Federal Government Passes COVID 19 Coronavirus Relief Package

Federal Government Passes COVID-19/Coronavirus Relief Package

Yesterday, March 18th, Congress passed, and the President signed into law, the Families First Coronavirus Response Act — an economic stimulus plan designed to address the impact of COVID-19 on Americans.  The House of Representatives passed the legislation first, last week.  A second vote by the House on Senate amendments to the bill cleared the way for the upper chamber’s vote and passage yesterday afternoon.  The new law provides several economic relief measures, including the following:

(1) Expanded FMLA Coverage — The Act significantly amends and expands FMLA on a temporary basis (called the Emergency Family and Medical Leave Expansion Act). The current employee threshold for FMLA coverage will change from only covering employers with 50 or more employees to instead covering those employers with fewer than 500 employees. It also lowers the eligibility requirement such that any employee who has worked for the employer for at least 30 days prior to the designated leave may be eligible to receive paid family and medical leaveAs a result, thousands of employers not previously subject to the FMLA may be required to provide job-protected leave to employees for a COVID-19 coronavirus-designated reason. However, the Act now includes language allowing the Secretary of Labor to exclude healthcare providers and emergency responders from the definition of employees who are allowed to take such leave, and to exempt small businesses with fewer than 50 employees if the required leave would jeopardize the viability of their business.

Any individual employed by the employer for at least 30 days (before the first day of leave) may take up to twelve (12) weeks of job-protected leave to allow an employee, who is unable to work or telework, to care for the employee’s child (under 18 years of age) if the child’s school or place of care is closed or the childcare provider is unavailable due to a public health emergency. This is the only qualifying need for Emergency FMLA.

The new provision provides that the first ten (10) days of Emergency FMLA leave may be unpaid. During this 10-day period, an employee may elect to substitute any accrued paid leave (like vacation or sick leave) to cover some or all of the 10-day unpaid period. After the 10-day period, the employer generally must pay full-time employees at two-thirds the employee’s regular rate for the number of hours the employee would otherwise be normally scheduled. The legislation limits this pay entitlement to $200 per day and $10,000 in the aggregate per employee. 

Employers with 25 or more employees will have the same obligation as under traditional FMLA to return any employee who has taken Emergency FMLA to the same or equivalent position upon the return to work. However, employers with fewer than 25 employees are generally excluded from this requirement if the employee’s position no longer exists following the Emergency FMLA leave due to an economic downtown or other circumstances caused by a public health emergency during the period of Emergency FMLA. This exclusion is subject to the employer making reasonable attempts to return the employee to an equivalent position and requires an employer to make efforts to return the employee to work for up to a year following the employee’s leave.

These new FMLA provisions will go into effect on April 2nd and remain in effect until December 31, 2020.

(2) Emergency Paid Sick Leave – The new Emergency Paid Sick Leave Act allows an eligible employee to take paid sick leave because the employee is:

  1. subject to a federal, state or local quarantine or isolation order related to COVID-19; 
  2. advised by a health care provider to self-quarantine due to COVID-19 concerns; 
  3. experiencing COVID-19 symptoms and seeking medical diagnosis; 
  4. caring for an individual(not necessarily a family member) subject to a federal, state or local quarantine or isolation order or advised by a health care provider to self-quarantine due to COVID-19 concerns; 
  5. caring for the employee’s child if the child’s school or place of care is closed or the child’s care provider is unavailable due to public health emergency; or 
  6. 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.

This provision requires employers with fewer than 500 employees to provide full-time employees (regardless of the employee’s duration of employment prior to leave) with 80 hours of paid sick leave at the employee’s regular rate (or two-thirds the employee’s regular rate to care for qualifying reasons 4, 5, or 6 listed above). However, there is an exception for employers who are healthcare providers or emergency responders, at the election of the employer.

The new law places limits on paid sick leave. Specifically, paid sick leave wages are limited to $511 per day up to $5,110 total per employee for their own use and to $200 per day up to $2,000 total to care for others and any other substantially similar condition.  This paid sick leave will not carry over to the following year and will be in addition to any paid sick leave currently provided by employers.

This emergency paid sick leave provision becomes effective April 2nd and will remain in effect until December 31, 2020.

(3)  Tax Credits Available to Employers for Providing Paid Leave – Employers are entitled to a refundable tax credit equal to 100% of the qualified sick leave wages paid by employers for each calendar quarter in adherence with the Emergency Paid Sick Leave Act. The qualified sick leave wages are capped at $511 per day ($200 per day if the leave is for caring for a family member or child) for up to 10 days per employee in each calendar quarter.

Similarly, employers are entitled to a refundable tax credit equal to 100% of the qualified family leave wages paid by employers for each calendar quarter in accordance with the Emergency Family and Medical Leave Expansion Act. The qualified family leave wages are capped at $200 per day for each individual up to $10,000 total per calendar quarter. Only those employers who are required to offer Emergency FMLA and Emergency Paid Sick Leave may receive these credits. 

These tax credits are allowed against the employer portion of Social Security taxes. While this limits application of the tax credit, employers will be reimbursed if their costs for qualified sick leave or qualified family leave wages exceed the taxes they would owe.

(4)  Emergency Unemployment Insurance Relief – This section of the new law provides $1 billion in 2020 for emergency grants to states for activities related to unemployment insurance benefit processing and payment, under certain conditions.  Half of the resources are to be allocated to provide immediate funding to all states for administrative costs so long as they meet some basic requirements, including: (1) requiring employers to provide notification of the availability of unemployment compensation at the time of separation; (2) ensuring applications for unemployment compensation and assistance with the application process are accessible in at least two ways (in-person, by phone, or online); and (3) notifying applicants when their application is received and being processed, as well as providing information about how to ensure successful processing if the application cannot be processed. 

The other half would be reserved for emergency grants to states where there is a 10% increase in unemployment compensation as compared to the same quarter in the prior calendar year. Those states would be eligible to receive an additional grant to assist with costs related to such an unemployment spike if they meet additional requirements, including: (1) expressing of commitment to maintain and strengthen access to unemployment compensation; and (2) taking or planning to take steps to ease eligibility requirements and access (like waiving work search requirements and the waiting period). The Act will provide those states that meet these requirements with 100 percent federal funding to provide extended unemployment benefits, up to an additional 26 weeks after the initial 26 weeks (i.e. up to 52 weeks of benefits). Previously, states were required to pay 50% of extended unemployment benefits. This provision will also remain in effect until December 31, 2020.

(5)  Coverage for COVID-19 Testing — Private health plans (including insured, self-insured, and grandfathered) are now required to provide coverage for COVID-19 diagnostic testing and related services to employees and their covered dependents, without cost sharing (like deductibles, copayments and coinsurance) from enactment of the Act through the end of the national emergency period.   

Covered services and related cost waivers apply to diagnostic testing, healthcare provider services (in-person and telehealth), and facility costs (physician office, urgent care center and emergency room) to the extent the costs are related to evaluating the need for, or furnishing, COVID-19 diagnosis and treatment. In addition to coverage and cost waiver provisions, plans cannot require prior medical authorization as a precondition of COVID-19 testing or services.