I. Introduction
On March 18, 2020, the President signed The Emergency Families First Coronavirus Response Act (“Bill”) into law. The Bill responds to the spread of the coronavirus (COVID-19) and provides for two new, overlapping paid leave requirements for employers. The first is an amendment to the FMLA, while the other is a separate new, standalone statute called the “Emergency Paid Sick Leave Act.”  Notably, both laws:

(1) apply only to employers with fewer than 500 employees;
(2) require paid leave for conditions relating to coronavirus; and
(3) provide tax credits to employers who give paid leave under either law.

II. Emergency Family and Medical Leave Expansion Act
The Bill amends the Family and Medical Leave Act (“FMLA”) with a section specifically discussing the coronavirus and related issues (“Emergency Family and Medical Leave Expansion Act”) (referred to below as the “Coronavirus-related FMLA Amendment” or “FMLA Amendment”). This section of the Bill applies to employers with fewer than 500 employees and requires that, if used for a specified coronavirus-related reason, certain portions of an employee’s 12-week FMLA leave must be paid.

Covered Employer.

  • All employers with fewer than 500 employees.
  • The Secretary of the Department of Labor has the authority to issue regulations to exempt small businesses with fewer than 50 employees, when the imposition of such requirements would jeopardize the viability of the business as a going concern.

Eligible Employee.

  • To be eligible, an employee simply must have been employed for 30 calendar days (not one year and 1,250 hours, as normally required for FMLA eligibility).
  • The Secretary of the Department of Labor has the authority to issue regulations to exclude certain health care providers and emergency responders from the definition of “employee.”

Qualifying conditions.  An eligible employee may use this leave because he or she:

  • Is unable to work (or telework) due to a need for leave to care for a son or daughter under 18 years of age if the son or daughter’s school or place of care has been closed, or the childcare provider is unavailable, due to a public health emergency (i.e. an emergency relating to COVID-19 as declared by a Federal, State, or local authority).

First 10 days of leave are unpaid. The first 10 days of corona-related leave may be unpaid. However, an employee can choose – but cannot be forced – to substitute accrued vacation leave, personal leave, or other medical or sick leave during this period.

Remaining Leave is PaidAny remaining FMLA leave following the initial 10-day period is paid at a rate of two-thirds the employee’s regular rate of pay. However, in no event shall such paid leave exceed $200 per day and $10,000 in the aggregate.

Amount of Available Leave. Note that the Bill does not appear to extend the employee’s total leave allotment under the FMLA. Thus, while an employee is entitled to up to 12 weeks of leave for the coronavirus-related conditions described above, that total would be reduced by any leave taken (whether previously or in the future) for other FMLA-qualifying reasons. So, for example, an employee who has already exhausted his or her FMLA allotment apparently would not be entitled to any additional leave under this bill.

Job Protection.

  • Like other forms of FMLA leave, this leave is job-protected. That means the employer must return the employee to the same or equivalent position upon their return to work.
  • Additionally, the job-restoration requirement does not apply to employers with fewer than 25 employees if the position held by the employee when the position commenced no longer exists due to economic conditions or other operating conditions of the employer, the employer makes reasonable efforts to restore the employee to a position equivalent to the position the employee held, and the employer makes reasonable efforts within one year to contact the employee if an equivalent position becomes available.

Relationship to other forms of FMLA Leave. The Bill should be thought of as operating separately from the FMLA as it adds several new defined terms (i.e. childcare provider), changes the definition of “covered employee”, and uses a different definition of “covered employer” (i.e. fewer than 500 employees). So, before denying leave based on the previous definitions found under the FMLA, an employer should refer to the Bill and these updated definitions. Furthermore, any “normal” FMLA leave (i.e., for a serious health condition) will continue to operate as it had before – meaning it will not automatically become paid leave.

III. Emergency Paid Sick Leave Act 
Apart from and in addition to the Coronavirus-related FMLA Amendment, the Bill also contains a new statute titled the “Emergency Paid Sick Leave Act” (referred to as the “Sick Leave Act”).

Covered Employer:

  • Like the FMLA Amendment, the Sick Leave Act applies to all employers with fewer than 500 employees.
  • The Secretary of the Department of Labor has the authority to issue regulations to exempt small businesses with fewer than 50 employees from taking paid sick time to care for a son or daughter, when the imposition of such requirements would jeopardize the viability of the business as a going concern.

Covered Employee:

  • Unlike the FMLA amendment, which only covers employees who have worked at least 30 calendar days, the Sick Leave Act covers all employees regardless of tenure.

Qualifying Reasons for Sick Leave:

  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 if the school or place of care for the son or daughter has been closed, or the childcare provider of the 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.

Amount of Leave:  The Sick Leave Act entitles employees to the following amount of paid leave:

  • Full time employees (i.e., 40 hours per week): 80 hours;
  • Part-time: average number of work hours over typical two-week period.

Pay Rate:

  • An employee will be compensated at their regular rate of pay for the first three qualifying reasons listed above but no more than $511 per day and $5,110 in the aggregate; and
  • An employee will be paid two-thirds of their regular rate of pay for the last three qualifying reasons listed but no more than $200 per day and $2,000 in the aggregate.

Relationship to other forms of leave.  An employer may not require an employee to use other paid leave before the employee uses paid sick leave under this section. This paid sick leave is given to an employee in addition to any leave that the employer currently offers.

No Retaliation.  The Bill also includes anti-retaliation protections meaning that an employer cannot terminate, or take any other adverse action against, an employee for taking paid sick leave provided under the Bill.

IV. Tax Credits for Paid-Leave Payments
The Bill also provides for refundable tax credits to employers for providing paid sick leave under the FMLA Amendment and/or Sick Leave Act:

  • Tax Credit for FMLA-Amendment Related Paid Leave:
    • A credit against payroll tax and certain employer excise taxes for each calendar quarter equal to 100 percent of the FMLA-Amendment-related wages that are paid by such employer in such calendar quarter.
    • The amount of qualified family leave wages taken into account for each employee is capped at $200 per day and $10,000 for all calendar quarters.
    • If the credit exceeds the employer’s total social security tax liability for all employees for any calendar quarter, the excess is treated as an overpayment and is refundable to the employer.
  • Tax Credit for Sick Leave Act Paid Leave:
    • A credit against payroll tax and certain employer excise taxes for each calendar quarter equal to 100 percent of the Sick Leave Act-related wages paid by such employer in such calendar quarter.
    • The amount of qualified sick leave wages taken into account for the credit with respect to any individual shall not exceed $200 per day with respect to paragraphs (4), (5), and (6) described above, or $511 in the case of paragraphs (1), (2), and (3) described above.[1]
    • If the credit exceeds the employer’s total social security tax liability for all employees for any calendar quarter, the excess is treated as an overpayment and is refundable to the employer.

V. Conclusion 
The Bill was a quickly drafted piece of legislation that left many holes and unanswered questions. Employers should be flexible in their implementation of this law and should seek appropriate guidance as they inevitably encounter issues interpreting the Bill. If employers have any questions regarding coverage, interaction of laws, tax credits, or other provisions of the law – please contact Frantz Ward Partners Brian Kelly or Christopher Koehler and they will engage the appropriate members of the response team.


[1] For eligible self-employed individuals the amount of qualified sick leave wages taken into account for the credit is the lesser of $200 or 67% for sick leave taken pursuant to paragraphs (4), (5), and (6) described above, and $511 or 100% for sick leave taken pursuant to paragraphs (1), (2), and (3) described above.