Unemployment Benefits and Paid Leave

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Unemployment Benefits Expanded

Gov. Whitmer signed an executive order to expand eligibility for unemployment benefits in effect from March 16 through April 12. Michigan’s Unemployment Insurance program provides temporary income to workers who have lost their job through no fault of their own. Learn about who the benefits are extended to and apply online.


Paid Leave Benefits

Families First Coronavirus Response Act 

Today, the President signed into law the Families First Coronavirus Response Act, the bill provides, among other things, provisions to address paid sick leave, paid family and medical leave and unemployment insurance for workers displaced by the ongoing outbreak.  

This bill responds to the coronavirus outbreak by providing paid sick leave and free coronavirus testing, expanding food assistance and unemployment benefits, and requiring employers to provide additional protections for health care workers. 

Specifically, the bill provides FY2020 supplemental appropriations to the Department of Agriculture (USDA) for nutrition and food assistance programs, including 

  • the Special Supplemental Nutrition Program for Women, Infants, and Children (WIC); 
  • the Emergency Food Assistance Program (TEFAP); and 
  • nutrition assistance grants for U.S. territories. 

The bill also provides FY2020 appropriations to the Department of Health and Human Services for nutrition programs that assist the elderly. 

The supplemental appropriations provided by the bill are designated as emergency spending, which is exempt from discretionary spending limits. 

The bill modifies USDA food assistance and nutrition programs to 

  • allow certain waivers to requirements for the school meal programs, 
  • suspend the work requirements for the Supplemental Nutrition Assistance Program (SNAP, formerly known as the food stamp program), and 
  • allow states to request waivers to provide certain emergency SNAP benefits. 

In addition, the bill requires the Occupational Safety and Health Administration to issue an emergency temporary standard that requires certain employers to develop and implement a comprehensive infectious disease exposure control plan to protect health care workers. 

The bill also includes provisions that 

  • establish a federal emergency paid leave benefits program to provide payments to employees taking unpaid leave due to the coronavirus outbreak, 
  • expand unemployment benefits and provide grants to states for processing and paying claims, 
  • require employers to provide paid sick leave to employees, 
  • establish requirements for providing coronavirus diagnostic testing at no cost to consumers, 
  • treat personal respiratory protective devices as covered countermeasures that are eligible for certain liability protections, and 
  • temporarily increase the Medicaid federal medical assistance percentage (FMAP). 

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More Information from the American Society of Employers: 

Emergency Leave 
The bipartisan bill provides for emergency paid-leave provisions that would require employers to provide paid sick time for 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 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 is subject to an order as described in reason for use (1) or has been advised as described in reason for use (2) (as described above).
(5) The employee is caring for a son or daughter of such employee if the school or place of care of the son or daughter has been closed or the childcare provider of such son or daughter is unavailable, due to COVID-19 precautions.
(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.

This requirement exempts employers with more than 500 employees from the paid-leave requirement. However, all employees, regardless of the duration of employment or full- or part-time status, are eligible if they meet one of the above-listed reasons.

Full-time employees would be eligible for up to 80 hours of paid emergency leave. Part-time employees would be eligible to receive the number of hours worked, on average, over a two-week period. The leave would terminate immediately once the reason for the leave has ended, and the employee would have to return to work for his or her next scheduled shift.

If the bill is passed, employers would be required to post a notice of the new law with their other required postings. The Secretary of Labor would make a model notice available within seven days of the date the law is enacted.

FMLA Expansion 
This bill also expands FMLA rights for the duration of the pandemic crisis.  This bill would apply to all employers with less than 500 employees. There is no minimum employee number.  Employees with less than 50 employees may be eligible for an exemption if the obligations would jeopardize the viability of the business as a going concern.  What that means is still unclear.

This bill would expand employee FMLA under this situation to those employees who have been employed for at least 30 days.  Normal FMLA requirement is 1,250 hours over a 12-month period.
 

An employee can take leave for caring for an “individual.”  This term “individual” is, though, undefined.  In the original House bill, the term was very expansive to include grandparents, domestic partners, etc. 

FMLA eligibility has been expanded to cover a “qualifying need related to a public health emergency.”  This situation is defined as “[i]Instances where the employee is unable to work (or telework) due to a need for leave to care for the son or daughter under 18 years of age of such employee if the school or place of care has been closed, or the child care provider of such son or daughter is unavailable, due to a public health emergency.”  Note that this include situations of telework. 

This law does have a special rule which would allow an employer who is a health care provider or an emergency responder to exclude employees from the new amendments to the FMLA. 

How Paid Leave Works 
The first 10 days for which an employee takes leave could consist of unpaid leave. An employee could elect to substitute any accrued vacation leave, personal leave, or medical or sick leave for unpaid leave. Employers could not require the employee to make the substitution.   

After the 10, days, employers would be required to pay for the leave an amount that is not less than 2/3 of an employee’s regular rate of pay and the number of hours the employee would otherwise be normally scheduled to work or the number of hours calculated for employees who have varying schedules.  For full-time employees, it would be a total of 80 hours. Part-time employees would receive a prorated amount.

It is unclear whether intermittent leave is allowed under this bill.

In addition, there are special rules for multi-employer plans that appear to give these employers more compliance flexibility than is provided to other employers.

Amount of Pay 
The amount of pay depends on which reason the time off is used.  Specifically, covered reasons (1) through (3) above must be paid at the 100% rate, while covered reasons (4) through (6) above can be paid at the 2/3 rate. 

In addition, PST payments can be capped as follows: (I) $511 per day and $5,110 in the aggregate for covered reasons (1) through (3) and (II) $200 per day and $2,000 in the aggregate for covered reasons (4) through (6).  However, while an employer appears able to pay an employee an amount that is greater than the above caps, the employer would not receive any corresponding additional tax credit.
 

The paid leave can be capped at $200 per day and $10,000 in the aggregate. 

Job Restoration 
As a general rule, an employee who is taking FMLA must have their job restored. However, the law’s job restoration requirements (in Section 104(a)(1) of the FMLA) would not apply to employees of an employer with fewer than 25 employees where the following conditions are met: 

  1. The employee takes leave under the public health emergencyprovision. 
  2. The position held by the employee when the leave commenced does not exist due to economic conditions or other changes in operating conditions of the employer that affect employment and are caused by a public health emergency during the leaveperiod; 
  3. The employer makes reasonable efforts to restore the employee to a position equivalent to the position that the employee held when the leave commenced, with equivalent employment benefits, pay, and other terms and conditions ofemployment; 
  4. Where the employer’s reasonable efforts under subparagraph (C) fail, the employer makes reasonable efforts for a one-year period beginning on the earlier of the date of the qualifying need or 12 weeks following the leave’s commencement, to contact the employee if an equivalent position becomes available.

Accrual of Paid Sick Leave 
Accrued paid sick leave would not carryover from one year to the next. 

Employee Notice to Company 
When an employee uses public health emergency leave related to school or childcare closures (see above) and the leave is foreseeable, an employee must provide the employer with such advance notice of leave as is practicable.  Otherwise, notice is similar to FMLA notice (which in practice is at the time or after the employee has need for it). 

Posting requirements
Employers are required to post a notice of the new law with their other required postings. The Secretary of Labor would make a model notice available within seven days of the date the law is enacted.

Coordination with other Leave Policies 
The sick leave provided would be in addition to any existing employer-provided sick leave and employers may not change such paid leave policy on or after the date of enactment to avoid the provision. In addition, an employer could not require, as a condition of providing paid sick time that the employee involved search for or find a replacement employee to cover the hours during which the employee is using paid sick time. 

Further, an employer may not require an employee to substitute any [public health emergency] leave.

Employees could use the additional sick time first. An employer could not require an employee to use other paid leave provided by the employer before the employee uses the paid sick time.

This law does not preempt any state or local paid sick leave laws; therefore, employers need to be careful of not violating those laws which may be even broader for usage in this situation.  For example, Michigan Paid Medical Leave would also apply in this situation, and in the case of school closures.  It is unclear whether it would run concurrently or in addition with this leave.

Refundable Tax Credits 
The bill would provide refundable payroll tax credits, subject to certain limitations, through 2020 to employers to cover wages paid to employees while they take time off under the bill’s sick leave and family leave programs, for up to 10 days.  The sick leave credit would be for wages up to $511/day or $200/day if the sick leave is to care for a family member or child following the child’s school closing.  The family leave credit would be for wages up to $200/day ($10,000/maximum) while the employee is receiving paid leave.  

The bill would also provide for a similar refundable credit against the self-employment tax for up to 10 days.  One difference between employer and self-employed is that self-employed individuals could receive a family leave credit for as many as 50 days multiplied by the lesser of $200 or their average self-employment income.  

In determining the total amount of an employer’s qualified sick leave wages paid for a calendar quarter, the total number of days that the employer can take into account with respect to a particular employee for that quarter cannot exceed 10 days minus the total number of days taken into account with respect to such employee for all previous quarters. 

The amount of the paid sick leave credit that is allowed for any calendar quarter cannot exceed the total employer portion of FICA Tax imposed on all wages paid by an employer to all of its employees during such quarter. If the amount of the credit that would otherwise be allowed is so limited, the amount of the limitation is treated as an overpayment of tax by the employer, the same as if the employer had actually overpaid the employer’s portion of FICA Tax.  Accordingly, the IRS will pay or credit to the employer the amount of the deemed overpayment.  Also, an employer who receives a credit for PST must include the amount of the credit in gross income. 

This approach is intended to prevent the employer from realizing a double benefit (i.e., a windfall) — one being the receipt of the credit and the other being a tax deduction for the paid sick leave wages. This will not nullify the tax credit, but by adding the amount of the credit to gross income, it offsets the tax deduction. 

An employer must exclude any wages taken into account in determining the paid sick leave credit when determining the paid family and medical leave tax credit under Internal Revenue Code Section 45S.  For any discussion of tax credits, please refer to your accountant and legal counsel. 

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