Monday, March 16, 2020

Answering the six questions I’ve received most about the Families First Coronavirus Response Act

In the past 48 hours, I’ve received a lot of emails and other correspondence asking questions about the Families First Coronavirus Response Act. Most of them fall into one of six categories.

  1. I am a small business, and if I have to pay family and sick leave for my employees, I’ll go out of business. What am I supposed to do?

  2. I work for a [large employer]. They don’t provide any paid time off. What am I supposed to do if I get sick, or a family member gets sick?

  3. How does the interaction between the FFCRA’s paid family leave and paid sick leave work?

  4. I understand the tax relief provision, but I operate a non-profit that doesn’t pay any taxes. What relief is there for us?

  5. What about self-employed people? What relief is there for us?

  6. If a business is forced to close because of COVID-19, what relief is there for its employees who lose their jobs, either temporarily or permanently?

Let me try to answer each as best as I can, understanding that there are no clear answers to any of this, and these issues are difficult and quickly developing and changing.

1. Small Businesses

There is no doubt that paid family and sick leave will impose a huge burden on the smallest of employers, especially since the only financial relief in the bill, the 100% tax credit for sick leave wages paid, is not a dollar-for-dollar match and only offers deferred relief.

There is one provision in the bill, however, that may offer some help in the most extreme of circumstances.

The Secretary of Labor shall have the authority to issue regulations to exempt small businesses with fewer than 50 employees from the requirements of section 102(a)(1)(F) when the imposition of such requirements would jeopardize the viability of the business as a going concern.

This means that if the Secretary of Labor takes this up, he could issue regulations that would permit the smallest of businesses (under 50 employees) to claim an exemption if paid leave “would jeopardize the viability of the business as a going concern.”

Also note that under the same provisions, the Secretary of Labor could also pass regulations “to exclude certain health care providers and emergency responders,” meaning that these vital employees might not receive any paid FMLA or paid sick leave.

Stay tuned to see if this happens once this bill passes.

Finally, late last night, the Treasury Secretary announced that employers will be able to use cash deposited with the IRS to pay sick-leave wages, and for businesses without sufficient taxes from which to draw, the Treasury would make advances available.

2. Employees of Large Employers.

One of the most curious of the decisions this bill makes is to exempt employers with 500 or more employees. Here’s the editorial board of The New York Times, taking this decision to task.

Paying sick workers to stay at home is both good policy and good politics. Why not pass a bill that required all employers to provide paid sick leave and then force Republicans to explain their objections to the public? 
The bill does require some employers to provide full-time workers with up to 10 days of paid leave. But the requirement does not apply to the nation’s largest employers — companies with 500 or more workers, who together employ roughly 54 percent of all workers.

All I can say is stay tuned. This coverage choice could be altered by the Senate when they take up this bill early this week, or it could be fixed by an entirely different piece of legislation. Or it can remain as-is, making the policy decision that large employers should offer these benefits without a government mandate. As the op-ed points out, according to federal statistics approximately 86 percent of employees at big companies already receive get some kind of paid sick leave. What I’d like to hear from Congress is why this 500-employee line was drawn? Was it a policy choice, the result of big-business lobbying, or with the knowledge that other legislation is on the way to close this loophole?

3. Paid FMLA vs. Paid Sick Leave.

There is a lot of uncertainly as to how the FFCRA’s paid-leave provisions interact with each other, but here’s my best read. The paid sick leave provision provides 80 hours of paid sick leave for full-time employees (or pro-rata for part-time employees) for COVID-19-related absences. The paid FMLA provision provides paid leave at two-thirds of an employee’s regular rate of pay for the number of hours the employee otherwise would have worked for the duration of a COVID-19-related FMLA leave, but the first 14 days of such leave can be unpaid. I’d expect most to substitute and run concurrently the paid sick leave during the initial unpaid portion of FMLA. Thus, the first 10 days of a COVID-19 leave will be paid at 100 percent of the employee’s regular rate as paid sick leave, and the remaining 10 weeks will be paid a two-thirds of an employee’s regular rate as paid FMLA. When an employer drafts or revises FMLA and paid sick leave policies, it should account for this overlap. Finally, please don’t forget about paid sick leave laws in your state or locality, which also might have something to add on this issue.

4. Non-profits.

I actually have some good news to share here. The tax credit offered by the FFCRA is against social security taxes, which, unless I misunderstand (and I’m not a tax lawyer), non-profits still pay on their employees. So, the tax credit provision will still off non-profit employers some future relief.

5. The self-employed.

This is, perhaps, the biggest issue. While the number varies wildly, there are anywhere between 50 million and 75 million gig workers. That’s a whole lot of self-employed people that this bill does not touch. What are they supposed to do? How are they supposed to earn if the economy shuts down? I wish I had the answer, but I have no idea. It’s a huge gap and huge problem, and absent specific government relief, these people are really going to be struggling, probably for a long time. That said, the tax-relief provisions also seem to apply to the self-employed. So that’s something.

6. Closures.

If a company is forced to shut its doors because of COVID-19, the Worker Adjustment and Retraining Notification (WARN) Act might apply if your business is large enough. It applies to employers with 100 or more employees. It mandates 60 days’ advance written notice (or if no notice is given or can be given, 60 days’ pay in lieu of such notice) before a “plant closing” or “mass layoff.” Please note, though, that a mass layoff does not occur, and therefore WARN does not apply, if the layoff is expected to be for less than six months. Because most expect this crisis to subside in less than six months, WARN likely will not apply to coronavirus-related layoffs. It will still apply to a plant closure if your business is large enough to meet the 100-employee threshold.

Also, keep in mind that some states have their own mini-WARN laws (California, Illinois, Maryland, New Jersey, New York, Tennessee, and Wisconsin, for example) that provide greater coverage. Ohio does not.

Finally, state unemployment compensation is available to employees who suffer coronavirus-related job losses. Ohio, for example, Governor DeWine is issuing an executive order so that unemployment insurance immediately covers workers who are displaced, even temporarily, by coronavirus, which will include a waiver any waiting periods to qualify and of the requirement that an individual seek work to collect benefits.

These issues are quickly evolving. I’m doing my best to stay on top of them and get everyone information as quickly as I can. Stay tuned. It’s going to a difficult time for everyone between now and when this crisis ends.

If your business needs FMLA or sick leave policies drafted, reviewed, or revised for anticipated FFCRA compliance, please let me know.

* Photo by Emily Morter on Unsplash