New Paid Sick Time Law Impacts Employers
The Families First Coronavirus Response Act is effective April 2, 2020. The law requires some employers to provide employees paid sick leave for COVID-19 related events and expands FMLA.
The Law Applies to Many Employers, But Not All Employers
The Act applies to government and employers with 500 or fewer employees. However, employers of healthcare providers and emergency responders “may elect to exclude” their employees from paid sick time. Additionally, the Department of Labor has the authority to exempt businesses with fewer than 50 employees from various requirements “when the imposition of such requirements would jeopardize the viability of business as a going concern.” No exemptions have been made yet.
Paid Sick Leave
After April 2, 2020, full-time employees are eligible to take 80 hours of paid sick time. Part-time employees are eligible for paid sick time that is equivalent to the number of hours the employee works, on average, over a two week period. This expands Arizona’s paid sick time law.
Under the new law, paid sick time is only for COVID-19 related events and there are two different pay caps. Additionally, it may only be used for the six purposes outlined below:
Employees are entitled to recover their full pay (capped at $511 per day and $5,110 in the aggregate) when taking paid sick leave for the following three reasons:
- 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 health care provider to self-quarantine due to concerns related to COVID-19.
- The employee is experiencing symptoms of COVID-19 and seeking a medical diagnosis.
However, not all paid sick time is created equally. Employees are entitled to recover two-thirds of their regular pay rate (capped at $200 per day and $2,000 in the aggregate) if the reason the employee has taken leave is for one of the following three reasons:
- The employee is caring for an individual who is subject to an order 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 his or her child if the child’s school or place of care has been closed or if the child’s child care provider is unavailable due to COVID-19 precautions.
- The employee is experiencing any other substantially similar condition specified by the Secretary of Health and Human Services in consultation with the Secretary of the Treasury and the Secretary of Labor.
Importantly, the Act extends paid sick leave when an employee is caring for an “individual” who has been quarantined or is in isolation related to COVID-19. Unlike Arizona’s paid sick time law, there is no requirement that the employee be related to the individual for whom the employee is caring to be eligible for paid sick leave. Another important distinction, is that all paid sick time must be used by December 31, 2020. It cannot be carried over into 2021. This also departs from Arizona law, which permits employees to carry paid sick time to the following year in some situations.
Employer Tax Credits
Employers may take tax credits each quarter for “an amount equal to the qualified leave wages paid by such employer.” However, these tax credits are limited to the statutory caps outlined above. These tax credits are subject to other limitations. Although the Act indicated employers will be eligible for tax credits for providing paid sick leave and FMLA leave for COVID-19 related events on a quarterly basis, the IRS has since advised that employers may simply deduct the amounts paid (subject to statutory caps) from their payroll taxes. The result is that employers will receive the tax credits much sooner than initially anticipated. If an employer's tax liability is less than the amount it paid for sick leave and FMLA leave, it is eligible for a refund. The IRS's newly released tax credit guidance can be found here.
The new law precludes employers from:
- Requiring employees to use other employer provided paid leave before the employee uses paid sick time provided under the new law.
- Requiring employees who are using this paid sick time to find replacements for their shifts as a condition of using their paid sick time; and
- Discharging, disciplining, or discriminating against an employee for taking paid sick time, filing a complaint related to the new law, or testifying in such a proceeding. Notice Requirements
By April 9, 2020, employers must keep a notice of the requirement of the Act prepared by or approved by the Department of Labor “posted, in a conspicuous place on the premises of the employer where notices to employees are customarily posted.” The Department of Labor is required to make a model notice publically available by March 25, 2020.
Potential Liability for Failing to Comply with the Act
An employer that fails to provide an employee paid sick leave in accordance with the new law is considered to have failed to pay the employee minimum wage, in violation of the Fair Labor Standard Act. Non-compliant employers may be held liable for unpaid sick leave, fines, penalties, liquidated damages, and attorney’s fees.
An employer that engages in a prohibited act, such as wrongfully terminating or otherwise retaliating against an employee for requesting or taking paid sick leave may also be held liable for fines, penalties, liquidated damages, and attorney’s fees.
Employers will soon be subjected to expansive new requirements under the Act, many of which go beyond the scope of this article. Additionally, the Act does not diminish employees’ right or benefits under existing Arizona law, collective bargaining agreements, or employers’ policies. Thus, employers are faced with the task of creating and implementing new policies that comply with all such requirements. An experienced employment attorney can assist employers navigate this unprecedented new legal landscape.
About the Author: Alden Thomas is an employment law attorney at Jaburg Wilk. She advises employees and employers in a wide array of issues, including state and federal sick leave, harassment, discrimination, wage and hour, wrongful termination, and whistle blower laws.