Many Employers Must Offer Paid Leave Under Coronavirus Relief Law

A new federal law will provide paid leave to employees who miss work for certain coronavirus-related reasons. As we wait on guidance and interpretation from the Department of Labor, employers can use the following to prepare.

The Families First Coronavirus Response Act (H.R. 6201), which was signed into law on March 18, will provide paid emergency family leave in limited circumstances, as well as paid sick leave for people affected by COVID-19, the respiratory disease caused by the coronavirus.

In general, the emergency paid-leave provisions in the legislation apply to businesses with fewer than 500 employees, but there may be some exceptions available for small businesses and companies that employ health care workers. These provisions take effect April 1 and expire on Dec. 31.

"Employers should use the lead-up time to review and revise their [Family and Medical Leave Act (FMLA)] and sick leave policies with the help of knowledgeable employment counsel," said Esra Hudson, an attorney with Manatt in Los Angeles. "Changes should be promptly communicated to employees in writing in a simple format, such as question and answer."

Paid Family Leave

The first 10 days of leave can be unpaid. "An employee can opt to substitute accrued vacation, personal or sick leave during this time, but an employer may not require an employee to do so," explained Jim Paretti and Michael Lotito, attorneys with Littler in Washington, D.C., and Sacramento, Calif., respectively. 

For the other 10 weeks, eligible workers must receive two-thirds of their regular rate of pay, which will be capped at $200 a day (and $10,000 total).

{SHRM members-only HR Q&A: How does the Families First Coronavirus Response Act (H.R. 6201) impact employers?]

"For employees with variable hours each week, paid leave would be equal to the average number of hours worked per day over the previous six months," said Linda Jackson, an attorney with Arent Fox in Washington, D.C.

Scott Witlin, an attorney with Barnes & Thornburg in Los Angeles, noted that the eligibility standards are much different than under regular FMLA provisions. Workers who have been on the payroll for at least 30 calendar days will be eligible for the emergency paid family leave benefits.

Paid Sick Leave

Under the bill, many employers will have to provide up to 80 hours of paid-sick-leave benefits if an employee:

1. Has been ordered by the government to quarantine or isolate because of COVID-19.
2. Has been advised by a health care provider to self-quarantine because of COVID-19.
3. Has symptoms of COVID-19 and is seeking a medical diagnosis.
4. Is caring for someone who is subject to a government quarantine or isolation order or has been advised by a health care provider to quarantine or self-isolate.
5. Needs to care for a son or daughter whose school or child care service is closed due to COVID-19 precautions.
6. Is experiencing substantially similar conditions as specified by the secretary of health and human services, in consultation with the secretaries of labor and treasury. 

Note that paid-sick-leave benefits are now available to employees who must care for any individual, Hudson said. This is substantially broader than a prior version of the proposed legislation which was limited to family members.

Paid sick leave must be paid at the employee's regular rate of pay, or minimum wage, whichever is greater, for leave taken for reasons 1-3 above.  Employees taking leave for reasons 4-6 may be compensated at two-thirds their regular rate of pay, or minimum wage, whichever is greater.

Part-time employees are eligible to take the number of hours they would normally work during a two-week period.

Employers should also note that they cannot:

• Require an employee to use other paid leave before using the paid sick time provided in the new legislation.
• Require an employee to find a replacement to cover his or her scheduled work hours.
• Retaliate against any employee who takes leave in accordance with the act.
• Retaliate against an employee who files a complaint or participates in a proceeding related to the act—including a proceeding that seeks to enforce the act.

Paid-sick-leave benefits will be immediately available when the law takes effect, regardless of how long the worker has been employed. "These benefits are also subject to statutory caps per employee, depending upon qualifying reasons for the leave, and therefore employers should track these to take advantage of the tax credits associated with these new forms of leave," Hudson said.

Under the legislation, paid sick leave is limited to $511 a day (and $5,110 total) for a worker's own care and $200 a day (and $2,000 total) when the employee is caring for someone else.

An employer can require the worker to follow reasonable notice procedures to continue receiving the benefit after the first workday that an employee receives paid sick time under the act.

Exceptions for Some Employers

"For larger employers with 500 employees or more, there is no change," Witlin said. "They are exempt." Big businesses may feel pressure, however, to cover such leave on their own. "Even without the pressure, I think they will step up to the plate," Witlin noted.

Treasury Secretary Steven Mnuchin had said that "big companies can afford these things." And U.S. House Speaker Nancy Pelosi wrote on Twitter during the bill's negotiations, "I don't support U.S. taxpayer money subsidizing corporations to provide benefits to workers that they should already be providing." 

The legislation allows the secretary of labor to exclude health care providers and emergency responders from the definition of employees who are allowed to take leave. Additionally, employers with fewer than 50 workers can ask the secretary of labor for an exemption from providing paid family and medical leave and paid sick leave if it "would jeopardize the viability of the business."

The emergency FMLA leave generally requires employers to reinstate employees in the same job or an equivalent position when they return to work, but there is an exception for employers with fewer than 25 employees if the position no longer exists due to economic conditions or operational changes that are made because of the public health emergency.

"The bill includes refundable tax credits for employers that are required to offer emergency FMLA or paid sick leave, including self-employed individuals," Paretti and Lotito said. "Note that these credits are only available to those employers that are required to offer these benefits under the bill."

Employer Takeaway

The legislation is complex and was put together quickly. "No one can be an expert on this new law and its intricate provisions," noted Jason Reisman, an attorney with Blank Rome in Philadelphia. "So, communicate early and often." 

If employers aren't clear about what to do, Reisman suggested that they say so: " 'We are reviewing the new law and its provisions, as our goal is to do everything we can to try to protect our workers and ensure we all remain healthy when things return to normal.' " Communication is important and can be soothing, he said. "But, think before you speak. Words do matter."

Reisman suggested that covered employers put together and issue to workers a written policy or outline describing the new required benefits, detailing what the benefits are, any eligibility criteria, how they can be used, and the interplay with other available benefits, such as paid time off, sick leave and vacation time. 

"It is important to stay alert for updates and guidance, which is expected primarily to come from the U.S. Department of Labor over the next two weeks," he said.