The COVID-19 crisis is resulting in frequent legal changes. We are doing our utmost to stay on top of these issues and provide our clients and friends with the most up to date information as it currently exists. However, please keep in mind that the legal landscape continues to evolve with new statutes, administrative guidance and regulations being issued frequently.
As discussed in our prior newsletter (here), the Families First Coronavirus Response Act (“FFCRA”) takes effect on April 1 and requires employers with 1-500 employees to provide paid sick leave and paid family and medical leave for employees due to the COVID-19 outbreak. The Department of Labor (“DOL”) has issued additional guidance for employers on the new law:
New Effective Date
The effective date is now April 1, 2020, rather than April 2 as initially announced. All leave taken from April 1 onward counts under the law.
Interaction with Previous Leave
Employees who have taken leave due to COVID-19 prior to April 1 are still eligible for paid leave under FFCRA. However, FFCRA leave benefits are not retroactive and do not apply to time off taken prior to April 1.
The DOL has not yet clarified how FMLA leave and FFCRA interact and whether FFCRA leave will cut against an employee’s allotment of FMLA leave (and vice versa). However, the DOL is rapidly releasing additional guidance and we will let you know if they clarify this question.
Employers with 1-500 employees are covered by the FFCRA. Employers must include all employees, including part-time or full-time employees, temporary employees, day laborers, and employees currently on leave, in their headcounts. Independent contractors are not included in headcounts.
Calculating Regular Rate of Pay
An employee’s regular rate of pay for leave purposes includes wages, tips, commissions, and any other regular compensation for the previous six months. If an employee has been with you for less than six months, their regular rate of pay is the average of their weekly pay during the course of their employment.
Calculating Hours for Part-Time Workers
Part-time workers are entitled to leave equal to their average number of hours worked in a two week period over the last six months, or the length of their employment if it is less than six months.
FFCRA leave can be taken intermittently if the employee and employer agree. For example, if an employee needs to care for a child out of school for 4 hours per day and can still telework 4 hours per day, you can set up an agreed-upon schedule where the employee takes FFCRA leave for the 4 hours of childcare. Leave can be taken in any agreed-upon increment. DOL encourages employers to be flexible and creative in setting up work and leave arrangements during this time.
However, sick leave due to COVID-19 symptoms or quarantine cannot be taken intermittently if the employee is required to work at a brick-and-mortar location. If an employee needs to quarantine, they should not report to a physical work location for any reason during their quarantine.
Shutdowns, Furloughs, and Reduced Hours
If your workplace has closed prior to April 1, 2020 and your employees have been laid off or furloughed, they are not eligible for FFCRA leave. These employees should rely on unemployment benefits instead.
Additionally, if you need to reduce an employee’s hours due to business slowdowns or closures after April 1, FFCRA leave cannot be used to cover the reduction in hours. These employees should also draw unemployment benefits to cover this time period.
Employees are only eligible for FFCRA leave to cover hours that they would be able to work but for illness/quarantine or school closures. They cannot use FFCRA leave to cover hours that they would not be scheduled to work anyway because of business slowdowns or closures.
Sick Leave and Family & Medical Leave for Childcare
Employees with children whose schools/daycares are closed can take up to 50 days of family and medical leave AND 10 days of sick leave to care for their children. However, employees may only receive 10 days of sick leave total, so any leave taken due to sickness or quarantine cannot be used for childcare purposes.
Tax Credits and Reimbursements
Employers will be reimbursed for the costs of providing paid leave through payroll tax credits. Employers can withhold the costs of paid leave from their quarterly payroll tax deposits. If paid leave costs more than payroll taxes, the IRS will issue an accelerated refund. The IRS will release additional guidance and forms for claiming the tax credit shortly.
DOL has published mandatory notice posters regarding the new law. These posters should be posted in a conspicuous place in your workplace. If your workplace is closed or if most of your workforce is working from home during this time, emailing the posters will count as sufficient notice.
The posters are available here:
On Deck – Expanded Unemployment and Relief for Small Businesses
On Wednesday night, the Senate passed another COVID-19 relief bill. The House is now considering the bill. Although it is not yet law, the Senate bill has several provisions that will affect small businesses and unemployment. These provisions include:
- Unemployment benefits would increase by $600 per week for the next four months. For employees in Massachusetts, this means that the maximum weekly benefit increases from $823 per week to $1432 per week. This increase would apply across the board, regardless of an individual’s weekly benefit.
- Independent contractors and gig economy workers would be eligible for unemployment.
- Unemployment benefits can be backdated to January 27, 2020. Benefits would be extended from 26 weeks to 39 weeks.
- Businesses would be able to take out low interest loans to cover their costs during the COVID-19 epidemic. Any loan proceeds used to pay payroll, rent, mortgages, or utilities for up to eight weeks during the crisis will be forgiven.
- Businesses could take a tax credit of up to 50% of wages paid to employees during the COVID-19 crisis. This credit is available if business operations were fully or partially suspended due to a COVID-19 shutdown, or if gross receipts declined by more than 50% compared to this time last year.
We will send out another update with more details if and when the bill is finalized and signed into law.
Finally, here are a few helpful links for navigating the flurry of changes due to COVID-19:
Department of Labor guidance on paid leave:
Massachusetts Department of Unemployment Assistance on COVID-19:
Massachusetts Attorney General’s Office guidance:
Please feel free to reach out if you have any questions about the COVID-19 crisis and options for your business and your workforce.