In March 2020 Congress passed two pieces of legislation that affect employers and employees: the Families First Coronavirus Response Act (FFCRA) and the Coronavirus Aid, Relief and Economic Security Act (CARES). As related to employment law, FFCRA provides paid leave from work due to the coronavirus. CARES pertains more to financial aid for employers in the form of low-interest loans and tax relief, as well as unemployment benefits for workers who have been laid off due to the coronavirus.
Elements of the FFCRA
The FFCRA, which covers a number of topics, provides paid leave of absence as (1) amendments that expand the Family Medical Leave Act (FMLA) and (2) a new “Emergency Paid Sick Leave Act” (the EPSLA). The two sections cover different situations and have different requirements.
All of the benefits under the new FFCRA are tied to the coronavirus. Under the expanded FMLA, only a parent of a school-aged child (up to 18) who cannot work or telework because the child’s school has closed due to the coronavirus is entitled to paid leave. This first section does not relate to being ill. The second section, the EPSLA, covers an employee who cannot work or telework due to a need for leave because the employee:
- is ordered to self-quarantine, i.e., stay at home, by federal, state, or local authorities,
- has been advised by a health care provider to stay home due to concerns related to the coronavirus,
- has symptoms of COVID-19, the illness caused by the coronavirus, and is seeking a medical diagnosis,
- is caring for an individual who has been ordered or advised to stay home or has symptoms and is seeking a diagnosis,
- must care for a child whose school was closed due to the coronavirus, or
- is experiencing any other condition substantially similar to COVID-19.
Which workers qualify
The expanded FMLA covers persons who have been employed for at least 30 calendar days and have requested leave from work. The EPSLA covers any employee regardless of how long they have been employed by that employer.
Amounts an employee receives in paid leave
Under the expanded FMLA which is related to school closings due to the coronavirus, an employee receives twelve (12) weeks at 2/3 of the regular wages, although there is no payment during the first ten (10) days. This paid leave is capped at $200 per day or a maximum of $10,000. Under the second section, the EPSLA related to paid sick leave, a fulltime employee is entitled to 100% of regular wages for up to ten (10) days. For part time employees, the amount is based on the average number of hours worked in the preceding two weeks. The payment stops at the next workshift after the “need” for the sick leave ends. The maximum is $511 per day for paid sick leave and no more than $5,110 total.
Large companies are not subject to the new statute’s mandates at all. The FFCRA applies only to employers with less than 500 employees. This was the result of a political battle with the Republicans drawing a line in the sand, refusing to subject large corporations to paying anything under the statute. Plus, many corporations already provide paid sick leave.
Employers are reimbursed with tax credits of 100% of any outlay for paid leave. Also, the Secretary of Labor has the authority to exempt businesses with fewer than 50 employees if imposing the statute’s requirements would jeopardize the viability of a business. Employers are not required to pay sick leave to certain health care providers and emergency responders.
If an employee returns to work and the job has been filled, the employer is absolved of liability if the employer makes “reasonable” efforts to find the employee an equivalent position within the company but cannot. And as with most statutes of this type, there is an anti-discriminatory provision.
Under the current CDC guidance on COVID-19, an employer can send home an employee with COVID-19 or symptoms associated with it. Even before this pandemic, based on the Texas Supreme Court opinion in Hathaway v. General Mills, an employer can make changes to employee’s terms and conditions of work so long as the employer gives the employee unequivocal notice of the changes.
Furthermore, employers can and should take precautionary measures to avoid spread of the virus. An employer is required to temporarily close its business if mandated by a governmental disaster declaration, as has occurred in Harris County.
Termination because the employee has COVID-19 or believes that an employee has the illness
Neither the EEOC nor other authorities have issued a definitive answer as to whether COVID-19 is a “disability” protected under the Americans with Disabilities Act (the ADA). At this point, we do not know enough about the disease to make a definitive statement. What we do know is that the ADA, which protects applicants and employees from disability discrimination, is relevant to a pandemic in at least three major ways.
First, the ADA regulates employers’ disability-related inquiries and medical examinations for all applicants and employees, including those who do not have ADA disabilities.
Second, the ADA prohibits covered employers from excluding individuals with disabilities from the workplace for health or safety reasons unless they pose a “direct threat” (i.e., a significant risk of substantial harm even with reasonable accommodation).
Third, the ADA requires reasonable accommodations for individuals with disabilities (absent undue hardship) during a pandemic.
See Pandemic Preparedness in the Workplace, EEOC website, March 21, 2020 update.
To determine whether a person has a “disability” under the ADA, the law assesses an individual’s particular condition. When viewing the individual, the question is whether a physical or mental condition impairs one of that employee’s “major life activities.” Further, courts apply this test considering the condition as it exists untreated.
In a practical sense, employers likely will not and should not terminate a valuable employee who contracts COVID-19. This is the very reason for the enactment of the EPSLA, to provide paid leave to the sick employee and then give the employer 100% reimbursement by a tax credit.
In response to the coronavirus crisis, the collapsing economy, and the resulting massive layoffs, Congress passed CARES. This statute provides economic relief to businesses, individuals, States and municipalities, and health care providers affected by COVID-19, the illness caused by the virus. According to the Brookings Institution, CARES is to provide relief from immediate financial losses, not as a stimulus to reignite economic growth.
Paycheck Protection Program
To help small businesses keep workers employed during the economic downturn, the Paycheck Protection Program (PPP) was included in CARES. These are low-interest loans which may be forgiven if borrowers maintain their payrolls during the crisis or restore their payrolls afterward.
To be eligible for these low-interest refundable loans, companies must have fewer than 500 employees. PPP covers sole proprietors, independent contractors, freelancers – almost any type of small-business employer. Loans can be up to 2.5 times the company’s average monthly net payroll cost. The loan proceeds can be used only for payroll, mortgage payments, rent, utilities, and interest on prior loans.
Employers are eligible for forgiveness of the PPP loan by providing documentation that the proceeds were used for the purposes enumerated in the statute. To support the purpose of the statute, employers must use at least 75% of the loan proceeds toward payroll costs. However, the amount of forgiveness will be reduced if there is a decrease in the number of employees or in the wages paid to employees.
Economic Injury Disaster Loans & Emergency Economic Injury Grants
This program involves both loans and grants. The Economic Injury Disaster Loans (EIDL) are low interest loans, with principal and interest deferment at the Administrator’s discretion, that are available to pay for expenses that could have been met had the disaster not occurred, including payroll and other operating expenses. To be eligible for an EIDL, the company must have 500 or fewer employees. This includes sole proprietorships, with or without employees, independent contractors, cooperatives, and employee owned businesses.
The Emergency Economic Injury Grants provide an emergency advance of up to $10,000 to small businesses and private non-profits harmed by COVID-19. A company must first apply for an EIDL and then request the grant. The grant does not need to be repaid under any circumstance. The grant money may be used for payroll, to pay for sick leave, meet increased production costs due to supply chain disruptions, or pay business obligations, including debts, rent and mortgage payments.
Tax-Cuts for Businesses
There is a refundable 50% payroll tax credit for businesses affected by the coronavirus, which is to encourage employee retention. Employers would also be able to defer payment of those payroll taxes if necessary. This retention tax credit is for eligible employers that continue to pay employee wages while their operations remain fully or partially suspended as a result of specific COVID-19-related government orders.
There also are loosened tax deductions for interest and operating losses; suspension of penalties for people who tap their retirement funds early; and tax write-offs to encourage charitable deductions and encourage employers to help pay off student loans.
Financial Aid for Employees
A smaller portion of the CARES funding is devoted to workers. Employees who are laid off due to the coronavirus will receive an additional $600 per week for eight weeks. This is in addition to States’ unemployment compensation payments. Also, every individual tax filer in the US will receive a one-time payment, a “rebate.”
These are just some of the key provisions in the $2.2 trillion statute. The funding authorized by Congress was a “must” to save our crumbling economy. The number of jobs lost due to the coronavirus could go as high as 47 million, according to the Federal Reserve Bank. A society cannot last if businesses are closed, workers receive no income, and there is no way for unemployed workers to feed their families. The federal government had to step in and provide monetary relief.
If you have questions about aspects of the new coronavirus laws, feel free to contact us. Gardner Employment Law can help.
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