Implementing the Families First Coronavirus Response Act

April 4, 2020
by Lee W. Cotugno, Esq.

Bottom Line:

-The Families First Coronavirus Response Act requires many employers to offer (1) expanded leave under the Family and Medical Leave Act (Expanded FMLA); and (2) additional paid sick leave through the Emergency Paid Sick Leave program (EPSL).  

-When paid leave is provided under EPSL or Expanded FMLA, employers can get a dollar-for-dollar tax credit and will not have to wait until 2021 to get the credit.  

-Some employers who were not previously required to provided FMLA leave may have obligations under the Expanded FMLA program; some employees who were not previously eligible for FMLA leave may be eligible for the Expanded FMLA leave.

-On April 1, 2020, the Department of Labor issued new regulations stating that employers with fewer than 50 employees may be eligible for an exemption from certain of the requirements if they would jeopardize the viability of the business. (See 29 § 826.40(b)(1) and (2))

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The changes over the last month have occurred at breakneck speed.  We have moved from a virus that was not a threat, to a nationwide shut down, with governments at all levels issuing unprecedented orders that impact all aspects of our lives.  Fear and uncertainty were the not-unexpected result, manifested by panic buying and the hoarding of toilet paper. And concerns were raised that the shutdown would lead to a recession, and possibly worse. Recognizing the need to ameliorate the economic downturn led to the Families First Coronavirus Response Act (FFCRA), introduced on March 11 and signed by President Trump on March 18.  Crafted at great haste, it contains gaps and inconsistencies that will have to be worked out over time.  One way or the other, all employers and employees will be affected, including Catholic and other religious entities.  

Catholic Theology and the Dignity of Work

In responding to these challenges, it is vital that religious employers continue to focus on the dignity of work and to show solidarity with their employees.  As Saint John Paul II observed in his Encyclical Letter, “On Human Work”:

Christianity brought about a fundamental change of ideas in this field [the nature of work], taking the whole content of the Gospel message as its point of departure, especially the fact that the one who, while being God, became like us in all things [and] devoted most of the years of His life on earth to manual work at the carpenter’s bench. This circumstance constitutes in itself the most eloquent “Gospel of work,” showing that the basis for determining the value of human work is not primarily the kind of work being done but the fact that one who is doing it is a person.  

Employers can show solidarity by understanding, and properly and thoughtfully applying, the new legal mandates of the FFCRA, which applies to all employers with fewer than 500 employees.  

FFCRA Key Provisions: Emergency Paid Sick Leave and Expanded FMLA Leave

For employers, the key provisions are those for Emergency Paid Sick Leave (EPSL) and expanded Family and Medical Leave (EFMLA).  We have provided below a brief summary of key provisions of the FFCRA.  It is anticipated that the Department of Labor will issue clarifying regulations and guidance on the new law.  We anticipate that this summary will be updated when clarifications are issued, or when best practices suggest how to comply, but you should periodically check the DOL website for the most recent information.  

One thing is clear from all of the questions that the new legislation raises:  How a religious employer communicates with its employees remains key.  Because of stay-at-home orders, the possibility of infection, or the loss of business, you may have to make some very difficult decisions.  Being upfront with your employees, taking the time to address their individual concerns, and recognizing the anxiety and fear they may have, is a crucial part of being an employer of faith.

In Depth: FFCRA Leave

Types of Leave

There are two types of leave under the FFCRA – Expanded Family and Medical Leave (Expanded FMLA) and Emergency Paid Sick Leave (EPSL).  The leave provisions are effective April 1, 2020 and will continue until December 31, 2020.  

Expanded FMLA Leave

Expanded FMLA is a limited provision and only provides another basis to take standard FMLA leave – to care for a son or daughter under 18 where the child’s school or place of care has closed or the child’s care provider is not available because of a declared government emergency.  

In addition, Expanded FMLA only applies if the employee is unable to work or telework.  

While the reason is limited, eligibility is greatly expanded in two major ways:  

(1) Expanded FMLA law applies to any employer with fewer than 500 employees; and  

(2) Expanded FMLA applies to any employee who has worked at least 30 calendar days for an employer, whether on a full time or part time basis.  

If eligible, an employee may take up to 12 weeks of Expanded FMLA, with the first two weeks being unpaid and the balance paid, though the payment is capped at $200 per day.  

Calculating Expanded FMLA Leave Pay

The pay must be calculated at not less than two-thirds of an employee’s regular rate of pay for the number of hours the employee would otherwise normally be scheduled to work.  If hours vary week to week, an average should be used.  Employees are permitted to supplement their two-thirds rate of pay with accrued leaves to reach 100% of their regular rate of pay.

Special Considerations

Expanded FMLA leave does not extended the amount of regular FMLA leave an employee has.  

As a result, if an employee has already used a portion of his 12-week entitlement to regular FMLA leave, he is only entitled to use the remaining balance.  

This result has raised questions of fairness since it means that a regular employee who has exhausted regular FMLA leave because of a serious health condition will be ineligible for Expanded FMLA leave, while a newly hired employee is eligible on the 31st day of employment.  

Employee’s Right to Reinstatement under Expanded FMLA

Employees who take Expanded FMLA leave have the same right to reinstatement as they would under the FMLA.  

However, if you employ fewer than 25 employees, there is an exception if the following conditions are met:  

1. The employee’s leave was under the expanded FMLA leave;  

2. The position held by the employee when leave commenced no longer exists due to economic conditions which are caused by the public health emergency;  

3. The employer must make a reasonable effort to restore the employee to a position equivalent to the position the employee held when leave commenced; and  

4. If those reasonable efforts fail, the employer makes reasonable efforts during the ”contact period” to contact the employee is an equivalent position becomes available. The "contact period” is defined as a 1-year period beginning on the earlier of:

     a. The date the public health emergency concludes; or  

     b. 12 weeks after the date that the employee’s expanded FMLA leave commences.

Emergency Paid Sick Leave

EPSL is designed to provide pay for the initial two weeks of eligible leave and applies to any employee working for an employer, no matter how long.  

Six Ways to Qualify for EPSL

To receive EPSL, at least one of the following six reasons must apply:

1. The employee is subject to a Federal, State or Local quarantine or isolation order related to the COVID-19;

2. The employee has been advised by a health care provider to self-quarantine due to COVID-19;

3. The employee is experiencing symptoms of COVID-19 and is seeking a medical diagnosis;

4. The employee is caring for an individual subject to a Federal, State or Local Quarantine or isolation order related to COVID-19 or an individual who has been advised by a health care provider to self-quarantine due to concerns related to COVID-19;

5. The employee is caring for a son or daughter because the school or place of care has been closed, or the child care provider is unavailable, due to COVID-19; or

6. The employee is experiencing any other substantially similar condition as specified by the Secretary of Health and Human Services in consultation with the Secretaries of the Treasury and Labor.    

Calculating EPSL Pay

Where the reasons are (1) through (3), employees are entitled to pay at their regular rate of pay.  Where the reasons are (4) through (6), employees are entitled to pay at two-thirds of their regular rate of pay.  There are caps on both.  For reasons (1) through (3), the maximum payment is $511 per day.  For reasons (4) through (6), the cap is $200 per day.  It remains uncertain whether employees can supplement the two-thirds pay with accrued leaves to achieve 100% of their regular rate of pay.

How the EPSL and Expanded FMLA Work Together

EPLS runs concurrently with Expanded FMLA.  This effectively means if an employee is eligible for Expanded FMLA, paid leave would be provided for up to 12 weeks, with the first two weeks being EPLS.

Tax Credits

When paid leave is provided under ESPL or Expanded FMLA, employers can get a dollar-for-dollar tax credit and will not have to wait until 2021 to get the credit.  Instead, the IRS and DOL have advised that the amount paid can be withheld from the employer’s next payroll period from the Social Security and Medicare taxes that are deposited with the government.  If such taxes are less than the amount of paid leave, an application can be submitted for emergency reimbursement.

Notices

The FCCRA requires employers by April 1 to post Notices in a public space in the workplace that describes employee’s rights under the new law.  Model Notices have been prepared by the DOL and are available on the DOL’s website.

Insurance

While beyond the scope of this article, employers should carefully review their insurance policies to see if there is any type of Business Interruption coverage.  Whether there is such coverage will depend both on the terms of the policy and state law, which vary greatly.  While business interruption insurance often appears to require physical damage to property to be triggered, some courts have held that loss of use of property is sufficient.  Some policies also provide that there is coverage if the place of business had to close because of an order from the government or a civil authority.  There still may have to be physical damage, or depending on state law or court decision, a loss of use of property.  And there may be coverage where, because of such an order, ingress or egress into the property is prohibited.

Conclusion: Carrying Our Crosses through Our Work

We were told by our Lord to pick up and carry our cross and follow him.  That is a daily task, and all who find themselves in times like this realize, in a special sense, the importance of this call.  Let us remember Saint John Paul II’s closing words from On Human Work:

The Christian finds in human work a small part of the Cross of Christ and accepts it in the same spirit of redemption in which Christ accepted His Cross for us.  In work, thanks to the light that penetrates us from the Resurrection of Christ, we always find a glimmer of new life, of the new good, as if it were an announcement of “the new heavens and the new earth” in which man and the world participate precisely through the toil that goes with work.  Through toil – and never without it.  

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Lee W. Cotugno obtained his law degree from the University of California at Berkeley in 1977 where he was a Member of the Moot Court Board and graduated summa cum laude from the University of Minnesota in 1973. Prior to joining his present firm, Mr. Cotugno worked for a prominent Los Angeles law firm and litigated a variety of complex business and commercial cases. He has tried numerous jury and court trials and has been lead trial and appellate counsel in unfair competition, banking, labor and real estate actions. A substantial portion of Mr. Cotugno’s current practice is in the area of employment law, representing small to medium sized companies as well as corporate officers, employees and workers who have claims for wrongful termination, discrimination, harassment, and other violations of state and federal civil rights laws. Mr. Cotugno also advises and represents companies that seek to comply with state and federal employment laws in order to avoid litigation.

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