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Small Businesses Must Pay Employees for Coronavirus Absence

Coronavirus paid sick leave

[For an update based on agency guidance please see Small Businesses Receive Help with Coronavirus Paid Leave.]

On March 18, Congress passed, and the President signed on the same day, the Families First Coronavirus Response Act (FFCRA) that, among other things, requires employers to give employees paid time off for certain absences that result from the COVID-19 coronavirus pandemic. This article summarizes the obligations of employers and the rights of employees under the FFCRA. This article is only a summary and does not address all the details and nuances of the statute. In addition, because the FFCRA was enacted and signed so quickly, there may be questions without obvious answers. You may contact our office to inquire about obtaining advice regarding your specific situation as either an employee or employer.

What Employers Are Covered?

The following employers are affected by the FFCRA:

  • Public and government agencies, regardless of the number of employees
  • Private employers (including individuals, corporations, limited liability companies, nonprofit corporations, and others) with fewer than 500 employees

Which Employees are Eligible?

The FFCRA applies to both full-time and part-time employees. Some of the benefits are available to all employees and some are available only to people who have been employed by the same employer for at least 30 days. Independent contractors are not eligible.

When is an Employee Eligible for Paid Leave?

The FFCRA requires employers to pay employees who are unable to work or telework due to one of the following situations:

(1) The employee is subject to a Federal, State, or local quarantine or isolation order related to COVID–19.

(2) A health care provider has advised the employee 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 a Federal, State, or local quarantine or isolation order related to COVID–19 or who has been advised by a health care provider to self-quarantine due to concerns related to COVID-19.

(5) The employee is caring for a son or daughter whose school or place of care of the son or daughter has been closed, or whose childcare provider is unavailable, due to COVID–19 precautions. “Son or daughter” includes the employee’s biological child, adopted child, foster child, stepchild, or legal ward. “Childcare provider” means a person who provides childcare services for compensation on a regular basis.

The FFCRA permits the Government to specify other substantially similar conditions that will make an employee eligible for benefits, but there have been none so far.

How much must the employee be paid, and for how long?

How much the employee is paid depends on the reason for the employee’s leave and whether the employee is full-time or part-time.

If the employee is on leave for any of the first three conditions listed above (in other words, due to a government order or the employee’s health, as opposed to the need to care for someone else), the employee must be paid at the employee’s regular rate of pay per hour, but in no event less than the federal or state minimum wage. If the reason for the employee’s leave is to care for another person (the fourth or fifth conditions listed above), the employee must be paid at least two-thirds of that hourly rate.

The basic idea is that employees will receive two weeks of paid time off. Full time employees are entitled to 80 hours of paid leave. Part-time employees are to be paid for the average number of hours they would ordinarily work in a two-week period. The FFCRA does not specify the time frame over which the average must be calculated, but there is an implication that the calculation should reasonably represent the number of hours the employee would have otherwise expected to work over the period of leave. If a part-time employee’s schedule is so irregular that the employer cannot calculate that number with certainty, the number of hours can be based on the average number of hours worked per day over the last six months. If six months of representative work history is unavailable, the employer must pay for the number of hours the employee would have reasonably expected to work during the period of leave.

There are also monetary limits. If the employee’s absence is due to one of the first three conditions, the employer’s obligation for paid time off is limited to $511 per day and $5,110 in total. If the absence is due to one of the other conditions, i.e., to care for another person, the cap is reduced to $200 per day and $2000 in aggregate.

Is that everything?

The basic benefit described above – two weeks of paid time off – is the entire benefit for employees who are absent because of the first four conditions listed above; however, extended benefits are available to employees who incur the need for leave to care for a son or daughter whose school or place of care is closed or whose care giver is unavailable. The extended benefit is created by an amendment to the Family and Medical Leave Act or FMLA, which requires employers to give each employee as least 12 weeks of paid or unpaid leave from work due to serious medical conditions or other situations, but only if the employ has been employed for at least 30 days.

The amendment adds the fifth condition listed above to the list of conditions that trigger the FMLA. Ordinarily the FMLA applies only to employers with at least 50 employees, but this amendment covers all private employees with fewer than 500 employees. The amendment also has a unique provision requiring the employer to furnish paid leave, not just unpaid leave.

The amendment to the FMLA works together with the requirements for paid leave described above. The employee can elect to take the first two weeks of FMLA leave as unpaid leave, or the employee can elect to use the two weeks of paid leave furnished under the FFCRA during that time. After that, the employer is obligated to pay the employee for the 10-week balance of FMLA leave at the same rate described above, subject to a cap of $200 per day and an aggregate of $10,000. The upshot is that parents who cannot work or telework because they need to care for their children whose schools or places of care have been closed, or whose care givers are unavailable because of COVID-19 precautions, may receive 12 weeks paid time off, albeit at only two-thirds of their usual pay rate and within the caps of $200 a day and of $12,000 in aggregate.

Are there any exceptions?

There are exceptions and the possibility that others will be created. First, employers of health care providers and first responders may choose to exclude those workers from receiving paid time off under the statute, and the Secretary of Labor is authorized to issue regulations to the same effect. Unfortunately, the FFCRA does not define “health care provider” or “first responder.”

The FFCRA also authorizes the Secretary of Labor to issue regulations that exempt small businesses (i.e., those with fewer than 50 employees) from the requirements of the FFCRA if complying with the requirements jeopardize the employer as an ongoing business. There are no such regulations yet.

May employers require employees to use their vacation, personal time, or regular paid time off instead of paid leave under the FFCRA?

The employee may use FFCRA leave first.  They may not be required to use vacation, sick leave, or similar benefits regularly provided by the employer before using paid time off under the FFCRA.

Do employers have to pay the benefits out of their own pockets?

Initially, employers must pay their employees, but employers will receive a 100% credit toward federal income taxes for the amounts they pay to comply with the FFCRA.

Is the FFCRA in effect now?

The FFCRA takes effect on April 2, 2020. The provisions for paid time of expire at the end of 2020.

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There are still many unanswered questions about the Families First Coronavirus Response Act and other responses to the COVID-19 pandemic that will affect businesses in the United States. Watch this blog for later articles. To receive notices of future articles, use the “SUBSCRIBE” button in the right-hand column on this page.