NOTE: The information in this Alert is current as of March 30, 2020, 12:00 pm Central Time. This is a rapidly-evolving situation and circumstances and guidance may change.
Which employers does it cover?
The Response Act applies to employers with fewer than 500 employees, measured at the time the employee’s leave is taken. This includes:
- all full-time and part-time employees within the United States;
- employees currently on leave;
- temporary employees jointly employed by multiple employers;
- laborers supplied by a temporary agency; and
- corporations with separate establishments or divisions (the “covered employers”).
Workers who are independent contractors under the Fair Labor Standards Act (the “FLSA”) are not considered employees for purposes of the 500-employee threshold.
Where a corporation has an ownership interest in another corporation, the two corporations are considered separate employers unless they are joint employers under the FLSA with respect to certain employees. If the two entities are found to be joint employers, all of their common employees must be counted.
In addition, two or more businesses are considered separate employers unless they meet the integrated employer test under the Family and Medical Leave Act (the “FMLA”). Separate entities or corporations may be parts of a single employer for FMLA purposes if they meet the integrated employer test which considers common management, interrelation between operations, centralized control of labor relations, and the degree of common ownership or financial control.
Employers with fewer than 50 employees may apply for an exemption from the Response Act if complying with its requirements would jeopardize the viability of the business as a going concern. Additional information regarding how to apply for that exemption should be available soon, but the DOL has made clear that any such submissions should not be directed to them.
Emergency Paid Sick Leave
The Response Act requires covered employers to provide two weeks of emergency paid sick leave to eligible full-time employees for up to two weeks (80 hours) and part-time employees for the typical number of hours that they work in a typical two-week period. Employers should utilize the higher of the employee’s regular rate or the applicable minimum wage.
The employer must provide for two weeks of paid sick leave at an employee’s regular rate, up to $511 per day and $5,110 total if the employee is unable to work or telework and is:
- subject to a Federal, State, or local quarantine or isolation order related to coronavirus;
- advised by a health care provider to self-quarantine related to coronavirus; or
- experiencing coronavirus symptoms and is seeking a medical diagnosis.
The employer must provide for two weeks of paid sick leave at two-thirds an employee’s regular rate, up to $200 per day or $2,000 total if the employee is unable to work or telework and is:
- caring for an individual subject to an order described in (a) above or self-quarantine as described in (b) above;
- caring for a child whose school or place of care is closed, or child care provider is unavailable for reasons related to coronavirus. “Child” is defined as under 18 years of age and biological, foster, adopted, a stepchild, a child of a domestic partner, a legal ward, or a child of a person standing in loco parentis, for which the employee has assumed parental status and obligations, as well as an adult (i.e., 18 years of age or older), who (1) has a mental or physical disability, and (2) is incapable of self-care because of that disability; or
- experiencing any other substantially-similar condition specified by the U.S. Department of Health and Human Services. However, this is not currently a qualifying reason to request leave because the Secretary of Health and Human Services has not yet identified any conditions substantially similar to coronavirus.
Emergency Family and Medical Leave Expansion
The emergency FMLA leave may be used if an employee is unable to work or telework due to a need to care for a child, as defined above, whose school or place of care is closed, or child care provider is unavailable, for reasons related to coronavirus. Unlike most provisions of the FMLA, which apply only to employers with fifty or more employees, the emergency FMLA under the Response Act applies to all covered employers with fewer than 500 employees. Employees who have been employed with an employer for more than thirty days as of the date of the request may be eligible for up to twelve weeks of partially paid emergency FMLA leave. The emergency FMLA leave is another form of FMLA leave and an employee is entitled to a total of twelve weeks of FMLA leave during the employer’s FMLA year; therefore, any amount of emergency FMLA leave will reduce the amount of FMLA leave an employee can take for other reasons during the applicable FMLA year. The first ten days of the emergency FMLA leave are unpaid and the remaining time is to be paid at two-thirds of the higher of the employee’s regular rate or the applicable minimum wage for up to $200 daily and $10,000 total.
The DOL recommends that the emergency paid sick leave and the emergency FMLA leave be used together; the emergency paid sick leave can be used for the first ten days (up to 80 hours) to cover the otherwise unpaid time under the emergency FMLA leave, and then the emergency FMLA is used for the additional ten weeks, for a total of up to $200 daily and $12,000 altogether. An employee may elect to substitute any accrued vacation leave, personal leave, or medical or sick leave for the first unpaid ten days of emergency FMLA leave, but they may not be required to do so.
Employer Payroll Tax Credits for Emergency Paid Sick and Family and Medical Leave
To help covered employers comply and maintain adequate cash flow to pay their employees, the Response Act also provides a refundable tax credit equal to 100% of qualified emergency paid sick leave and emergency FMLA leave wages paid by an employer up to the appropriate per diem and aggregate payment caps listed above, plus the cost of the employer’s health insurance premiums during leave. The credit can be used to offset all federal income tax withholding from all employees, including those still working, and both the employer and employee portions of Social Security and Medicare taxes for all employees. Employers may opt out of the applicable refundable credit. The Internal Revenue Service may also provide additional guidance regarding information and procedures that must be followed to retain the credit.
Required Response Act Poster
Each covered employer, including those with fewer than fifty employees who may qualify for an exemption, must post a notice of the Response Act requirements in a conspicuous place in each of its premises. An employer may satisfy this requirement by e-mailing or direct mailing this notice to employees, including to all new hires, or posting this notice on an employee information internal or external website. The required poster may be accessed here, but please check back for any required updates. For further clarification, the DOL’s FAQ regarding the poster can be accessed here.
Required Documentation for Leave
If employees take emergency paid sick leave or emergency FMLA leave pursuant to the Response Act, employers must require employees to provide appropriate documentation to support the reason for leave. Therefore, employers should consider creating a Request for Leave form under the Response Act, to help evaluate whether employees fit within the required criteria and to allow the employer to claim the applicable tax credit. Within the form, employers should request true and correct copies of any relevant orders, documentation from health care providers or schools and daycares, and other documents to determine whether the employees qualify for the requested leave. Please contact us to request assistance in drafting a Request for Leave form.
Other Important Considerations
The Response Act states that an employee affected by coronavirus has the right to use paid emergency sick leave before using existing vacation or paid time-off benefits; therefore, an employer cannot require an employee to use vacation or paid time-off benefits prior to receiving benefits under the Response Act.
Employers may not discharge, discipline, or otherwise discriminate against any employee for taking leave under the Response Act or for filing a complaint or instituting a proceeding under or related to the Response Act for failure to comply.