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March 25, 2020

FAQ - Coronavirus: Impact on Benefits and Employment

 

Frequently Asked Questions

 

The Families First Coronavirus Response Act (H.R. 6201) enacted on March 18, 2020 addresses many issues.  Specific to employee benefits, it provides for mandated health coverage for coronavirus testing and related services, emergency paid sick leave, and emergency family and medical leave.  The law also provides for a dollar for dollar tax credit for providing emergency leave, as well as tax credit for providing certain health coverage continuation for employers impacted by the coronavirus.  Following are some FAQs relating to this law.  Please refer to the CBIZ Benefits & Insurance Services’ At Issue for additional information.

 

Topics

 Emergency Paid Sick Leave

Emergency Family and Medical (FMLA) Leave

Coordinating Emergency PSL and FMLA Leave Provisions

 Health Plan Considerations

Layoffs, Furloughs and Effects on Benefits  

Notice Obligations: Emergency paid sick leave and Emergency FMLA Leave

 

Q. 1    Which employers are subject to the emergency paid sick leave law?

For-profit and not-for-profit private sector employers who employ between 1 and 499 employees, and most public sector employers including state and local governments of any size are subject to the emergency paid sick leave law.  A private sector employers determines employer size in the same manner as the federal Family and Medical Leave (FMLA) law.  The employer counts all full-time and part-time employees on its US payroll, including all states, the District of Columbia and US territories and possessions.  Both the joint employer and integrated employer tests used for FMLA purposes apply (see Q&A 1 under Emergency Family and Medical (FMLA) Leave).  The employer counts employees on the date the employee’s leave commences.

Small employer exemptionThe law includes a small employer exemption available to employers employing fewer than 50 employees if providing the child care related leave would result in economic hardship.  Regulations have not been issued on how economic hardship will be determined but should be issued soon.  The employer should keep good records validating any economic hardship.

Q. 2    Which employees are entitled to emergency paid sick leave?

An employee, employed for any length of time, is entitled to emergency paid sick leave if the individual is:

  • Currently diagnosed as having COVID-19
  • Quarantined, either as self-quarantine, or by his/her health care provider, employer or government official
  • Caring for another person who has been diagnosed with or quarantined due to the virus; or
  • Caring for a child or other individual who is unable to care for themselves due to school closures, child care facility or other day care program.

Part-time employees are eligible for the benefit of the law.  To determine the amounts available, hours are averaged over a two-week period.  If the individual is a variable employee, hours are averaged over a 6-month period.  If the individual has not been employed for 6 months, the average hours agreed to at the time of hire should be used and if that is not available, then the hours expected to have been scheduled should be used.

Q. 3    How much leave is available is under the emergency paid sick leave law?

The law provides up to 80 hours of leave for qualifying reasons.  Individuals who work part-time receive a pro-rata amount of leave, based on their average hours worked in a two-week period.

Q. 4    How much is an individual entitled to under the emergency paid sick leave law?

The maximum paid sick leave amounts payable vary based on the reason for absence:

  • For employees who are quarantined or experiencing symptoms and seeking diagnosis would be compensated at their regular rate, up to a maximum of $511 per day ($5,110 total).
  • Employees caring for another individual diagnosed or quarantined due to the virus, or who are caring for a son or daughter due to school closure or unavailable child care provider would receive two-thirds of their regular rate, up to a maximum of $200 per day ($2,000 total).

Q. 5.   Does an employer have any notice obligations?

Yes.  See Notice Obligations: Emergency paid sick leave and Emergency FMLA Leave.

O. 6    When does the emergency paid sick leave law take effect?

The emergency paid sick leave provision takes effect April 1, 2020 and expires on December 31, 2020.  It is not retroactive and any leave taken prior to April 1 will not offset available leave under these laws.

 

Emergency Family and Medical (FMLA) Leave

Q. 1    Which employers are subject to the emergency FMLA leave law?

For-profit and not-for-profit private sector employers who employ between 1 and 499 employees, and most public sector employers including state and local governments of any size are subject to the emergency family and medical leave (FMLA) law. A private sector employers determines employer size in the same manner as the federal Family and Medical Leave (FMLA) law.  The employer counts all full-time and part-time employees on its US payroll, including all states, the District of Columbia and US territories and possessions. 

Both the joint employer and integrated employer tests used for traditional FMLA purposes apply, as follows: 

Integrated employers.  If two or more employers are considered to be integrated, they will be deemed to be a single employer for purposes of the FMLA.  Factors in determining whether or not the employers are integrated include common management, interrelationship between operations, central control of labor relations, and degree of common ownership (financial control).

Joint Employment.   Under the FMLA, if an employee is considered to be jointly employed by two or more employers, each employer must count that individual in determining whether or not the employer is subject to the law. Only the primary employer is responsible for providing leave to the employee in question and providing the requisite notices.  Factors to be considered in determining joint employment include the degree of control or supervision of the work, payroll issues, and the right to hire, fire or modify the employment conditions of the worker.   Joint employment is particularly relevant in the case of a temporary or leasing agency. In these situations, the temporary agency or leasing company is generally considered to be the primary employer.

Q. 2    Which employees are entitled to emergency FMLA leave?

Any employee who has:

  1. Worked for the employer for at least 30 days, and
  2. Is unable to work or telework due to a need for leave to care for a son or daughter under age 18, as a result of a closure of the child’s school or day care facility, or the child care’s provider is unavailable, due to a coronavirus-declared emergency.

Part-time employees are eligible for the benefit of the law.  To determine the amounts available, hours are averaged over a two-week period.  If the individual is a variable employee, hours are averaged over a 6-month period.  If the individual has not been employed for 6 months, the average hours agreed to at the time of hire should be used and if that is not available, then the hours expected to have been scheduled should be used.

Determining emergency paid leave eligibility.  Emergency FMLA leave is available to individuals who have been on the payroll for 30 calendar days as of the date the leave begins. For example, if an individual is eligible on April 1, 2020, then the individual must have been on the payroll as of March 2, 2020.

Q. 3    How much leave is available under the emergency FMLA leave law?

Up to 12 weeks of leave is available.

Q. 4    Are there exemptions to these leaves for health care workers and emergency responders?

The law grants the Department of Labor (DOL) the authority to provide an exemption for health care workers and emergency responders.  Thus far, no guidance has been provided.

Q. 5    Is an employer who employs fewer than 50 employees exempt from the emergency FMLA leave law?

Employers employing fewer than 50 employees are not exempt from the law.  The law does grant the DOL the authority to issue guidance on when economic downturn could exempt an employer who employs fewer than 50 employees from the requirements of the law.

Q. 6    Are there special exemptions for employers employing fewer than 25 employees?

Similar to Q. 5 above, it is possible that the DOL may issue clarifying guidance and possibly exempt an employer with less than 25 employees from the provisions of this law.  Under the new emergency FMLA leave law, an employer who employs fewer than 25 employees could be exempt from the job protection aspect of the law, if the individual’s position is lost as a result of the coronavirus situation.  If the job becomes available within 12 months, however, the individual would need to be offered a position.

Q. 7    How much is an individual entitled to under the emergency FMLA leave law?

The first 10 days of the leave could be unpaid, though, an individual could, at his/her discretion, choose to use available paid time off such as vacation, personal leave or other available PTO.  In many instances, the emergency paid sick leave described above could be used for this purpose.  After 10 days, the leave would be paid at not less than two-thirds of the individual’s regular monthly rate of pay, not to exceed $200 per day and $10,000 in the aggregate.  Emergency FMLA leave for a part-time employee would be pro-rated based on their hours worked.

Q. 8    What other benefits are available under the emergency FMLA leave law?

The emergency FMLA leave law, like the traditional FMLA leave law, provides job protection.  While it is unclear at this time, it would appear that other benefits of traditional FMLA, such as health continuation and right to be returned to other benefits upon return from leave, would likewise apply.

Q. 9.   Does an employer have any notice obligations?

Yes.  See Notice Obligations: Emergency paid sick leave and Emergency FMLA Leave.

Q. 10.  When does the emergency FMLA law take effect?

The emergency paid FMLA provision takes effect April 1, 2020 and expires on December 31, 2020.  It is not retroactive, and any emergency FMLA leave taken prior to April 1 will not offset available leave under these laws.

 

Coordinating Emergency PSL and FMLA Leave Provisions

Q. 1.   How is the rate of pay calculated under these laws?

An individual is entitled to be paid the greater of his/her regular rate of pay (subject to caps described below), the federal minimum wage or the state minimum wage.

 

Type of leave

 

Reasons for leave

Amount of pay

(greater of regular rate of pay, federal minimum wage or state minimum wage)

 

 

Emergency paid sick leave (EPSL)

  1. Individual subject to federal/state quarantine
  2. Individual advised by health care provider to self-quarantine
  3. Individual experiencing COVID-19 symptoms

 

100% of the greater of the amounts above, subject to a maximum $511/per day or

$5,110 in the aggregate

  1. Caregiver leave due to federal/state quarantine
  2. Caring for a child whose school or place of care is closed
  3. Care for individual with COVID-19

 

2/3 of the greater of the amounts above, subject to a maximum of $200/per day or $2,000 in the aggregate

 

 

Type of leave

 

Reasons for leave

Amount of pay

(greater of regular rate of pay, federal minimum wage or state minimum wage)

 

Emergency family and medical leave (EFML)

Individual is unable to work or telework due to a need for leave to care for a son or daughter under age 18, as a result of a closure of the child’s school or day care facility or the child care’s provider is unavailable, due to a coronavirus-declared emergency.

Maximum of 12 weeks

  • First 10 days: Unpaid (individual can choose to use available PTO or EPSL)
  • For the next 10 weeks: 2/3 of the greater of the amounts above, subject to a maximum $200/per day or $10,000 in the aggregate

 

Combined EPSL and EFML

Individual is unable to work or telework due to a need for leave to care for a son or daughter under age 18, as a result of a closure of the child’s school or day care facility or the child care’s provider is unavailable, due to a coronavirus-declared emergency.

 

Maximum of $200/per day or

$12,000 in the aggregate

 

 

Regular rate of pay is determined by averaging an employee’s rate of pay over the prior 6 months or such shorter time as the individual has been employed.  In determining rate of pay, if an individual would be scheduled for over-time, it would be included in the calculation. 

As an example, emergency PSL is available to any qualifying employee without any length of service obligation; the maximum number of hours worked is 80 hours in a two-week period.  If an individual would be scheduled to work 50 hours (generally 10 hours would be overtime) in the first week of leave, then individual would have 30 hours of available emergency PSL in week two.  Again, subject to the daily and aggregate caps described above.

Q. 2    How does an employer get a tax credit for providing these leaves?

In both types of emergency leave, the employer pays for the leave but is entitled to a dollar for dollar reimbursement through a refundable tax credit.  Note, the tax credit is only available to private sector employers. 

The IRS together with the Departments of Labor and Treasury, issued guidance on March 20, 2020 addressing how an employer can get an immediate reimbursement for the emergency paid sick leave (PSL) and emergency Family and Medical Leave Act (FMLA) leave provided to affected employees.  While employers are obligated to compensate employees for the emergency PSL and emergency FMLA leave to which an employee becomes entitled, employers can re-coup, dollar for dollar, amounts paid out, up to the prescribed caps.  According to this guidance, an employer can retain both federal income tax withholding, and the employer and employee share of FICA (Social Security and Medicare) for all employees to compensate itself for disbursement of emergency PSL and emergency FMLA amounts.  If the withheld amounts would not cover the employer’s outlay for these emergency leave, then the IRS will develop a process that will allow an employer to get the excess, which is expected to be paid out within 2 weeks of the request.  Future guidance will address this matter. 

Q. 3    Can the emergency paid sick leave law and emergency FMLA leave law overlap?

If an individual qualifies for both laws, i.e., the need for leave is child care responsibilities due to daycare or school closings, the individual could qualify under both laws.  The emergency paid sick leave could subsidize the first 10 work days since the emergency FMLA leave need not be paid for the first 10 day period of emergency FMLA leave.

Q. 4    Can emergency FMLA leave overlap the traditional FMLA leave law?

Emergency FMLA leave is only available in the very specific instance of caregiver responsibilities deriving from a child being out of school or out of daycare, and the individual is unable to telework during the required absence.  This would not necessarily overlap with traditional FMLA which provides for caregiver leave only in the event of the employee’s own or his/her family member’s serious health condition.

Q. 5    Does emergency paid sick leave ever overlap with traditional FMLA law?

Yes, emergency paid sick leave could overlap with traditional FMLA if the individual qualifies for both.  As a reminder, traditional FMLA applies to all private sector employers who employ 50-plus employees in 20-plus calendar weeks of current or preceding calendar year, and public sector agencies without regard to number of employees.  Further, to be entitled to FMLA, the employee must have had 12 months of service for covered employer, accrued 1,250 hours of service during 12-month period prior to leave, and worked for the covered employer at worksite subject to FMLA.

Assuming an employee has met the traditional FMLA leave criteria and works for an employer subject to FMLA, and the need for the leave is for purposes of caring for the individual’s own serious health condition or the need to care for a family member who has a serious health condition, then the emergency paid sick leave and traditional FMLA leave could overlap.

Q. 6    How does an employer’s own paid leave program integrate with the emergency FMLA leave law?

An employer should review its existing paid leave policy and determine whether its policy would be available for the type of leave for which the emergency FMLA leave is being granted.  Note, many state and local jurisdiction leave laws specifically provide for leave in the event of emergency closures of schools and the like.

 

Health Plan Considerations

Q. 1    What does the Families First Coronavirus Relief law require a health plan to cover?

Effective March 18, 2020, individual and group health plans, including insured, self-funded plans and grandfathered health plans, are required to provide first dollar coverage for FDA-approved testing for COVID-19, as well as related services received during emergency rooms, urgent care facilities, or in-person or telehealth visits.  For self-funded plans, this change would require an amendment to the plan, as well as any stop loss contract.

 

Congress is considering clarification of the issue of HSA-compatibility with first dollar coverage of telemedicine services. Congress is also considering legislation that would deem a coronavirus vaccine to be preventive at such time as a vaccine was developed.

Q. 2    If my health plan, whether insured or self-funded, offers a voluntary special enrollment event, would this permit individuals to change their Section 125 cafeteria plan election?

Generally, a Section 125 cafeteria plan election is binding for 12 months.  The election can only be changed if certain status change events occur. Included among the permissible status change events of a cafeteria plan is when there is a change in cost or coverage.  The relevant Section 125 cafeteria plan must specify the status change events in the plan and any change made must be consistent with the event. 

 

Whether a voluntary special enrollment event would entitle an individual to make an election change depends on facts and circumstances, and whether the Section 125 cafeteria plan contains the specific language that would allow an election change.  If it is determined that the salary reduction election cannot be changed, then determine whether the payroll system can accommodate an after-tax employee contribution methodology.

Q. 3    What are some considerations for self-funded health plans?

Review the health plan document.  Update it to provide coverage for coronavirus testing described in Q. 1, above.  Review the eligibility language contained in the plan document. If it is not consistent with the employer’s intent, for example, if the employer wants to expand eligibility during a leave of absence that is not currently provided for in the plan, then amend the plan according with the amendment process contained in the plan.  Any changes to the plan must be approved by the stop loss insurer.  If the plan is amended, and if the self-funded plan is subject to ERISA, communicate the change to plan participants by providing a summary of material modification.  Plans exempt from ERISA should provide description of the change to plan participants.

Q. 4    Does the coronavirus situation raise any HSA issues?

The extension of the federal tax filing due date to July 15, 2020 announced by the IRS likewise extends the 2019 health savings account (HSA) contribution due date.  As a reminder, an HSA contribution for a tax year can be made any time up to the individual’s tax filing due date. The 2019 HSA contribution limitations continue to apply.  But, if an individual did not max out his/her HSA contribution for 2019 and would like to do so, the individual has until July 15, 2020 to make the contribution.  The account holder should identify the contribution as being for the 2019 tax year.

Q. 5    Does telemedicine raise any issues for HSA eligibility?

As indicated in Q. 1 above, the IRS guidance relating to coronavirus testing and treatment including services provided through telemedicine will not jeopardize HSA eligibility (also see IRS Notice 2020-15).  The guidance, at this time, does not extend to telemedicine services provided outside the scope of coronavirus testing and treatment. Therefore, there is uncertainty as to the impact on HSA eligibility for telemedicine services that are subsidized prior to satisfaction of the minimum statutory deductible.  Congress is considering a fix for the dilemma; but at this time, the issue remains unclear.

 

Layoffs, Furloughs and Effects on Benefits

Q. 1    What is a layoff?

A layoff is a reduction in force resulting in a termination of employment.

Q. 2    What is a furlough?

A furlough is a temporary suspension of work that does not constitute a termination of employment.

Q. 3    What happens to benefit eligibility during a lay-off or a furlough?

For health coverage purposes, the first step is to review the eligibility language contained in the health plan and/or insurance contract.  If the eligibility language is contingent on working a set number of hours and if the furlough causes the individual to lose eligibility due to the reduction in hours, then COBRA or a state continuation coverage would apply because there is a reduction in hours that results in a loss of coverage.  In this instance, COBRA should be offered.  The employer could choose to subsidize all or a portion of the COBRA premium for a period of time.  If this is done, it should be made very clear in the election process. 

If the eligibility language is not contingent on being regularly scheduled to work a certain number of hours in a week, for example, if the eligibility language mirrors an ACA’s employer shared responsibility provision relating to an employer’s stability period, then the furlough would not cause a loss of coverage.  The employer should explain how individuals should pay their premiums during the leave.  The employer would continue to pay its share. 

Keep in mind failure to pay premium typically results in loss of coverage.  A loss of coverage resulting from a failure to pay premium is not a COBRA qualifying event.

Q. 4    How should employee contributions toward their benefit programs be paid during a leave of absence?

The employer should follow the terms of its health plan and its past practices with regard to employee contributions, as well as other benefit programs, during a leave of absence (LOA).  Make certain to review any IRC Section 125 cafeteria plan provisions regarding continued participation and method for payment of premium during an LOA.  Generally, cafeteria plans offer three methods for payment of premium: a pay as you go option, catch up option or pre-pay option.  Make certain to communicate all obligations to employee/participants clearly, and as soon as possible.

Q. 5    What happens to eligibility under benefits such as life insurance and disability?

The terms and conditions of the governing plan and insurance contract govern. Be aware of actively at work provisions contained in the plan and insurance contract that could affect continued eligibility.  Review the plan/contract for any leave of absence provisions.  If eligibility is lost, be aware and communicate any conversion options available to the employee/participant.  For life insurance, be aware of any waiver of premium standards contained in the contract.

Q. 6    Can individuals change cafeteria plan elections?

The terms and conditions of the cafeteria plan govern.  Look for status change events contained in the plan documents.  Be aware that any status change event must satisfy the consistency rule. 

Also note, many plans include an election change resulting from change in cost of coverage or change in benefit availability.  Note, a change in cost of coverage does not allow a change to an individual’s flexible medical spending account. 

With regard to a dependent care assistance plans, the plan could allow a participant to change his/her election in the event of a change in daycare provider.  However, a DCAP participant can only claim expenses under a DCAP when he/she is gainfully employed or when seeking employment.  A short absence is permissible without causing the individual to allocate the time as ‘time not worked’.  If the individual’s hours are reduced or the individual is laid off, then he/she would not be able to use monies from the DCAP to stay home to care for child.

 

Notice Obligations: Emergency paid sick leave and Emergency FMLA Leave

Q. 1    Do employers have a notice obligation?

Yes.  Both the emergency paid sick leave and emergency FMLA leave impose an employer notice obligation.  The DOL issued a model poster that can be used for this purpose, together with FAQs about the posting requirement. 

Q. 2.   What are the methods for providing the notice to employees?

Generally, the poster must be placed in a conspicuous place where the employer generally places its other federal workplace postings.  Given that many employees are now working remotely, the DOL states that the poster can also be posted on the employer’s internal or external website, or it can be emailed or otherwise electronically delivered to employees. The DOL affirms that the poster need not be provided to applicants nor does it need to be provided to individuals laid off.  It does, however, need to be provided to new hires.  Currently, the poster does not need to be provided in any language other than English, but the DOL indicates that it will prepare it in other languages.

In addition, the DOL provides fact sheets for both employees and employers, a set of FAQs, along with other workplace guidance on its dedicated COVID-19 website.

 

Private sector employers who employ between 1 and 499 employees, and most public sector employers of any size are subject to the emergency paid sick leave law. A private sector employers determines employer size in the same manner as the federal Family and Medical Leave (FMLA) law. The employer counts all full-time and part-time employees on its US payroll, including all states, the District of Columbia and US territories and possessions. Both the joint employer and integrated employer tests used for FMLA purposes (see Q&A 1 under Emergency Family and Medical (FMLA) Leave,, below) apply. The employer counts employees on the date the employee’s leave commences.

Small employer exemption. The law includes a small employer exemption available to employers employing fewer than 50 employees if providing the child care related leave would result in economic hardship. Regulations have not been issued on how economic hardship will be determined but should be issued soon. The employer should keep good records validating any economic hardship.

An employee, employed for any length of time, is entitled to emergency paid sick leave if the individual is:

  • Currently diagnosed as having COVID-19;
  • Quarantined, either as self-quarantine, or by his/her health care provider, employer or government official;
  • Caring for another person who has been diagnosed with or quarantined due to the virus; or
  • Caring for a child or other individual who is unable to care for themselves due to school closures, child care facility or other day care program.

Part-time employees are eligible for the benefit of the law. To determine the amounts available, hours are averaged over a two-week period. If the individual is a variable employee, hours are averaged over a 6-month period. If the individual has not been employed for 6 months, the average hours agreed to at the time of hire should be used and if that is not available, then the hours expected to have been scheduled should be used.

The law provides up to 80 hours of leave for qualifying reasons. Individuals who work part-time receive a pro-rata amount of leave, based on their average hours worked in a two-week period.

The maximum paid sick leave amounts payable vary based on the reason for absence:

  • For employees who are quarantined or experiencing symptoms and seeking diagnosis would be compensated at their regular rate, up to a maximum of $511 per day ($5,110 total).
  • Employees caring for another individual diagnosed or quarantined due to the virus, or who are caring for a son or daughter due to school closure or unavailable child care provider would receive two-thirds of their regular rate, up to a maximum of $200 per day ($2,000 total).

Yes. See Notice Obligations: Emergency paid sick leave and Emergency FMLA Leave on page 8

The emergency paid sick leave provision takes effect April 1, 2020 and expires on December 31, 2020. It is not retroactive and any leave taken prior to April 1 will not offset available leave under these laws.

Private sector employers who employ between 1 and 499 employees, and most public sector employers of any size are subject to the emergency family and medical leave (FMLA) law. A private sector employers determines employer size in the same manner as the federal Family and Medical Leave (FMLA) law. The employer counts all full-time and part-time employees on its US payroll, including all states, the District of Columbia and US territories and possessions.

Both the joint employer and integrated employer tests used for traditional FMLA purposes apply, as follows:

Integrated employers. If two or more employers are considered to be integrated, they will be deemed to be a single employer for purposes of the FMLA. Factors in determining whether or not the employers are integrated include common management, interrelationship between operations, central control of labor relations, and degree of common ownership (financial control).

Joint Employment. Under the FMLA, if an employee is considered to be jointly employed by two or more employers, each employer must count that individual in determining whether or not the employer is subject to the law. Only the primary employer is responsible for providing leave to the employee in question and providing the requisite notices. Factors to be considered in determining joint employment include the degree of control or supervision of the work, payroll issues, and the right to hire, fire or modify the employment conditions of the worker. Joint employment is particularly relevant in the case of a temporary or leasing agency. In these situations, the temporary agency or leasing company is generally considered to be the primary employer.

Any employee who has:

  1. Worked for the employer for at least 30 days, and
  2. Is unable to work or telework due to a need for leave to care for a son or daughter under age 18, as a result of a closure of the child’s school or day care facility, or the child care’s provider is unavailable, due to a coronavirus-declared emergency.

Part-time employees are eligible for the benefit of the law. To determine the amounts available, hours are averaged over a two-week period. If the individual is a variable employee, hours are averaged over a 6-month period. If the individual has not been employed for 6 months, the average hours agreed to at the time of hire should be used and if that is not available, then the hours expected to have been scheduled should be used.

Up to 12 weeks of leave is available.

The law grants the Department of Labor (DOL) the authority to provide an exemption for health care workers and emergency responders. Thus far, no guidance has been provided.

Employers employing fewer than 50 employees are not exempt from the law. The law does grant the DOL the authority to issue guidance on when economic downturn could exempt an employer who employs fewer than 50 employees from the requirements of the law.

Similar to Q. 5 above, it is possible that the DOL may issue clarifying guidance and possibly exempt an employer with less than 25 employees from the provisions of this law. Under the new emergency FMLA leave law, an employer who employs fewer than 25 employees could be exempt from the job protection aspect of the law, if the individual’s position is lost as a result of the coronavirus situation. If the job becomes available within 12 months, however, the individual would need to be offered a position.

The first 10 days of the leave could be unpaid, though, an individual could, at his/her discretion, choose to use available paid time off such as vacation, personal leave or other available PTO. In many instances, the emergency paid sick leave described above could be used for this purpose. After 10 days, the leave would be paid at not less than two-thirds of the individual’s regular monthly rate of pay, not to exceed $200 per day and $10,000 in the aggregate. Emergency FMLA leave for a part-time employee would be pro-rated based on their hours worked.

The emergency FMLA leave law, like the traditional FMLA leave law, provides job protection. While it is unclear at this time, it would appear that other benefits of traditional FMLA, such as health continuation and right to be returned to other benefits upon return from leave, would likewise apply.

Yes. See Notice Obligations: Emergency paid sick leave and Emergency FMLA Leave on page 8.

The emergency paid FMLA provision takes effect April 1, 2020 and expires on December 31, 2020. It is not retroactive and any leave taken prior to April 1 will not offset available leave under these laws.

An individual is entitled to be paid the greater of his/her regular rate of pay (subject to caps described below), the federal minimum wage or the state minimum wage.

 

Regular rate of pay is determined by averaging an employee’s rate of pay over the prior 6 months or such shorter time as the individual has been employed. In determining rate of pay, if an individual would be scheduled for over-time, it would be included in the calculation.

The example provided by the DOL provides as follows:

  • For EPSL: The maximum number of hours worked is 80 hours in a two-week period. If an individual would be scheduled to work 50 hours (generally 10 hours would be overtime) in the first week of leave, then individual would have 30 hours of available EPSL in week two.

Again, subject to the daily and aggregate caps described above.

Determining emergency paid leave eligibility. EPSL is available to any qualifying employee without any length of service obligation. EFML is available to individuals who have been on the payroll for 30 calendar days as of the date the leave begins. If an individual is eligible on April 1, 2020, the individual must have been on the payroll as of March 2, 2020. For EFML, the first 10 days are unpaid, however, the employee can choose to use available paid time off or EPSL, to the extent that it is available.

In both types of emergency leave, the employer pays for the leave but is entitled to a dollar for dollar reimbursement through a refundable tax credit. The IRS together with the Departments of Labor and Treasury, issued guidance on March 20, 2020 addressing how an employer can get an immediate reimbursement for the emergency paid sick leave (PSL) and emergency Family and Medical Leave Act (FMLA) leave provided to affected employees. While employers are obligated to compensate employees for the emergency PSL and emergency FMLA leave to which an employee becomes entitled, employers can re-coup, dollar for dollar, amounts paid out, up to the prescribed caps. According to this guidance, an employer can retain both federal income tax withholding, and the employer and employee share of FICA (Social Security and Medicare) for all employees to compensate itself for disbursement of emergency PSL and emergency FMLA amounts. If the withheld amounts would not cover the employer’s outlay for these emergency leave, then the IRS will develop a process that will allow an employer to get the excess, which is expected to be paid out within 2 weeks of the request. Future guidance will address this matter

If an individual qualifies for both laws, i.e., the need for leave is child care responsibilities due to daycare or school closings, the individual could qualify under both laws. The emergency paid sick leave could subsidize the first 10 work days since the emergency FMLA leave need not be paid for the first 10 day period of emergency FMLA leave.

Emergency FMLA leave is only available in the very specific instance of caregiver responsibilities deriving from a child being out of school or out of daycare, and the individual is unable to telework during the required absence. This would not necessarily overlap with traditional FMLA which provides for caregiver leave only in the event of the employee’s own or his/her family member’s serious health condition.

Yes, emergency paid sick leave could overlap with traditional FMLA if the individual qualifies for both. As a reminder, traditional FMLA applies to all private sector employers who employ 50-plus employees in 20-plus calendar weeks of current or preceding calendar year, and public sector agencies without regard to number of employees. Further, to be entitled to FMLA, the employee must have had 12 months of service for covered employer, accrued 1,250 hours of service during 12-month period prior to leave, and worked for the covered employer at worksite subject to FMLA.

Assuming an employee has met the traditional FMLA leave criteria and works for an employer subject to FMLA, and the need for the leave is for purposes of caring for the individual’s own serious health condition or the need to care for a family member who has a serious health condition, then the emergency paid sick leave and traditional FMLA leave could overlap.

An employer should review its existing paid leave policy and determine whether its policy would be available for the type of leave for which the emergency FMLA leave is being granted. Note, many state and local jurisdiction leave laws specifically provide for leave in the event of emergency closures of schools and the like.

Effective March 18, 2020, individual and group health plans, including insured, self-funded plans and grandfathered health plans, are required to provide first dollar coverage for FDA-approved testing for COVID-19, as well as related services received during emergency rooms, urgent care facilities, or in-person or telehealth visits. For self-funded plans, this change would require an amendment to the plan, as well as any stop loss contract.

Congress is considering clarification of the issue of HSA-compatibility with first dollar coverage of telemedicine services. Congress is also considering legislation that would deem a coronavirus vaccine to be preventive at such time as a vaccine was developed.

A layoff is a reduction in force resulting in a termination of employment.

A furlough is a temporary suspension of work that does not constitute a termination of employment.

For health coverage purposes, the first step is to review the eligibility language contained in the health plan and/or insurance contract. If the eligibility language is contingent on working a set number of hours and if the furlough causes the individual to lose eligibility due to the reduction in hours, then COBRA or a state continuation coverage would apply because there is a reduction in hours that results in a loss of coverage. In this instance, COBRA should be offered. The employer could choose to subsidize all or a portion of the COBRA premium for a period of time. If this is done, it should be made very clear in the election process.

If the eligibility language is not contingent on being regularly scheduled to work a certain number of hours in a week, for example, if the eligibility language mirrors an ACA’s employer shared responsibility provision relating to an employer’s stability period, then the furlough would not cause a loss of coverage. The employer should explain how individuals should pay their premiums during the leave. The employer would continue to pay its share.

Keep in mind failure to pay premium typically results in loss of coverage. A loss of coverage resulting from a failure to pay premium is not a COBRA qualifying event.

The employer should follow the terms of its health plan and its past practices with regard to employee contributions, as well as other benefit programs, during a leave of absence (LOA). Make certain to review any IRC Section 125 cafeteria plan provisions regarding continued participation and method for payment of premium during an LOA. Generally, cafeteria plans offer three methods for payment of premium: a pay as you go option, catch up option or pre-pay option. Make certain to communicate all obligations to employee/participants clearly, and as soon as possible.

The terms and conditions of the governing plan and insurance contract govern. Be aware of actively at work provisions contained in the plan and insurance contract that could affect continued eligibility. Review the plan/contract for any leave of absence provisions. If eligibility is lost, be aware and communicate any conversion options available to the employee/participant. For life insurance, be aware of any waiver of premium standards contained in the contract.

The terms and conditions of the cafeteria plan govern. Look for status change events contained in the plan documents. Be aware that any status change event must satisfy the consistency rule.

Also note, many plans include an election change resulting from change in cost of coverage or change in benefit availability. Note, a change in cost of coverage does not allow a change to an individual’s flexible medical spending account.

With regard to a dependent care assistance plans, the plan could allow a participant to change his/her election in the event of a change in daycare provider. However, a DCAP participant can only claim expenses under a DCAP when he/she is gainfully employed or when seeking employment. A short absence is permissible without causing the individual to allocate the time as ‘time not worked’. If the individual’s hours are reduced or the individual is laid off, then he/she would not be able to use monies from the DCAP to stay home to care for child.

Yes. Both the emergency paid sick leave and emergency FMLA leave impose an employer notice obligation. The DOL issued a model poster that can be used for this purpose, together with FAQs about the posting requirement.

Generally, the poster must be placed in a conspicuous place where the employer generally places its other federal workplace postings. Given that many employees are now working remotely, the DOL states that the poster can also be posted on the employer’s internal or external website, or it can be emailed or otherwise electronically delivered to employees. The DOL affirms that the poster need not be provided to applicants nor does it need to be provided to individuals laid off. It does, however, need to be provided to new hires. Currently, the poster does not need to be provided in any language other than English, but the DOL indicates that it will prepare it in other languages.

In addition, the DOL provides fact sheets for both employees and employers, a set of FAQs, along with other workplace guidance on its dedicated COVID-19 website.

The information contained herein is not intended to be legal, accounting, or other professional advice, nor are these comments directed to specific situations. The information contained herein is provided as general guidance and may be affected by changes in law or regulation. The information contained herein is not intended to replace or substitute for accounting or other professional advice. Attorneys or tax advisors must be consulted for assistance in specific situations. This information is provided as-is, with no warranties of any kind. CBIZ shall not be liable for any damages whatsoever in connection with its use and assumes no obligation to inform the reader of any changes in laws or other factors that could affect the information contained herein.

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