COVID-19 legislative relief package: understanding the impact for U.S. employers

On Wednesday, March 18, the U.S. Senate passed and the President signed H.R. 6201, the Families First Coronavirus Response Act, which was previously passed by the House on March 14, 2020. The Act provides important provisions to alleviate the impact of COVID-19 for U.S. workers. We have prepared frequently asked questions to help employers better understand the legislation and its potential impact on their organizations.
 

There are three main provisions applicable to employers and their health plans:

100% of COVID-19 testing covered

Effective during the “emergency period” declared by Health and Human Services (HHS), the Act requires virtually all employer group plans (self-insured or insured) to provide free COVID-19 diagnostic testing, including any related services from providers, urgent care, emergency care, or telehealth.  There may be exceptions for retiree-only plans or plans providing excepted benefits. 
 

Only applicable to government employers and private sector employers with fewer than 500 employees:

Emergency paid sick leave

From no more than 15 days after enactment through December 31, 2020, with certain narrow exceptions, applicable employers will immediately have to provide full-time employees with 80 hours (approximately two weeks) of sick leave for COVID-19 related reasons (with special rules for part-time employees).

Public Health Emergency Leave (a new FMLA leave)

Effective upon enactment through December 31, 2020, with certain narrow exceptions, applicable employers will immediately be required to provide employees, who have been employed at least 30 days, with up to 12 weeks of job-protected paid leave if they are unable to work (or telework) because they need to care for a child under the age of 18 whose school has closed or care provider is unavailable for public health emergency related reasons. Note that the first 10 days of the leave may be unpaid, but the emergency paid sick leave or other paid leave programs may apply.

Both of these leaves are reimbursable to the employer by the federal government and federal agencies have been directed to issue rules and model notices for the programs in a very short amount of time (approximately 7 to 15 days).

Frequently asked questions

1. What health and leave changes does the Families First Coronavirus Response Act (FFCRV) require of employers? 

The Act requires virtually all employer health plans to cover 100% of the cost of COVID-19 diagnostic testing expenses, including doctor/provider charges, urgent care, emergency room, and telehealth expenses associated with the testing, during the emergency period declared by HHS. There may be exceptions for retiree-only plans or plans providing excepted benefits.
 
For private employers with fewer than 500 employees, the Act creates two new types of leave they must provide through December 31, 2020: (1) Emergency Paid Sick Leave; and (2) Public Health Emergency Leave. Note, however, the Act allows employers that are health care providers or emergency responders not to provide either of these new leaves under certain circumstances.
 
Government employers, generally, regardless of size, and including state and local units of government, have to provide these two new types of paid leave.
 
Employers can recoup the cost of the leave programs from the federal government. (see FAQ 9, and we expect additional guidance from the agencies).
 

2. What do group health plans need to do to cover the diagnostic testing as required?

Employer benefits teams should confer with their legal counsel and health plan advisors to assess whether plan changes are necessary. In many cases, the insurance carrier may make the changes to the policy/ASO agreement and provide notices to participants, but plan administrators and fiduciaries should ensure that the plan document, summary plan document (SPD), and other materials are updated appropriately, if needed.  
 

3. How much paid time do the new leaves provide?

The Emergency Paid Sick Leave provides approximately two weeks of immediate sick time availability to all employees regardless of how long they have worked for the employer. Full-time employees are entitled to 80 hours of leave and part-time employees receive the amount of hours they would work on average in two weeks (using a prescribed formula). 
 
The Public Health Emergency Leave adds a new variation to employment leave (generally with job protection) under the Family Medical Leave Act (FMLA) for employees who have been employed for at least 30 calendar days. In total it provides 12 weeks of leave:

• First, 10 days of unpaid leave (although it may be paid by the employer, or if the person uses accrued paid time off (sick, vacation, etc.), or uses the Emergency Paid Sick Leave during this 10 day period).

• Second, up to 10 additional weeks of paid leave.

Note, however, that the Act allows the Secretary of Labor to exempt employers with fewer than 50 employees if the Public Health Emergency Leave paid leave provisions “would jeopardize the viability of the business as a going concern.”
 

4. How much money does the employer pay for each type of leave?

For Emergency Paid Sick Leave when an employee is on leave for his or her own reasons (see FAQ 5) the leave is generally paid for the number of leave hours used at the employee’s regular rate of pay, or if greater, the minimum wage (FAQ 5; (a), (b), (c)). However, the paid sick leave amount paid for these reasons is capped at $511 per day and $5,110 aggregate.
 
If the employee is on leave to take care of a family member or child (including for school/care provider closure) or because of a similar condition (to be defined by the agencies), the leave will be paid at 2/3 of the employees regular rate of pay (FAQ 5; (d), (e), (f)).However, the paid sick leave amount paid for these reasons is capped at $200 per day and $2,000 aggregate.
 
For Public Health Emergency Leave, after the initial 10 day period, the leave is paid at 2/3 of the employee’s regular rate of pay, assuming the employee’s normal schedule, and capped at no more than $200 per day or $10,000 in the aggregate. For employees with variable schedules, there is a formula to calculate the number of applicable hours to pay per week. 
 

5. What are the circumstances when employees can take the leaves?

For Emergency Paid Sick Leave, the employee can take paid sick time when they are unable to work (or telework) and:

1. The employee is subject to a federal, state or local quarantine or isolation order related to COVID-19;

2. The employee has been advised by a health care provider to self-quarantine due to concerns related to COVID-19;

3. The employee is experiencing symptoms of COVID-19 and seeking a medical diagnosis;

4. The employee is caring for an individual who

1. is subject to a federal, state or local quarantine or isolation order related to COVID-19, or

2. has been advised by a health care provider to self-quarantine due to concerns related to COVID-19;

5. The employee is caring for a son or daughter when the school or place of care has been closed or the child care provider is unavailable, due to COVID-19 precautions;

6. The employee is experiencing any other substantially similar condition specified by the Secretary of HHS in consultation with the Secretary of the Treasury and the Secretary of Labor

 
For Public Health Emergency Leave an employee has a “qualifying need” for leave only if the employee is unable to work (or telework) in order to care for a son or daughter under age 18 because of a school closing or child care provider’s unavailability due to a public health emergency declared by a federal, state, or local authority (COVID-19 related).  
 

6. Why are the circumstances different in FAQ #5 for the different types of leave?

In general, we expect the Emergency Paid Sick Leave has additional flexibility because it is short-term and likely has less financial and operational impact. Since the Public Health Emergency Leave is longer-term, it is more narrowly offered if the person doesn’t have the ability to work (or telework) while taking care of a son or daughter under age 18 for the reasons explained above.
 

7. Are there notice and other requirements employers need to know about?

For Emergency Paid Sick Leave, the employer will have to provide notice, but the Department of Labor will provide a model notice within seven days. Applicable employers are also prohibited from having employees look for, or find other employees to replace them during the leave, or from requiring employees to use other types of paid leave before using the Emergency Paid Sick Leave.

For Public Health Emergency Leave, we expect that the existing notice requirements under the FMLA will apply to this new leave.
 
For both leaves there are special rules for applicable employers with multiemployer collective bargaining obligations.
 

8. For Public Health Emergency Leave, when does the employee’s job have to be “protected” during the leave and restored when he/she returns?

Like FMLA generally, the Public Health Emergency Leave has terms related to preserving an employee’s job (or equivalent) while the employee is on qualified leave. In most cases, the expectation will be that the person’s job (or equivalent) will be preserved, and the general rules appear to follow those of the FMLA. However, the act provides certain specific exceptions for small employers, no larger than 25 employees.
 

9. Does the government pay for these leaves? 

Under both leave programs, federal reimbursement of the paid leave amounts is available to the employer. There are detailed instructions and limitations to follow for employers seeking to recoup any money for either, or both of these leaves, and the Treasury Department has indicated that it will provide additional guidance about accessing the funds to provide these benefits.
 

10. Will there be more guidance on these new leaves?

The law provides that certain agencies must issue rules, guidance, and model notices very quickly after the law is enacted. We expect that guidance will provide helpful new details and instructions.
 
Alight will continue to monitor developments and provide new information as it becomes available. As a reminder, Alight is not a law firm and does not give legal or tax advice. This general summary is not a substitute for legal advice applicable to an employer’s specific situations and plans. We suggest employers contact their legal counsel for all guidance related to this matter.