As we face a national climate of economic uncertainty, many employers are finding themselves questioning best practices to preserve the viability of their businesses. Some employers must consider the unfortunate option of downsizing their workforce in order to preserve their businesses. Further, under the newly passed Families First Coronavirus Response Act (“FFCRA”), some employers are faced with two new relevant regulations, with which they might have to comply: 1) the requirement to pay certain eligible employees under the Emergency Paid Sick Leave portion of the FFCRA (“Paid Sick Leave Act”); and 2) the requirement to pay certain eligible employees under the Emergency Family and Medical Leave Expansion portion of the FFCRA (“FMLA Expansion Act”). Some employers are concerned that their businesses cannot withstand the economic hit that might follow when required to comply with the mandates of paid sick leave or extended FMLA coverage for their employees.

If you are an employer, and you are considering downsizing your workforce (whether by implementing layoffs, furloughs, pay reductions, and/or hour reductions), it is important to note that there are caps to the monetary amount of paid leave an employer is required to pay under both the Paid Sick Leave Act and the FMLA Expansion Act. These monetary caps differ between the Paid Sick Leave Act and FMLA Expansion Act. The monetary caps also differ depending upon what kind of eligibility qualifications your employee falls under.

MONETARY CAPS UNDER THE PAID SICK LEAVE ACT

Under the Paid Sick Leave Act, there are six different eligibility qualifications that would make your employee eligible for benefits under the Paid Sick Leave Act.  An employer must provide to each employee paid sick time to the extent that the employee is unable to work (or telework) due to a need for leave because:

1. 1. The employee is subject to a federal, state, or local quarantine or isolation order related to COVID-19.
   2. The employee has been advised by a healthcare provider to self-quarantine due to concerns related to COVID-19.
   3. The employee is experiencing symptoms of COVID-19 and seeking a medical diagnosis.
   4. The employee is caring for an individual who is subject to an order as described in subparagraph (1) or has been advised as described in paragraph (2).
   5. The employee is caring for their son or daughter if the school or place of care of the son or daughter has been closed, or the childcare provider of the son or daughter is unavailable, due to COVID-19 precautions.
   6. The employee is experiencing any other substantially similar condition specified by the Secretary of Health and Human Services, in consultation with the Secretary of the Treasury and the Secretary of Labor.

Under the Paid Sick Leave Act, for qualification numbers (1), (2), and (3), the monetary amount of paid sick leave an employer must pay his or her employee is capped at $511 per day or $5,110 in the aggregate. The rate the employer must pay is equal to the employee’s regular rate of pay.

Under the Paid Sick Leave Act, for qualification numbers four (4), (5), and (6), the monetary amount of paid sick leave an employer must pay his or her employee is capped at $200 per day or $2,000 in the aggregate. The rate the employer must pay is equal to 2/3 the employee’s regular rate of pay.

MONETARY CAPS UNDER THE FMLA EXPANSION ACT

Under the FMLA Expansion Act, there is only one eligibility qualification that would make your employee eligible for benefits under the FMLA Expansion Act.

1. 1. An employee who has been employed for at least thirty (30) calendar days who is unable to work (or telework) due to a need for leave to care for the son or daughter under 18 years of age of such employee if the school or place of care has been closed, or the child care provider of such son or daughter is unavailable, due to a public health emergency.

Under the FMLA Expansion Act, the monetary amount of paid sick leave an employer must pay to his or her employee is capped at $200 per day and $10,000 in the aggregate. The rate the employer must pay is not less than 2/3 the employee’s regular rate of pay.

WHAT DO THESE CAPS MEAN FOR THE EMPLOYER?

Employers should calculate the maximum amount they would be required to pay under both the Paid Sick Leave Act and the FMLA Expansion Act. This could guide the employer to determine what his or her “worst case scenario” might be. For example, under the Paid Sick Leave Act, an employer is required to pay a maximum of $5,110 over the span of two weeks. This breaks down to $2,555 per week. Further, under the FMLA Expansion Act, an employer is required to pay a maximum of $10,000 over the span of ten weeks[1]. This breaks down to $1,000 per week. If you are an employer, knowing these calculations and multiplying them with the number of your potentially eligible employees could help you make a decision regarding whether downsizing is right for you and your business. Keep in mind that essentially any of your employees might eventually be eligible for benefits under the Paid Sick Leave Act; however, only your employees with children might eventually be eligible for benefits under the FMLA Expansion Act.

DISCLAIMER: Please take note that the FFCRA has very recently been enacted (March 18, 2020) and there are still many questions remaining related to interpretation of its provisions. This article reflects our best effort to highlight frequently asked questions from our clients and an offering of our assessment thereof. We will update this article as interpretation and practical use of the FFRCA unfolds. As this article is meant to act only as a guide, you must still consult with your attorney prior to making any final decisions.

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[1] Note that the FMLA Expansion Act provides a total of 12 weeks of protected employment for employees. However, the first ten days (i.e. two work weeks) of FMLA Expansion Act coverage may consist of unpaid leave. Notably, during these ten days, the employee can elect whether to use any accrued sick days or PTO. After those ten initial days, the employer must begin paying the employee at 2/3 his or her regular rate of pay. Thus, the employer is on the hook for ten weeks of paid leave. The language of the FMLA Expansion Act provides “In no event shall such paid leave exceed $200 per day and $10,000 in the aggregate.” Therefore, we are interpreting this language to require an employer to pay a maximum of $10,000 within the ten-week paid timeframe. Thus, employers should take heed that if the employer elects to pay the employee in the initial 10-day window OR an employee elects to receive payment for any accrued PTO, the employer might be responsible for payment to the employee outside the scope of the $10,000 within the full 12-week FMLA Expansion Act covered time. Notably, this legislation was very recently enacted and there are still questions related to the interpretation of its provisions. We will update this article as information unfolds.

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This Blog was written by Hunter Business Law Attorney Stephanie Boussias.

DISCLAIMER: This blog is for educational purposes only and does not offer nor substitute legal advice. Additionally, this blog does not establish an attorney-client relationship and is not for advertising or solicitation purposes. Any of the content contained herein shall not be used to make any decision without first consulting an attorney. The hiring of an attorney is an important decision not to be based on advertisements or blogs. Hunter Business Law expressly disclaims any and all liability in regard to any actions, or lack thereof, based on any contents of this blog.