New COVID-19 Related Federal Paid Leave Requirements Effective Tomorrow
On March 18, 2020 Congress passed and the president signed into law the Families First Coronavirus Response Act (FFCRA). There are two key pieces to the FFCRA – the Emergency Paid Leave Act and the Emergency Family and Medical Leave Expansion Act. The FFCRA, in part, applies to businesses with under 500 employees and provides workers with paid leave in a variety of situations if they are impacted by COVID-19. While employment law is somewhat beyond the scope of our expertise at NAFCU and credit unions may need to consult with counsel in this area during these challenging times, we wanted to give some basic highlights of these new paid leave requirements as these provisions go into effect tomorrow, April 1, 2020. Note, these provisions expire on December 31, 2020.
Emergency Paid Leave Act
This part requires credit unions to provide two weeks of paid sick leave in several situations, with amounts of paid leave permitted depending on reason for the leave. Specifically, there are six cases where an employee would be entitled to paid leave if they are impacted by COVID-19:
1. The employee is subject to a federal, state or local quarantine or isolation order;
2. The employee was advised by a health care provider to self-quarantine;
3. The employee is experiencing symptoms of COVID-19 and is seeking a diagnosis;
4. The employee is caring for someone who is either subject to a government quarantine/isolation order or someone who was advised by a health care provider to self-quarantine;
5. The employee is caring for a child if the child’s school has been closed or their child care is unavailable; or
6. The employee is experiencing a “substantially similar condition” as specified by Health and Human Services in consultation with Treasury and the Department of Labor.
For this sixth category, to date there is not guidance indicating what kinds of situations might be “substantially similar” but this seems designed to give regulators some flexibility as the COVID-19 situation evolves.
How much paid leave is an employee entitled to? Generally, the credit union would be required to pay two weeks of leave but the amount differs based on the reason for the leave. For reasons one through three above, the employee is entitled to their regular rate of pay, up to a maximum of $511 per day and an aggregate of $5,110. For reasons four through six above, the employee is entitled to two-thirds of their regular rate of pay, up to a maximum of $200 per day and an aggregate of $2,000. Full time employees are entitled to 80 hours of leave, and part time employees are entitled to pay for the number of hours typically worked in a two-week period.
Section 5111 of the Emergency Paid Leave Act allows the Department of Labor (DOL) to exempt small businesses with under 50 employees from the requirement to provide paid leave in two of the six situations listed above: (1) the employee is taking leave to care for another person who is under a government quarantine order or self-quarantining on advice of their health care provider; or (2) the employee is taking leave to care for a child whose school or day care are unavailable due to COVID-19. The DOL has the option to issue a small business exemption if it finds that these requirements “would jeopardize the viability of the business” and is considering this issue.
Also of note, some states and localities have taken or may in the future take their own actions entitling employees to paid leave, such as the recent law in New York. The Emergency Paid Leave Act does not “diminish the rights or benefits” an employee may be entitled to under state or local laws.
Emergency Family and Medical Leave Expansion Act
This second piece of the FFCRA amends the Family Medical Leave Act (FMLA). This also applies to credit unions with under 500 employees and entitles full and part-time employees who have worked for the credit union for at least 30 days to twelve weeks of job-protected leave, with ten weeks of that leave paid. Specifically, this applies when an employee cannot work or telework because, due to COVID-19, their child’s school is closed or paid child care provider is unavailable.
Of the twelve weeks of leave, technically the first two weeks are not paid and the remaining ten weeks are paid at two-thirds of the employee’s regular pay, at maximum of $200 per day and $10,000 in the aggregate. But keep in mind that the Emergency Paid Leave Act provides two weeks of sick leave for those employees who must care for a child in similar circumstances so all twelve weeks will end up paid between the two key provisions of the FFCRA.
Generally, job protected leave means the employer would be required to return the employee to the same or equivalent position once they return to work. There is a carve-out to this provision for credit unions with under 25 employees if certain conditions are met, including the position no longer existing due economic conditions or because of COVID-19 and the credit union making “reasonable” efforts to restore the employee to an equivalent position. Credit unions may need to consult with counsel for a full understanding of their obligations for returning employees, such as if a position was eliminated.
DOL Guidance and Regulations
The FFCRA directs the DOL to issue guidance and regulations. On March 24, 2020 the DOL’s Wage and Hour Division released Questions and Answers on the FFCRA and a Fact Sheet for Employers that credit unions may find useful. The act requires credit unions to provide notice to employees of their paid leave rights so DOL issued a model notice/poster which credit unions covered by the act must make available to employees and stated the agency would not bring enforcement actions through April 17, 2020 if an employer made reasonable, good faith efforts to comply. As many are staff are working remotely, some are posting on employee websites and sending out through email. The DOL is hosting an “online dialogue” to seek information from both employers and employees to aid in the development of their compliance resources.
Finally, the FFCRA does create payroll tax credits for the amounts paid in leave. The amount of payroll tax credits is the same as the aggregate amounts allowable per employee as described above. The Internal Revenue Service (IRS) has published some initial guidance on these tax credits. According to guidance, funds that eligible employers would otherwise be required to deposit to cover employees’ payroll taxes could be withheld from that usual deposit.
The CARES Act. Many of you have seen that on March 27, 2020, Congress passed and the president signed the Coronavirus Aid, Relief, and Economic Security (CARES) Act. NAFCU created a chart summarizing key provisions that impact credit unions and we will provide additional details in future blog posts.