Federal Passage of the Families First Coronavirus Response Act & Impact on West Virginia Businesses

March 2020

Flaherty is here for you in the face of unprecedented actions taken to combat COVID-19. Please reach out to Chris Brumley at 304.347.4254 or if you have questions or concerns about how these new requirements may impact your business or employees.

The Families First Coronavirus Response Act was signed into law by President Trump on March 18, 2020, and is set to take effect on April 2, 2020. While additional legislation is anticipated over the coming days and weeks, below is a summary of the impact this particular piece of legislation will have on West Virginia businesses in the coming days. An understanding of three of the key provisions is helpful as employers plan to meet the new requirements.

(1) Expansion of the Emergency Family and Medical Leave Expansion Act (FMLA)

Who does this impact? 

Private sector employees with fewer than 500 employees will need to provide employees with up to 12 weeks of paid family and medical leave (FMLA) for any employee who has been employed for at least 30 days if they are out of work to care for children because school or daycare is closed and they are unable to work or telework.

How is pay calculated?

The first ten days (rather than 14 days) of Emergency FMLA may be unpaid. During these ten-days, employees may elect to use any accrued paid leave (such as vacation or sick leave). After the ten days, these employees must be compensated at 2/3 of their regular rate, with payment not to exceed $200 per day and $10,000 in the aggregate. Part-time employees are entitled to be paid based on the average number of hours they worked before taking Emergency FMLA. For employees who have worked less than six months before taking leave, their hours should be calculated based on the average number of hours they would typically be scheduled to work. Some types of employees, such as health care providers and emergency responders, may be exempt as well as small businesses with fewer than 50 employees.   

What are an employer’s obligations when the employee wants to return to work?

Employers with 25 or more employees will have the same obligations as under traditional FMLA to return any employee to the same or equivalent position upon the employee’s return to work. However, employers with fewer than 25 employees are generally excluded from this requirement if the employee’s position no longer exists due to an economic downturn or other circumstances caused by a public health emergency during the period of Emergency FMLA. This exclusion is subject to the employer making reasonable attempts to return the employee to an equivalent position for up to a year following the employee’s leave.

What actions should employers avoid taking at this time?

Employers can be penalized at this time for changing their paid leave policies, attempting to require an employee to use other paid leave before emergency paid sick time under the Act, or retaliating against their employees for seeking leave under the Act.

(2) The Emergency Paid Sick Leave Act 

Who does this impact?

Private-sector employers with fewer than 500 employees and government employers will be required to provide two-weeks of paid sick leave, regardless of the duration of employment, if an employee is unable to work because they (1) are subject to a government quarantine or isolation order related to COVID-19; (2) have been advised by a healthcare provider to self-quarantine due to COVID-19; (3) are experiencing symptoms of COVID-19 and are seeking medical diagnosis; (4) are caring for an individual subject to quarantine order or self-quarantine; (5) are caring for children if schools are closed or childcare is unavailable because of a public health emergency; or (6) are experiencing substantially similar conditions as specified by the Secretary of Health and Human Services.

Some categories of employees are exempt, including healthcare workers and emergency responders, meaning the employer can elect to exclude them from the paid sick leave. Additionally, small businesses with fewer than 50 employees may be exempt from the requirement to offer leave to care for a child when school or daycare is closed in certain circumstances.

How is pay calculated?

Two-weeks of sick leave means 80 hours for full-time employees and typical hours over a two-week period for part-time employees. Generally, employees must be paid at their regular rate but not exceeding $511 per day and $5,110 in the aggregate. However, if the employee is absent to care for a sick family member or a child unable to attend school or daycare, they can be compensated at 2/3 of the rate they would otherwise receive but not to exceed $200 per day and $2,000 in the aggregate. For employees who work a part-time or irregular schedule, pay should be based on the average number of hours they worked before taking paid sick leave.

(3) Expansion of the Unemployment Compensation Program 

The federal government will be providing $1 billion to the states to help fund changes to their unemployment insurance programs. Some of these changes include removing the one-week waiting period before an individual can apply for unemployment and authorizing states to provide benefits beyond the usual 26-week cutoff.

Employers must give notice to employees.

Employers are required to notify their employees of these new requirements by posting a notice in conspicuous places where notices to employees are customarily posted. The Secretary of Labor is expected to release a sample notice that will detail what exact points the notification must include by March 25, 2020.

Who is going to pay for this?

The Act provides for the use of quarterly refundable tax credits for employers who are required to provide additional leave under these new provisions. The tax credits will be applied against the employer portion of their Social Security taxes. If the employer’s costs exceed the taxes they would owe, they will be reimbursed. These tax credits are intended to equal 100% of the qualified sick leave wages paid by employers. 

Many businesses are justifiably concerned about the time period between paying out the additional paid sick leave and paid FMLA, and the time it takes for the federal government to reimburse them. We will provide more guidance on how the Federal Government plans to address this concern as it becomes available. Possible solutions include waiving penalties for businesses not submitting their payroll taxes if they do so in anticipation of a refund under this bill or exempting companies with fewer than 50 employees if it would jeopardize the business. Some businesses may elect to furlough employees, which would allow the employees to utilize the expanded access to unemployment compensation. 

ALERT AUTHORED BY Meghan Capps and Morgan Villers

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