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Families First Coronavirus Response Act and Minnesota Employers

By Tom Marshall

As the COVID-19 virus spreads, Federal and State governments have taken action. Minnesota Gov. Walz, in addition to ordering the closure of schools and certain businesses, issued an Executive Order dramatically altering Minnesota’s unemployment compensation system for employees finding themselves out of work for reasons related to the virus. This Order may be found here: https://mn.gov/governor/assets/2020_03_16_EO_20-05_Unemployment_Insurance_tcm1055-423379.pdf

On Wednesday, President Trump signed the Families First Coronavirus Response Act which, regarding employment, provides for a paid sick leave, changes to the Family and Medical Leave Act (FMLA), as well as tax benefits to employees impacted by the virus. This new law may be found here: https://www.congress.gov/bill/116th-congress/house-bill/6201/text/eh. The law becomes effective 15 days after enactment, April 2, 2020. The employment changes are discussed below.

Emergency Paid Sick Leave

This part of the Act provides for two weeks of paid sick leave when an employee cannot work for reasons related to COVID-19. Full time employees would receive 80 hours (two weeks) while part time employees would receive paid leave based on the average number of hours worked in a two-week period. The leave is available for the employee’s own care, ordered quarantine, and to care for a child if their day care or school is closed due to a public health emergency.

This part of the Act applies to all but the largest employers as employers with 500 or fewer employees must comply. It also includes employers subject to a multi-employer collective bargaining agreement. The Secretary of Labor has the authority to exempt small businesses of less than 50 employees “when the imposition of such requirements would jeopardize the viability of the business as a going concern.”

The leave is available for all employees, no matter how long they have worked for the employer. If an employer currently has a sick leave policy, that policy may be used as long as the leave under the policy is available for all the types of leave authorized under the Act. An employer may not require that the employee use other paid time off, such as vacation, before using this sick leave. An employee does not need to find a replacement to cover their work before taking leave as well. Violations of the law will be subject to the same remedies available under the Fair Labor Standards Act.

The Act does limit the amount ultimately paid for the sick leave. When the leave is for the employee’s own care or self-quarantine as ordered by a healthcare provider or governmental authorities, the leave is capped at $511 per employee per day to a maximum of $5,110 per employee. Otherwise, it is to be paid at two-thirds the employee’s regular rate when the leave is to care for a family member, children or a person quarantined. While the Act says this, it also states that, for these purposes, the cap is $200 per employee per day up to a maximum of $2,000 per employee. The Secretary of Labor is anticipated to provide a posting on or before April 2, 2020, so that issue may be cleared up at that point.

The law becomes effective 15 days after enactment, April 2, 2020 and sunsets on December 31, 2020.

Employers With 50 or Fewer Employees and Healthcare Providers/First Responders. The Secretary of Labor is given the power to issue regulations to exempt these groups from the requirements of both forms of leave. In the prior version of the bill, this power was limited to the FMLA Expansion Act leave, but not the Emergency Paid Sick Leave. Now, the Secretary may exempt these groups from both forms of leave. Until such regulations are finalized, however, employers of 25 or fewer employees may still avoid the 12-week leave requirements of the FMLA Expansion Act if they meet certain criteria, described below.

FMLA Expansion

This part of the Act allows a leave for an employee who must care for a son or daughter for school closures or unavailable childcare due to the COVID-19 public health emergency. The Act provides for up to twelve weeks of leave, part of which is paid.

Where an employee must have over 1250 hours of service before being eligible for FMLA, here, the employee need only have worked for 30 days. All employers, not just those over 50 employees, are subject to the law. Again, like the sick leave part of the Act, large employers of over 500 employee are not.

Under the Act, the leave is partially paid. The first 10 days are unpaid. The remainder of the leave is paid at two-thirds of the employee’s regular rate for hours the employee would normally be scheduled to work, or, if the schedule is varied, the average number of hours the employee would work over the six months preceding the date of leave. These payments are capped at no more than $200 per employee per day to a maximum of $10,000 per employee.

Small businesses of 25 or less employees must comply unless, (1) the position did not exist when the leave commenced due to economic conditions or other changes caused by the public health emergency, and (2) the employer makes efforts to restore the employee to the position and to contact the employee if such position becomes available up to one year after the date the leave was needed. Like the sick leave part of the Act, small businesses with 50 or fewer employees whose viability would be jeopardized if required to provide this leave may be exempted by the Secretary of Labor. This part of the law also sunsets or ends on December 31, 2020.

Tax Credits

Employers can take payroll tax credits for certain wages paid for sick leave and FMLA expansion. For the sick leave, employers can claim a credit up to $200 per employee per day for all employees taking leave for family care, including the closure of schools and $511 per employee per day for employees taking leave for prevention, care or treatment of COVID-19. These credits are limited to 10 days per employee. The FMLA expansion allows a credit of up to $200 per employee per day to a maximum of $10,000 for each employee.

Stay tuned, there will likely be more laws coming!

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