For small businesses, navigating employment related laws and regulations has long been a challenge. The COVID-19 outbreak has produced a double whammy for many companies. Many employers are dealing with a loss of revenue combined with increasing employer related costs due to newly expanded rules related to sick leave, paid family leave and expansion of the Family and Medical Leave Act (FMLA). While some of these details remain fluid, companies using a Professional Employer Organization will get assistance from their PEO that ensures they are legally compliant and doing the best they can for their company and their employees.
On Wednesday March 19, 2020 President Donald J. Trump signed H. R. 6201 in to law which extends additional assistance to individuals affected by the COVID-19 outbreak.
House Resolution 6201 Highlights include:
- Requires employers with fewer than 500 employees to provide up to 12 weeks of job-protected leave related to caring for a child via an expansion of the Family and Medical Leave Act (FMLA) (with the first 10 days unpaid).
- Requires employers with fewer than 500 employees to provide up to 80 hours (generally two weeks) of emergency paid “sick” leave to full-time employees (with special rules for part-time employees).
- Provides tax credits for required paid sick leave, paid family and medical leave and certain health plan expenses.
- Requires group health plans, health insurers and government programs to provide free coronavirus testing.
Employers who are working with a PEO should contact their PEO HR support contact for additional information about funding the additional costs and how tax credits will be assigned. Impacts on State Unemployment Tax Funds (SUTA) has yet to be understood.
Components of H.R. 6201, COVID-19 relief legislation
Temporary Expansion of Family and Medical Leave
- H.R. 6201 would require employers with fewer than 500 employees to provide up to 12 weeks of job-protected leave, ten weeks of which would be paid.
- Leave would be for “qualifying need related to a public health emergency.”
- Qualifying need is defined as to mean “the employee is unable to work (or telework) due to a need for leave to care for the son or daughter under 18 years of age of such employee if the school [meaning a primary or secondary school only] or place of care has been closed, or the child care provider of such son or daughter is unavailable, due to a public health emergency.”
- A “public health emergency” is then defined to mean “an emergency with respect to COVID-19 declared by a Federal, State, or local authority.”
- The leave applies to employees who have been employed for at least 30 calendar days, rather than the 12-month period under the current FMLA.
- The Secretary of Labor has the regulatory authority to exempt employers with fewer than 50 employees if the provision of paid FMLA leave “would jeopardize the viability of the business as a going concern.”
- Employers with 25 or more employees would be required to reinstate employees after their FMLA leave period ends.
- Employers with fewer than 25 employers do not have to reinstate an employee if they are experiencing significant economic hardship.
- The first 10 days for which an employee takes leave could be unpaid leave, or the employee could choose to substitute any accrued vacation, personal or sick leave (including in certain instances the emergency paid “sick” leave described below).
- After the initial 10 days, the employer would be required to provide paid leave based on an amount that is not less than two-thirds of an employee’s regular rate of pay and the number of hours the employee would otherwise be normally scheduled to work.
- The bill caps the amount of the paid leave, per employee, to no more than $200 per day or $10,000 in the aggregate.
Creation of a Temporary Paid Sick Leave Program
- H.R. 6201 requires employers to provide full-time employees with 80 hours of certain emergency paid “sick” leave related to the coronavirus (with special rules for part-time employees).
- The paid sick leave could be used in any of the following circumstances:
- The employee is subject to a federal, state or local quarantine or isolation order related to COVID-19.
- The employee has been advised by a healthcare provider to self-quarantine due to concerns related to COVID-19
- The employee is experiencing symptoms of COVID-19 and seeking a medical diagnosis.
- The employee is caring for an individual who:
- Is subject to a federal, state or local quarantine or isolation order related to COVID-19, or
- Has been advised by a health care provider to self-quarantine due to concerns related to COVID-19.
- The employee is caring for a son or daughter where the school or place of care of the son or daughter has been closed or the child care provider of such son or daughter is unavailable, due to COVID-19 precautions.
- The employee is experiencing any other substantially similar condition specified by the Secretary of HHS in consultation with the Secretary of the Treasury and the Secretary of Labor.
- Full-time employees would be entitled to 80 hours of paid leave
- Part-time employees are entitled to “a number of hours equal to the number of hours that such employee works, on average, over a 2-week period.”
- The required paid leave ends with the employee’s next scheduled work shift following the end of the qualifying need.
- The required sick pay is calculated based on the employee’s regular rate of pay or, if higher, the applicable minimum wage rate.
- In the case of leaves to care for a family member or child, however, the required sick pay is based on 2/3rds of the regular rate of pay.
- For part-time employees whose schedule varies from week to week, special rules apply to calculate the average number of hours.
- The maximum amount of required sick pay per employee is $511 per day and $5,110 in the aggregate.
- In the case of leaves to care for a family member of child, however, the maximum amount of required sick pay per employee is $200 per day and $2,000 in the aggregate.
- The bill imposes notice requirements and prohibits employers from discharging, disciplining or discriminating against employees who take paid sick leave.
- The Secretary of Labor is instructed to provide a model notice within seven days after enactment.
- An employer is also prohibited from requiring employees to look for or find replacement employees to cover the hours during which the employee is using the paid sick time.
- Violations are punishable under the FLSA.
Refundable Tax Credits to Pay for Leave
- H.R. 6201 provides provide a series of tax credits to those employers subject to expanded FMLA and emergency paid “sick” leave requirements.
- The employer-related credits, which are refundable, would be applied against the employer portion of Social Security taxes for each quarter equal to the “qualifying” paid leave wages paid by the employer.
- The tax credits would apply with respect to both the FMLA-expanded paid leave as well as the emergency paid “sick” leave.
- The amount of the tax credits varies based on the type of leave.
- Tax Credit for Expanded FMLA Leave
- H.R. 6201 would provide employers a refundable tax credit equal to 100 percent of the “qualified family leave wages” that the employer is required to pay for a given quarter under the Expanded FMLA Leave.
- The amount of the qualified family leave wages that would be taken into account for purposes of the credit per employee is $200 for any day for which the employer pays the employee qualified family leave wages, up to a maximum amount for all calendar quarters of $10,000 per employee.
- Tax Credit for Emergency Paid “Sick” Leave
- H.R. 6201 would provide employers a refundable tax credit equal to 100 percent of “qualified sick leave wages” that the employer is required to pay for a given quarter under the Emergency Paid Sick Leave Act.
- The amount of qualified sick leave wages for purposes of the credit would vary depending upon the reason for the leave.
- For employees who must self-isolate, obtain a coronavirus diagnosis or comply with a self-isolation recommendation from a public official or health care provider, the amount of qualified sick leave wages taken into account is capped at $511 per day.
- The bill also allows for an increase in the amount of the tax credit equal to the amount “of the employer’s qualified health plan expenses as are properly allocable to the qualified family [or sick] leave wages for which such credit is allowed.”
- The tax credit would apply to wages the employer pays between (1) a date that the Secretary of the Treasury must specify within 15 days after the date of enactment and (2) December 31, 2020.
Free Coronavirus Testing
- H.R. 6201 would require that group health plans and health insurance issuers of group to cover FDA- approved COVID-19 diagnostic testing products.
Cost covered include the items and services furnished during a provider visit (office, telehealth, urgent care and emergency room) to the extent those items and services relate to the furnishing or administration of the testing product or the evaluation of the individual’s need for the testing product.
The mandated coverage must be provided without “any cost sharing (including deductibles, copayments and coinsurance) requirements or prior authorization or other medical management requirements.”
The requirement to cover COVID-19 testing costs starts from the date of enactment until the Secretary of HHS determines that the public health emergency has expired.
This provisions would be effective “not later than 15 days after the date of enactment.”
The paid leave provisions go into effect “not later than 15 days after the date of enactment” and expire on December 31, 2020.
Additional Resources for Business Managers Regarding COVID-19:
Thanks to the National Association of Professional Employer Organizations for compiling some of the information used in this article.