New Paid Leave Law Means More Uncertainty for Employers

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By Tyler Mayfield

The coronavirus outbreak is a health and financial crisis of unprecedented proportions.

Small businesses are scrambling to mitigate declining revenue and ensuing profitability losses. Business owners and executives must forecast operational requirements with little to no visibility on what the immediate future holds. They face difficult decisions about employees and need to balance team continuity with their company’s ability to survive.

Before the coronavirus pandemic, many companies were navigating the implications of new local family and sick leave requirements. What’s more, employers with footprints in multiple states had to sort out how rules specific to states or cities integrated with federal statutes such as the Family and Medical Leave Act (FMLA).

Unfortunately, the FMLA remains opaque at best, leaving executives and HR professionals alike to decipher the law’s impact on their operations.

Starting today, April 1, companies will contend with an additional layer of complexity: the Families First Coronavirus Response Act (FFCRA). The law’s intent is similar to that of the FMLA, but with a much broader scope. More businesses are required to comply, more employees are eligible for coverage, and more circumstances are addressed.

Coronavirus Paid Leave

The new law includes the following coverage:

  • All companies with fewer than 500 employees (the FMLA applies to companies of 50 or more employees)
  • All employees with at least 30 days of service (the FMLA covers all employees with a year of service)
  • Any employee is eligible if they are unable to work because they:
    • are subject to a federal, state, or local quarantine or isolation order related to the coronavirus outbreak;
    • have been advised by a health care provider to self-quarantine due to concerns related to coronavirus;
    • are experiencing symptoms of coronavirus and seeking a medical diagnosis;
    • are caring for a quarantined individual or experiencing symptoms of coronavirus; or
    • are caring for a child because the school or place of care has closed.

Businesses with fewer than 50 employees may qualify for exemption from the requirement to provide coronavirus paid leave if the rules would jeopardize the viability of the business.

Employee Compensation

If an employee uses the emergency paid sick leave to care for themselves, the company must pay the employee their regular compensation up to a maximum of $511 per day or $5,110 in the aggregate.

If an employee is out to care for a family member, employers must pay the greater of two-thirds of the regular compensation or the minimum wage up to a maximum of $200 per day or $2,000 in the aggregate.

Under the FFCRA, employers will receive quarterly tax credits for paid leave, allowing credits against the employers’ portion of Social Security taxes. Employers can credit up to $200 per day for each individual and $10,000 total for all calendar quarters.

Uncertainty Is Here to Stay

Business owners already facing market unrest, a drop in customers, and a torrent of government actions now confront workforce uncertainty.

The FFCRA will impact almost all businesses and create some degree of work schedule shortages, additional labor expenses, strain on existing HR policies, and increased legal liability due to the newly created protected status of the workforce.

Furthermore, companies will need to navigate the labyrinth of overlapping state and federal policies and will shoulder the responsibility to educate employees.

Understanding the law and clearly communicating the benefits with employees will help businesses better plan for the trying times ahead.

Tyler Mayfield serves as a managing director and chief compliance officer at Brighton Jones.

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