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UPDATE: The Families First Coronavirus Response Act Is Enacted

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DISCLAIMER: As the COVID-19 public health situation evolves, new regulations are being continually issued. This page/story/information may not include the most recent information.

As we previously wrote here, Congress has drafted emergency legislation (H.R. 6201) to provide employees paid family and medical leave and paid sick leave in response to the COVID-19 pandemic. Last night, President Trump signed into law the Families First Coronavirus Response Act (the “Act”). The Act will take effect on or by April 2, 2020.

The Act creates two new emergency leave benefits for eligible employees: (1) emergency paid family and medical leave and (2) emergency paid sick leave. The Act generally applies to employers with fewer than 500 employees; certain exceptions are discussed in this alert.

Key provisions of the Act that will impact employers are summarized below, including important amendments that have been added to the law since our previous alert.

Up to 12 weeks of Emergency Family Medical Leave (EFML) is available to employees who have been employed a minimum of 30 days and who are unable to work (or telework) because they need to care for their child whose school is closed, or whose childcare provider is unavailable because of a public health emergency. Additionally, the Act provides that:

  • The first ten (10) days of EFML is unpaid, but employees may elect to substitute any of the employer’s other paid leave benefits during this period, e.g., paid vacation leave.
  • After the initial unpaid ten (10) day period, employers must pay employees at least two-thirds of their regular compensation, up to a maximum of $200 per day or $10,000 in the aggregate.
  • The FMLA’s job protections apply to EFML, but there is an exemption for employers with fewer than 25 employees, where the employee’s position is eliminated because of economic slowdowns related to the declaration of a public health emergency and the employer attempts to restore the employee’s employment within a year.
  • The Secretary of Labor is permitted to exempt employers with fewer than 50 employees from the EFML requirements if the Act’s requirements would “jeopardize the viability of the business as a going concern.” We are closely monitoring the Department of Labor for announcements about possible exemptions for small employers.

Emergency Paid Sick Leave (EPSL) is available to all employees for immediate use, regardless of their length of employment. Employees may take EPSL for the following reasons:

  1. The employee is subject to a federal, state, or local quarantine or isolation order due to COVID-19;
  2. The employee has been advised by a healthcare provider to self-quarantine because of 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 quarantined or advised by a healthcare provider to self-quarantine;
  5. The employee is caring for a son or daughter if the school or place of care for the child has been closed, or the child care provider is unavailable, because of COVID-19 precautions;
  6. The employee is experiencing any other, substantially similar condition, as specified by the Secretary of Health and Human Services in consultation with the Secretary of the Treasury and the Secretary of Labor.

Other aspects of EPSL include:

  • Full-time employees are entitled to 80 hours of EPSL, and part-time employees are entitled to EPSL in the amount equal to the average amount of hours they work over a two-week period.
  • There is no carryover of EPSL into the following calendar year, and employers are not required to pay out unused leave upon an employee’s separation from employment.
  • Employers must pay EPSL to employees in addition to any other leave benefits the employer offers, and employers may not require employees to use any other leave before using EPSL.
  • If an employee uses EPSL to care for himself or herself for reasons (i)-(iii) listed above, employers must pay the employee his or her regular compensation, up to a maximum of $511 per day or $5,110 in the aggregate.
  • If an employee uses EPSL to care for a family member or for reasons (iv)-(vi) listed above, employers must pay the employee either two-thirds of his or her regular compensation or the minimum wage, whichever amount is greater. Employers must only pay up to a maximum of $200 per day or $2,000 in the aggregate.
  • Employers must post a notice about leave entitlements in a conspicuous location within the job site; the Department of Labor is expected to publish a model notice for positing on or before March 25, 2020.
  • The Secretary of Labor is permitted to exempt employers with fewer than 50 employees from the EPSL requirements if the Act’s requirements would “jeopardize the viability of the business as a going concern.”  We are closely monitoring the Department of Labor for announcements about possible exemptions for small employers.

The Act provides employers some financial relief in the form of tax credits on a dollar-for-dollar basis for EFML or EPSL payments to employees, subject to certain caps.

In addition to the Act, many state and local jurisdictions are considering legislation that may supplement the Act’s leave benefits in response to COVID-19. Employers should confer with counsel about how state and local laws may augment the leave to which their employees are entitled.

We are monitoring legislative and regulatory developments and will provide updates as more guidance is released. For some answers to commonly asked questions regarding how to communicate with staff about COVID-19 challenges, click here. For additional information regarding COVID-19 legal issues, please visit Venable’s COVID-19 legal resources page.

Employers with additional questions should contact Michael VolpeNicholas ReiterAllison Gotfried, or any other Venable Labor and Employment Group attorney.

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Michigan license number:   DM-0016282 Available to the public and licensed in Michigan.

Section 13(1)  When a licensee establishes a debt management plan for a debtor, the licensee may charge and receive an initial fee of $50.00

Section 13(2)  A licensee shall attempt to obtain consent to participate in a debt management plan from at least 51%, in number or dollar amount, of the debtor’s creditors within 90 days after establishing the debt management plan. If the required consent is not actually received by the licensee, the licensee shall provide notice to the debtor of the lack of required consent and the debtor may, at its option, close the account. If the debtor decides to close the account, any unexpended funds shall be returned to the debtor or disbursed as directed by the debtor.

Sec. 14. (1) A contract between a licensee and debtor shall include all of the following:

(a) Each creditor to which payments will be made and the amount owed each creditor. A licensee may rely on records of the debtor and other information available to it to determine the amount owed to a creditor.

(b) The total amount of the licensee’s charges.

(c) The beginning and termination dates of the contract.

(d) The principal amount and approximate interest charges of the debtor’s obligations to be paid under the debt management plan.

(e) The name and address of the licensee and of the debtor.

(f) Any other provisions or disclosures that the director determines are necessary for the protection of the debtor and the proper conduct of business by a licensee.

Sec. 18. (1) In addition to the fee described in section 13(1), a licensee may charge a reasonable fee for providing debt management services under a debt management plan. The fee under this subsection shall not exceed 15% of the amount of the debt to be liquidated during the express term of the plan.

(2) A licensee may offer a debtor the option to purchase credit reports or educational materials and products, and charge a fee to the debtor if the debtor elects to purchase any of those items from the licensee.  Fees charged under this subsection are not subject to the 15% limitation on fees described in subsection (1).

(3) Except for a cancellation described in subsection (4), in the event of cancellation of or default in the performance of the contract by the debtor before its successful completion, a licensee may collect $25.00 in addition to any fees and charges of the licensee previously received by the licensee. This $25.00 fee is not subject to the 15% limitation on fees and charges under subsection (1).

(4) A contract is in effect when it is signed by the licensee and the debtor and the debtor has made a payment of any amount to the licensee. The debtor has the right to cancel the contract until 12 midnight of the third business day after the first day the contract is in effect by delivering written notice of cancellation to the licensee. A cancellation described in this section is not subject to, and a licensee shall not collect, the fee described in subsection (3).

(5) If a debtor fails to make a payment of any amount to a licensee within 60 days after the date a payment is due under a contract, the licensee may, in its discretion, cancel the debt management contract if it determines that the plan is no longer suitable for the debtor, the debtor fails to affirmatively communicate to the licensee the debtor’s desire to continue the plan, or the creditors of the debtor refuse to continue accepting payments under the plan.

(6) A licensee shall not contract for, receive, or charge a debtor an amount greater than authorized by this act. A person that violates this subsection, except as the result of an inadvertent clerical or computer error, shall return to the debtor the amount of the payments received from or on behalf of the debtor and not distributed to creditors, and, as a penalty, an amount equal to the amount overcharged.

530 W Allegan Street, 7th Floor
Lansing, MI  48909-7720
877-999-6442

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