Navigating the New Federal Emergency Paid

FMLA and Sick Leave Mandates, CARES Act

& More

April 2, 2020

Presented by

Ashlie B. Johnson, PHR

Owner

Brooke Human Resource Solutions

ajohnson@brookehrs.com(608) 490-2200

Agenda

• Outline and Analysis of Key Provisions ofFFCRA, the EPSL and FMLA+

• Common Practical Questions and Issues Associated with Each Type ofLeave

• FFCRA Tax Credits Overview

• Unemployment

• CARES Act

Agenda

The Families First Coronavirus Response Act (FFCRA)—H.R. 6201

• Enacted March 18, 2020—takes effect April 1, 2020

• Divisions of the Final LawA. Appropriations

B. Nutrition Waivers

C. Emergency Family and Medical Leave Expansion Act (“FMLA+”)

D. Emergency Unemployment Insurance Stabilization and Access Act of 2020

E. Emergency Paid Sick Leave Act (“EPSL”)

F. Health Provisions

G. Tax Credits for Paid Sick and Paid Family and Medical Leave

H. Budgetary Effects

• DOL has published a notice that all covered employers must post. If employees are working from home, email or mail this notice to your employees.

Where Things Stand Right Now

• Was enacted quickly (first draft out of House, to enacted, in fourdays)

• DOL has launched two informational pages as well as additional Q&As:

– Families First Coronavirus Response Act: Employee Paid Leave Rights: https://www.dol.gov/agencies/whd/pandemic/ffcra-employee-paid-leave

– Families First Coronavirus Response Act: Employer Paid Leave Requirements: https://www.dol.gov/agencies/whd/pandemic/ffcra-employer-paid-leave

– Families First Coronavirus Response Act: Questions and Answers https://www.dol.gov/agencies/whd/pandemic/ffcra-questions

DOL’s “No-Enforcement” Announcement*

The Department will observe a temporary period of non- enforcement for the first 30 days after the Act isenacted, so long as the employer has acted reasonably and in good faith to comply with the Act.For purposes of this non-enforcement position, “good faith” exists when violations are remedied and the employee is made whole as soon as practicable by the employer, the violations were not willful, and the Department receives a written commitment from the employer to comply with the Act in the future.

*This has no impact on private litigation for alleged violations of the Act

FFCRA

Emergency Paid Sick Leave

- Up to 80 hours (~first 10 days)

- 6 different reasons

- Full pay or 2/3 pay (depending on reason) subject to caps

Emergency Paid FMLA

- Up to 12 weeks (~Days 11 – 60)

- 1 reason only

- Weeks 1-2: unpaid

- Weeks 3-12: 2/3 pay subject to caps

Overview of Paid Leave Provisions

Employer Coverage for Both EPSL and FMLA+

• Which Employers are Covered?

– A private employer with fewer than 500 employees, includes non-profits

– A public agency (federal/state governments, political subdivisions, schools)

The Question of the Hour for Employers—How Do We Count “500” Under this Law?

• Why not larger (500+) companies (benefits available & Tax implications)

• Counting the 500

• Relying on language in the statute and its incorporation of FMLA and FLSA principles:

– When do we count? DOL struck “50 employees for 20 or more calendar weeks” and now it’s

just “fewer than 500.”

– Which employees do we count—anyone on the payroll as of 4/1/2020

– Likely means counting employees in the U.S. only

– Part-time/full-time employees, as well as temporary or seasonal hires

Emergency Paid Sick leave (EPSL)Paid Time Off for the First 80 Hours

Who is Eligible to Take EPSL?

• Who is an Eligible Employee?

– Eligible on DAY ONE of employment

• How about:– Part-time/full-time employees -Yes

– Temporary or seasonal employees - Yes

For What Reasons May an Employee take EPSL

Employee is unable to work or telework because:

1.Employee subject to a quarantine or isolation order related to COVID-19

2. Employee advised by a health care provider to self-quarantine because of COVID-19

3. Employee experiencing symptoms of COVID-19 and is seeking a medical diagnosis

4. The employee is caring for an individual subject or advised to quarantine or isolation

5. The employee is caring for a son or daughter whose school or place of care is closed, or child careprovider is unavailable, due to COVID-19 precaution (like FMLA+)

6. The employee is experiencing substantially similar conditions as specified by the Secretary of Healthand Human Services, in consultation with the Secretaries of Labor and Treasury.

What Do The Reasons Mean?

• As to all six—the employee is unable to work OR TELEWORK• The DOL explains that being “unable” to work or telework means that an employer has work

available, but one of the specified paid reasons for leave under the FFCRA prevents the employee from being able to do so. If an employer offers the ability to work the same number of hours per day but different hours, the employee is able to work and leave is unnecessary unless: 1) the reason for leave prevents the employee from working that schedule; 2) the employee has a qualifying paid sick leave absence; or 3) the employee cannot telework due to the need to care for a child.

Note, however, that if an employee can telework while caring for the child, leave is unavailable.

• Reason 1: Employee subject to a quarantine or isolation order related to COVID-19• Per the DOL, if the worksite closes, employees do not receive, or continue to receive, FFCRA leave. It

does not matter whether: 1) the closure occurs before or after the law takes effect; 2) an employee is on leave when closure occurs; 3) an employer furloughs an employee; 4) the worksite temporarily closes, and the employer says it will reopen in the future. This is true whether the worksite closes for lack of business or per a federal, state, or local directive. If this occurs, an employee's only recourse is to seek unemployment benefits.

What Do The Reasons Mean?

• Reason 2: Employee advised by a health care provider to self-quarantine because of COVID-19• Don’t forget potential for “regular” FMLA due to a chronic condition

• Reason 3: Employee experiencing symptoms of COVID-19 and seeking a medical diagnosis

What Do the Reasons Mean, cont’d

• Reason 4: The employee is caring for an individual subject or advised to

quarantine or isolation• Note the statutory change from “family member” to “individual”

• Reason 5: The employee is caring for a son or daughter whose school or place of

care is closed, or childcare provider is unavailable, due to COVID-19 precaution• This is the only reason that can be both EPSL and FMLA+ and extend a full 12 weeks with

some level of pay

• Reason 6: The employee is experiencing substantially similar conditions as

specified by the Secretary of Health and Human Services, in consultation with

the Secretaries of Labor and Treasury

Amount of EPSL and Caps on Amounts Paid

• Amount of EPSL:

• Up to 80 hours for full-time employees.

• For part-time employees, average number of hours employee works during 2-

week period. This is determined based on number of hours employee was

scheduled to work per day over the prior 6-month period.

• Caps on Amount of Leave Paid

• If the employee chooses to, they may use earned PTO benefits to “top up” and make themselves

whole during this time.

Sick Leave taken for the purposes listed in 1-3 is paid at 100% and capped at $511 per day/$5,110 aggregate.

Sick Leave taken for the purposes listed in 4-6 is paid at 2/3 and capped at $200 per day/$2,000 aggregate.

Sequencing Leave – Paid Sick Leave, Then Employer Policy

• Employer must allow the employee to first use EPSL provided for under this new leave law

• The employer cannot require the employee to use accrued leave under an employer policy first

• What you have provided prior to 4/1/2020 doesn’t count against new law’s requirement—no matter how generous

• More generous options: no tax credit

How in the World is this Documented?

• The DOL explains that employees must support leave requests with appropriate information, including the employee’s name, qualifying reason for leave, a statement that the employee is unable to work or telework for that reason, and leave date(s).

• Employees must provide documentation supporting the absence, e.g., a copy of the quarantine or isolation order, or written documentation from a health care provider advising self-quarantine. For employees using leave to care for a child, examples of supporting documentation include a notice posted on a government, school, or day care website, or published in a newspaper, or an email from an employee or official of the school, place of care, or child care provider.

How in the World is this Documented, cont’d

• The DOL recommends that employers keep this documentation if they will seek tax credits for providing paid leave. The DOL points employers to consult Internal Revenue Service (IRS) applicable forms, instructions, and information for the process they will need to follow to claim this tax credit, including any necessary supporting documentation.

Emergency Family and MedicalLeave Act (FMLA+)Could Be Weeks 1-12,

But Only Pays for Weeks 3-12

Key Principle of FMLA+ to Remember

If H.R. 6201 does not expressly change a provision of the FMLA, it does not

change the FMLA (for FMLA+)

(i.e., FMLA classic rules apply, unless H.R. 6201 or DOL tells us otherwise)

Employer Coverage/Employee Eligibility FMLA+

• Which Employers are Covered?– A private employer with fewer than 500 employees; and

– A public agency (federal/state governments, political subdivisions,schools)

• Which Employees are Eligible?

– Any full-time or part-time employee that has been on the employer’s payroll for 30 calendar days

– That’s it. Period. This change disposes of the year of service, 1,250 hours in the last 12 months, and the 50-in-a-75-mile radius requirements

FMLA+: One Reason, Up to 12 Weeks

• The original version was all six reasons like EPSL—now there is just ONE reason

• An employee can take leave for “a qualifying need related to a public health emergency”—but there is only one qualifying need: when an employee is unable to work (or telework) to care for a minor child if the child’s school or place of child care has been closed or is unavailable due to a public health emergency

– Up to 12 weeks of FMLA leave

– This still means 12 weeks combined for all FMLA reasons in the employer’s 12-month period

– What is your 12-month period?

How Do the 12 Weeks Work?

• The first 80 hours (two weeks) are unpaid FMLA+, but an employee is eligible for EPSL #5 for 2/3 wages during that time (both runconcurrently)

• The remaining 10 weeks:

– Paid at 2/3 of the employee’s regular rate, for the number of hours the employee would otherwise be scheduled to work

– Maximum payment of $200 per day and$10,000 total

Job Protection and Restoration Under FMLA+

• FMLA+ is job-protected like FMLA classic

– Employer must restore employees to the same or equivalent position upon their return to work

– Exception for employers with fewer than 25 employees:

– If employee’s position no longer exists following leave due to operational changes caused by public health emergency

– Employer must make reasonable efforts to contact a displaced employee for up to one year after he/she is displaced if an equivalent position becomesavailable

What About Layoffs/Terminations?

What about terminations, layoffs, RIFs, etc. prior to and after April 1—do those employees still have paid leave rights under EPSL orFMLA+?

NoAccording to the DOL’s FAQ page “If, prior to the FFCRA’s effective date, your employer sent you home and stops paying you because it does not have work for you to do, you will not get paid sick leave or expanded family and medical leave but you may be eligible for unemployment insurance benefits. This is true whether your employer closes your worksite for lack of business or because it is required to close pursuant to a Federal, State, or local directive.”

FFCRA Potential Relief for Employers Under 50

• The DOL stated that employers that elect the exemption “should document why [their] business with fewer than 50 employees meets the criteria set forth by the Department, which will be addressed in more detail in forthcoming regulations.” The DOL also stated that employers should not send in any materials to them “when seeking a small business exemption for paid sick leave and expanded family and medical leave.”

FFCRA Tax Credits

High Level Overview:

Summary of FFCRA Tax Credit Information

• The IRS has established a special section focused on steps to help taxpayers, businesses and others affected by the coronavirus. (https://www.coronavirus.gov)

• The Department of Treasury also has information available at Coronavirus: Resources, Updates, and What You Should Know.• Dollar-for-dollar credit: Employers are provided a “dollar-for-dollar” tax

credit for wages paid as either paid sick leave or paid FMLA leave, up to the maximum caps for each type of leave.

• FICA Payroll Tax: The amounts are credited against the employer’s FICA payroll tax payments on wages due to all employees (even those who did not take either type of leave).

• Refunds to employer: If the credits exceed the amount due, the excess is refunded to the employer and must be included in the employer’s gross income.

• Work with your payroll provider to understand how these credits can be documented and accounted for.

A Brief Note About Unemployment

Expansion of Unemployment Benefits

Compensation of $600/week for any Worker Eligible for State or Federal Unemployment Compensation (UC) Benefits• Through July 31, 2020, the federal government would provide a temporary Federal Pandemic

Unemployment Compensation (FPUC) of $600 a week for any worker eligible for state or federal unemployment compensation (UC) benefits.

• The federal supplement would not affect eligibility for Medicaid or the Children’s Health Insurance Program. State UC programs would be fully reimbursed for the cost of administering the supplement and for the cost of the supplement itself.

• States would be permitted to expand eligibility to provide unemployment compensation to workers who are not normally eligible for benefits, so long as their unemployment was connected to the COVD-19 pandemic, as determined by the state and the Department of Labor.

• Reimbursable employers would not have charges against their accounts for these benefits.

13 Weeks of Emergency UI Available in All States for Workers who Exhaust Regular Benefits• All states would be eligible to provide an additional 13 weeks of unemployment benefits to

workers who need beyond what is provided for in state and federal law.

The Coronavirus Aid, Relief, and Economic Security (CARES) Act

Bill Highlights

President Trump signed the “Coronavirus Aid, Relief, and Economic Security Act” or the “CARES Act”. These measures are largely aimed at stimulating the economy and focus on assistance for small businesses (500 or fewer employees), industries that have suffered a more severe impact, and individual taxpayers.

• Delay of Payment of Employment Taxes• Employee Retention Credit• Paycheck Protection Program• Suspension on wage garnishments for student loans through Sept 30, 2020• Individual Recovery Payments• Delayed Payment of Unemployment Taxes • Employee Retention Credit

Deciphering the CARES Act

Deciphering the CARES Act

Who is Eligible? What Does This Do? What Else Should You Know?

Employers that are not participating in the

Paycheck Protection Program (PPP).

Employers can defer 100% of employer Social Security tax

for amounts due 3/27/2020 through

12/31/2020.

50% of deferred amount is due

December 31, 2021.The other 50% of

deferred amount is due December 31,

2022.

FICA Deferral

Deciphering the CARES Act

Deciphering the CARES Act

Who is Eligible? What Does This Do? What Else Should You Know?

Employers that are not participating in the

Paycheck Protection Program (PPP)

- and -Have 100 employees or

fewer- or -

Have 100 employees or more and have

furloughed employees whose wages are

continued for business closure due to COVID-

19*.

All employers are eligible for a credit up

to $5,000 representing 50% of the first $10,000 of

wages paid this yearEmployers may take

this credit against their current

employment tax liability.

Credits limited to the total employer social

security liability for the quarter, but reduced by the FFCRA credits taken against those

same taxesLimits also apply to

Qualified R&D credits and WOTC credit for

employment of qualified veterans.

Employee Retention Credit

Deciphering the CARES Act

Deciphering the CARES Act

Who is Eligible? What Does This Do? What Else Should You Know?

Employers that have 500 or fewer employees (full and part-

time)- includes -

For-profit of non-profitSole proprietorships

Independent contractors, self-employed/gig workers

-required -Businesses must keep their employees and pay them at least 75% of their prior-year

compensation.

PPP loans can be as large as 250% of a business's average monthly payroll

costs over the last 12 months, not to exceed $10

million. Salaries over $100,000 are not counted

as payroll costs.

Principal amounts for the first 8-week period from when the

loan is made, may be forgiven.

Loan amounts that may be forgiven cannot exceed the

principal amount of the loan.For principal amounts that

exist after any loan forgiveness under the PPP,

may defer payment of remaining principal, interest, and fee balances for at least 6 months and not more than a year, essentially allowing a

substantial portion of the loan to be forgiven with remaining balances deferred for up to 6

months.

Paycheck Protection

Program (PPP)Loans

Additional Relief for Larger Nonprofits (500-10,000 employees)

The “Economic Stabilization Fund,” also referred to as the “Treasury Industry Stabilization Loan Program,” provides for $500 billion in financial assistance to a range of businesses, $454 billion of which would be for “eligible businesses including, to the extent practicable, nonprofit organizations” with between 500 and 10,000 employees.• It is uncertain whether, or how much, nonprofits will be able to benefit from this program

due to the bill’s “to the extent practicable” language.• This fund would provide direct financing at interest rates not to exceed 2%. Principal and

interest payments may be deferred for six months.• An employer would be required to certify that:

• It will use the loaned funds to retain at least 90% of its workforce, at full compensation and benefits, through September 30, 2020.

• It intends to restore at least 90% of its workforce existing as of February 1, 2021, and restore all compensation and benefits to its workers no later than four months after the end of the COVID-19 public health emergency.

Additional Resources/ Open Floor & Questions

Following this presentation BrookeHR will provide an informational document that covers the items in this presentation as well as other topics such as:• Layoff vs. Furlough,• WI Dept of Health Services Guidance on preparing for

COVID-19 impacts to the workplace,• Tax preparation information and notices• Maintaining Healthy Business Operations• Additional non-profit guidance; and • A wealth of resource links and additional information.

For personalized solutions and advice, feel free to contact Ashlie directly at ajohnson@brookehrs.com or (608) 490-2200