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Coronavirus and Congress: Employment Law Updates for Employees and Businesses

March 21st, 2020 by David Minces

Over the past several weeks, the coronavirus has created unprecedented hardships for individuals, families and businesses. The federal government has attempted to implement policies and procedures as swiftly as the spread of the virus. On March 18, the Families First Coronavirus Response Act was passed. One unique aspect of the Act is that it applies to almost all small businesses—even those generally exempt from other federal employment laws. The Act requires compliance by all employers with under 500 employees, with limited exemptions that have yet to be expounded upon by the Department of Labor (DOL).

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While there are still numerous wrinkles in the Act that have yet to be ironed out, the aim is to mitigate the difficulties posed to sick workers, their families, and their children who are temporarily unable to attend school or daycare. Compliance with the Act will be required beginning April 1. In the interim, the DOL will publish additional information about the details and logistics of the Act. Yesterday afternoon, the DOL published its first round of helpful guidance for employers. The next round of information from the DOL is expected to roll out next week.

A concern among many very small employers is that compliance will place an undue hardship on their business in a time where they are making little to no revenue. To address this concern, employers with less than 50 employees may seek an exemption from the DOL if compliance would “jeopardize the business’s viability.”

While the Act covers a variety of areas, including SNAP benefits, the areas of concern for covered employers (those with under 500 employees) are the leave requirements created by it. Some highlights of the leave requirements are.

1. Employees must be given up to 80 hours of paid sick leave at 100% of their pay if they are unable to work because they are quarantined, and/or experiencing symptoms of coronavirus, and seeking a medical diagnosis.

2. Employees can receive up to 80 hours of paid sick leave at 2/3 of their pay if they are unable to work because:

a.  they need to provide care for an individual who is quarantined;
b. they need to care for a child whose school is closed or whose childcare provider is unavailable for reasons related to coronavirus; and/or
c. they are experiencing substantially similar conditions specified by the Department of Health and Human Services.

3. Employees who are unable to work because they need to care for a child whose school is closed or whose childcare provider is unavailable for reasons related to coronavirus may also receive up to an additional 10 weeks (on top of the 80 hours listed above) of expanded family and medical leave at 2/3 of their pay.

Employers may obtain refundable sick leave credit for each employee’s sick leave (at the employee’s regular rate of pay—up to $511 per day, and $5,110 in the aggregate, for a total of 10 days). Employers may also obtain a sick leave credit for up to 2/3 of the employee’s pay if they are unable to work because the child’s school or childcare facility is closed (at a rate of 2/3 of the employee’s regular rate of pay—up to $200 per day and $2,000 in the aggregate, for up to 10 days). Up to $200 per day or $10,000 in the aggregate for up to 10 weeks is available as a tax credit to employers for each employee who uses the corresponding childcare leave credit. Additional tax credits for an employer’s costs to maintain health insurance coverage for eligible employees during the leave period are also available.

To ensure these tax credits are promptly applied when employers need them most, they will be applied to the employer’s share of federal taxes, SSI and Medicare taxes. To illustrate, if an employer must pay out $10,000 in leave benefits, and would owe $15,000 in payroll taxes, a tax credit for the sick leave benefits would apply so that the employer would only pay $5,000 in payroll taxes. If the employer must pay more leave benefits than it owes in payroll taxes it may apply for expedited payment for the deficit from the IRS. This specific guidance will be released by the DOL and IRS next week.

The small business (fewer than 50 employee) exemption to the leave requirements relating to school closings or childcare unavailability, is available when providing leave benefits prescribed by the Act would jeopardize the ability of the business to continue. The exemption criteria will be on a “simple and clear” basis. The DOL will provide emergency rules and guidance to lay out this standard for employers in the coming days. There is also a health care provider exemption that the DOL will be providing guidance on.

Employers with 25 or more employees are required to reinstate employees to the same or equivalent position. Employers must make reasonable efforts to provide the employee with the same or equivalent position for 1 year after the public health emergency concludes or 12 weeks after the commencement of the leave, whichever is earlier.

The DOL will be creating a notice advising employees of their rights under the Act on or before March 25. Covered employers must post this notice on or before April 1.

The DOL will be issuing a temporary non-enforcement policy that provides employers a 30-day immunity from enforcement actions, so long as they have acted “reasonably and in good faith to comply with the Act.”

The Act expires on December 31, 2020. In the meantime, many employers, including those who have never been covered by leave obligations, are in a purgatory of sorts as we all wait for the DOL and IRS to clarify the finer points of this rapidly drafted and passed law. Minces PLLC is staying on top of all coronavirus-related legal issues and will provide periodic updates.

We welcome the opportunity to help individuals navigate their rights, and employers understand and fulfill their obligations under the Act. Click here to submit a contact form through our website or call our office at 346-701-8563 to schedule a consultation.

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