President signs bill to address pandemic impact on people and businesses
By John Schulze, ABC of Wisconsin Director of Legal and Government Relations
H.R. 6201, commonly called Phase 2, will become effective April 1, 2020 until December 31, 2020. While less expansive than earlier drafts being considered, the legislation does expand employees’ FMLA and paid sick leave rights. A summary of the highlights:
Employers with 500 or fewer employees will be required to provide employees who have worked for their employer at least 30 calendar days with paid FMLA leave as set forth below:
- 12 weeks (2 weeks of sick leave, and 10 weeks of expanded FMLA) to care for their minor child if the school or day care provider is closed or unable due to the public health emergency.
- 2 weeks to care for an individual either subject to a quarantine order or has been advised by a health care provider to self-quarantine.
- 2 weeks to care for a person experiencing any other substantially similar condition specified by the Secretary of Health and Human Services.
In all the above situations, the first two weeks of this new type of leave would be paid. Employers are required to pay employees an amount equal to at least two-thirds of each employee’s regular rate of pay multiplied by the number of hours the employee would otherwise be normally scheduled to work, or if that number varies, the amount of paid leave on the average number of hours that the employee was scheduled to work per day over the previous 6-month period preceding the need for the leave. Again, this amount is capped at $200/day or $10,000 in aggregate. Cost of the amount paid is capped at $200/day, with a total of $10,000 per employee.
Restoration Rights. Like other types of FMLA leave, employers will be required to restore employees to their position after expiration of their leave, unless they have fewer than 25 employees and meet all four of the following conditions:
- The employee took leave for a “qualifying need related to a public emergency.”
- The position that the employee held no longer exists due to economic conditions or other changes of the employer caused by the public health emergency.
- The employer makes reasonable efforts to restore the employee to an equivalent position with equivalent benefits, pay, and other terms and conditions of employment.
- If the employer is unable to restore the employee’s employment to an equivalent position, then the employer must contact the employee within a 1-year period beginning on the date the FMLA leave concludes if an equivalent position eventually becomes available within that 1-year time period.
Emergency Paid Sick Leave
Employers with 500 or fewer employees will be required to provide paid sick leave to an employee, regardless of how long the employee has been employed by the employer, if the employee is:
- Subject to a federal, state, or local quarantine or isolation order.
- Has been advised by a health care provider to self-quarantine.
- Experiencing symptoms of COVID-19 and is seeking a medical diagnosis.
- Caring for an individual who is subject to an order to quarantine or isolate by a public order or self-quarantine as advised by a health care provider.
- Caring for their minor child if the school or day care has been closed or otherwise unavailable.
- Experiencing any other substantially similar condition specified by the Secretary of Health and Human Services in consultation with the Secretary of the Treasury and the Secretary of Labor.
Full-time employees will be entitled to up to 80 hours of paid leave based on their normal wage. Part-time employees will be entitled to paid leave equal to the number of hours worked, on average, over a two-week period. This paid sick leave is capped at:
- For 1-3 above, $511 per day and $5,110 total per employee for employees.
- For 4-6 above, $200 per day and $2,000 total per employee for an employee.
This paid sick time would be in addition to any other paid leave made available to the employee by the employer. Employers are prohibited from requiring an employee to use other paid time before using this paid sick time. This sick leave cannot be carried over year-to-year and is not required to pay out any unused sick time at the time of separation.
Employers will be required to post and keep posted a notice to employees describing these paid sick leave requirements. The US DOL will make a model notice available.
Employers are entitled to tax credits on their employer’s portion of payroll taxes for wages paid to employees.
- For paid FMLA leave, an employer will be entitled to a tax credit for qualified family leave wages in an amount up to $200 per day or $10,000 in the aggregate (5 days x 10 weeks x $200/day cap). If any tax credit exceeds the amount of payroll taxes due by the employer, then such excess would be treated as an overpayment entitling the employer to a refund.
- For paid sick leave, the available tax credit for each employee would be for wages capped at either $200 or $511 per day depending on the reason for the sick leave as detailed above.
- Applicable tax credits also extend to amounts paid or incurred to maintain health insurance coverage. for more information, please visit https://www.irs.gov/coronavirus.
Potential Exception for Small Businesses. The US Department of Labor is authorized to issue regulations that would exempt employers with fewer than 50 employees if such payment obligation would jeopardize the viability of the employer’s business as a going concern. NOTE – After the regulations are issued, an employer taking advantage of this provision risks being subject to having to defend the decision.