NYS and Federal COVID-19 Response — WHAT WE KNOW TODAY
Last Updated March 25, 2020 2:00 PM EST
New York State Paid Sick and Family Leave for COVID-19
The NYS law only provides paid sick and family leave to employees who are “subject to a mandatory or precautionary order of quarantine or isolation that is issued by the state of New York, the department of health, local board of health, or any governmental entity duly authorized to issue such order due to COVID-19.” It does not cover employees directed to quarantine by their doctor or those who choose to self-quarantine because of suspected exposure. Likewise, Governor Cuomo’s executive order directing the closure of all non-essential businesses is most likely considered to be a “preventative” order which would not be covered by the law.
Thus, the application of the NYS law is rather limited in its scope and, therefore, we believe it is more important to focus on what employers will be required to provide under the federal law, which takes effect on April 1st.
Families First Coronavirus Response Act (FFCRA)
At the outset, it is important to note that this federal law was hastily written and passed without the normal time for considering all of the potential nuances and, therefore, some of the language is vague and certain key details are not addressed. It is our hope that the U.S. Department of Labor (“DOL”) and other agencies tasked with issuing regulations interpreting the law will provide clarity when those regulations are issued within the next week.
In the meantime, this is what we know about the law’s requirements as of today, March 25, 2020. Please note that this is just a summary of the key points of the law for informational purposes, rather than a complete summary of all of its provisions.
The law, which covers all employers with less than 500 employees, has two parts: Emergency Paid Sick Leave (EPSL) and changes to the existing Family and Medical Leave Act, which we will refer to as FMLA+.
- Employer Reimbursement for Providing Paid Leave
- Employers will receive 100% reimbursement for paid leave provided pursuant to the FFCRA.
- Health insurance costs are also included in the credit.
- To take immediate advantage of the paid leave credits, businesses can retain and access funds that they would otherwise pay to the IRS in payroll taxes, including social security and Medicare taxes.
- If those amounts are insufficient to cover the cost of the paid leave provided, employers can seek an expedited monetary advance from the IRS by submitting a streamlined claim form that will be released next week. The IRS expects to process these requests in two weeks or less.
- Key points about EPSL:
- Covers first two weeks (10 days) of leave if the employee:
- is subject to a quarantine or isolation order related to COVID-19;
- has been advised by a health care provider to self-quarantine due to COVID-19;
- is experiencing symptoms of COVID-19 and seeking a medical diagnosis;
- is caring for an individual who is subject to a quarantine order or has been advised to self-quarantine;
- is caring for their child as a result of childcare or school closures or if the childcare provider is unavailable due to COVID-19 precautions; or
- is experiencing any other substantially similar condition specified by the Secretary of Health and Human Services.
- Provides full pay (up to a maximum of $511 per day and $5,110 total) or 2/3 pay (up to a maximum of $200 per day and $2,000 total), depending on reason for leave.
- Any employee is eligible for EPSL on day one of employment, including part-time, temporary and seasonal employees.
- Employee must be unable to work OR to telework because of one of the six listed reasons. It is unclear at this point who makes the determination about whether or not an employee is unable to telework.
- Covers first two weeks (10 days) of leave if the employee:
- Key points about FMLA+:
- All employees who have been on the payroll for 30 days are eligible for up to 12 weeks of leave.
- FMLA+ is only available to employees who are unable to work OR telework because they have to care for a minor child whose school is closed or for whom childcare is unavailable due to the crisis.
- Technically, the first two weeks of FMLA+ are unpaid and then the remaining 10 weeks are paid but, because an employee can take EPSL at 2/3 pay for two weeks due to a child unable to go to school or lack of childcare, and that leave will run concurrent with the first two weeks of FMLA+ leave, in reality the entire 12 weeks of FMLA+ is paid to some extent.
- It is not clear if employers can count other FMLA leave that employees have taken in the past 12 months will count against their FMLA+ entitlement, but it may be possible. Hopefully the regulations will clarify.
- It is also not clear whether FMLA+ can be taken intermittently but, based on the fact that prior drafts of the law required FMLA+ to be taken as one block and that there is no such requirement in the final bill, there is a good likelihood that intermittent FMLA+ will be allowed.
- Employers with fewer than 50 employees are eligible for an exemption from the requirements to provide leave to care for a child whose school is closed, or childcare is unavailable in cases where the viability of the business would be threatened by doing so. The DOL will provide emergency guidance and rule making to clearly articulate this standard.
- Employers with less than 25 employees do not have to reinstate an employee whose position is eliminated for business reasons related to the crisis but, if that or an equivalent position becomes available within one year of the employee’s leave, the employer must contact the employee to offer the employee the position.
- Effect of furloughs or layoffs on eligibility for these benefits:
- Not addressed by the law, but hopefully the regulations will address.
- Best guess – laid off employees will not be entitled to EPSL or FMLA+ leave, but furloughed employees will be.
- However, laying off employees just to avoid paying these benefits could result in retaliation claims and would violate the spirit of the law.
- Employers who are considering layoffs should be able to articulate and document legitimate reasons for the layoffs due to economic conditions affecting the business rather than just avoiding compliance with this law.
- Other general points:
- Each covered employer must post in a conspicuous place on its premises a notice of FFCRA requirements. According to the DOL, an employer may satisfy this requirement by emailing this notice to employees or posting this notice on an employee information internal or external website. Here is a link to the notice: https://www.dol.gov/sites/dolgov/files/WHD/posters/FFCRA_Poster_WH1422_Non-Federal.pdf
- The law’s requirements will be subject to a 30-day non-enforcement period for good faith compliance efforts by employers.
- It is important that employers keep detailed records of paid leave provided to employees pursuant to this law so that they can reconcile it with their tax credits.
- Healthcare workers can be excluded from the definition of “employee” under this law.
- The law does not provide any guidance on what types of documentation can be required by employers to support the need for leave. Hopefully that will be provided in the regulations, but employers should be lenient.
- The law says that employers must comply by April 2nd, which means some employers may choose to start granting EPSL or FMLA+ sooner, but employers who do so will probably not be eligible for the tax credit for that leave.
- Employees can choose to augment partial pay provided pursuant to FFCRA with available PTO, but employers cannot require employees to substitute PTO for the legally mandated paid leave.
- An employer’s current policies regarding leave and use of PTO can continue to apply until April 1st, when the FFCRA requirements will pre-empt those policies.
- It is important to note that an employee may also be eligible for “regular” FMLA leave due to the employee’s own serious health condition or to care for a family member with a serious health condition, which would include having COVID-19, in accordance with the existing FMLA regulations.
Federal Economic Stimulus Bill
Congress reached an agreement on a COVID-19 economic stimulus package early this morning. It is likely to be finalized and signed into law within the next few days. We know that the legislation will provide direct economic relief to individuals and families, as well as small businesses, but we are still waiting for all the details to be made available. What we do know from news reports is that:
- It will extend the length of eligibility for unemployment insurance benefits by 13 weeks and include a four-month enhancement of benefits that would allow employees to maintain their full salaries if forced out of work as a result of the pandemic.
- The law will establish lending programs for small businesses, but only for those who keep their payrolls steady through the crisis. Small businesses that pledge to retain their employees will also receive cash flow assistance structured as federally guaranteed loans. If the employer continues to pay its employees for the duration of the crisis, those loans will be forgiven.
We recognize that we have provided you with a lot of information. Please feel free to contact us if you have any questions about how this applies to your particular business. We will provide additional updates as more information about these laws becomes available.