The U.S. House of Representatives and the Senate have passed a second emergency coronavirus aid package, the Families First Coronavirus Response Act, requiring all employers with less than 500 employees, in addition to all federal and state employers, to provide paid leave to all employees who need the time for reasons related to COVID-19. The president subsequently signed the bill, otherwise known as H.R. 6201. The bill takes effect April 2, 2020.
- To self-isolate because an employee is diagnosed with coronavirus.
- To obtain a medical diagnosis or to receive care if an employee is experiencing symptoms of the coronavirus.
- To comply with an order or recommendation of a public official or health care provider that the presence of an employee on the job would jeopardize the health of others because the employee was exposed to the virus or is exhibiting symptoms.
- To care for a family member who is self-isolating because the family member has been diagnosed with the coronavirus or is exhibiting symptoms.
- To care for a family member if a public official or health care provider concludes that the presence of the family member in the community would jeopardize the health of others because the family member was exposed to the virus or is exhibiting symptoms.
- To care for a child if the school, or place of care, has been closed, or if the child’s childcare provider is unavailable due to the coronavirus.
All full-time employees, who have been working for their employer for at least 30 days, are entitled to 80 hours of paid sick time. Sick time for part-time employees is equal to the average number of hours the employee works over a two-week period. While H.R. 6201 does not require that the sick time be provided in addition to the sick time the employer already provides, it does specify that an employer cannot require its employees to use other sick time provided before using the time provided under the bill. In terms of long-term leave, employers must provide their employees with 12-weeks of job protected leave. The first two weeks may be unpaid. The following 10 weeks must be paid. For the first two weeks, the employee may use the 80 hours of short-term sick leave provided under H.R. 6201.
The bill authorizes a refundable tax credit for qualified sick leave wages and qualified family medical leave wages that can be applied against the Social Security taxes which the employer pays on wages up to $137,700.
- The credit is limited to $511/day per employee if qualified sick leave was taken by the employee for his or her needs and $200/day if leave was taken to care for others. In either situation, the credit is limited to 10 days per employee.
- The credit is limited to $200/day per employee with a cap of $10,000 per employee if the leave was taken for qualified family medical leave.
- Due to the effective date of the bill, the credit is only available for the 2nd-4th quarter of the 2020 tax year.
- The credit amount is taken into the employer’s gross income, effectively eliminating any potential double benefit because the employer will have deducted any sick leave wages it paid
- The sick leave waged paid are not considered to be “wages” for purposes of the Social Security tax.
Employers cannot prevent or discourage employees from claiming paid sick leave. Should they do so, it could be considered to be an obstruction of their employees’ rights or an act of discrimination. If an employer violates the new bill, she/he will be subject to the penalties outlined in Sections 16 and 17 (29 U.S.C. § 216-217) of the Fair Labor Standards Act. This includes fines, imprisonment, damages to the employee amounting to double the unpaid wages and reasonable attorney’s fees and court costs.
In addition, under the House bill “gig” and self-employed workers would receive similar benefits to Americans working at small and medium-sized businesses. People who are independent contractors, such as Uber and Lyft drivers, would be eligible for a tax credit of up to two weeks of sick pay at their average pay and 12 weeks of family leave pay at two-thirds their average rate. These workers must demonstrate that they were forced to comply with a self-isolation recommendation or that they had to take care of a child whose school was closed due to COVID-19. Their benefit is capped at $511/day for paid sick leave and $200/day for family leave (or the average daily income the individual receives if it is less than those amounts). The tax credit can be applied against a person’s income tax and is refundable.
Since the bill was passed, the Secretary of Labor must now provide a model notice within 7 days which employers can post detailing the requirements of the law. Within 15 days of the enactment of the law, the Secretary of Labor must issue guidelines explaining how to determine the wages of part-time workers in different situations. In addition, the Secretary of Labor has the authority to issue regulations “to ensure the consistency between the Sick Leave Act and Division C (The FMLA Section) and Division G (The Tax Credit Section).”
H.R. 6201 provides a substantial safety net for people working at small to medium-sized businesses. Employers must understand their rights and obligations. A knowledgeable and experienced employment law attorney can provide employers with the necessary information and peace of mind that they are following the ever-changing legal landscape. To speak with a seasoned employment law attorney, contact Danielle G. Eanet by email or Matthew Eanet by email or call us at (310) 997-4185.