Last night, the President signed into law important legislation that shifts the employment advice we would otherwise be giving, particularly to our small employer clients who do not have collective bargaining agreements in place and thus, would usually be considered employers at will and generally exempt from state and federal family medical leave requirements. The Families First Coronavirus Response Act (the “Response Act”) a sweeping, if temporary, new law that, in addition to providing nutritional assistance and funding for COVID-19 responses to local officials, imposes significant new duties on small businesses with respect to paid sick time and expansion of family medical leave. Maine’s small businesses should pay attention as this law drastically, if temporarily, affects their obligations.
When it takes effect:
15 days after enactment – April 2, 2020.
UPDATE: The DOL has shortened this to April 1, 2020.
When it goes away:
December 31, 2020.
What Employers it affects:
Generally, all U.S. private employers with fewer than 500 employees and all public employers with at least 1 employee – UNLESS the employees are healthcare workers or first responders, in which case employers can exempt themselves from this law. Yes, you heard that right. While usually the Federal FMLA only applied to employer with at least 50 employees and the Maine counterpart kicks in at 15 employees, this law exempts large employers, though the U.S. Department of Labor has been given some rulemaking authority to exempt small employer with 50 or fewer workers. As of this writing, we are waiting for rules to be promulgated and will update you if and when that happens.
However, we also hasten to note that the new law does exempt small employers (generally, those with less than 50 employees), from its penalty provisions, including the provisions that allow for an affected worker to sue for damages.
Key Changes you need to know:
In general, there are two aspects that employers need to know- the expansion of family medical leave, and a requirement that employers offer paid sick time. Here’s a brief summary of the changes.
Which employees are eligible?
Anyone who worked for at least 30 days prior to the leave request. This is a significant shift in employee eligibility. Generally, under the “normal” Federal statute, an employee must first work at least 12 months and 1250 hours to qualify, and under the Maine statute, an employee must work at least 12 consecutive months.
How long must the leave be?
The existing leave period of up to 12 workweeks under the federal law has not changed.
How much advance notice is required?
Only as much as is “practicable.”
What new bases for requesting leave are added?
There must be a qualifying need related to a public health emergency” This means the employee can’t work due to COVID-19, including for reasons related to the care of children under the age of 18 whose school or child care facility has closed due to the outbreak.
Must the leave be paid?
Under the prior state and federal FMLA laws, family medical leave for non-COVID-19 reasons need not be paid. In this new law, the first 10 days of leave may be unpaid (though the employee can use accrued sick or vacation time if they have any – more on that below), and after the first 10 days, the leave must be paid.
How much do I have to pay?
After the initial 10 days, employees must receive at least 2/3 of their regular pay rate, up to $200 per day and $10,000.00 in aggregate – per worker. Special rules apply for part time workers or those who do not work a regular schedule.
Part Two – Paid Sick Leave
Again, we’re waiting to see what the Department of Labor will do in terms of regulations, but as enacted, this statute requires employers to offer 80 hours of paid sick leave to all full time employees, and paid sick leave for part-time workers equal to their average hours worked over a two-week period. There are rules for estimating average work schedules for those who do not have a fixed schedule. This time can be used to care for children who are home because schools are closed, as well as care for the employee him or herself or for their family members, or if the employee is subject to a quarantine or isolation order, or experiencing “any other substantially similar condition.”
The law states that this sick time may not be carried over into the next calendar year. However, that leave may be eligible for carryover under employer policies or state or local law. The law also states that it does not require a sick pay cash-out upon the employee’s separation from employment, which appears to preempt Maine law to the contrary.
Part Three- Employer Incentives
It’s not all stick – there are also some carrots for employers and the self-employed in terms of tax credits for vacation and sick pay extended to employees. We encourage you to keep good records as always, and to consult with your tax advisors about whether this can benefit you.
Other Take-Aways and Considerations
Here are a few other thoughts we’ve discussed with employers in recent days:
- Stay calm and do what you feel is best for your business. If you’re a small employer with 50 or fewer workers, stay tuned to see if exemptions are extended before this new law takes effect in April.
- Consider the extensive disaster loans that are coming into the market to help employers make payroll. I will discuss these in an upcoming newsletter.
- Remember that even if small employers end up exempt from the recent federal legislation through DOL regulations, your employees may be eligible for unemployment benefits if you terminate employment. The Maine DOL has a variety of resources on unemployment compensation here. As part of the Maine Legislature’s recent emergency enactments, unemployment benefits paid out during this crisis are not charged against the employer’s experience rating.
- If you are considering a payroll advance and repayment plan, be sure to have that documented and confirm it is for the convenience of the employee; otherwise it is likely to be deemed an unfair employment agreement subjecting you to penalties and court costs.
With so much activity coming out of Congress and Augusta, my approach is to try to take things one day at a time and to actually read, re-read, and reflect on this rapidly evolving situation. Fortunately, our office was prepared for this scenario with a variety of cloud-based systems and procedures. If you would like to schedule a phone or video call to review your policies and discuss any questions you might have, you can reach me at 333-6700 or at msm@malloyfirmmaine.com.
Thanks for reading, and good luck out there!
Michael