Title III – Supporting America’s Health Care System in the Fight Against Coronavirus, Subtitle C – Labor Provisions

Early in the morning on Thursday, March 26, 2020, the Senate passed the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”).  On Friday, March 27, 2020, the House of Representatives also passed the CARES Act and President Trump quickly signed it into law the same day.

In this continuing series of blogs by lawyers at Forrest Firm, P.C., we will examine the most important, relevant, and impactful provisions of the CARES Act.  Our goal is not to provide you with a granular level examination of each provision of the CARES Act, but rather to provide a macro view of the CARES Act in clear, concise, and understandable language that will enable readers to move forward with their businesses and lives with confidence.  These are trying times, and here at Forrest Firm we want these articles to support our clients, positively impact our communities, and be available to help you with questions and concerns raised by the CARES Act.

This portion of the CARES Act primarily provides updates, amendments, and clarifications to the recently passed Families First Coronavirus Relief Act (the “FFCRA”).  Forrest Firm previously provided a summary of the FFCRA’s requirements regarding paid sick and family leave here, as well as a summary of the related payroll tax credits here

Limitations on Paid Leave.  Section 3601 of the CARES Act amends a provision of the Family and Medical Leave Act (the “FMLA”) created by the FFCRA as the Emergency Family and Medical Leave Expansion Act to provide a cap on payments by employers for emergency medical and family leave in the amount of $200 per day, and $10,000 in the aggregate, for each employee.

Emergency Paid Sick Leave Act Limitation.  Section 3602 of the CARES Act provides a cap on paid sick leave provided under the Families First Coronavirus Response Act.  Specifically, it amends Section 5102 of the Emergency Paid Sick Leave Act, which is part of the FFCRA, so that employers are not required to pay more than: 

  • $511 per day, and $5,110 in the aggregate, for each employee taking emergency paid sick leave if the employee is subject to a federal, state, or local quarantine or isolation order related to the coronavirus; the employee has been advised by a healthcare provider to self-quarantine due to concerns related to the coronavirus; or the employee is experiencing symptoms of the coronavirus and is seeking a medical diagnosis; or
  • $200 per day, and $2,000 in the aggregate, for each employee taking emergency paid sick leave in order to care for another individual who is subject to a federal, state, or local quarantine related to the coronavirus; in order to care for another individual who has been advised by a healthcare provider to self-quarantine due to concerns related to the coronavirus; to care for their son or daughter if the school or place of care of their son or daughter has closed or their childcare provider is unavailable, due to the coronavirus; or as a result of experiencing any other substantially similar condition specified by the Department of Health and Human Services.

Paid Leave for Rehired Employees.  Section 3605 of the CARES Act amends Section 110(b)(2)(B) of the Family and Medical Leave Act (the “FMLA”), which was created by the FFCRA amends the Emergency Family and Medical Leave Expansion Act to clarify that an “eligible employee” is an employee who has been employed for at least 30 calendar days by the employer from whom leave is requested.  The employee must have been laid off by that employer on or after March 1, 2020, worked for the employer for at least 30 of the last 60 calendar days prior to the employee’s layoff, and be rehired by the employer.

Advance Refunding of Payroll Credits for Required Paid Sick Leave and Required Paid Family Leave.  Section 3606 of the CARES Act amends a provision of the Family and Medical Leave Act (the “FMLA”) created by the FFCRA as the Emergency Family and Medical Leave Expansion Act to provide for additional relief under the FFCRA.  The FFCRA provides a payroll tax credit to employers paying required paid sick leave and required paid family leave. In anticipation of the credit, the IRS may advance the credit, according to forms and instructions to be provided (draft forms were released on March 31, 2020)  In addition, the IRS will waive penalties under Internal Revenue Code Section 6656 for failure to timely make employment tax credits if the failure was due to anticipation of the IRS allowing the credit.

ERISA Provisions.  Sections 3607 – 3609 of the CARES Act addresses ERISA requirements.

  • Section 3607 of the CARES Act waives certain deadlines due to a public health emergency such as the coronavirus pandemic.
  • Section 3608 of the CARES Act addresses single employer plan funding rules, extending the deadline for minimum required contributions (including quarterly contributions) due during 2020 to January 1, 2021, with accrued interest added, and allowing plan sponsors to use the plan’s adjusted funding target attainment percentage for the last plan year ending before January 1, 2020 as the adjusted funding target attainment percentage for plan years which include calendar year 2020.
  • Section 3609 of the CARES Act provides a series of criteria that, if met, allow pension plans to be considered a cooperative and small employer charity pension plan effective for plan years beginning after December 31, 2018.  Notably, these requirements are specific enough so that only the March of Dimes qualifies.  

Federal Contractor Authority.  Section 3610 of the CARES Act allows for modifications of the terms and conditions of agreements with Federal contractors in order to reimburse the contractors for any paid leave, including sick leave, the contractors provide to keep their employees or subcontractors in a ready state, including to protect the life and safety of Federal government and contractor personnel, through September 30, 2020.  The provision applies only to Federal contractors (1) whose employees or subcontractors cannot perform work on a site that has been approved by the Federal government due to facility closures or other restrictions and (2) whose employees cannot telework because their job duties cannot be performed remotely during the coronavirus pandemic.  However, the maximum reimbursement allowed to contractors is reduced by certain credits to which the contractors are entitled under the CARES Act and the FFCRA. 

If you have any questions, please do not hesitate to contact Brian Bernhardt for more information.