COVID-19: New Federal PSL and Expanded FMLA

  • On March 18, 2020, President Trump signed emergency relief legislation known as the Families First Coronavirus Response Act (Families First Act). Passed because of the escalating coronavirus (also known as COVID-19) situation, the Families First Act creates expanded employee benefits and protections related to COVID-19, including a new federal paid sick leave law and an emergency expansion of the Family and Medical Leave Act (FMLA).

Read about 2020 legislation and recently issued guidance.

The Families First Act is only one of many measures that federal, state and local governments are taking to address COVID-19. Employers can expect ongoing developments at all levels of government over the coming weeks and months. Employers should continue to consult regularly with their legal counsel on how to address this new complicated federal framework in addition to the already existing leave laws in the context of their specific circumstances.

Since the act’s passage, employers have raised concerns and questions about the law’s requirements — questions the U.S. Department of Labor (DOL) has been working quickly to address through informal guidance materials posted on its website. It also issued regulations that went into effect on April 2, 2020, the day after the law took effect. This page outlines the act’s basic leave requirements as well as some of the big issues addressed by the DOL’s guidance and regulations.

Emergency Paid Sick Leave

The Families First Act requires many employers to provide paid sick leave to their employees for qualifying reasons related to COVID-19.

Coverage and Eligibility

Employers with fewer than 500 employees will be required to provide full-time employees with an additional 80 hours of paid sick leave, or, for part-time employees, the number of hours equal to the hours worked during an average two-week period. For part-time employees with varying schedules, employees can base their calculation on the average number of hours the employee was scheduled per day over a six month period, or, if they haven’t worked that long, the reasonable expectation of the average hours the employee is expected to be scheduled to work.

The DOL provided more guidance on how to calculate hours for part-time employees in its new regulation.1

Full-time Employees

The regulation clarifies that employees are considered full-time if they’re scheduled to work at least 40 hours per week. Additionally, if an employee has an irregular schedule but averages 40 hours or more per week over the six-month period prior to taking leave, the employee is considered full time and may take up to 80 hours of paid sick leave.

Part-time Employees

The DOL provide the following guidance for part-time employees:

  • If the employee has a normal weekly schedule, the employee is entitled to the number of hours the employee is normally scheduled to work over two workweeks.
  • If the employee has a varying schedule and has been employed for at least six months, the employee is entitled to up to the number of hours equal to fourteen times the average number of hours that the employee was scheduled to work each calendar day over the six-month period ending on the date on which the employee takes leave, including any hours in which the employee took leave of any type.
  • If the employee has a varying schedule and has worked less than six months, the employee is entitled to number of hours equal to fourteen times the number of hours the employee and employer agreed the employee would work, on average, each calendar day. If there is no agreement, the employee is entitled to the number of hours equal to fourteen times the average number of hours per calendar day that the employee was scheduled to work over the entire period of employment, including any hours in which the employee took leave of any type.

For example, if an employee takes leave on April 13, 2020, the six-month period for estimating hours is October 14, 2019, to April 13, 2020, which consists of 183 calendar days. In that time, the employee worked 550 hours over 100 workdays and took 100 hours of personal and medical leave, which means the employee has 650 total hours. Next, divide 650 hours (the total hours) by 183 calendar days, which equals 3.55 hours per calendar day (650/183 = 3.55). Then, multiply 3.55 hours by 14 (the number of calendar days in two weeks) to obtain the two-week average of 49.7 hours (3.55 x 14 = 49.7).

The leave is provided in addition to any existing paid leave available to employees and is available for immediate use, regardless of how long the employee was employed — meaning it doesn’t need to be accrued like most paid leave.

Reasons for Leave

Employers must provide this emergency paid sick time when the employee is unable to work (or telework) because the employee is:

  1. Subject to a federal, state or local quarantine or isolation order related to COVID-19;
  2. Advised by a health care provider to self-quarantine due to concerns related to COVID-19;
  3. Experiencing symptoms of COVID-19 and seeking a medical diagnosis;
  4. Caring for an individual who is subject to a government quarantine or a self-quarantine advised by a health care provider (reasons 1 and 2 above);
  5. Caring for their child if the child’s school or place of care has been closed, or the child-care provider is unavailable due to COVID-19 precautions; or
  6. Experiencing any other “substantially similar condition” specified by the Secretary of Health and Human Services.

Rate of Pay

Employees must be paid at their regular rate for reasons No. 1 through No. 3 above, except that pay cannot exceed $511 per day and $5,110 total. When employees take paid sick leave to care for someone else, or the employee is experiencing any other “substantially similar condition,” i.e., reasons No. 4 through No. 6 above, then employers can pay employees two-thirds their regular rate, except that pay cannot exceed $200 per day and $2,000 in the aggregate in those circumstances.2

The new regulation specifies that employers must pay employees the higher of the employee’s “average regular rate,” the federal minimum wage, or any state or local minimum wage the employee is entitled to. For most employers, this is going to require calculating the average regular rate.

To determine the “average regular rate,” employers must compute the “regular rate for each full workweek” in which the employee has been employed over the six months preceding leave, or if employed for less than six months, the entire period of employment. Employers must then compute the average of the weekly rates, weighted by the number of hours worked for each workweek.3

Additionally, an employee’s commissions, tips and piece rates are incorporated into the calculation of the regular rate under this law in the same way they are under the Fair Labor Standards Act (FLSA).

If, over the six-month period, an employee is paid exclusively through fixed hourly wage or salary, the average regular rate would equal the hourly wage or hourly equivalent of their salary.

But, if an employee is paid through different arrangements, such as piece rate, commissions or tips, the regular rate may fluctuate from week to week. In that case, for each full workweek in the six-month period, employers will calculate all remuneration not excluded from the regular rate under the Fair Labor Standards Act. Then, employers will compute the number of hours worked for each full workweek. (Note: This does not count hours when the employee took leave.) Finally, divide the total pay over the six-month period by all hours worked. The result is the average regular rate.

For example, if there are 26 full workweeks in the six-month period, and an employee worked 1,150 total hours over those weeks and received $23,000 in non-excludable remuneration, then the average regular rate is $20.00 ($23,000 divided by 1,150 hours).

The DOL addresses calculation of the average regular rate in its Q&A guidance. (See #8 – “What is my regular rate of pay for purposes of the FFCRA?” and #82 “How do I compute my employee’s average regular rate for the purpose of the FFCRA?”)

To read more about the regular rate, see “Regular Rate of Pay Defined” in Calculating Overtime.

Notice Requirements

Employers are obligated to post the emergency paid sick leave requirements for employees in conspicuous places at the worksite. The DOL issued a model poster employers may use, and stated on a notice Q&A page that employers can comply with notice requirements for teleworking employees in one of two ways: by emailing or direct mailing this notice to their employees or by posting the notice on an “employee information internal or external website.”

Exemptions

The law allows the exemption of health care providers and emergency responders from the sick pay requirements, including allowing them to opt out. It also allows for the exemption of small businesses with fewer than 50 employees from the requirement to pay sick leave when the employee misses work while caring for their child if the child’s school has been closed, or the child-care provider is unavailable due to COVID-19 precautions (reason No. 5 above), when the requirements would “jeopardize the viability of the business as a going concern.”

  • The Emergency Paid Sick Leave program took effect on April 1, 2020, and remains in effect until December 31, 2020.

Emergency Family and Medical Leave Expansion

The Families First Act also temporarily provides emergency FMLA leave for a “qualified need related to public health emergency.”

Coverage and Eligibility

For specified COVID-19-related reasons, the current employee threshold for coverage is changed from covering employers with 50 or more employees to covering any workplace with fewer than 500 employees. Employee eligibility requirements for emergency FMLA are also lowered. Instead of working 1,250 hours in the preceding 12 months, the emergency FMLA provisions apply to any employee who has been employed for at least 30 days.

Reason for Leave

The employee may only take emergency FMLA leave when the employee is unable to work (or telework/remote work) due to a need to care for the employee’s child under 18 years of age if the school or place of care has been closed or the child care provider is unavailable due to a public health emergency related to COVID-19.

Paid Leave

Unlike standard FMLA leave, a significant portion of the emergency FMLA leave must be paid. The first 10 days of emergency FMLA leave may be unpaid, so employees may elect to substitute vacation, personal leave or paid sick leave during that time.

After the first 10 days, the employer must pay full-time employees at a rate of no less than two-thirds of their regular rate of pay for the hours normally scheduled. Employees who work part-time, irregular schedules are entitled to a rate based on the average number of hours worked over a six-month period. If they haven’t worked that long, then they’re entitled to the average number of hours per day that the employee would normally be scheduled to work. Paid leave under this law is capped at $200 per day and $10,000 in the aggregate, per individual.

The new regulations specify that employees are entitled to two-thirds of their “average regular rate” (as described in the Emergency Paid Sick Leave section above) multiplied by the employee’s scheduled number of hours for each day of leave taken.4

The scheduled number of hours is determined as follows:

  • If the employee has a normal work schedule, then it is the hours the employee is normally scheduled to work on that day.
  • If the employee has a varying schedule and has been employed for at least six months, the employee is entitled to the average number of hours the employee was scheduled to work each workday over the six-month period ending on the date on which the employee takes leave, including any hours in which the employee took leave of any type.
  • If the employee has a varying schedule and has worked less than six months, the employee is entitled to the average number of hours employee and employer agreed the employee would work, on average, each calendar day. If there is no agreement, the employee is entitled to the to the average number of hours per workday that the employee was scheduled to work over the entire period of employment, including any hours in which the employee took leave of any type.

Using the same example from the paid sick leave section above of an employee working 550 hours over 100 workdays and taking 100 hours of personal and medical leave within the six-month period, the number of hours per workday is calculated by dividing 650 by the 100 workdays, which is 6.5 hours per workday. That employee would be entitled to 6.5 hours pay for each day of expanded leave taken at two-thirds of their average regular rate, subject to the cap.

  • Note that an employee’s average hours per workday may exceed eight hours per day. If, after doing the above calculation, an employee averages 9.2 hours per workday, the employer must pay the employee 9.2 hours for each day of leave times two-thirds of the employee’s average regular rate, but it’s still subject to the cap of $200 per day and $10,000 total.

The regulation also allows employers to compute the amount of pay in hourly increments instead of full days. For each hour of expanded FMLA (after the first two weeks) the employer must pay two-thirds of the employee’s “average regular rate.”5

Exemptions

The law allows for the exemption of certain health care providers and emergency responders and to exempt small businesses with fewer than 50 employees from its requirements when they would jeopardize the viability of the business.

Job Protections

As with standard FMLA leave, the emergency leave is protected, meaning an employer must return the employee to the same or an equivalent position upon their return. Small employers with fewer than 25 employees are exempted if the position doesn’t exist due to economic conditions or other changes in operating conditions that affect employment and are caused by a public health emergency. However, the employer must make reasonable efforts to restore the employee to an equivalent position, and, if those efforts fail, the employer must make reasonable efforts to contact the employee if an equivalent position opens within a year.

  • The Emergency FMLA expansion program took effect on April 1, 2020, and remains in effect until December 31, 2020.

Tax Credits

The act provides quarterly tax credits for employers required to pay for leave under the paid sick leave or emergency FMLA requirements. The DOL and Internal Revenue Service (IRS) announced that businesses can begin quickly taking advantage of the tax credits under a plan in which they withhold certain payroll taxes equal to the amount of leave paid, rather than depositing them with the IRS. If that amount is insufficient, employers will be able to file a request for an accelerated payment from the IRS, which the IRS expects to process in two weeks or less. The IRS issued guidance and FAQs on its tax credit plan detailing the plan’s specifics. Employers should review the IRS guidance for detailed instructions on how to claim their tax credits.

U.S. Department of Labor Regulations and Guidance

Since the act was passed, the DOL has been busy trying to answer employers’ most common questions leading up to April 1 by posting informal guidance on its website, addressing, for example, how the new federal leaves work with existing leaves, whether they can be taken intermittently, documentation, the effect of worksite closures and reduced hours, and some additional information on the small business exemption.

The DOL issued regulations on April 1, 2020 that provide additional clarity and certainty on the Families First Act’s requirements. The following highlights some of the big issues but is not exhaustive.

Documentation

  • The Families First Act regulations require employees to provide notice to their employers of their need to take either paid sick leave or expanded family and medical leave.

The notice must include the following information:

  • Employee’s name;
  • Date(s) for which leave is requested;
  • Qualifying reason for the leave; and
  • Oral or written statement that the employee is unable to work because of the qualified reason.

Employees must also provide additional information specific to the qualifying reason for leave (see Reasons for Leave and Reason for Leave above), including:

  • If the employee is subject to a quarantine or isolation order, the name of the government entity that issued the order;
  • If the employee has been advised to self-quarantine due to COVID-19 concerns, the name of the health care provider who advised the employee;
  • If the employee is caring for someone else, the employee must provide the name of the government entity that issued the quarantine or isolation order affecting the individual, or the information of the health care provider who advised the individual to self-quarantine; or
  • If the employee is taking care of a child whose school is closed or child care is unavailable due to COVID-19, then the employee must provide the name of the child being cared for, the name of the school, place of care or child care provider that has closed, and a representation that no other suitable person will be caring for the child during the leave.

The regulation specifies that employers may also request additional materials as needed to support their requests for Families First Act tax credits and tells employers to consult recently released IRS tax credit guidance for more detail. Currently, the IRS guidance largely mirrors the employee information requirements listed above, with one difference related to caring for children whose school or day care is closed. In addition to the requirements described above, the IRS guidance also requires, with respect to the employee’s inability to work or telework because of a need to provide care for “a child older than fourteen during daylight hours, a statement that special circumstances exist requiring the employee to provide care.”

The regulation states that employers may not require the employee’s notice include documentation beyond what’s allowed by the regulation (the items listed above). Thus, for the time being, it appears as though employers cannot require employees to provide notes from health care providers, copies of government orders or school closure notices, or other supplemental documentation.

CalChamber’s COVID-19-Related Paid Sick Leave or Family and Medical Leave (FFCRA) — Employee Notice includes all the above required information and the COVID-19-Related Paid Sick Leave or Family and Medical Leave (FFCRA) Documentation Checklist — For Employer Use Only will help guide you through the required documentation.

In order to obtain the FFCRA tax credits, the IRS requires some additional information from employers, including:

  • Documentation to show how the employer determined the amount of qualified sick and family leave wages paid to employees that are eligible for the credit, including records of work, telework, and qualified sick and family leave.
  • Documentation to show how the employer determined the amount of qualified health plan expenses that the employer allocated to wages.
  • Copies of any completed Forms 7200, Advance of Employer Credits Due To COVID-19, that the employer submitted to the IRS.
  • Copies of the completed Forms 941, Employer’s Quarterly Federal Tax Return, that the employer submitted to the IRS (or, for employers that use third party payers to meet their employment tax obligations, records of information provided to the third party payer regarding the employer’s entitlement to the credit claimed on Form 941).

Employers can read more about the FFCRA tax credit process on the IRS guidance page.

The new regulation requires employers to keep the above documentation for four years, regardless of whether the employee was granted leave or not.

Employers should develop a process for collecting the above information from employees and consult with legal counsel before denying leave under the new law.

Retroactivity

The new law is not retroactive. It only applies to leave taken between April 1, 2020, and December 31, 2020. The DOL clarified that this means if employers gave employees paid leave prior to April 1, 2020, for circumstances that constitute a qualifying reason under new paid sick leave law, employers cannot count that toward the new paid sick leave requirements and deny them new paid sick leave — the law imposes a new leave requirement on employers that is effective April 1.

Intermittent Leave

The new regulation states that, generally, employees may take paid sick leave or expanded family and medical leave intermittently (i.e., in separate periods of time, rather than one continuous period), provided the employer and employee agree. There are some limitations depending on the qualifying reason for leave and whether the employee is teleworking or reporting to their usual worksite.

Teleworking employees may take both the paid sick leave and expanded FMLA leave intermittently. Additionally, teleworking employees may take intermittent leave in any increment, provided the employer and employee agree on it.

If the employee still reports to their usual worksite, there’s less flexibility for intermittent leave. In that case, employees can only take paid sick leave intermittently for the qualifying reason of caring for a child whose school or place of care is closed, or child care provider is unavailable due to COVID-19. If employees are taking paid sick leave for any of the other qualifying reasons, they must continue to use their leave until either the leave is exhausted or the qualifying reason is resolved. Employees coming to their usual worksite may also take emergency FMLA leave intermittently by agreement. The DOL is encouraging employers and employees to be collaborative and flexible under the circumstances.

Amount of Expanded Family and Medical Leave

The regulation clarifies that leave taken under the expanded FMLA provisions counts toward the 12 week overall total leave provided by FMLA because it is a type of FMLA leave. In other words, the expanded FMLA leave does not provide an additional twelve weeks of leave on top of what is provided under traditional FMLA. Thus, an employee’s eligibility for expanded FMLA leave depends on how much leave the employee has already taken during the 12-month period that the employer uses for FMLA.

For example, if an eligible employee took three weeks of FMLA leave for their own serious health condition in January 2020, the employee would have nine weeks of FMLA left. Assuming eligibility requirements are met, the employee could take up to nine weeks of expanded FMLA leave, rather than 12 weeks.

Worksite Closures

The new regulation makes clear in several places that employees may not take paid leave (either paid sick leave or expanded FMLA) where the employer does not have work for the employee.

The DOL clarified that if a worksite closed before the act’s effective date of April 1, 2020, for either lack of business or because of government order, employees that worked there are not entitled to leave under the act. If the worksite is closed after April 1 but before the individual requests leave, that person is not entitled to leave. If an employer closes a worksite while an employee is on leave, the employer must pay for all paid sick or emergency FMLA leave taken before the closure. Once closed, the employee is no longer entitled to leave benefits, but may be entitled to unemployment benefits.

The DOL also clarified that employees aren’t entitled to leave for hours they are no longer scheduled. So, for example, if an employee was working 40 hours per week and is reduced to 20 hours due to the employer’s lack of work for the employee, the employee cannot use paid sick leave or emergency FMLA for the hours they’re no longer scheduled to work, even if the reduction in available work is due to COVID-19.

Small Business Exemption

The act’s small business exemption applies to employers with fewer than 50 employees and is available for both the emergency paid sick leave and expanded FMLA. It applies only to leave for the qualifying reason of caring for a child if their school or place of care is closed or their child care provider is unavailable due to COVID-19, and not for any of the other qualifying reasons. This means small employers may be exempt from expanded FMLA leave requirements entirely but only one qualifying reason for paid sick leave. To qualify for the exemption, small employers must show that paying for the leave would, in the words of the law, “jeopardize the viability of the small business as a going concern.” The DOL’s new regulation expanded on what that means, stating that a small business could claim the exemption if an authorized officer of the business determined that:

  1. The provision of paid sick leave or expanded family and medical leave would result in the small business’ expenses and financial obligations exceeding available business revenues and cause the small business to cease operating at a minimal capacity;
  2. The absence of the employee or employees requesting paid sick leave or expanded family and medical leave would entail a substantial risk to the small business’ financial health or operational capabilities because of their specialized skills, knowledge of the business or responsibilities; or
  3. 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.

To elect the small business exemption, an employer must document that a determination has been made as to the criteria listed above. The employer should not send the documentation to the DOL, rather it should retain the records in its files.

The new regulation and the DOL’s guidance gives employers a better understanding of the law’s requirements. The DOL will likely continue to revise and expand its website guidance content to address employer’s questions. Employers should continue to monitor the DOL’s website for updates. Employers can also read the full text of the new regulation for more information.

For more information and resources related to COVID-19, please visit CalChamber’s COVID-19 resource page.

1.29 C.F.R. sec. 826.21

2.29 C.F.R. sec. 826.22

3.29 C.F.R. sec. 826.25

4.29 C.F.R. sec. 826.24

5.29 C.F.R. sec 826.24(c)