CARES Act – What Employers Should Know (Part I): Paid Emergency Sick and Public Health Emergency Leave and More

By unanimous vote on March 25, 2020, the Senate passed the largest stimulus measure the United States has ever seen, the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”). The bill—totaling a whopping 880 pages—tackles numerous issues on several fronts in an effort to stabilize the economy during the Coronavirus crisis. Included in the bill are provisions related to employers and employees. In this article, we address the provisions of the CARES Act regarding employees’ entitlement to Public Health Emergency Leave and Paid Sick Leave and states’ entitlement to grants to pay and process unemployment claims. In the coming days, our Employment Law Commentary will address additional employment-related provisions of the CARES Act, and our colleagues across the firm will publish analyses of the other provisions of the bill, all of which will be available at our Coronavirus (COVID-19) Resource Center.

The CARES Act modifies the Families First Coronavirus Response Act (“FFCRA”) enacted March 18, 2020. As we described in our prior Employment Law Commentary analyzing the FFCRA, the FFCRA created two new kinds of paid leave for employees of employers with fewer than 500 employees. First, the FFCRA expanded the available leave under the Family and Medical Leave Act (“FMLA”) by requiring covered employers to provide up to 12 weeks of paid leave due to “a qualifying need related to a public health emergency.” Second, the FFCRA created the Emergency Paid Sick Leave Act, which requires covered employers to provide employees up to 80 hours of paid sick leave for a qualifying purpose. In addition to creating new types of paid leaves, the FFCRA included the Emergency Unemployment Insurance Stabilization and Access Act (“EUISA”), which allocates emergency funds to states to pay and handle processing of unemployment compensation claims.

The CARES Act is now before the House of Representative, which is expected to approve it on March 27, 2020.

Public Health Emergency Leave (Sec. 3601)

Under the FFCRA, employees of covered employers are entitled to up to 12 weeks of leave where the employee is unable to work (or telework) due to a need to care for a child of the employee under age 18 if the child’s school or place of care has been closed or the child’s care provider is unavailable due to a public health emergency (i.e., COVID-19). The first 10 days of Public Health Emergency Leave are unpaid (though employees may use their accrued vacation and sick leave during this time), while leave after the 10 days is paid. The FFCRA included a cap on this paid leave of $200 per day and $10,000 in the aggregate. The CARES Act clarifies that these caps are per employee and only for the Public Health Emergency Leave portion of the FFCRA. The new provision states, “An employer shall not be required to pay more than $200 per day and $10,000 in the aggregate for each employee for paid leave under this section.”

Emergency Paid Sick Leave Act (“EPSLA”) Limitation (Sec. 3602)

The FFCRA created the EPSLA, which requires covered employers to provide up to 80 hours of paid sick leave for full-time employees and an amount equal to the average number of hours that part-time employees work, on average, during a two-week period. This paid sick leave is available when an employee is unable to work (or telework) due to the following reasons:

  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 healthcare 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 a family member who is subject to a federal, state, or local quarantine or isolation order related to COVID-19 or has been advised by a healthcare provider to self-quarantine due to concerns related to COVID-19;
  5. The employee is caring for their son or daughter if the school or place of care of the son or daughter has been closed, or the child care provider of such son or daughter is unavailable due to COVID-19 precautions; or
  6. The employee is experiencing any other 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.

The FFCRA capped this paid sick leave at $511 per day and $5,110 in the aggregate for sick leave taken due to reasons (1), (2), or (3) above and $200 per day and $2,000 in the aggregate due to reasons (4), (5), or (6) above. As with the Paid Public Health Emergency Leave, the CARES Act clarifies that these caps apply “for each employee.”

Unemployment Insurance (Sec. 3603)

The FFCRA created the EUISA, which expands unemployment benefits and provides grants to states for processing and paying claims of unemployment compensation. Among the conditions for any state to receive a grant under the EUISA, the state must: (1) require employers to notify employees at the time they lose their jobs of the availability of unemployment compensation, (2) ensure that unemployment compensation applications and assistance with them are accessible in at least two media (in-person, by phone, and/or online), and (3) take certain steps to ensure the successful processing of applications. The original text of the EUISA mirrored language in the Social Security Act, which requires that applications for unemployment compensation (as well as assistance with applications) be accessible in at least two of the following three media: in-person, by phone, and/or online. The CARES Act softens this requirement so that recipient states must provide access and assistance in two of the three media only “to the extent practicable.”

OMB Waiver of Paid Family and Paid Sick Leave (Sec. 3604)

The CARES Act amends the FFCRA to permit the Director of the Office of Management and Budget to exclude from certain employers of the U.S. government from entitlement to Public Health Emergency Leave and Paid Sick Leave.

Paid Leave for Rehired Employees (Sec. 3605)

The CARES Act changes the eligibility requirements for employees who to receive leave under the FMLA due to “a qualifying need related to a public health emergency.” Under the FFCRA, only employees who had been employed for at least 30 days were eligible for this leave. The CARES Act expands this eligibility to include rehired employees—specifically, employees laid off after March 1, 2020 (but who had worked at least 30 of the 60 days prior to the layoff) and then rehired.

Federal Contractor Authority (Sec. 3610)

The CARES Act provides that funds made available through the stimulus to federal contractors may be used to modify contracts as necessary so as to keep employees and subcontractors who would otherwise be employed on federal government sites (and who cannot telework) in “a ready state.” This provision is effective through September 30, 2020.

Technical Corrections (Sec. 3611)

Section 3611(7) of the CARES Act empowers the Secretary of Labor to issue regulations regarding leave under the FMLA due to “a qualifying need related to a public health emergency.” Previously, the Secretary of Labor’s regulatory powers in the FFCRA were limited to excluding healthcare and emergency responders from the definition of employee and to exempting small businesses of less than 50 employees from the requirements of providing FMLA leave due to “a qualifying need related to a public health emergency,” which, when doing so, would jeopardize their viability.