcare providers from the provisions of the FFCRA.

FN3:  See answers to questions 47, 58, and 59.

FN4:  See answer to question 33

Items on this web page are general in nature. They cannot—and should not—replace consultation with a competent legal professional. Nothing on this web page should be considered rendering legal advice.

© 2020