Family First Coronavirus Response Act (The “Act”) provided by BKCW
Family First Coronavirus Response Act (The “Act”)
BKCW Insurance cares about the well-being of our clients and their employees. We wanted to reach out with updated Coronavirus information and how it may impact your leave plans and obligations under the Family and Medical Leave Act (“FMLA”).
Last week, the U.S. House of Representatives passed the Families First Coronavirus Response Act (“The Act”). This allows free Coronavirus testing, establishes paid and unpaid leave programs, provides grants to states to process and pay unemployment insurance benefits, expands food service initiatives, and increases federal Medicaid funding. The Act, which applies only to employers with less than 500 employees, requires covered employers to provide job-protected paid leave to employees for up to 12 weeks for a Coronavirus-related absence. The Act expands the FMLA and adds a new paid sick leave program.
The Senate is expected to pass the current version of the Act early this week. While some provisions may change before the President signs the bill into a law, we feel it is important to share this update with you as soon as possible. A summary of the legislation is attached to the end of this letter.
What Does This Mean For You and Your Business?
The leave and tax credit provisions of the Act apply to all employers with less than 500 employees. If you are subject to the Act, here are some best practices options we suggest you consider:
● Expand PTO/Sick Leave and FMLA programs to allow up to 12 weeks of Coronavirus-related time off following the requirements of the Act.
● During any Coronavirus-related absence, if the intent is to continue payment for the duration of the absence, employers should continue paying employees through their payroll. This would create a seamless benefit experience and limit payroll disruptions.
● Monitor federal, state, and local legislation for additional changes that could impact your obligations as an employer.
● Consult with your legal counsel to create a legally compliant plan that works best for you and your employees.
● If you outsource your leave administration, work with them to update your programs and help communicate any changes to your workforce. Your leave administrator may be able to easily help implement a new program during this challenging time.
If you have over 500 employees, consider expanding your disability and leave programs to help cope with the issues resulting from the Coronavirus pandemic. Here are some options we suggest you consider:
● Expanding your PTO or Sick Leave to include up to 80 hours of Coronavirus-related time off following similar criteria as the Act.
● Update your existing leave program to allow employees to take leave for the same or similar qualifying reasons as the Act. This is consistent with the Department of Labor’s recent guidance for the Coronavirus. This encourages employers to start “flexible leave policies for their employees.” https://www.dol.gov/agencies/whd/fmla/pandemic
● For a Coronavirus-related absence, if payment to employees for the duration of the absence is desired, employers should continue paying employees through their payroll. This creates a seamless benefit experience for employees and limits payroll disruptions.
● Monitor federal, state, and local legislation for additional changes that could impact your obligations as an employer.
● Consider risks of voluntarily expanding FMLA protections to employees during Coronavirus-related leaves, such as expanding your potential FMLA liability, along with the potential benefits like providing job-protection for your employees similar to the Act’s requirements for smaller employers.
● Consult with your legal counsel to create a legally compliant plan that works best for you and your employees.
BKCW is continuing to monitor federal and state legislation. We will keep you informed with any updates as they become available. If you have any questions, please reach out to any member of your BKCW account team.
Summary of the New Federal Sick Leave Requirements of the Act
Initially, the Act requires employers with fewer than 500 employees to offer sick leave to their employees for the following Coronavirus-related absences:
● An employee is diagnosed with Coronavirus and is self-isolating;
● An employee is experiencing symptoms of Coronavirus and needs to obtain a medical diagnosis or receive care;
● An employee cannot work because a public official or health care provider recommends or orders that the employee stay home due to Coronavirus exposure or symptoms;
● To care for a family member who is exposed to or has symptoms of Coronavirus based on a determination by a public official or health care provider; or
● To care for a minor child if the child’s school or place of care is closed or if the childcare provider is unavailable because of a Coronavirus-related public health emergency.
Full-time employees can use up to 80 hours of sick time, while part-time employees can use proportionally less time, based on the average number of hours the employee works over a two-week period. An employee cannot carry over sick time into the next year, nor is an employee entitled to payment of unused sick time upon separation from employment. Employees will be able to use this sick leave immediately after the Act becomes effective.
During sick leave taken for the employee’s own condition, employers must pay employees their regular rate of pay or the applicable minimum wage, whichever is higher. However, if the sick leave is taken to care for a family member, the rate of pay is reduced to two-thirds of the employee’s regular rate of pay. Within seven days of enactment of the Act, the Department of Labor will publish a model notice that employers must conspicuously post in their workplaces. The paid sick leave under the Act must be in addition to an employer’s existing sick leave policies and employers cannot scale back their existing leave policies to account for the Act. Similar to the FMLA amendments, the new sick leave proposal will become effective 15 days after the enactment of the Act and will sunset on December 31, 2020.
To help employers shoulder the financial burden of paying for these additional benefits, the Act allows employers with fewer than 500 employees to claim a tax credit equal to 100% of qualified sick leave wages paid to employees. These credits, however, are limited to $200 to $511 per day, depending on the qualifying leave event, subject to other conditions and limitations. The aggregate number of days taken into account per employee may not exceed the excess of 10 over the aggregate number of days taken into account for all preceding calendar quarters. These credits will effectively help employers recover all of the wages paid to employees earning up to $132,860 in income. For employees earning above $132,860, the Act will help employers recover some of these wages.
Summary of the Proposed FMLA Expansions
The Act may also expand FMLA to allow employees to use FMLA for the last three leave reasons mentioned above (i.e., an employee needs to stay home due to their own or family member’s exposure to or having symptoms of Coronavirus or to care for a child whose school or place of care is closed).
Although the first 14 days of Coronavirus-related FMLA leave is unpaid, employers must pay employees for up to 10 additional weeks of leave at the rate of two-thirds of the employee’s regular pay rate. The 50-employee minimum applicable to current FMLA leave reasons does not apply to Coronavirus-related leaves. Rather, all employers with fewer than 500 employees must offer Coronavirus-related FMLA leave to their workforce. The job protection requirements of the FMLA also apply to Coronavirus-related leaves, but only to employers with 25 to 499 employees. Any employee who has been employed for at least 30 calendar days will be eligible for this new type of FMLA leave. These amendments will be effective 15 days after enactment and will sunset on December 31, 2020.
Similar to the sick leave requirement, the Act allows employers with fewer than 500 employees to claim a tax credit of 100% of qualified FMLA wages paid to employees, which is capped at $200 per day and $10,000 per quarter per employee. The FMLA tax credit is designed to help employers recover up to $30,000 or $40,000 in wages (depending on the enactment date) for employees earning up to $52,000 per year. For employees earning above $52,000 per year, the tax credit will help employers recover a portion of wages.
Please Note: The information contained in this letter is not legal advice and should not be relied upon or construed as legal advice. This letter is for general informational purposes only and does not purport to be complete or cover every situation. Please consult your own legal advisors to determine how these laws affect you.