Employment Law Alert: New Federal Laws Require Employers to Provide Additional Paid Sick Leave & FMLA-Type Leave for COVID-19 Related Uses

On March 18, 2020, President Trump signed the Federal Emergency Paid Sick Leave Act (“EPSLA”), and the Federal Emergency Family & Medical Leave Expansion Act (“Emergency FMLA”), requiring employers to provide paid and unpaid time off for COVID-19 crisis related uses. Both new laws apply to employers with fewer than 500 employees. Both new laws take effect no later than April 1, 2020, and expire on December 31, 2020.  The new laws provide certain tax credits to help offset the cost of the new paid leaves provided (employers should consult with their tax advisers for detailed guidance concerning the tax credits). Importantly, U.S. Department of Labor guidance indicates that employers do not receive any credit toward the new leave entitlements for leaves provided before April 1. In other words, employers must provide the full entitlements starting April 1, regardless of any leave provided previously.

Federal Emergency Paid Sick Leave

EPSLA requires employers to provide additional paid sick time to employees who are “unable to work (or telework) due to a need for leave because:

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

(2) The employee has been advised by a health care provider 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 an order as described in subparagraph (1) or has been advised as described in paragraph (2).

(5) The employee is caring for a son or daughter of such employee if the school or place of care of the son or daughter has been closed, or the child care provider of such son or daughter is unavailable, due to COVID-19 precautions.

(6) The employee is experiencing any other substantially similar condition specified by the Secretary of Health and Human Services in consultation with the Secretary of the Treasury and the Secretary of Labor.

All categories of employees are eligible regardless of tenure and number of hours worked per week. There are some coverage exceptions for certain employees of health care providers and emergency responders.

EPSLA requires employers to provide such paid sick leave in a lump sum of: (a) 80 hours for full-time employees; (b) for part-time employees, the average number of hours the employee works in a 2-week period. Any unused EPSLA paid sick leave does not carry over to 2021, and need not be paid out upon separation of employment. EPSLA prohibits an employer from requiring employees to use other forms of paid leave (e.g., PTO, vacation, or other available sick leave) before using EPSLA paid sick leave.

EPSLA provides that “[a]fter the first workday (or portion thereof) an employee receives paid sick leave under this Act, an employer may require the employee to follow reasonable notice procedures in order to continue receiving such paid sick leave.” We recommend that employers consider drafting and publishing supplemental sick leave policies to address how the employer will implement EPSLA sick leave generally, including with respect to such notice requirements (e.g., when and how to keep the employer informed of the need for continued sick leave use).

With respect to sick leave pay rates, EPSLA is somewhat complex. Generally, employers must pay employees for EPSLA sick leave the greater of the employee’s regular rate (as defined by the Fair Labor Standards Act), or the highest applicable minimum wage (i.e., among federal, state, and local minimum wage rates). As an exception, however, only two-thirds of such rates are required for paid sick leave uses (4), (5), and (6) set forth in the second paragraph of this article, relating primarily to care of individuals other than the employee. As a further exception, employers may cap EPSLA paid sick leave to $511 per day and $5,110 in aggregate for uses arising from the employee’s own COVID-19 related condition or restrictions (see (1)-(3) of second paragraph), and $200 per day and $2,000 in the aggregate for other uses (see (4)-(6) of second paragraph). For illustration only, the former corresponds to an annualized pay rate of $132,860, and the latter to $52,000.
EPSLA prohibits an employer from retaliating against an employee for using EPSLA sick leave. EPSLA requires employers to post a notice to employees of EPSLA rights, which may be satisfied by posting a model notice to be published by the Secretary of Labor next week.

EPSLA authorizes the Secretary of Labor to issue regulations for good cause to exempt businesses with fewer than 50 employees from the requirement to provide paid sick leave for parents to use to care for children whose school or child care provider is closed due to COVID-19 precautions (see (5) in the second paragraph), if it would jeopardize the viability of the business. As of the date of this alert, however, such requirement remains in effect.

We recommend that employers immediately prepare to comply with the law by no later than April 2. Employers should consider preparing new policy publications to supplement their employee handbooks with respect to EPSLA, and other policy adjustments being made in light of the COVID-19 crisis. With respect to EPSLA paid sick leave, such policy supplements should include discussion of how the new sick leave integrates with other paid leave/benefits, pay rates (including whether the employee will utilize any of the caps on pay rates for EPSLA paid sick leave), and the reasonable notice provisions discussed above.

Employers should also carefully consider how employee itemized wage statements will reflect EPSLA paid sick leave balances, usage, and pay rates. California Labor Code Section 226(a) requires that itemized wage statements include all applicable hourly rates. Employers paying EPSLA sick leave at a unique rate will need to account for this accurately on the itemized wage statements. In addition, California’s pre-existing state sick leave law requires that “[a]n employer shall provide an employee with written notice that sets forth the amount of paid sick leave available, or paid time off leave an employer provides in lieu of sick leave, for use on either the employee’s itemized wage statement . . . or in a separate writing provided on the designated pay date with the employee’s payment of wages.” The most clear way to comply with these requirements would be to separately track EPSLA sick leave balances, use and pay rates on itemized wage statements.

Federal Emergency Family & Medical Leave Expansion Act

The Federal Emergency Family & Medical Leave Expansion Act (“Emergency FMLA”) requires employers to provide up to 12 weeks of paid and unpaid FMLA leave to employees unable to work (or telework) due to a need for leave to care for a child under the age of 18 if the child’s school or place of care has been closed, or the child’s care provider is unavailable, due to a COVID-19 related emergency declared by a Federal, State, or local authority. Where the need for leave is foreseeable, the employee must provide the employer with as much notice as is practicable.

Employer and employee coverage requirements differ dramatically from traditional FMLA uses. Under Emergency FMLA, employers with fewer than 500 employees are covered (in contrast to the general FMLA coverage requirement of 50 or more employees). Employees merely need to have been employed with the employer for at least 30 days to be eligible (in contrast to the general FMLA eligibility requirements of 12 months employment, 1,250 work hours within the prior 12 months, and working at a location with at least 50 employees within a 75-mile radius).

Pay provisions also differ dramatically from general FMLA uses. Under Emergency FMLA, the first 10 days of leave are unpaid, except that employees must be given the option to substitute any accrued vacation leave, personal leave, or medical or sick leave. For leave beyond 10 days, the employer is required to provide pay of at least two-thirds of the employee’s regular rate (as defined by the Fair Labor Standards Act) for the employee’s normally scheduled work hours (including normally scheduled overtime), subject to a cap of no more than $200 per day and $10,000 in the aggregate. For clarity, although overtime hours are included, all normally scheduled hours are to be paid at the regular rate (i.e., overtime premium rates do not apply).

Employers with 25 or more employees are required to restore employees to their positions following Emergency FMLA leave, consistent with general FMLA provisions. Employers with fewer than 25 employees may deny restoration following Emergency FMLA leave only if the following conditions are met: (a) the position no longer exists due to economic conditions or changes in other operating conditions that affect employment, and are caused by a public health emergency; (b) the employer makes reasonable efforts to restore the employee to an equivalent position; and, (c) the employer makes reasonable efforts for a specially defined one year period to contact the employee if an equivalent position becomes available.

The new law authorizes the Secretary of Labor to issue regulations for good cause to exempt businesses with fewer than 50 employees from the requirement to provide Emergency FMLA if it would jeopardize the viability of the business, and to exclude certain health care providers and emergency responders from the definition of an eligible employee. As of the date of this alert, however, no such exemptions or exclusions are in effect.

We recommend that employers immediately prepare to comply with the law by April 1. Employers should consider preparing new policy publications to supplement their employee handbooks, and publish to employees explaining their right to request Emergency FMLA leave. In addition, employers should prepare appropriate leave notices to provide to employees promptly upon learning of an employee’s need or request for Emergency FMLA leave.