Congress Responds: A Closer Look at the Families First and CARES Acts
This episode of Point By Point was produced prior to the combination of Waller and Holland & Knight.
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In this episode, Waller’s Mark Peters talks with employment attorney Kierstin Jodway about two of the major federal stimulus packages related to the coronavirus and what it means for businesses.
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Mark: Kierstin, thanks for being with us today. One of the topics that I wanted to cover today was the Families First Act that was passed and signed into law last week. And, of course, that act provides for an expansion of the Family Medical Leave Act as well as some additional paid sick leave benefits. One of the fundamental questions that folks have is “am I covered?” How does an employer know if it is covered or not under the Families First Act?
Kierstin: Thank you, Mark. Yes, that's the first question that companies have to look at and so to fall within the Families First Act, a company has to have fewer than 500 employees. When counting employees, the employer should count part time, full time temporary employees and even day laborers. So independent contractors wouldn't be included, but those other categories would be included. There is a potential exemption, and it applies for employers with fewer than 50 employees, if providing the leave would jeopardize the company going forward from a financial perspective.
Mark: On that point, how does the company know, or how would a company document, how would a company let the Department of Labor, which is the federal agency responsible for enforcing this act, that they believe they fall within that 50 employees exemption?
Kierstin: So if a company has fewer than 50 employees and they're looking at their books and think that they just cannot continue to run the organization and provide the leave under the act, then they're going to want to document that. But at this point, based on the information we have from the Department of Labor, which is in charge of enforcing the Families First Act, they've asked that employers just document that and the reasons why they think they fall within the exception but not provide any information quite yet to the deal.
Mark: Kiersten, the act was passed by Congress a little over a week ago, or about a week ago. When does the act become effective and if an employer had provided the event benefits like those set forth were required by the act prior to the effective date, do they have to do it again after the act becomes effective?
Kierstin: So the answer to your first question is April 1, 2020. That's when the act takes effect. Originally in the text of the act that said it would take effect no later than April 2, but we now know, based on guidance we received from the Department of Labor, that it takes effect April 1. For your second question, the answer is yes. Anything that an employer is doing right now is not going to count towards the requirements under the Families First Act.
Mark: So it's not retroactive, in other words.
Kierstin: That's exactly right.
Mark: All right, so I’m an employer, and I've got fewer than 500 but more than 50 employees. What benefits are my employees entitled to now that are different from the benefits prior to the enactment in the effective date of the Act? In other words, what am I going to be on the hook for paying that I wasn't before?
Kierstin: There are two separate provisions within the Families First Act. First you have the Emergency Paid Sick Leave Act. What that provides is 80 hours, up to 80 hours, of emergency paid sick leave to an employee who is not able to come to work because of some COVID-19 related reason. For example, some of the qualifying reasons would be if they're under a self quarantine or stay home or shelter in place order at either federal, state or local level. Another reason would be if they have been diagnosed with COVID-19 or if the employee thinks they have COVID-19 and is seeking a medical diagnosis. Another reason would be if they have a child and their child is at home because the school is closed and so they can't come to work or telework. If they have, if they qualify under one of those listed reasons then the employee can get up to 80 hours of paid leave. The second part of the Families First Act is an expansion of the Family and Medical Leave Act, and what it does is provide up to 10 additional weeks, so 12 weeks in total, for employees, and those additional 10 weeks are just available for employees who have a child who’s unable to go to school and therefore the employee is prevented from working or teleworking.
Mark: So let me ask you a question on one of the points you mentioned. I want to make sure I'm clear about this. If there's an executive order that requires employees to stay away from work, those folks are not entitled for paid leave, correct?
Kierstin: Not necessarily. The way that the act is written is it would have to be an employee that cannot work or telework in order to be entitled to the leave.
Mark: Kierstin, if I'm a covered employer and one of my employees is eligible for leave under the Families First Act, how do I know how much I'm supposed to pay?
Kierstin: Yeah, so it depends. There's different pay requirements for different types of leave. With the paid sick leave, there are six reasons for which an employee could take that leave. The first three, if they fall within the first three, then they can get their full earnings with a cap of $511 per day. If they fall within the fourth, fifth and sixth reason, then they get two-thirds of their regular rate with a cap of $200 per day. Now, under the expansion of the Family and Medical Leave Act, employees taking leave under that provision get two-thirds their regular rate of pay with a cap of $200 per day.
Mark: That sounds complicated to me. Let me ask you a question that might even provide more complication. Under the Family Medical Leave Act, employees can take leave intermittently. Can they take intermittent leave under the Families First Act as well?
Kierstin: We didn't know the answer to that question until today. The DOL, Department of Labor, just expanded on their frequently asked questions resource on their website. Basically, what they said is yes, under certain circumstances, because you can imagine you wouldn't want someone who's taking leave because they think they have COVID-19 coming to work on an intermittent basis. But under the expansion of the Family and Medical Leave Act, you have an employee who's out because they're trying to care for their child. The DOL has said yes, an employee could take that leave intermittently. For example, they could work Monday, Wednesday, Friday, but ask to take that leave on Tuesday/Thursday.
Mark: What if somebody has already taken their 12 weeks of leave the under the Family Medical Leave Act. Do they get additional leave under the Families First Act?
Kierstin: That is a question that we have not received an answer to by the DOL. We're hoping to get some regulations that expand and cover that next week.
Mark: This sounds like an expensive proposition for employers. Does the Families First Act provide any type of relief from the government for the payments made or required to be made under the Families First Act?
Kierstin: Yes, the government has recognized that this is going be expensive for employers, potentially, and so what it has said, the DOL has said, that employers can take an immediate tax offset. In other words, whenever they withhold that Social Security tax from wages, instead of depositing it with the IRS, the employer can use that money and hold onto it to offset against the leave provided with the Families First Act.
Mark: How do employees know about the Families First Act other than by reading it in the news and on the Internet? Is there any requirement that companies post a notice?
Kierstin: There is. The DOL has posted a model poster, and employers are required to post in a conspicuous location on site. Now, given that a large part of the workforce nationwide is working remotely, the DOL has also asked that employers either mail or email that poster to their employees.
Mark: What happens if I'm a business, and I decide, gosh, I don't think I can afford this, and I've already furloughed or laid off some employees prior to the effective date of the act, are those employees who have either been furloughed or laid off on a temporary basis, are they eligible for benefits under the act as well?
Kierstin: No. And that was directly addressed today by the DOL in their expanded FAQ.
Mark: And why now?
Kierstin: So the act does not apply retroactively. So anyone who's laid off between now and April 1 is not going to be eligible for the leave. Then the DOL went as far as to say, if an employer closes its work site, or reduces hours down to zero, or even furloughs people after April 1, those employees are not going to be eligible for the leave.
Mark: Let’s change gears a little bit because, as I understand, under the Families First Act, there are potential exemptions, not only for small businesses, but businesses are allowed to designate certain employees as healthcare providers or emergency responders. Is there any definition yet for either of those terms?
Kierstin: Yes, so the act incorporates the FMLA's definition of healthcare provider, which is going to include podiatrist, dentist, clinical psychologists, optometrist, chiropractors, nurse practitioners, clinical social workers and other healthcare providers.
Mark: So under the definitions, it's a pretty narrow scope of employees. At this point, it doesn't include, for example, or not might not include, for example, under the definition nurses for other people who are on the front lines of this event. Is there some move to try to expand that definition?
Kierstin: Yes, there is.
Mark: And do I understand correctly that there have been a number of trade organizations that have been sending requests to the Department of Labor, and in particular Secretary Scalia, asking for that interpretation to be expanded?
Kierstin: Yep, that's what we're seeing, and we expect to have some updated information on that topic in the coming weeks.
Mark: Kiersten, just a few minutes ago, President Trump signed The Cares Act bill into law. Is there any interaction? Should employers be thinking about how the CARES Act interacts with the Families First Act?
Kierstin: Sure, so I think what the government has realized is, with the passage of the Families First Act, which was aimed at helping employees who are struggling to go to work because of COVID-19, what happened as a result is employers were looking at their books and considering making large layoffs in order to stay profitable and survive this period of time. What the CARES Act does is provide some really attractive loan options for small businesses. It applies to employers with fewer than 500 employees, just like the Families First Act, and employers can use these loans to cover payroll costs for the next couple of months, and a large portion of those loans, if an employer retains its employees, will be forgiven.
Mark: Kierstin, I really appreciate you taking the time to talk with us today and look forward to our next podcast.
Kierstin: Thanks, Mark, and thanks for having me.