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Paying the Sick and Tired

Updated: Jul 15



By Rayan Omer

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The only time it’s recommended to stay away from positive people is during the COVID-19 Pandemic. By saying positive people, I don’t mean people with positive energy. Rather, people who have tested positive for the Coronavirus.

If your employee drops the bombshell, that he or she has tested positive and is self-isolating, are you required under federal law to provide them with paid sick leave? If you are required, are there any exemptions to this general rule?

This is a stressful time for everyone, especially small business owners, as most of them were shut down during the shelter-at-home order. The need to pay employees while they are on leave due to their own quarantine or the need to take care of a close family member further add to the pressure of small business owners. While you want to keep your business running, it’s important to be mindful of the employees’ situation.

In this blog post, we will shed light on paid sick leave policies by answering some of the most frequently asked questions to help small business owners navigate some of the challenges they face when an employee tests positive with Coronavirus.

Families First Coronavirus Response Act (“FFCRA”)

The Families First Coronavirus Response Act (“FFCRA”) requires employers to provide their employees paid sick leave or expanded family and medical leave for specified reasons related to COVID-19.

To determine whether the FFCRA applies to your business, Faegre Drinker LLP provides an excellent answer to that question. You must count the number of employees you have from the date the employee is requesting the leave. If the number of employees is fewer than 500, then the

FFCRA applies to the business and it must provide the paid benefits under the new law.

When it comes to counting your employees, the 500 employees include:

  • Full-time and part-time employees.

  • Employees on leave.

  • Temporary employees who are jointly employed by the business and another employer.

  • Day laborers supplied by a temporary agency.

Independent contractors that fall under the Fair Labor Standards Act (“FLSA”) are not considered employees for purposes of the 500-employee quota.

Which employees qualify for the Emergency Paid Sick Leave Act (“EPSLA”)?

Under the Emergency Paid Sick Leave Act, any employee who is unable to work or telework because the employee is:

· Subject to a Federal, State, or local quarantine or isolation order related to COVID-19;

· Is having symptoms of COVID-19 and is seeking a medical diagnosis;

· Is advised by a health care provider to self-quarantine related to COVID-19;

· Caring for an individual who is self-quarantined;

· Caring for his or her child whose school or place of care is closed due to Covid-19;

· Is experiencing any other substantially-similar condition specified by the U.S

Department of Health and Human Services, in consultation with the Secretaries of Labor and Treasury.

SMALL BUSINESS EXCEPTION: The Secretary of Labor has authority to issue regulations to exclude small businesses (with less than 50 employees) from the Emergency Paid Sick Leave requirements if the requirements jeopardize the ongoing viability of the business. For more information on small business exception, please visit Hinshaw Law.

Family Medical Leave Act (“FMLA”)

The FFCRA Act includes the expanded Family Medical Leave Act (“FMLA”), which requires employers to provide unpaid leave with continuing healthcare coverage for employees.

Which employees are eligible for expanded FMLA leave?

The Department of Labor has set forth the criteria for eligibility under the expanded FMLA provision. Such eligibility includes employees who are unable to work or telework, or whose child care provider is unavailable due to COVID-19 related reasons.

Only current employees employed with the company for at least 30 days are eligible for leave under this policy. According to Ogletree Deakins, laid off employees or otherwise terminated on or after March 1, 2020, who are reinstated on or before December 31, 2020, are eligible for leave upon reinstatement if they had previously been employed with the company for 30 or more of the 60 calendar days prior to their layoff or termination.

How to apply for expanded FMLA?

All employees requesting FMLA leave must provide written notice of the need for leave as soon as practicable. For more information on the written notice, click here. Verbal notice will otherwise be accepted until written notice can be provided.

Notice of the need for leave must include:

  • The name and age of the child or children being cared for.

  • The name of the school, place of care, or child care provider that became unavailable due to COVID-19 reasons.

  • A statement representing that no other suitable person is available to care for the child or children during the period of requested leave. In the case of children over the age of 14, a statement indicating the special circumstances that require the employee to provide care during daylight hours.

Is an employee required to give notice to the employer of the EPSLA?

An employee should provide notice to the employer whenever it’s foreseeable and practicable to do so. An employer may request employees to follow reasonable notice procedures to continue receiving paid sick leave.

Which employers are covered under the EPSLA?

The EPSLA covers any private employer under 500 employees, and certain public employers. The Act requires those employers to provide emergency paid sick leave for their eligible employees.

Are there any exemptions from providing the Emergency Paid Sick Leave Act EPSLA?

Small businesses may apply for an exemption of the requirement to pay EPSLA if the:

· Employers have 50 employees or less.

· If providing EPSLA would cease the business as an ongoing concern.

· The employee is a health care provider or an emergency responder.


How long does an employer need to provide paid sick leave?

The Emergency Paid Sick Leave Act provides that employees of covered employers are eligible for:


· Two weeks (up to 80 hours) of paid sick leave at the employee’s regular rate of pay where the employee is unable to work because the employee is quarantined.

· Two weeks (up to 80 hours) of paid sick leave at two-thirds the employee’s regular rate of pay because the employee is unable to work because of a bona fide need to care for an individual subject to quarantine or to care for a child (under 18 years of age) whose school or child care provider is closed or unavailable for reasons related to COVID-19.

· Up to an additional 10 weeks of paid expanded family and medical leave at two-thirds the employee’s regular rate to pay where an employee, who has been employed for at least 30 calendar days, is unable to work due to a bona fide need for leave to care for a child whose school or child care provider is closed or unavailable for reasons related to COVID-19. In no condition shall the paid amount of leave exceed $200 a day, in total of $10,000.

Concurrent use of expanded FMLA and EPSLA

The employee may use emergency paid sick leave under this policy before using any other accrued paid time off.

Employees on expanded FMLA leave under this policy may use emergency paid sick leave concurrently with that leave. Emergency paid sick leave may also be used when an employee is on leave under traditional FMLA for their own COVID-19-related serious health condition or to care for a qualified family member with such a condition.

When does the emergency paid sick leave terminate?

The paid sick leave would end at the beginning of the employee’s next scheduled work shift following the termination of the need for paid sick leave.


Tax credit compensation

An employer who provides the emergency paid sick leave for an employee qualifies for a dollar-to-dollar reimbursement through tax credits for all qualifying wages paid under the federal paid sick leave and paid FMLA mandates. An eligible employer may receive a refundable sick leave credit for the paid sick leave at the employee's regular rate of pay, up to $511 per day and $5,110 in the aggregate, for a total of 10 days.

The IRS gives a good example of how this tax credit works. If an eligible employer paid $5,000 in sick leave and is otherwise required to deposit $8,000 in payroll taxes, including taxes withheld from all its employees, the employer could use up to $5,000 of the $8,000 of taxes it was going to deposit for making qualified leave payments. Hence, the employer would only be required under the law to deposit the remaining $3,000 on its next regular deposit date.

For more information on tax credit compensation, please visit CBIZ.

What documentation does the employer need to obtain tax credit?

The IRS makes it clear that those credits won’t be issued without some supporting documentation. According to the IRS, an employer should have a written request for (EPSL) from the employee which includes the following information below;

· Name of employee.

· Date for which the leave is requested.

· A statement relating to a Covid-19 reason for requesting such leave.

· Written support for such reason. (name of healthcare provider advising the self-isolation or government entity requiring such quarantine)

· Statement that the employee is unable to work or telework.

In addition to the documents of the employee requesting EPSLA, the employer should keep records of the following information:

  • Documentation to show how the employer determined the amount of qualified health plan expenses allocated to qualified EPSL wages.

  • Documentation to show how the employer determined the amount of qualified EPSL wages paid to employees that are eligible for the credit.

  • Advance of employer credits due to COVID-19, that the employer submitted to the IRS. Copies of any completed Forms 7200.

  • Copies of the completed Forms 941, Employer’s Quarterly Federal Tax Return, that the employer submitted to the IRS. Employers that use third-party payers to meet their employment tax obligations will need to have records of information provided to the third-party payer regarding the employer’s entitlement to the credit claimed on Form 941.

How long should a business maintain the records?

The IRS requires an employer to keep the employees EPSL records and the employer’s records for at least four years following the date the tax becomes due or is paid, whichever is later.

Should the employer notify the employees of their eligible rights?

An employer should post the requirements described in this Act in a place that is customarily viewed by his employees. Such posts should be approved by the Secretary of Labor or prepared by them. An example of the post prepared by the Secretary of Labor can be found here.

Prohibited acts by the employer

An employer is prohibited from discharging, disciplining, or discriminating against any employee who takes leave in accordance with the Emergency Paid Sick Leave Act, or any employee who initiates a complaint or any proceeding under this Act. It is also prohibited to require an employee to find a replacement for him or her before providing the emergency paid sick leave.

Finally, an employer may not ask the employee to take other paid leave before using the emergency paid sick leave.

What are the legal consequences of not providing EPSLA/ expanded FMLA?

A covered employer who fails to pay the EPSLA or expanded FMLA would be subject to penalties under the law.

Can an employee carry over any unused benefits from the FFRCA Act?

The paid emergency sick leave or expanded family medical leave under the Family First Response Act would not be provided for after December 31, 2020. Any unused paid sick leave or family medical leave would not be carried over to the following year or paid out to the employee.

For additional information relating to providing for your employee who has been tested positive or an employee taking care of his or her child due to Coronavirus associated issues, check out the Families First Coronavirus Response Act FAQs.

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Are you interested in launching or sustaining a pandemic proof small business? Spot issues, take action, stay safe, and thrive in a post Covid-19 world with Legalucy. Learn more at thelucyreport.com


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