In-Depth: COVID-19 – New Employer Obligations & Considerations

Supplement to COVID-19 – New Employer Obligations & Considerations (Barack Ferrazzano Client Alert, March 2020).

• Local Orders to Quarantine. We are likely to see more local governments order residents to shelter in place under the threat of fines or imprisonment. Others are ordering residents to shelter in place without the threat or fines or imprisonment. Be prepared to address employee concerns about not coming to work. Do not require an employee under an order that includes fines or imprisonment to come to work. Other shelter in place orders should be individually evaluated. Determine whether you are required to pay an affected employee under applicable wage laws or new paid sick leave laws.
• New Paid Sick Leave Requirements. The Families First Coronavirus Response Act includes an Emergency Paid Sick Leave Act. This Act requires that, beginning April 2, 2020 and continuing until the end of the year, all employers, with limited exceptions, must provide up to 80 hours (or the equivalent of 2 weeks of pay for part-time employees) if the employee:
  1. Is subject to a federal, state, or local quarantine or isolation order related to COVID-19;
  2. Has been advised by a health care provider to self-quarantine due to concerns related to COVID-19;
  3. Is experiencing symptoms of COVID-19 and seeking a medical diagnosis;
  4. Is caring for an individual who is subject to an order under #1 above or has been advised under #2 above;
  5. Is caring for a son or daughter due to school closure or unavailability of childcare provider; or
  6. Is experiencing any other substantially similar condition, as specified by the Secretary of Health and Human Services in consultation with the Secretary of the Treasury and the Secretary of Labor.

Paid sick leave is paid at the employee’s regular rate, but is not required to exceed: $511 per day and $5,110 in the aggregate for a use described in paragraph (1), (2), or (3); and $200 per day and $2,000 in the aggregate for a use described in paragraph (4), (5), or (6).

The new paid sick leave law is enforced by the Department of Labor and has the Fair Labor Standards Act remedies. This means that there are risks of litigation and liabilities well beyond the cost of the paid sick leave.

• New FMLA Leaves. Beginning no later than April 2, 2020 and continuing until the end of the year, the Family and Medical Leave Act includes a new qualifying leave related to a public health emergency. Significant provisions include:
  1. Eligible employees are employees who have been employed for at least 30 calendar days (no hours requirement).
  2. Covered employers are expanded to include all employers with fewer than 500 employees (standard FMLA leave remains in place for employers with 500 or more).
  3. Qualifying need related to a public health emergency is focused on childcare. The employee has to be unable to work or telework because he or she has to care for a son or daughter under the age of 18 if the school is closed or a childcare provider is unavailable due to a public health emergency.
  4. The public health emergency may be declared by a federal, state, or local authority.
  5. The first 10 days may be unpaid with the employee being able to use accrued vacation, personal, or sick leave. Thereafter, for the remaining period of the leave, the employer has to pay the employee in an amount not less than two-thirds of the employee’s regular rate of pay and based on the employee’s normal number of hours, provided that the pay does not have to exceed $200 per day or $10,000 in the aggregate.
• Partial Offset of Cost Through Tax Credit. The emergency legislation provides employers with a refundable tax credit to offset some of the cost of providing employees paid sick leave and family leave wages. The tax credit is allowed against the 6.2% Social Security payroll tax. The amount of the credits are capped as follows:
  • Sick Leave. For sick employees, limited to $511 per day, and for employees who are caring for another, limited to $200 per day, both subject to a 10-day per employee maximum.
  • Family Leave. Limited to $200 per day per employee taking such leave, capped at $10,000 per employee.

Employers are also given additional payroll credits for group health plan costs for, and the 1.45% Medicare payroll tax on wages paid to, employees on sick leave or family leave. In addition, similar credits apply to self-employed individuals.

• Consider Flexible Sick Pay Policies. Many employers have paid time off policies that do not distinguish between vacation and sick leave. Others have sick leave policies that do not permit an employee to take paid sick time if a family member is sick. Evaluate your policies to determine whether they sufficiently address your goal of keeping sick employees out of the workplace. As with the temporary legal responses described above, consider temporary changes to those policies and benefits.