As North Carolina businesses grapple with the effects of coronavirus on their day-to-day operations and workforce, there is also new legislation to consider.
The Families First Coronavirus Response Act, HR 6201, initially passed the House on March 14. A variety of changes were made while it was being considered by the Senate and it was signed into law, going into effect April 1, 2020.
As Tryon Direct’s Coronavirus Task Force has had conversations with clients and heard from participants in their ongoing webinar series, there have been many questions about the finer points of the Families First Act. We’ve asked task force member Grainger Pierce to help us with the act’s interpretation.
An attorney practicing employment law, Pierce encourages businesses not to shoot from the hip when it comes to interpreting the act or choosing how to incorporate it as there are currently no guidelines and nuances for how the act will be enforced. There are punitive elements for employers, including violations of minimum wage, which can have massive impacts.
Here are a few important elements Pierce brings to the table for local business leaders:
Why April 1 Matters
As the act was being considered, it became common knowledge that it would go into effect April 2. That, however, is not the case. Taking into consideration the way the law is written and U.S. Department of Labor issued materials, the date is, in fact, April 1.
ALL Businesses With 500 Or Less Employees
The act is designed to impact employers with 500 or less team members and all public agencies. While there is a provision that would allow the Secretary of Labor to exempt employers with 50 or less employees if it would jeopardize the viability of the business, there have not been regulations issued saying how this would be implemented. They have said guidance would come in April so, the current bottom line is that for ALL businesses with 500 or less employees, this does apply to you.
Two Key Components
The Families First Coronavirus Response Act has two main provisions that apply to employers:
- Emergency Paid Sick Leave – Offers employees affected by COVID-19 additional paid sick time.
- Emergency Family and Medical Leave Expansion – An expansion of FMLA, employees are offered additional time that is partially paid.
Eventual Tax Credits Mean Businesses Front the Money
Employers will receive a payroll tax credit under the act, but they will be funding it out-of-pocket for now.
6 Qualifying Reasons for Emergency Paid Sick Leave
The Families First Act defines six reasons under which employers must provide the new paid sick time to employees affected by COVID-19:
- 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 medical diagnosis;
- The employee is caring for an individual who is subject to a federal, state or local quarantine order, or the individual has been advised to self-quarantine due to concerns related to COVID-19;
- The employee is caring for the employee’s son or daughter, if the child’s school or childcare facility has been closed or the child’s care provider is unavailable due to COVID-19 precautions; or
- The employee is experiencing any other substantially similar condition specified by Health and Human Services in consultation with the Department of the Treasury and the Department of Labor.
Emergency Sick Time Pay Caps
Emergency sick time that relates to an employee’s own condition (1-3 above) is calculated based on the employee’s regular rate or minimum wage, whichever is greater, but is limited to $511 per day and $5,110 total.
Emergency sick time relating to situations where the employee is acting as a caregiver (4-6 above) is calculated based on two-thirds of the employee’s regular rate or minimum wage, whichever is greater, but is limited to $200 per day and $2,000 total.
How Emergency Family and Medical Leave Expansion Act Diverges from FMLA
Since it was passed in 1993, the provisions of FMLA have become common knowledge for employers and employees. The expansion diverges from what’s universally understood of FMLA in several ways:
- FMLA is available to employees who have been on payroll for 12 months while the emergency expansion makes provisions available for those who have been employed for 30 days.
- The first 10 days of leave are covered by sick time, then the next 10 weeks are paid at two-thirds an employee’s regular pay capped at $200 per day with a $10,000 aggregate cap.