How New FMLA Changes and EPSLA Will Affect Churches and Nonprofits During the Coronavirus Outbreak throughout 2020.
By Robert Showers, Esq. and Q&A with permission of Danny Miller, Esq. March 27, 2020
The Families First Coronavirus Response Act (“Act”) has now been enacted, the second significant federal law addressing the COVID-19 pandemic. The Act is designed to provide paid leave to cushion employees who cannot work due to certain virus-related circumstances. These new provisions are temporary and set to expire at the end of this year. Congress recently passed additional legislation relating to COVID-19 on Friday, March 27, 2020 (the CARES Act), which may alter these new paid sick leave requirements and provide additional employee protections. An article on its impact to churches, nonprofits, and businesses will be coming soon!
In summary, two major changes may apply to churches, nonprofits, and small businesses:
First: FMLA, which applies to employers with 50 or more employees, is amended to require employers to permit Public Emergency Health Leave (PEH) to cover an employee who “is unable to work (or telework) due to a need for leave to care for his or her son or daughter (under 18 years old) if the child’s school or place of care has been closed, or the child’s care provider is unavailable, due to a public health emergency.” Self-quarantining for COVID-19 is not covered in this provision. Under PEH, the first 10 days are unpaid but the next 12 weeks will be paid at 2/3 pay with maximum $200 per day and $10,000 total. Employees of religious organizations who are “ministers” may be exempt under the so-called “ministerial exception.”
Second: a new stand-alone law, called the Emergency Paid Sick Leave Act (EPSLA), applies to all organizations regardless of size and requires them to pay emergency paid sick leave for the 6 covered situations outlined below. In short, the first 3 covered situations involve those individuals that are government-mandated to self-quarantine/isolate or ordered by healthcare provider to self-quarantine because they have COVID-19 or been directly exposed to it. The last 3 covered situations apply to persons who are caring for family members who are subject to the above or for their children who are out of school due to a government mandate. Employers are required to provide full regular pay for the those directly impacted in the first 3 situations and two-thirds (2/3) regular pay for the indirect impact in the last 3 covered situations. The maximum required pay under EPSLA is full pay for 10 days or $511 per day with max of $5110. For 2/3 pay it will be $200 per day with max of $2000. Under EPSLA, the employers cannot require employees to use their sick leave before getting EPS leave.
Under EPLSA, an employee is eligible for paid sick time if the employee is unable to work (or telework) because the employee is:
- Subject to a Federal, State, or local quarantines or isolation order related to COVID-19;
- Been advised by a health care provider to self-quarantine related to COVID-19;
- Experiencing COVID-19 symptoms and is seeking a medical diagnosis;
- Caring for an individual subject to an order described in (1) or self-quarantine as in (2);
- Caring for a child whose school is closed or childcare is unavailable for reasons related to COVID-19; or
- Experiencing any other substantially-similar condition specified by the Secretary of Human and Health Services, in consultation with the Secretaries of Labor and Treasury.
Key points other than paid Sick Leave for Workers outlined above and below in the Q&A are the following:
- Complete coverage for paid sick leave under the Act, with Health insurance costs included, via a refundable credit. This means employers will face no payroll tax liability and self-employed persons get equal tax credit;
- Quick and Easy Reimbursement promised through dollar-for-dollar tax offset against payroll taxes and refunds if necessary (in short, businesses can retain and use funds that they would otherwise pay IRS in payroll taxes to offset paid sick leave costs);
- Small businesses under 50 employees are eligible for exemption from requirement for leave for childcare where schools are closed where the viability of the business is threatened;
- Easing Compliance by having a 30-day non-enforcement period for good faith compliance efforts.
The below Q&A provided by my longtime friend Danny Miller, Esq. summarizes the Act, which is set to take effect no later than April 2 and end on December 31.
What changes does the Act make to family and medical leave?
Section C of the Act (the “Emergency Family and Medical Leave Expansion Act”) expands family and medical leave under the FMLA. Section E (the “Emergency Paid Sick Leave Act”) establishes a new paid sick leave entitlement. The Act requires employers, for the first time, to provide workers paid leave, albeit only in limited circumstances.
Emergency Family and Medical Leave Expansion Act
Does the Act apply to nonprofits and religious organizations?
The FMLA generally applies to all employers that meet the coverage tests, whether commercial, for-profit, nonprofit, or charitable. The Act does not alter that scope. However, employees of religious organizations who are “ministers” may be exempt under the so-called ministerial exception to employment laws.
When is paid leave required?
The Act amends the FMLA by adding a new Section 110, which adds “public emergency health leave” (PEH) to the types of FMLA-leave qualifying employees may take. The Act does not require existing types of FMLA leave to be paid leave.
Does the Act change which employers are covered by the FMLA?
Yes, but only for PEH leave. The FMLA normally applies to employers with 50 or more workers. The PEH leave provisions apply to employers with fewer than 500 employees. That includes employers with fewer than 50 workers.
Does the Act change which employees the FMLA covers?
Again, yes, but only for PEH leave. Employees are eligible (assuming their employer is covered) if they have worked for their employer for at least 30 calendar days. This includes part-time workers.
What is PEH leave?
PEH leave is leave taken because of a “qualifying need related to a public health emergency,” which means that an employee is unable to work (or telework) due to a need for leave to care for his or her son or daughter (under 18 years old) if the child’s school or place of care has been closed, or the child’s care provider is unavailable, due to a public health emergency. Unlike the more expansive initial House bill described in our prior Alert, the new law does not provide PEH leave for other circumstances, such as for self-quarantining.
What is considered a “public health emergency?”
The term “public health emergency” means an emergency with respect to COVID-19 declared by a federal, state, or local authority. President Trump declared a national emergency on March 13.
When would PEH leave need to be paid leave?
An employee’s first 10 days of qualifying leave may be unpaid. During that period, an employee can choose to substitute any available employer-provided accrued paid leave, but the employer may not require the employee to use accrued paid leave. Additional qualifying leave after 10 days would have to be paid at a rate of at least two-thirds of the employee’s normal wage and on the assumption that the employee is working a normal schedule. Up to twelve weeks of PEH leave is available.
Are there any limits on the amount of paid PEH leave?
Yes. The maximum per employee is $200 per day and $10,000 in total.
What if the employee does not work the same schedule from week to week?
For employees whose schedule various from week to week to such an extent that the employer is unable to determine with certainty the number of hours the employee would have worked during leave, pay may be based upon the average number of hours the employee was scheduled to work per day during the previous six months. For recent hires, pay may be based upon the employee’s reasonable expectation at the time of hiring of the average number of hours per day the employee would be scheduled to work.
Do employees have to provide advance notice to employers before taking PEH leave?
Yes, but only where the need for leave is foreseeable. Even then, employees must only provide employers with as much advance notice as is practicable.
Emergency Paid Sick Leave Act (EPSLA)
What does the EPSLA do?
The EPSLA is stand-alone legislation, rather than an amendment to the FMLA. It requires employers to provide emergency paid sick (EPS) leave in covered situations.
Does the ESPLA cover the same employers and employees as the FMLA?
Employers covered by the PEH leave provisions discussed above are also subject to the EPSLA (i.e., those with fewer than 500 employees). The ESPLA covers every worker, not just those who have been on the job for a certain length of time.
When is EPS leave required?
EPS leave is required in six situations—specifically, when an employee is absent because he or she:
- is subject to a federal, state, or local quarantine or isolation order related to COVID-19;
- has been advised by a health care provider to self-quarantine due to concerns related to COVID-19;
- is experiencing symptoms of COVID-19 and seeking a medical diagnosis;
- is caring for an individual who (a) is subject to a federal, state, or local quarantine or isolation order related to COVID-19; or (b) has been advised by a health care provider to self-quarantine due to concerns related to COVID-19;
- is caring for a son or daughter of such employee if the school or place of care of the son or daughter has been closed, or the childcare provider of such child is unavailable, due to COVID-19 precautions; or
- is experiencing any other substantially similar condition specified by the Secretary of Health and Human Services.
How much paid leave may employees receive?
Employees must receive their regular rate of pay for leave caused by events 1, 2, or 3, above. They receive two-thirds (2/3) of their regular rate of pay for leave caused by events 4, 5, or 6. In general, employees must receive the pay they would have gotten based on the hours they “would otherwise be normally scheduled to work” at their regular rate of pay. The limit for full-time employees would be 80 hours. For part-time employees, the limit is the average number of hours the employee works in a two-week period. These requirements are subject to maximum limits, which vary based on the type of situation. EPS leave maxes out at $511 per day and $5,110 in total for events 1, 2, and 3, above. The limits are $200 per day/$2,000 in total for events 4, 5, and 6, above.
Can employers require employees to use other accrued sick leave provided by an employer before using the EPS leave?
No. Employees may elect to use emergency paid sick leave first. The law prohibits employers from requiring employees to use other paid leave provided by the employer before the employee uses EPS leave.
Are there other provisions employers should know about?
Yes, but they do not require immediate action. For example, when the Department of Labor makes it available, employers are to post a notice about these new requirements. In addition, the law prohibits retaliation against workers for taking leave or filing a complaint to enforce the law. Finally, the Act includes enforcement penalties should an employer fail to pay mandated sick leave.
The Act has raised many questions, and some common questions beyond the summary above are provided in the sidebar. The sidebar also discusses the Act’s effect on health plans. Please contact us if you have questions about the Act’s specific application to your workplace.
Health plans
Should we change our FMLA policies?
The Act’s amendments to the FMLA are temporary. Future near-term federal legislation may incorporate additional changes. We suggest that employers prepare and distribute addenda to their leave policies, noting that policy provisions covering additional leave will automatically expire.
Can we provide pay and benefits more generous than the Act requires?
Absolutely, and most of our clients are doing so. Part-time and hourly workers are most vulnerable to unexpected payroll hits, and they can be protected with guaranteed pay for hours worked at home, bonuses, and paid sick leave that goes beyond the Act’s requirements. Keep in mind that these changes must be deliberately considered; promising an hourly worker a bonus, for example, likely will increase his or her effective hourly wage, and any overtime pay would need to be based on that enhanced regular rate of pay.
Does the Act impact state and local family and medical leave obligations?
No. Absent changes to state and local laws, those laws remain in place. In this area of the law, federal legislation does not supplant state and local laws, so they remain in force. If the laws differ, workers are entitled to the most favorable benefits and protections
What will the Act require for employer-sponsored health plans?
The Act will require group health plans and health insurers to provide coverage for COVID-19 diagnostic testing and items and services furnished during an office, telehealth, urgent care center, or emergency room visit to the extent those items and services relate to the furnishing of the test or the evaluation of the individual’s need for the test. Coverage must be provided without cost-sharing (such as deductibles, copayments, and coinsurance), prior authorization, or other medical management requirements. The coverage requirement is effective on the date of enactment and continues until the Secretary of DHHS determines that the public health emergency has ended.
We are aware that some third-party administrators are proposing to provide COVID-19-related coverage on a retroactive basis. Plan sponsors will want to confirm that the coverage administered by their third-party administrator satisfies any requirements under the Act and, if additional coverage is provided, that it is consistent with the plan sponsor’s intent.
Are there other considerations for high deductible health plans (HDHP)?
The Act does not address HDHPs. However, in Notice 2020-15, the IRS announced that HDHPs are permitted to pay for “medical care services and items purchased related to testing for and treatment of COVID-19” before the deductible is satisfied. Other services currently remain subject to HDHP requirements. Sponsors of HDHP plans will want to confirm that any extension of pre-deductible coverage is consistent with the IRS announcement and any subsequent guidance.
For your interest, the Department of Labor just issued a poster that summarizes these provisions and it is attached at:
https://www.dol.gov/sites/dolgov/files/WHD/posters/FFCRA_Poster_WH1422_Non-Federal.pdf
Stay tuned for the next article on the $2 trillion Stimulus Package just passed by Congress and signed into law by the President on March 27, 2020.
Disclaimer: This memorandum is provided for general information purposes only and is not a substitute for legal advice particular to your situation. No recipients of this memo should act or refrain from acting solely on the basis of this memorandum without seeking professional legal counsel. Simms Showers LLP expressly disclaims all liability relating to actions taken or not taken based solely on the content of this memorandum. Please contact Robert Showers or Will Thetford at wrt@simmsshowerslaw.com for legal advice that will meet your specific needs. Q&A used with permission of Danny Miller who is a partner in the Washington, D.C., office of Conner & Winters, LLP, is also an advisor-at-large for Church Law & Tax like Robert Showers.
