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Legislative Update: Families First Coronavirus Response Act

Update: This article was updated on April 17, 2020, to clarify aspects of the FFCRA and to provide updates based on new guidance from the US Department of Labor and the Internal Revenue Service

US Employment Laws are currently part of a changing legal landscape resulting from the coronavirus/COVID-19 pandemic. Federal, State, and Local governments have taken action to combat this public health emergency and limit the economic impact it will have. As of March 18, 2020, the federal government passed the Families First Coronavirus Response Act that, among other things, provides for an expansion of the Family Medical Leave Act (the “FMLA”), creates a new Emergency Paid Sick Leave Act (the “EPSLA”), and provides employers with refundable tax credits for qualified paid sick leave expenses (the “Tax Credits”). To date, other than Governor Cooper’s previous executive orders related to mass gatherings and business closures (restaurants, bars, personal care/grooming, and entertainment), North Carolina has not passed a law that impacts the state’s employment laws. Additionally, the US Department of Labor is and will continue to provide guidance to employees and employers throughout this emergency. However, it is critical to note that this is a changing landscape and federal and state law may change considerably over the coming days or weeks.

Effected Employers by the EFMLA and ESPLA - Both acts apply to employers of 500 or fewer employees.

Small Business Exemption - Small businesses of 50 or fewer employees may claim a small business exemption if providing (a) paid sick leave due to school or place of care closures or child care provider unavailability for COVID-19 related reasons and (b) expanded family and medical leave due to school or place of care closures or child care provider unavailability for COVID-19 related reasons when doing so would jeopardize the viability of the small business as a going concern. Although no documentation is required to be submitted tot he US Department of Labor, to claim this exemption an authorized officer of the business must determine and document that (any such documentation must be kept for 4 years):

  • Providing paid sick leave or expanded family and medical leave would result in the small business’s expenses and financial obligations exceeding available business revenues and cause the small business to cease operating at a minimal capacity;
  • The absence of the employee or employees requesting paid sick leave or expanded family and medical leave would entail a substantial risk to the financial health or operational capabilities of the small business because of their specialized skills, knowledge of the business, or responsibilities; or
  • There are not sufficient workers who are able, willing, and qualified, and who will be available at the time and place needed, to perform the labor or services provided by the employee or employees requesting paid sick leave or expanded family and medical leave, and these labor or services are needed for the small business to operate at a minimal capacity.

Emergency FMLA Expansion Act – Expands the FMLA to allow employees to take up to 12 weeks leave (2 weeks unpaid and 10 weeks paid) to care for the employee’s children (under age 18) whose school or child care provider is closed/unavailable due to a public health emergency, such as the coronavirus/COVID-19 pandemic.

  • Employees who are eligible for leave
    • Employed for at least 30 days
    • Qualifying Need related to a Public Health Emergency – Employee is unable to work/telework because he/she must care for a child(ren) (under age 18) if school/childcare provider is closed/unavailable due to a public health emergency
    • Provide notice of need for leave as practicable
  • Limitation on Unpaid Leave
    • Initial 10 days of leave may be unpaid
      • Employee may elect to substitute employer paid leave for the initial 10 days
    • Employer must offer paid leave after initial 10 days of unpaid leave
      • Amount – not less than 2/3 regular hourly rate for each hour employee would normally be scheduled to work
        • If the employee works based on varying schedules
          • Average number of hours over previous 6-month period
          • Reasonable expectation of hours (if not worked for 6 months)
      • Maximum amount of leave - $200 per day and $10,000 total (10 weeks)
  • Restoration of Position
    • Does not apply if less than 25 employees and certain conditions are met
    • 1-year contact period beginning the earlier of
      • Public health emergency concludes
      • 12 weeks after date leave commences
  • This expansion appears to be temporary as it is set to expire on December 31, 2020.

Emergency Paid Sick Leave Act – Requires employers to offer employees affected by the coronavirus/COVID-19 pandemic up to 2 weeks of paid sick leave

  • Employer must provide paid sick leave to employees that are unable to work or telework because of
    1. Federal/State/local quarantine/isolation order related to COVID-19
    2. Healthcare provider directed employee self-quarantine related to COVID-19
    3. Experiencing symptoms of COVID-19 and seeking med diagnosis
    4. Employee caring for individual subject to 1 or 2
    5. Caring for the employee’s children when the children’s school/childcare is closed/unavailable due to COVID-19 precautions
      • Note – paid leave for employees facing school/childcare closure is required in place of the initial 2 weeks (10 days) of limited unpaid leave as provided for in the FMLA expansions noted above.
    6. Substantially similar condition as defined by the Secretary of the US Department of Health and Human Services
  • Exclusion – Employers may elect to exclude a healthcare provider/emergency responder employee from application of the EPSLA
  • Amount of hours
    • Full time – 80 hours (2 weeks)
    • Part-time – average number of hours worked over 2-week period
  • Maximum amount of Leave
    • For reasons 1, 2, and 3 above – $511 per day and $5,110 total
    • For reasons 4, 5, and 6 above – $200 per day and $2,000 total
    • US Department of Labor will provide guidelines for calculating leave amounts
  • Notice – Employer must provide posted notice of the requirements of this act (US Department of Labor will draft a model notice)
  • Termination of Leave – Paid leave terminates on the date of the employees next scheduled work shift after the need for leave terminates
  • Carryover – Employee may not carryover paid sick leave guaranteed by the EPSLA from year to year
  • Prohibitions
    • Employers cannot require employee to find replacement
    • Sequencing of Leave – Employer cannot require an employee to use employer provided paid leave before using the EPSLA paid leave
    • Failure to pay sick leave or unlawful termination of an employee is a violation of the Fair Labor Standards Act

Tax Credits – Provides employers with a refundable tax credit against payroll taxes (Sections 3111(a) and 3221(a) of the Internal Revenue Code) (see IRS guidelines)

  • Any excess of credit over amount of tax owed is treated as an overpayment and refunded
  • ESPLA - Credit for 100% of qualified paid sick leave per calendar quarter based on amount of leave for each reason for up to 2 weeks
  • EFMLA - Credit for 100% of qualified paid sick leave per calendar quarter based on amount of leave for each reason for up to 10 weeks
  • Documentation required - In order to substantiate eligibility for these credits, an employer must document the following (documentation must be kept for 4 years regardless of whether leave is granted or denied):
    • The employee’s name;
    • The date or dates for which leave is requested;
    • A statement of the COVID-19 related reason the employee is requesting leave and written support for such reason; and
    • A statement that the employee is unable to work, including by means of telework, for such reason.
    • Additional EFMLA Documentation
      • The name of the child being cared for;
      • The name of the school, place of care, or child care provider that has closed or become unavailable;
      • A representation that no other suitable person will be caring for the child during the period for which the employee takes EFMLEA leave; and
      • With regard to a child who is over the age of 14, a statement describing the special circumstances that require the employee to provide care for the child during daylight hours.
    • Additional ESPLA Documentation
      • For Reason 1 - an employee must provide the employer with the name of the government entity that issued the quarantine or isolation order;
      • For Reason 2 or 3 - an employee must additionally provide the employer with the name of the health care provider who advised the employee to self-quarantine due to concerns related to COVID-19;
      • For Reason 4
        • The name of the government entity that issued the quarantine or isolation order to which the individual is subject; or
        • The name of the health care provider who advised the individual to self-quarantine due to concerns related to COVID-19; or
      • For Reason 5
        • The name of the child being cared for;
        • The name of the school, place of care, or child care provider that has closed or become unavailable;
        • A representation that no other suitable person will be caring for the child during the period for which the employee takes EPSLA leave; and
        • With regard to a child who is over the age of 14, a statement describing the special circumstances that require the employee to provide care for the child during daylight hours.

Worker Adjustment and Retraining Notification (“WARN”) Act – Please note that any employer considering layoffs must remember to remain in compliance with anti‑discrimination laws and the federal WARN Act, which requires that employers must give 60 days advanced notice to employees of any mass layoff/plant closing

  • Employers Affected - employers with 100 or more employees, not counting
    • those employees with less than 6 months on job
    • those employees working less than 20 hour per week
  • Applies to layoffs of
    • 50 or more people at a single site of employment
    • 500 or more at single site of employment during 30-day period
    • Temporary layoff of less than 6 months extended for more than 6 months
    • Reduces hours of 50 or more employees by 50% or more for each month in a 6-month period
  • Exceptions to 60-day notice (only need as much notice as practicable)
    • Faltering company
    • Unforeseeable business circumstances – likely the most reasonable exception to the notice requirement for any layoffs due to the coronavirus/COVID-19 pandemic
    • Natural disaster

The NC Bar Association Blog has a recent post Work in the Time of COVID-19: FAQs for Employers that provides additional information about these new laws and their impact on businesses.

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DISCLOSURE: This legislative update, drafted by attorneys at Homesley & Wingo Law Group PLLC, is only intended to be a summary of recently passed legislation in a legal environment that is subject to change daily. Accordingly, this summary is not intended to be a full explanation of the law, nor should it be considered legal advice. For a more detailed explanation of how these or other legislative changes may affect your business, contact your attorney.