Dive Brief:

• President Donald Trump signed an emergency bill Wednesday to expand family and medical leave as well as guarantee paid sick leave for certain U.S. workers, including those employed by private entities or individuals who employ fewer than 500 employees, according to various media reports.
• The U.S. Senate passed the bill, titled the Families First Coronavirus Response Act, by a 90-8 vote earlier in the day. It was first passed in the U.S. House of Representatives on March 14, and a revised version passed Tuesday.
• The bill takes effect April 1, 2020, and it will sunset on Dec. 31, 2020.

Dive Insight:

Management-side observers who spoke to HR Dive acknowledged that while federal legislation to relieve the burden on U.S. businesses is needed amid the COVID-19 epidemic, small businesses are worried about the potential impact on the private-sector employers who now need to provide Family and Medical Leave Act (FMLA) leave and sick leave protections.

"My out of the box, biggest takeaway is 'wow, this is a very big hit on small businesses,'" Jim Paretti, shareholder at Littler Mendelson, told HR Dive in an interview.

The bill has two separate provisions that impact private entities and individuals that employ fewer than 500 employees. First, it amends the FMLA to allow U.S. workers, including those employed by such entities, to take up to 12 weeks of job-protected leave if the employee is unable to work or telework due to a need to care for a child under 18 years of age because that child's school or place of care has closed or the child's child care provider is unavailable due to a public health emergency with respect to COVID-19.

The first 10 days of the emergency FMLA leave may consist of unpaid leave, but the employee must be paid for each subsequent day of leave. That payment would be calculated based on the number of hours the employee would normally be scheduled to work, and would not be less than two-thirds the employee's regular rate of pay. But the bill provides that this amount will not exceed $200 per day and $10,000 "in the aggregate."

Additionally, the bill exempts employers that employ fewer than 25 employees from the job-protected aspect of the emergency FMLA leave provided a specific set of conditions are met, including if a leave-taking employee's position is eliminated due to "economic conditions" or other changes that affect the employer's operations resulting from the public health emergency. The bill allows the Secretary of Labor to exempt employers with fewer than 50 employees from the emergency FMLA leave requirement, "when the imposition of such requirements would jeopardize the viability of the business as a going concern."

Second, the bill mandates that employers with fewer than 500 employees provide paid sick time to workers. This applies if the worker is sick with or has been quarantined due to COVID-19, is experiencing symptoms of the disease and seeking medical attention, or is caring for a child in the event of a school closure or unavailable child care provider, among other situations. Full-time employees are entitled to 80 hours of such leave, while part-time employees are entitled to time equal to the number of hours they work on average over a two-week period. The leave doesn't carry over from one year to the next.

An employer may not require, as a condition of providing the paid sick time, that an employee search for or find a replacement to cover for the hours during which the employee is using the paid sick time. The payment is calculated based on the employee's "required compensation" (i.e. the employee's regular rate of pay or the federal, state or local minimum wage, whichever is greater) and the number of hours the employee would otherwise be scheduled to work. Pay standards differ in certain situations, such as if an employee is using the time to care for a family member.

As with the expanded FMLA provision, the bill contains language allowing the Secretary of Labor to exempt small businesses with fewer than 50 employees from the paid sick leave requirement.

The bill stipulates that tax credits are available to employers providing the paid FMLA leave or pick sick leave. But for many employers covered by the legislation, the more immediate concern is how they'll be able to afford payroll, Paretti said, especially as many operate in industries that are being closed by state and local governments out of public health concerns.

"The only parallel I can draw in my lifetime is 9/11," Paretti said. "This has largely come out of nowhere."

Small employers and other private entities will need to take immediate steps, including making sure that employees who are parents as defined under the bill are properly classified as such internally, Scott Witlin, partner at Barnes & Thornburg, told HR Dive in an interview. And outside of the bill's provisions, many of those employers will need to ensure they are up-to-date with their obligations under the Worker Adjustment and Retraining Notification Act, should layoffs be a consideration, he added.

The bill does appear to allow certain smaller employers to receive an exemption from its provisions, but these employers will need to weigh the costs of a) providing the leave in the first place and b) not complying. "It may cost more time and money to try and get the exemption than to pay the bill," David Sherwyn, professor of hospitality HR at Cornell University, told HR Dive in an interview, but he noted any such decision is based on the employer's own circumstances. He added that it's uncertain many local establishments, like restaurants, would be able to shoulder the costs of leave while facing declining revenues.

On the monetary side, help may be on the way from the Federal Reserve, which announced earlier this week that it would soon take action to support the flow of credit to businesses during the epidemic, Axios reported. The same outlet reported Wednesday that the White House has asked Congress for a $1 trillion coronavirus relief and economic stimulus plan.

Employers may also need to assess their current paid leave programs to determine how they interact with the bill's provisions, Paretti said. Telework or other forms of flexibility should be used to the extent that an employer may be able to implement them, he added.