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Small businesses are included in the new coronavirus paid leave law. Here’s how to comply.

By: Eric N. Allen and Chandler Clark

The Families First Coronavirus Response Act (“Response Act”) imposed sweeping obligations on employers whose employees are affected by COVID-19. The new legislation even expands existing requirements under the Family Medical Leave Act (“FMLA”) in significant ways. Unlike the FMLA, the new Response Act applies to businesses with fewer than 50 employees. So, small businesses should be aware of their obligations under the Response Act as certain violations could result in legal consequences.

This article seeks to educate small businesses on compliance with the Response Act. It begins by discussing when paid leave is required. This tees up the following section as to how paid leave is calculated. Last, the article examines when small businesses are exempt from mandatory paid leave.

  1. When is paid leave required for my employees?

Paid leave is required if your employee faces one of the following circumstances:

  1. The employee is unable to work (or telework) because their minor child’s school, place of care, or childcare provider is closed or unavailable due to COVID-19;
  2. The employee is subject to a government isolation order issued because of COVID-19;
  3. The employee’s healthcare provider has advised they self-quarantine due to COVID-19 related concerns;
  4. The employee is experiencing COVID-19 symptoms and seeking a medical diagnosis;
  5. The employee is caring for an individual to whom (b) and (c) apply;
  6. The employee is experiencing substantially similar conditions specified by the Secretary of Health and Human Services.

The next section will discuss the required amount of paid leave. This discussion also describes how certain pay caps and employee limitations protect small businesses.

  1. What amount of paid leave is required?

All employees are entitled to an immediate two weeks of paid leave for any reason described above. Both full time and part time employees must receive the amount they would ordinarily earn during this two week period. For part time employees whose weekly hours vary, simply multiply their pay rate by the average number of hours the employee works over two weeks.

Some employees are entitled to paid leave for an additional ten weeks beyond the initial two week period (total of twelve weeks paid leave). To qualify, these employees must (1) have worked for the employer for 30 calendar days, and (2) request leave to care for a minor child whose place of care is closed due to the pandemic (subsection (a)). But qualifying employees are entitled to only two-thirds their ordinary pay rate during this ten week period.

The required amounts of paid leave are subject to various caps and limitations. First, the pay must equal at least what a minimum wage earner would make working the same number of hours during the same time period. Second, if leave is requested because the employee is under quarantine or experiencing COVID-19 symptoms (section 1 subsections (b) through (d)), the amount must not exceed $511 per day and $5,110 total during the initial two week period. The initial two week cap is even lower for employees who request leave for any other permitted reason (subsections (a), (e) and (f)): $200 per day and $2,000. Last, paid leave during the additional ten week period is capped at $200 per day and $10,000 total.

  1. Can my small business apply for an exemption?

Limited exemptions apply to businesses with fewer than 50 employees. These employers are not required to pay employees due to childcare closures (subsection (a)) if compliance would jeopardize the business’s viability as a going concern. This means an officer of the business determines that (1) compliance would cause expenses to exceed income and prevent operations at a minimal capacity; (2) the employee’s absence would cause substantial financial or operational risks because of the employee’s skills, knowledge, or responsibilities; or (3) replacement employees are unable, unqualified, or unavailable to replace the employee seeking leave, and these services are necessary to maintain minimal operations.

If you qualify for the exemption, simply document why your situation fits the qualifying criteria. You are not required to send documents to the Department of Labor. But this system is temporary. Later this month, the Department will pass regulations thoroughly addressing compliance with the available exemption.

In summary, the Families First Coronavirus Response Act applies to small businesses. Some small businesses might qualify for the limited exemption. Either way, it is important that your employees are aware of their rights under this law. To that end, employers are required to post notice (available here) in a conspicuous location. The Department is currently drafting regulations to enforce compliance with this law. For that reason, more important changes are expected.  The attorneys at | Allen Wellman Harvey Keyes Cooley, LLP are committed to educating small businesses and will continue to post important updates.