This news update is brought to you from our national affiliate, National Financial Partners.
On Saturday, March 14, 2020, the House passed HR 6201, the Families First Coronavirus Response Act (the FFCRA), which contains several different provisions (also called Acts). The Senate is considering the FFCRA. This means the FFCRA is NOT yet law and could change significantly before it becomes law. This summary meant to help employers understand potential changes under this proposed legislation.
In short, the FFCRA:
- Provides a new paid sick leave entitlement for work absences related to the coronavirus (COVID-19)
- Extends and expands FMLA protections for similar absences
- Provides tax credits for employers to help address related employer costs of these benefits
- Requires group health plans to cover COVID-19 related tests, services, and other items without employee cost-sharing. Generally, the first three provisions apply to employers with fewer than 500 employees and would be in effect through 2020 (the fourth would apply to any group health plan and would not have an expiration date). All four provisions would take effect 15 days after enactment (signature by the president). Below is a description of these FFCRA provisions, as passed by the House.
Emergency Paid Sick Leave Act
This provision, which applies to every private sector employer with fewer than 500 employees, requires employers to provide paid sick time for individuals who are:
- Diagnosed with COVID-19, to self-isolate (or to obtain a diagnosis or care for symptoms of COVID-19)
- Under quarantine to comply with an official order or recommendation because of COVID-19 exposure or symptoms
- Providing care to a COVID-19-diagnosed individual or an individual seeking a diagnosis or care for symptoms of COVID-19
- Caring for an individual affected by a school or other care facility closing
Unlike the FMLA expansion (described below), this would apply to an employer with fewer than 25 employees and to employees who have been employed for only a few days. Full-time employees could use up to 80 hours of sick time, while part-time employees could use proportionally less time, based on the average number of hours the employee works over a two-week period. An employee could not carry sick time over into the next year, nor would an employee be entitled to payment of unused sick time upon separation from employment.
During sick leave taken for an employee’s own condition, employers would be obligated to pay employees their regular rate of pay or the applicable minimum wage, whichever is higher. However, if the sick leave is taken to care for a family member, the rate of pay would be reduced to two-thirds of the employee’s regular rate of pay. This would be in addition to an employer’s existing sick leave policies and employers cannot scale back their existing leave policies.
As written, employers would need to post a notice regarding the requirements of the Emergency Paid Sick Leave Act (the Department of Labor will publish a model notice within 7 days of enactment) in their workplaces.
To help employers shoulder the financial burden of paying for these additional benefits, employers would have the ability to claim a tax credit equal to 100% of qualified sick leave wages paid to employees. These credits, however, would be limited to $200 to $511 per day, depending on the qualifying leave event. The credits would be fully available for employees earning up to $132,860 in income (and partially available for higher earners).
The Emergency Family and Medical Leave Expansion Act
This provision would modify the Family and Medical Leave Act (FMLA) by expanding the circumstances under which an employee is entitled to take leave. Individuals would be able to use unpaid leave if they are diagnosed with COVID-19, caring for a family member, or caring for a child whose day care has closed because of a public health emergency. The first 14 days of COVID-19-related FMLA leave is unpaid, but employers would be obligated to pay employees at the rate of two-thirds of the employee’s regular pay rate for each day of FMLA leave taken thereafter.
Importantly, all employers with fewer than 500 employees would have to offer COVID-19-related FMLA leave to their workforce (a change to the 50-employee threshold that currently applies under FMLA). Additionally, any employee who has been employed for at least 30 calendar days would be eligible for this new type of FMLA leave. Finally, the job protection requirements of the FMLA would also apply to COVID-19-related leaves, but only for employers with 25 to 499 employees (if certain conditions are met).
On tax credits relating to these changes to FMLA, employers with fewer than 500 employees would be able to claim a tax credit of 100% of qualified FMLA wages paid to employees, capped at $200 per day and $10,000 per quarter per employee. The FMLA tax credit is designed to help employers recover up to $30,000 or $40,000 in wages (depending on the enactment date) for employees earning up to $52,000 per year (and a portion of wages for those earning more).
Relevant Provisions for Employer-Sponsored Group Health Plans
Group health plans (insured and self-insured) and health insurers in the group and individual market would be required to cover COVID-19 tests and related services without cost sharing or prior authorization requirements. This provision would apply to grandfathered coverage as well as non-grandfathered coverage but would not apply to excepted benefit group health plans. Based on the language of the bill, it appears that even the smallest group health plan must comply. (Separately, most states have published guidance that requires COVID-19 coverage without cost sharing as well, which would apply to fully insured plans in each state.) Employers should work with their carriers and plan administrators to ensure COVID-19 coverage is provided.
The tests and services include in vitro diagnostic tests (cleared by the FDA) and items and services furnished during an in-office visit, urgent care visit or emergency room visit that result in an order for an in vitro diagnostic test. Thus, an individual visiting an ER who is given several lab tests, an MRI, and chest x-ray may be swept into this “no cost” requirement as there is no qualifier that the other items and services relate to the relevant evaluation.
Our Compliance team will continue to monitor developments on this new legislation, including changes to the legislation made by the Senate. The timing on these changes and enactment of the final legislation is up in the air. In the meantime, please reach out to your advisor with any questions.