Reimbursement for Mandated Sick and Family Leave Pay

As a response to the COVID-19 pandemic, President Trump signed into law the Families First Coronavirus Response Act (the “FFCRA”) along with the Coronavirus Aid, Relief, and Economic Security Act (as detailed in our previous client alert and article). The FFCRA requires small and mid-sized employers (including nonprofit and religious organizations) with less than 500 employees to provide paid sick and family leave for employees who are unable to work due to the COVID-19 pandemic, while also reimbursing employers for such compensation. It is important to note that certain small businesses (including religious and nonprofit organizations) are exempt from the mandated paid leave requirements under FFCRA as discussed below.

QUALIFYING REASONS FOR LEAVE

An employee qualifies for paid sick leave under the FFCRA if the employee (excluding health care providers and emergency responders) (a) has worked for at least thirty (30) days prior to taking paid leave and (b) is unable to work (or unable to work remotely) because the employee:

i. is subject to a Federal, State, or local quarantigne or isolation order related to COVID-19;
ii. has been advised by a health care provider to self-quarantine related to COVID-19;
iii. is experiencing COVID-19 symptoms and is seeking a medical diagnosis;
iv. is caring for an individual subject to an order described in (i.) or self-quarantine as described in (ii.);
v. is caring for a child whose school or place of care is closed (or childcare provider is unavailable) for reasons related to COVID-19; or
vi. is experiencing any other substantially-similar condition specified by the Secretary of Health and Human Services, in consultation with the Secretaries of Labor and Treasury.

In addition to paid sick leave, an employee can qualify for up to an additional 10 weeks of paid expanded family and medical leave if the employee is unable to work due to a bona fide need to care for a child whose school or place of care is closed (or child care provider is unavailable) for reasons related to COVID-19.

DURATION OF LEAVE & MAXIMUM PAYMENT

The maximum paid leave time is 80 hours over a two-week period, so an employee cannot take 80 hours paid leave under one qualifying reason and then additional paid leave for a second qualifying reason. It is critical for employers to pay close attention to the limits for the duration of employee leave and the maximum payment permitted, as the employer will not be reimbursed for any wages paid beyond the limits.

RECOVERABLE COSTS

In order to be eligible for reimbursement, which comes in the form of tax credits, the employer must be withholding payroll taxes from its employees. Under the FFCRA, qualified employers can receive 100% reimbursement through tax credits for all “qualifying wages” paid to their employees for the period between April 1, 2020 and December 31, 2020. A “qualifying wage” is defined as compensation paid to an employee who takes leave under the FFCRA for a qualifying reason (as listed above), up to the appropriate per diem and aggregate payment caps. Employers may also receive additional reimbursement through tax credits for amounts paid or the cost incurred to maintain the employee’s health insurance coverage during the paid leave period.

EXEMPTION UNDER FFCRA

There is an exemption under FFCRA which provides that the Secretary of Labor has the authority to exempt small businesses (including religious and nonprofit organizations) from the mandated paid leave requirements, if (a) the employer has less than 50 employees, (b) the employee has requested sick or medical leave to care for a child because schools or childcare services are unavailable due to COVID-19, and (c) providing such compensation would critically impact the viability of the business/organization, such that compensation under FFCRA would (i) cause the business/organization to cease operation, and (ii) pose a substantial risk to the financial wellbeing of the business/organization or (iii) generate an inability to find enough able, willing, and qualified employees to provide the required services and labor. Employers falling under this exemption should maintain records evidencing employee requests for paid leave as well as the impact such compensation would have on the business.

Additionally, employers may be exempt from the requirements under FFCRA for paid sick, medical and family leave for clergy (including pastors) and thus employers would also not be entitled to any reimbursement for paid leave of their clergy. At this point it is unclear whether clergy are excluded from the term “employee” under the FFCRA – check back for an update when more information on the regulations and exemptions are published.

NEW YORK STATE PAID SICK TIME PLAN

Additionally, on March 18, 2020, Governor Andrew M. Cuomo passed a paid leave law for COVID19, the Paid Sick Time Plan, which provides additional reliefs for residents. Employee benefits depend on the size of the employer. If there are additional benefits not given under the federal program, then New York State will provide the incremental difference. See here for specific requirements and details provided by New York State.

ADDITIONAL RESOURCES

• The U.S. Department of Labor’s Wage and Hour Division (the “Department”) is responsible for administering and enforcing the new law’s paid leave requirements. The Department’s WHD posted a temporary rule issuing regulations pursuant to the law that can be found here.
• The U.S. Department of Labor Wage and Hour Division have released a webinar focusing on the FFCRA, which can be accessed here, along with corresponding PowerPoint slides here.
• You can access an expansive FAQ provided by the Department’s WHD to assist employees and employers here.
• A poster for your workplace can be accessed here, which will fulfill employer notice requirements. For an FAQ on these notice requirements, see here. This Field Assistance Bulletin explains the Department’s WHD’s 30-day non-enforcement policy.
• The Department’s WHD provides additional information on common issues employers and employees face when responding to COVID-19 and its effects on wages and hours worked under the Fair Labor Standards Act and job-protected leave under the Family and Medical Leave Act.

Disclaimer:

The information in this article is continuously changing and being updated. This article is for informational purposes only and does not constitute legal or business advice. In no way is Capell Barnett Matalon & Schoenfeld LLP advising that it is appropriate to only follow the information listed here. If your religious corporation or nonprofit organization requires assistance, please contact Jodi Warren, Esq., at Jwarren@cbmslaw.com or Renato Matos, Esq., at Rmatos@cbmslaw.com.

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