The COVID-19 situation in the United States is continuously changing. Both the Federal government and the New York State government recently signed major legislation into law giving employees job-protected, paid leave from work. Many of our clients have questions regarding the new paid leave bills and obligations as an employer – here is an update about what we know as of today.
Federal Families First Coronavirus Response Act
The Federal government has passed its own measures to respond to COVID-19. This Act was signed on Thursday, March 19th which means the leave provisions will go into effect on April 2nd.
The Federal bill contains two major parts:
1. the Emergency Paid Sick Leave Act
2. the Emergency Family and Medical Leave Expansion Act which expands the existing Family Medical Leave Act (FMLA) to cover leaves due to the closure of an employee’s child’s school/child care provider due to COVID-19.
Emergency Paid Sick Leave Act
The Emergency Paid Sick Leave Act creates new paid sick leave requirements for employee leave due to COVID-19. This Act covers employers with fewer than 500 employees as well as all public employers.
Employers will be required to provide paid sick time for employees who cannot work or telework because the employee is:
1. subject to a Federal, State, or local quarantine or isolation order
2. advised by a health care provider to self-quarantine
3. experiencing symptoms of COVID-19 and needs to seek a medical diagnosis
4. caring for an individual who is subject to a quarantine order or has been advised by a health care provider to self-quarantine
5. caring for a child whose school or place of care has closed or child care provider is unavailable due to the public health emergency
6. experiencing any other substantially similar condition to be determined by the Secretary of Health and Human Services in consultation with the Secretary of the Treasury and the Secretary of Labor
Full-time employees (regardless of the employee’s duration of employment prior to leave) will be entitled to 80 hours of paid sick time, while part-time employees will be entitled to paid time equivalent to the average number of hours that they work in a 2-week period. Employees taking leave due to qualifying reasons 1, 2, or 3 listed above will be entitled to their regular rate of pay. Employees taking leave due to qualifying reasons 4, 5, or 6 listed above will be entitled to two-thirds their usual rate of pay.
Employees cannot be required to use their existing accrued paid leave such as PTO before the employee uses their paid sick leave time.
Paid sick leave wages are limited to $511 per day up to $5,110 total per employee for their own use and to $200 per day up to $2,000 total to care for others and any other substantially similar condition.
The Secretary of Labor also has the discretion to exempt employers with fifty (50) or fewer employees from compliance with the Act upon showing that compliance would cause financial hardship.
Emergency Family and Medical Leave Expansion Act for Child Care Reasons
Businesses with less than 500 employees and all public employers will be covered by the FMLA’s coronavirus-related reason for leave.
Under the amended FMLA, an employee may take FMLA leave if their child’s school has closed or child care provider is unavailable due to the public health emergency. The first 10 days of leave under the FMLA will be unpaid but employees may elect to use their accrued vacation and/or PTO leave during this time. An employer cannot require the employee to use any accrued vacation and/or PTO during the unpaid period. After the initial two-week period, the employer must continue paid FMLA leave at a rate of no less than two-thirds of the employee’s usual weekly rate of pay.
Pay would be capped at $200 per day, and $10,000 in total. Employees taking leave under the FMLA due to the closure of their child’s school or unavailability of their child care provider will be entitled to job restoration at the conclusion of the leave.
The Secretary of Labor also has the discretion to exempt employers with fifty (50) or fewer employees from compliance with the Act upon showing that compliance would cause financial hardship.
Tax Credits for Paid Sick and Paid Family Leave
To help employers pay for these requirements, the law provides a refundable payroll tax credit for 100 percent of qualified paid sick leave wages paid by an employer, which is permitted against the employer portion of Social Security taxes. There’s also a refundable tax credit for 100 percent of qualified family leave wages paid by an employer, which is allowed against the employer portion of Social Security taxes.
For the self-employed, the law provides a refundable tax credit for 100 percent of qualified sick leave wages for individuals in quarantine for coronavirus, or for 67 percent of qualified wages when caring for a quarantined family member or child whose school or place of care was closed because of coronavirus. This tax credit is allowed against income taxes. There’s also a refundable tax credit for family leave for self-employed individuals equal to 100 percent of qualified family leave wages.
New York State Emergency Paid Sick Leave Act
The New York State Emergency Paid Sick Leave Act took effect on March 18th and creates a new paid sick leave program for quarantined employees, and expands the existing N.Y. Paid Family Leave (PFL) and Disability Benefit Leave for quarantined employees.
The act only applies to employees who have been ordered to quarantine or isolate by New York State, the Department of Health, a local health board, or another government entity authorized to issue a quarantine or isolation order. It is important to note that the Act does not cover employees who have voluntarily chosen to quarantine or self-isolate. Benefits would not be available to quarantined employees who are asymptomatic and able to perform their job functions remotely.
Required Paid Sick Leave
The Act covers all employers and the amount of leave an employee is entitled to depends on the employer’s size.
• Employers of 10 or fewer as of January 1, 2020 must provide unpaid, job protected sick time during an employee’s period of ordered quarantine or isolation, except those employers with net income of more than $1 million, which must provide five days of paid sick leave
• Employers of 11 to 99 must provide five days of paid sick leave
• Employers of 100 or more must provide up to fourteen days of paid sick leave
• Public employers must provide at least fourteen days of paid sick leave
NOTE: Paid sick leave shall be provided without loss of an employee’s accrued sick leave. That is, this leave is in addition to whatever leave is already provided by the employer and is to be used first.
The paid sick leave is to be paid by the company itself and the paid sick leave is “job protected,” meaning that employees who take sick leave due to a quarantine order will be entitled to the restoration of their job. Similarly, employees may not be discriminated against or retaliated against for taking sick leave.
New York PFL and Disability Leave Expansion
The Act also expands New York’s Paid Family Leave Law and Disability Benefit Law to cover employees under a quarantine order.
PFL will be available to employees when an employee is unable to work due to a quarantine order or an employee has to care for their child, under 18, who is subject to a quarantine order.
Employees will also be eligible for disability leave on the first day of disability when an employee is unable to perform the regular duties of employment or the duties of any other employment which the employer may offer, as a result of the quarantine order, and the employee has exhausted all paid sick leave provided by the employer under this law.
If you have any questions on the new Federal or NYS legislation, please contact Caroline Organ, Director of Human Resources at 854-5034 or cmo@bspcpa.com.