State-Mandated 2-Week Shutdown of Physical Workplaces for Non-Essential Businesses & Overview of the New Paid Leave Laws
We hope this newsletter finds you well and taking appropriate steps to remain healthy in the face of the current public health emergency.
We are writing to alert you to Governor Charlie Baker’s order today requiring all Massachusetts businesses and organizations that do not provide “COVID-19 Essential Services” to close their physical workplaces and facilities to workers, customers, and the public as of Tuesday, March 24th at noon through Tuesday, April 7th at noon in an effort to slow the transmission of COVID-19 in Massachusetts. Please note, however, that this order encourages businesses to continue operations via telework and other remote work options wherever possible. Massachusetts’ official list of “COVID-19 Essential Services” may be reviewed at the following website: https://www.mass.gov/doc/covid-19-essential-services/download.
In conjunction with this state-wide order, we also want to take this opportunity to provide you with an overview of the new federal “Families First Coronavirus Response Act” (“Families First Act” or “Act”) that was signed into law on March 18, 2020 and is scheduled to take effect “not later than 15 days after the date of enactment” – meaning on or before April 2, 2020.
While various provisions of this Act have been discussed in the media over this past week, there were several last-minute modifications made prior to its final passage by both the House and Senate. We are writing today to provide you with a summary of the final version of two interrelated portions of the Act concerning Emergency Paid Sick Leave and Emergency Paid Family and Medical Leave. Both provisions are intended to provide some degree of income continuity to qualified employees regardless of their employer’s internal leave policies. The Act also defines how employers subject to the Act may offset the cost of these payments though credits against the employer’s portion of quarterly payroll taxes. For certain small employers with fewer than 50 employees, the Act also provides a mechanism to request an exemption from the requirements of the Act if compliance “would jeopardize the viability of the business as a going concern.”
While Massachusetts has not issued state-specific guidance on whether (and if so, how) this new federal law will impact existing state-based leave laws, we will continue to monitor this important issue as it evolves. While we are hopeful that Congress and the President will expand the availability and duration of benefits for both employers and employees given this unprecedented public health emergency, below is a summary of the new federal provisions that have currently been enacted:
PAID SICK LEAVE
This is the portion of the Act that will typically apply to the first two weeks of an employee’s COVID-19 related leave. Generally speaking, the Act requires employers with fewer than 500 employees to provide two weeks of paid sick leave to an employee who is unable to work or telework for the following COVID-19 related reasons:
- The employee is subject to a local, state, or federal quarantine or isolation order;
- The employee has been advised to self-quarantine by a health care provider due to COVID-19 concerns;
- The employee is experiencing symptoms consistent with COVID-19 and is seeking a medical diagnosis;
- The employee is caring for someone who is subject to a quarantine or isolation order, or has been advised by a health care provider to self-quarantine;
- The employee is caring for a child whose school or place of care has been closed, or whose childcare provider is unavailable, due to COVID-19 concerns; or
- The employee is experiencing any other condition substantially similar to COVID-19, as specified by the Secretary of Health and Human Services.
Employers with more than 500 employees are not subject to the requirements of this new federal law, but it is hoped that they will voluntarily offer similar paid sick leave benefits to incentivize workers to stay home if they are or may be sick and are unable to perform their jobs remotely.
Under the Act’s Paid Sick Leave provision, qualified employees are entitled to different amounts of compensation depending on the reasons for which they qualify for paid sick leave under the Act. For full-time employees qualifying for paid sick leave under reasons 1-3 above, they are generally entitled to receive 80 hours of paid sick leave at 100% of his or her regular rate of pay, not to exceed $511 per day or $5,110 in the aggregate. For full-time employees unable to work for the remaining reasons listed above, they would be entitled to receive 80 hours of paid sick leave at not less than two-thirds of their regular rate of pay, not to exceed $200 per day and $2000 in the aggregate. Part-time employees are entitled to the same rates of pay, but the number of hours for which they are eligible for paid sick leave is equal to the average number of hours that the employee works over a two-week period.
Importantly, the amount of paid sick leave available to an employee under the Act is not dependent on the length of time that the employee has been employed by the employer. Also, the Act expressly prohibits employers from conditioning sick leave payments under the Act as follows:
- An employer may not require an employee to use other paid leave provided by the employer to the employee before the employee uses the paid sick time provided under the Act; and
- An employer may not require, as a condition of providing paid sick leave under the Act, that the employee involved search for or find a replacement employee to cover the hours during which the employee is using paid sick time
PAID FAMILY AND MEDICAL LEAVE
This is the portion of the Act that will typically apply to the time period AFTER an employee’s first two weeks of COVID-19 related leave. Generally speaking, this portion of the Act requires employers with fewer than 500 employees to provide paid family and medical leave to qualified employees who they have employed for at least 30 calendar days and who are unable to work or telework due a qualifying need related to a public health emergency. The Act defines “qualifying need related to a public health emergency” in relation this leave to mean the following:
“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 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.”
In essence, this portion of the Act provides eligible employees with the right to take up to 12 weeks of job-protected leave during which the first ten days is unpaid under the Act (subject to an election of the employee to use accrued leave) and after that ten-day period the employer is required to pay an amount not less than two-thirds of the employee’s regular rate of pay up to $200 per day and $10,000 in the aggregate. Please note that the Act does allow employees to elect to substitute any accrued vacation leave, personal leave, medical leave, or sick leave for some or all of the initial ten-day period of unpaid leave.
HOW ARE EMPLOYERS TO FUND EMPLOYEE PAYMENTS UNDER THE ACT?
Many businesses, in particular small businesses, have inquired about where they are supposed to obtain the funds to pay this required sick leave and family and medical leave to their employees when their business has been substantially impacted or temporarily closed due to COVID-19 precautions.
In short, the Act provides employers with a refundable tax credit against the employer’s portion of Social Security payroll taxes for each calendar quarter to offset the costs associated with paying their employees under both the Paid Sick Leave and Paid Family and Medical Leave portions of the Act. Specifically, this tax credit would be equal to 100% of the qualified sick leave and qualified family leave wages paid by an employer, subject to the payment caps described above.
For certain self-employed individuals, the Act contains special rules to allow them to take similar credits to offset their quarterly tax payments.
We will publish a newsletter outlining the federal relief that may be available for your business or personally once a bill gets signed by the President.
Our team at Robert B. Feingold & Associates stands ready to assist you in navigating these changes and, where necessary, to connect you with additional resources that may be able to help in weathering this economic and public health emergency. Please do not hesitate to reach out and let us know how we may assist you during this difficult time.