By Tracey I. Levy, Esq.
- [Ed. Note 4/3/20: updated guidance from the NYS DOL has made clear that the paid sick leave requirement, discussed below, with respect to employers with 100 or more employees is 14 calendar days, not working days as a prior version of the DOL guidance had indicated. Therefore, employers with 100-499 employees must provide the same duration of emergency paid sick leave under both federal and New York State law.]
On March 18, 2020 both the federal government and New York State adopted emergency legislation designed to provide some degree of salary protection to employees who are unable to work because of quarantine and isolation orders and certain precautionary measures taken in response to COVID-19. These laws offer government funding to support employers in the form of tax credits (at the federal level) and by tapping into the existing disability and family leave insurance benefit pool (at the state level), but also impose substantial new requirements on employers that at least involve an initial outlay of salary payments to employees.
Federal Emergency Paid Sick Time
The federal government has taken a two-pronged approach to provide paid time off and job guarantees for employees who are unable to work due to health, child care or public safety reasons stemming from COVID-19. More specifically, all private employers with 500 or fewer employees and many public employers are required to provide their employees (even new hires) with up to two weeks (80 hours) of paid sick time if an employee is unable to work due to one of six situations:
1.The employee is subject to a government-issued quarantine or isolation order due to COVID-19;
2. A health care provider has advised the employee to self-quarantine due to COVID-19 exposure;
3. The employee is experiencing COVID-19 symptoms and seeking a medical diagnosis;
4. The employee is caring for someone subject to a government-issued quarantine or isolation order;
5. The employee is caring for a child where the school or child care provider has closed or the paid care provider is unavailable due to COVID-19 precautions;
6. The employee is experiencing any substantially similar condition specified by the Secretary of Health and Human Services in consultation with the Secretary of the Treasury and the Secretary of Labor.
Full-time employees are entitled to 80 hours of paid sick time, paid at their regular rate of pay up to a maximum of $511 per day for absences based on their personal condition (reasons 1 through 3 above) and two-thirds of their regular rate of pay, up to a maximum of $200 per day, for absences based on their care of others (reasons 4 through 6 above). This paid sick time will not carry-over into next year, and unused amounts need not be paid out in the event of an employee’s termination. Rather, all paid sick time ends immediately following termination of the emergency need. Significantly, though, for employers that already offer some amount of paid leave time, an employer cannot require an employee to use other paid leave before claiming paid leave for a qualifying reason under this Emergency Paid Sick Leave Act.
Federal Emergency FML Leave
Following the initial two-week period of Emergency Paid Sick Leave, employers with 500 or fewer employees must permit employees to request up to twelve weeks of job-protected paid leave under the Emergency Family Medical Leave Expansion Act (“Emergency FMLEA”) [Ed. clarification 3/30/20: the first 2 weeks are unpaid under Emergency FMLEA but may run concurrently with Emergency Paid Sick Leave; up to 10 weeks of paid leave are then available] if the employee remains unable to work because the employee needs to care for the employee’s child under the age of 18 due to the closing of the child’s school or child care center or unavailability of the child’s regular paid child care provider for a COVID-19-related public health emergency as declared by a federal, state or local government authority. In this limited childcare-related context, the Emergency FMLEA expands the federal FMLA, both in its coverage of every employer with 500 or fewer employees, and in its application to every individual who has been employed by such an employer for at least 30 calendar days. It also provides that employees are to receive at least two-thirds of their regular rate of pay for this time off, based on their regular work schedule, to a maximum of $200 per day or $10,000 in aggregate.
Although the scope of covered employers, employees and qualifying reasons under the Emergency FMLEA, as well as the concept of paid leave, deviate substantially from employers’ existing obligations under the FMLA, other aspects of the FMLA with regard to providing requesting employees with notice of their leave rights, health insurance continuation, and job protection, are fully applicable in this context. Employees cannot be discriminated or retaliated against for requesting or taking qualifying leave. However, for Emergency FMLEA, employers with fewer than 25 employees can be exempted from the obligation to restore an employee to the same or equivalent job at the end of the leave period if the position no longer exists due to economic conditions or changes in operations that affect the individual’s employment, or as caused by a public health emergency during the period of leave. To claim the benefit of this exception, the employer must have made reasonable efforts to restore the employee to an equivalent position, and for one year thereafter, the employer must continue to make reasonable effort to notify the employee if an equivalent position becomes available.
Federal Tax Credits
To pay for these substantial paid leave benefits, the federal law provides that employers may claim credits against taxes owed to the Internal Revenue Service each quarter equal to 100 percent of qualified sick leave wages and 100 percent of qualified family leave wages paid in the calendar quarter, up to the full amount of the taxes owed. If the credit exceeds the taxes owed, then the excess is to be treated as an overpayment to be refunded to the employer. The law also provides that sums paid as emergency paid sick leave or Emergency FMLEA leave are not to be considered “wages” for purposes of the federal tax law section 3221(a). Finally, it should be noted that the tax credits are equally available to self-employed individuals to the extent they are unable to work because of qualifying sick or family leave reasons.
Limited Duration, Exceptions and Penalties Under the Federal Laws
Both Emergency Paid Sick Leave and Emergency FMLEA take effect by April 2, 2020 and end on December 31, 2020. The laws both authorize the Secretary of Labor to issue regulations that exempt businesses with fewer than 50 employees where imposing the laws’ requirements would jeopardize the viability of the business as a going concern. Health care providers and emergency responders also may opt out from the laws’ requirements. Employers will be required to post a notice of rights under the Emergency FMLEA law, which the Department of Labor is supposed to be issuing within the next week. Failure to comply and provide paid leave under the emergency paid leave laws will be considered a failure to pay minimum wages and will thereby be subject to the penalty provisions of the Fair Labor Standards Act.
New York State Emergency Paid Sick Leave
On the same day as the passage of the federal emergency paid leave laws, New York State passed its own emergency paid sick leave law, which takes effect immediately. The New York State law is similarly comprised of two components – sick leave and extended paid leave – and, as with the federal law, it mandates that COVID-19-related sick leave days be provided in addition to any other paid leave benefit currently offered by the employers’ policies. The New York State law also assures employees that, at the end of their leave, they will be returned to their job at the same pay, terms and conditions, and it prohibits employers from discriminating or retaliating against employees for requesting or taking leave under the law. The law states that it does not preclude employers from taking any personnel action they would otherwise have taken had the leave not been requested or taken. Despite these similarities, the New York State law differs in several material respects from the federal laws.
First, the state is not offering any tax credits or other reimbursement to employers for the sick leave component of the New York State law, but depending on their size and profitability, many employers will be required to provide some period of additional paid leave, as discussed below. The extended paid leave benefit is to be administered through the existing mechanisms of New York State Short-Term Disability Leave (“STD”) and/or New York State Paid Family Leave (“PFL”), without the usual qualifying waiting period, and is thereby paid through employers’ current state-mandated STD/PFL insurance policies.
Second, New York State sick leave and STD are available only to employees who are unable to work (even remotely) because they are personally subject to a COVID-19-related order of protection or isolation (equivalent to category 1 under the federal Emergency Paid Sick Leave law). PFL benefits may also be used in that context to provide a combined benefit. Employees who are unable to work (remotely or otherwise) because they are caring for a minor dependent child who is subject to a COVID-19-related order of protection or isolation (which is a more limited version of category 4 under the federal Emergency Paid Sick Leave law) are also covered by the New York State law, but those individuals are only entitled to apply for benefits through the PFL program.
Calculating the Combined Federal and NYS Paid Leave Benefits
For any employee subject to a COVID-19-related order of protection or isolation whose regular salary equates to $511 or less per day and who works for an employer with 99 or fewer employees, the federal Emergency Paid Sick Leave law will fully supersede the New York State sick leave requirement. Similarly, to the extent an employee is absent from work for a COVID-19-related reason other than a government-mandated quarantine or order of isolation, only the federal law will apply because the state law will be inapplicable. In contrast, employers with more than 500 employees are fully subject to the New York State law requirements; the state provides no exemption for the largest employers.
There are several circumstances in which, depending on the size and profitability of the employer, an employee who is eligible for benefits under both laws may enjoy greater benefits under the state law than the federal law:
- New York State-qualifying employees with a daily salary higher than $511 – these individuals are entitled to receive paid sick days under New York State law at their full, uncapped daily rate.
- For employers which, as of January 1, 2020, had eleven to 99 employees, and smaller employers that had a net income greater than $1 million last year, five days of emergency sick leave must be paid at the employee’s regular base salary.
- For New York State employers that had 100 or more employees as of January 1, 2020, 14 days of emergency paid sick leave at the employees’ regular base salary.
- Employees who work for an employer with 100-500 employees – the New York State law literally mandates “at least fourteen days” of emergency paid sick leave. It appears, from the FAQs issued by the state Department of Labor, that this means 14 working days, which is more than the two full workweeks of pay provided under the federal law. Therefore, at any salary level, these employees would be entitled to four more days of emergency paid sick leave under the state law than is provided by federal law. [See Ed. Note at top of this article]
- Employees who are already subject to an order of protection or isolation or become subject to such before the federal law takes effect – because the New York State law has immediate effect, to the extent New York State employees already are subject to an order of protection or isolation or become subject to such an order prior to the federal law taking effect, they would be entitled to receive the full benefit provided under the state law and their eligibility for federal Emergency Paid Sick Leave would likely be determined looking forward from the effective date of the federal law. This may have the effect of entitling New York employees to the benefit of both paid New York State emergency sick leave and some amount of federal Emergency Paid Sick Leave, and we will need to await clarification from the state and federal Departments of Labor as to how to reconcile this overlap.
New York State Emergency Extended Leave
Once an employee has exhausted their federal and state emergency paid sick leave, the state law requires that they exhaust any other sick leave provided by their employer. If they thereafter remain unable to work and are still subject to an order of protection or isolation, then they will be eligible to apply for both STD and PFL benefits for the duration of their time in quarantine or isolation. Notably, although the New York State law uses the vehicle of the STD program, it has substantially enhanced the benefit threshold to an amount equal to an employee’s total average weekly wage, up to a maximum of $2,043.92 per week. In addition, the state has made an exception to the PFL benefit program to permit the use of PFL in this context for an employee’s own condition, and to permit simultaneous receipt of benefits under both the STD and PFL programs. As a result, when combined with the maximum PFL benefit of $840.70, eligible employees will receive a combined total weekly payment of $2,884.62, which may offer employees greater pay than the Emergency FMLEA benefit.
For any employee who is not personally under a quarantine or isolation order, but who needs to care for a minor child subject to such an order, the two weeks of federal Emergency Paid Sick Leave offers the same or a greater benefit (even at the $200 cap) than just applying for the NYS PFL benefit. If the isolation order continues and care is required beyond those first two weeks, the Emergency FMLEA likely offers a greater benefit and will thereby supersede the New York State extended paid leave requirement for employers with 500 or fewer employees.
These emergency paid leave laws represent uncharted territory from a federal law perspective, and the overlay with state laws presents interesting challenges. The immediate effect of the New York State law and the realities of the COVID-19 response in New York State may necessitate taking employment actions without the benefit of further guidance from the Department of Labor. While the above analysis highlights the key provisions of both laws and how they do or may intersect, employers are advised to seek legal advice to clarify their obligations before taking responsive action.