By: Ofer Barlev
On Wednesday, the President signed the emergency paid leave law after it expeditiously moved from the U.S. House of Representatives to the Senate without much opposition. The legislation provides much-needed help to those affected by the crisis. Aside from providing free testing for the Coronavirus, the new law provides paid sick leave and paid family leave for workers. In addition, the Treasury Department will also propose a direct cash payment to taxpayers, $300 billion in small business loans, $50 billion for the airline industry, and $150 billion to other distressed industries.
The new law’s Paid Sick Leave component will require employers with fewer than 500 employees to provide their employees with two weeks (10 work days) of emergency paid sick leave pay resulting from Coronavirus absences. If the employee is part-time, the wages paid will equal the number of hours the employee works on an average two-week period. The employers may not require their employees to first exhaust other forms of paid leave (such as sick leave or paid time off) before allocating this Coronavirus paid sick leave. There are specific payment structures and caps attached to the law that must be examined for each situation. Importantly, the law does not carry-over and will terminate on December 31, 2020. Please note, the law allows the Secretary of Labor to exempt health care providers, emergency responders, and employers with less than 50 employees. Such entities must wait until the Secretary of Labor provides this exemption through additional regulations.
Posting Requirements, Compliance, and Caps
The law also requires employers to post a notice in the workplace of the paid sick leave rights (and the Secretary will provide language for the notice within seven days). If employers fail to comply with this new law, they will be subject to penalties similar to those issued for minimum wage violations. Any employer who provides the paid sick leave wages to its employees due to the Coronavirus will receive payroll tax credits quarterly if they are above the required Social Security taxes the employer ordinarily owes. The paid sick leave wages are capped at $511 per day (or $200 per day if the leave is to care for a child or family member) for up to 10 days per employee in each calendar quarter.
Employers who must also offer emergency Family and Medical Leave Act (“FMLA”) wages would be entitled to tax credits equal to the entire amount paid per calendar quarter. Such Emergency FMLA tax credits are capped at $200 per day for each individual up to $10,000 in the aggregate per calendar quarter. Please note that regular FMLA applies to private employers with 50 or more employees and the employees are eligible (eligibility for benefits requires that the worker has worked for the employer for at least 12 months, has worked at least 1,250 service hours for the employer during the 12-month period immediately preceding the leave, and works at a location with at least 50 employees that is within 75 miles.) California’s Family Rights Act provides additional protections.
If the Employer Closes the Office, What Legal Requirements Must be Followed?
If the employer anticipates continuing to employ the employees, there is no need for a “final paycheck” when the employees leave to work from home. Rather, they should be paid on the next regular payday. The employer should inform the employees in writing (email is ok) that the employment relationship will continue and that as soon as the employer has more information it will notify them of a return date.
On the other hand, if the employer plans on terminating the employees, the employer must provide them with a final paycheck on their last day. If an employee quits, the employer must provide him/her with the final paycheck within 72 hours of when the employee gave the notice. Final paychecks must be provided at the company site where the employee worked. However, an employee can request that his/her final paycheck be delivered by mail or direct deposit. Employees are entitled to use their paid sick leave under state and local law. The California Labor Commissioner issued FAQs on paid sick leave during the coronavirus pandemic:
“Paid sick leave can be used for absences due to illness, the diagnosis, care or treatment of an existing health condition or preventative care for the employee or the employee’s family member. Preventative care may include self-quarantine as a result of potential exposure to COVID-19 if quarantine is recommended by civil authorities.” (https://www.dir.ca.gov/dlse/2019-Novel-Coronavirus.htm.) See additional legal requirements per the Emergency Paid Sick Leave and Emergency Paid Family and Medical Leave laws.
Must Employers Give Employees Anything in Writing?
Yes. Employers must give employees something in writing (email is ok) notifying them that due to the current crisis and for their own safety, they are not to arrive at the workplace. Rather, they should work from home until the employer informs them of a return date. In addition, if the employer plans on shutting down operations, the employer must notify them of this and allow the employees to file an Unemployment Insurance Claim. The Employment Development Department (“EDD”) states that workers “who are temporarily unemployed due to COVID-19 and expected to return to work with their employer within a few weeks are not required to actively seek work each week. However, they must remain able, available, and ready to work during their unemployment for each week of benefits claimed and meet all other eligibility criteria.” (See https://edd.ca.gov/Unemployment/Filing_a_Claim.htm)
Must Employers Keep Paying their Employees?
Yes. If an employee “reports” for their regularly scheduled shift but is required to work fewer hours or work the entire shift from home, the employee must be compensated for at least two hours, or no more than four hours, of reporting time pay.
An employee who “reports” to work for an eight-hour shift and only works for one hour must receive four hours of pay, one for the hour worked and three as “reporting time pay” so that the worker receives pay for at least half of the expected eight-hour shift. “Reports to work” includes logging onto a computer remotely from the employee’s home.
Under California law (Healthy Workplace, Healthy Families Act), all California employers must provide their employees paid sick leave of at least 24 hours (or three days) per year. If the employee has paid sick leave available, the employee can use it in accordance with California paid sick leave law. If the employee does not have any sick leave available, the employee can use other leave such as vacation or paid time off (if you offer it in your Employee Handbook or other Policy). (See https://www.dir.ca.gov/dlse/ab1522.html)