The Relationship between Federal, State & Local COVID-19 Related Leave Laws
By Christine Samsel
This article was co-authored by Karen Dinino, Senior Counsel, Brownstein Hyatt Farber Schreck, LLP
Employers who operate in multiple jurisdictions must navigate a maze of sometimes conflicting employment laws, and one area that poses many traps for the unwary is paid leave. This issue has become particularly difficult given the web of overlapping and inconsistent COVID-19-related leave requirements under federal, state and local law; the array of laws applicable to multi-jurisdictional employers, and the speed with which they change, is dizzying.
In this article, we outline some examples, and provide practical tips for employers to consider.
Federal COVID-19-Related Leave (Employers of Fewer than 500 Employees): Expanded and Extended in 2021
Federal COVID-19-related paid leave initially was required, but now is voluntary. Specifically, the Families First Coronavirus Response Act (the "FFRCA"), which required that employers of fewer than 500 employees provide Emergency Paid Sick Leave ("EPSL") and Expanded Family and Medical Leave ("EFML") to eligible employees for designated COVID-19-related purposes, ended by its terms on Dec. 31, 2020.
Although many expected the FFCRA protections to be extended due to the continuing pandemic, only a portion of the FFCRA was extended via the Consolidated Appropriations Act of 2021 (the "CAA"). Under the CAA, covered employers could elect to voluntarily extend FFCRA leave through March 31, 2021, and continue to receive a payroll tax credit.
The American Rescue Plan Act of 2021 ("ARPA"), signed into law on March 11, 2021, further extended and modified the FFCRA. Specifically, ARPA makes available continuing tax credits for covered employers who voluntarily extend EPSL and/or EFML through Sept. 30, 2021. To be eligible for the payroll tax credit, employers must expand the FFCRA leave previously available.
For EPSL, a covered employer must provide a new bank of 10 days of EPSL, available to use for expanded reasons between April 1 and Sept. 30, 2021. For EFML, through Sept. 30, 2021, participating employers must provide employees with any remaining EFML to which they would have been entitled under the FFCRA and CAA, and must permit EFML paid leave to be used for many more "qualifying reasons" than previously. ARPA appears to allow employers to elect to continue either EPSL or EFML, neither or both.
If a covered employer chooses to extend FFCRA leave, eligible employees may use EPSL for the reasons originally specified in the FFCRA, i.e., when an employee is unable to work because he or she is quarantined, is experiencing COVID-19 symptoms and seeking a medical diagnosis, has the need to care for an individual subject to quarantine, or must care for a child whose school or child care provider is closed or unavailable due to COVID-19.
In addition, as of April 1, 2021, ARPA permits employees to use EPSL to obtain a COVID-19 vaccine, recover from adverse reactions to a COVID-19 vaccine, and seek and await the results of a diagnostic test or medical diagnosis of COVID-19 if the employee has been exposed to COVID-19 or his or her employer has requested such test or diagnosis.
ARPA greatly expanded the permissible uses of EFML (up to 12 weeks). Previously limited only to leaves for employees unable to work due to closure of a child's school or place of care, EFML now is available for all of the reasons outlined above for using EPSL. Covered employers must ensure that employee eligibility requirements are being met and leaves are properly documented in order to maximize the tax benefit.
State and Local Paid Leave Laws
Many states and municipalities are enacting paid sick leave laws, particularly in response to the COVID-19 pandemic. Some were intended to fill in the gaps of the FFCRA (e.g., applying to larger employers). Some layered on top of the FFCRA. Others modified or clarified existing paid sick leave laws as they pertained to COVID-19-related leaves. Space constraints prohibit a full analysis of nationwide paid sick leave requirements, but we offer a few examples below (other examples abound).
California: California enacted two laws providing COVID-19 specific leave rights. These leaves are in addition to leave that may be available under California's Healthy Workplaces, Healthy Families Act (Cal. Labor Code sections 245-249), which provides paid sick leave for various purposes, as well as California Paid Family Leave and the paid sick leave required by various jurisdictions such as the City of Los Angeles and San Diego, San Francisco, Oakland and other counties.
On March 29, 2021, California implemented Supplemental Paid Sick Leave ("SPSL") (Cal. Labor Code § 248.2), applicable to employers with more than 25 employees, including those with collective bargaining agreements. Covered workers include California employees who are unable to work or telework due to one of the specified COVID-19-related qualified reasons. SPSL provides covered employees with up to two weeks (up to 80 hours) of paid leave retroactive to Jan. 1, 2021, and continuing through Sept. 30, 2021 (part-time employees generally receive the number of hours they would be scheduled to work over two weeks, with a calculation method designated for part-timers with a fluctuating schedule).
Numerous California counties and cities have additional COVID-19-related paid sick leave requirements, including San Francisco, Los Angeles, Long Beach, etc. These COVID-19 specific paid leaves can run concurrently with FFCRA leave if the reason for leave qualifies under both state and federal laws (but see the discussion below regarding the practical difficulties of running the leaves concurrently).
In addition, the California Occupational Safety and Health Standards Board adopted Emergency Temporary Standards ("ETS") addressing COVID-19 prevention in the workplace, which became binding and enforceable against nearly all California employers effective Nov. 30, 2020. Among other things, the ETS requires that covered employers provide "exclusion pay" to employees under certain circumstances (i.e., where employees are "COVID-19 cases" or have had COVID-19 exposure, other than fully vaccinated employees with COVID-19 exposure who are asymptomatic, all as detailed in the ETS), which could be up to 14 days per incident, with no limitation on the number of times an employee may receive exclusion pay.
Specifically, as outlined in the "frequently asked questions" for the ETS, if the employee is able and available to work, the employer must continue to provide the employee's pay and benefits, unless the employer can establish that the employee's exposure was not work-related. The employer may require the employee to exhaust paid sick leave benefits provided by the employer that are separate from and in addition to Paid Sick Leave under California Labor Code section 246 (as discussed below), and may require the employee to use SPSL (discussed above), before providing exclusion pay.
Colorado: Colorado implemented the Healthy Families and Workplaces Act ("HFWA") in July 2020, with modified terms effective Jan. 1, 2021. (Colo. Rev. Stat. §§ 8-13.3-401, et seq.) Business and school closures due to public health emergencies constitute qualifying reasons to use "regular" paid sick leave provided under the HFWA. In addition, the HFWA includes a Public Health Emergency ("PHE") supplement, applicable to all employers, regardless of size, of up to 80 hours of paid leave for specified circumstances arising from designated emergencies, such as the COVID-19 pandemic. The PHE for COVID-19-related reasons in 2021 is a new entitlement, regardless of whether an employee used some or all available PHE leave in 2020.
Oddly, for several of the qualifying reasons, the law and the related Interpretive Notice & Formal Opinion (INFO #6B) do not specify that the individual must be unable to work due to that qualifying reason (e.g., needing to self-isolate, seeking care of COVID-19, or caring for a child or family member). (Compare Colo. Rev. Stat. § 8-13.3-405(3)(a)-(c) with § 8-13.3-405(3)(d).) Employees are allowed to use PHE leave prior to using accrued HFWA leave if the reason for leave would qualify for both.
Under some circumstances, an employer's more generous PTO policy can be used in lieu of providing additional HFWA leave, under the same circumstances and with no stricter conditions imposed; however, if a public health emergency is declared and the employee has already used some or all of his or her accrued PTO (e.g., for a vacation), the employer may be required to provide additional leave for PHE purposes.
The HFWA's "reasonable documentation" provisions do not apply to PHE leave; employers are not permitted to require documentation for PHE leave, other than a return-to-work certification if there is a good faith basis to believe the employee was exposed to a contagious disease that may persist past the leave period. The HFWA does not address the interplay with FFCRA leave.
New York: New York requires employers to provide COVID-19-related leave and job protection under specified circumstances, with benefits varying depending on the size of the employer. Larger employers are required to provide at least 14 days of paid sick leave and medium-size employers are required to provide at least five days. Some of the qualifying reasons for COVID-19-related leave also may overlap with New York's Paid Family Leave ("PFL") and/or disability benefits. COVID-19-related paid sick leave, PFL and disability benefits are available only to the extent they exceed paid FFCRA leave.
Chicago, Illinois: The City of Chicago enacted the Vaccine Anti-Retaliation Ordinance that provides all workers in Chicago (employees and independent contractors) with the right to obtain COVID-19 vaccinations during their work hours and imposes significant penalties for employer violations. If the employer mandates the vaccines (which we do not recommend while the vaccines are under FDA Emergency Use Authorization (EUA) status), the time spent getting the vaccine is compensable work time. Otherwise, workers may elect to use accrued paid sick leave or other paid time off, and if none is available, the time off can be unpaid.
Employer-Provided Leaves
The vast majority of employers provide some form of paid vacation/paid sick leave to employees in addition to legally required paid time off. Some companies break this out into "vacation" and "paid sick leave," often because unused paid sick leave does not generally need to be paid out upon termination of employment, even in jurisdictions where unused vacation time must be paid out. Other employers use the catch-all "paid time off" ("PTO"), which typically covers all types of paid leave and has historically been easier to administer than having separate categories of paid leave.
Either way, some-but not all-state and local laws permit an employer's "more generous" PTO policies to substitute for legally required paid leaves. This can be a tricky analysis, given the question of what "more generous" means. Employers need to examine various factors, such as the PTO accrual rate (is it as fast as required under applicable law?), carryover from year to year, eligible employees (part-time, casual and temporary employees often are excluded from PTO policies, but not paid sick leave mandates), permissible uses, request processes (paid sick leave laws often require very liberal request procedures and notice requirements), pay rates (often specified in paid sick leave laws), documentation procedures (many paid sick leave laws strictly limit documentation that may be required of employees), tracking requirements (employers often are required to track and maintain records of paid sick leave accrued, requested and granted/denied) and reinstatement of unused time upon rehire. And some jurisdictions, such as Santa Monica, California, require a separate paid sick leave policy regardless of how generous the employer's PTO policy may be.
Interplay Between Various Leaves: Practical Considerations for Employers
In light of this mind-boggling array of overlapping laws, how can employers ensure compliance? While we can't address every potential issue here, we have outlined the pertinent questions to provide a framework with which to analyze employee leave requests.
What leaves may apply? Determine, based on the jurisdiction and the company size, what federal, state and local leave laws and what company policies might apply. Remember that even if COVID-19-related leaves do not apply (for instance, if a covered employer did not voluntarily extend FFCRA leave), "regular" leaves, whether paid or unpaid, might still be available. This can include Family and Medical Leave Act leave, state- or locality-required leave, leave under the Americans with Disabilities Act, disability leave or other time off under the employer's policies or benefit plans, workers' compensation leave, or other types of leave, subject to eligibility requirements.
For what leave(s) is the employee eligible? Based on the reason for which the employee is seeking leave and other eligibility requirements (such as tenure with the company), determine what leave laws might apply to the employee's situation. It is possible, if not probable, that more than one type of leave may be applicable.
Can the applicable leaves run concurrently? If the employee is eligible for more than one type of leave, determine whether they can run concurrently. This often requires a close analysis of the leaves. Some leave laws expressly indicated they are permitted to run concurrently in certain circumstances, while others state they are not, and still others are silent on the issue. Employers should review applicable rules in conjunction with legal counsel as appropriate to ensure that, under the circumstances at issue, concurrent designation is permitted, and designate in writing where leave periods are running concurrently.
Per FFCRA guidance, FFCRA leave is in addition to existing leave entitlements. However, some state and local laws provide that they may run concurrently, or only apply to the extent FFCRA leave is not otherwise available. California's SPSL, for example, expressly states that SPSL can run concurrently with EPSL and EFML leave under the extended FFCRA for qualifying circumstances, as long as the time off is paid at the higher California rate.
However, in practice, this may be difficult. California's request procedures are very liberal, even permitting oral leave requests, and employers cannot require any documentation or specific information (other than the general basis for the leave) as a condition of granting leave. This means that employers may not be able to obtain the documentation required for the tax credit under the FFCRA (although the leaves presumably could still run concurrently).
In addition, the qualifying reasons for leave under the SPSL and FFCRA are slightly different. Among other things, the definition of "family member" varies, and although the basis for the "isolation" qualifying reason is broader under California law, the school/child care provider closure reason is narrower (requiring COVID-19 "on the premises" as opposed to closure for COVID-19-related reasons).
Likewise, some California county and city leave laws expressly outline the interaction with other types of paid leave, such as SPSL or other California paid sick leave, and indicate whether they may or may not run concurrently.
In other jurisdictions, such as Colorado, there is no reference to the FFCRA as it pertains to PHE leave, for instance, as to whether it can run concurrently. However, the FFCRA guidance suggests that Colorado PHE and the FFCRA would not run concurrently because the FFCRA does not displace existing leave. Colorado's PHE leave entitlement began Jan. 1, 2021, and ARPA extended and expanded the FFCRA (including requiring a new grant of leave) as of April 1, 2021; therefore, Colorado's PHE leave predated the current FFCRA. Our read therefore is that Colorado PHE and FFCRA leave would not run concurrently.
This issue will need to be analyzed in a similar manner for the various types of leave that may be available to an employee in a given situation.
If the leaves cannot run concurrently, which run(s) first? Sometimes the applicable leave laws will specify the order in which the leaves must be used. Others allow the employer or employee to specify. In some circumstances, it is at the employee's sole option. Employers must ensure that they are following the restrictions of the particular law in designating the order of leaves.
How much compensation is the employee entitled to? The applicable leave laws generally designate the rate of pay to which the employee is entitled and the applicable leave period. Where it gets particularly tricky is for part-time employees, especially those on a variable schedule. Look for guidance issued by the state or locality in the applicable jurisdiction, which may provide details on how to calculate compensation in such circumstances.
What documentation can be required? It varies widely. The IRS issued quite specific guidance regarding documentation that can be required for FFCRA leave, and what must be maintained in order to receive the tax credit. Other jurisdictions permit only limited documentation, or none at all (e.g., Colorado and California). Again, employers must look to the specific leave law and guidance issued with respect thereto to determine what can be required.
How do employers need to track the time? Various paid sick leave laws require that employers track and retain information related to requests for and usage of paid leave for a specified time period. Similarly, many jurisdictions require that pay stubs reflect accrued and available paid sick leave (which may be different in jurisdictions that allow a "waiting period" before requiring employers to permit use of paid sick leave). Employers should be cognizant of such tracking and reporting requirements. As noted above, these tracking requirements may apply even where the employer's more generous PTO policy supplants the need for a separate paid sick leave policy in a particular jurisdiction.
How can employers curb abuse? As the paid sick leave options available to employees proliferate, so too does the potential for abuse. While most employees use paid sick leave in good faith, reports of suspected abuse by employees have multiplied exponentially. This includes such things as employees claiming to be missing work for vaccinations when they are not actually getting them, reporting side effects from vaccines for up to two weeks post-vaccination, and falsely (and sometimes repeatedly) reporting COVID-19 exposure in order to obtain paid leave. Given the liberal nature of the paid sick leave laws, many of which permit very little documentation or inquiry beyond the claimed need for leave, it can be difficult to curb suspected employee abuse.
Employers should internally document the process they are following in considering the leave request, including communications with the employee. To the extent the applicable leave law permits the employer to require documentation from the employee, ensure that such documentation is timely provided. If there is reason to believe that the employee is being untruthful, there may be an opportunity to obtain additional documentation.
In California, for instance, the SPSL FAQs provide, "[a]lthough an employer cannot deny [SPSL] solely for lack of a medical certification, it may be reasonable in certain circumstances to ask for documentation before paying the sick leave when the employer has other information indicating that the covered employee is not requesting [SPSL] for a valid purpose. In any such claim, the reasonableness of the parties' actions will undoubtedly come into play.
For example, if a covered employee informs an employer that the covered employee is subject to a local quarantine order or recommendation, has to stay home, and qualifies for [SPSL], but the employer subsequently learns that the covered employee was out at a park, the employer could reasonably request documentation."
The bottom line, though, is that employers must tread carefully in challenging employees with respect to protected leaves, and would be wise to consult with legal counsel before doing so.
Takeaways
These laws are changing virtually every day as more states and localities add their own patches to the crazy quilt of paid sick leave laws. Employers must ensure they stay up-to-date on state and local laws in each jurisdiction where they have employees, including locations where those employees perform work, even if sporadic.
It is especially important for employers to review their PTO and paid sick leave policies to confirm compliance with applicable laws, regulations and posting requirements, as well as collective bargaining agreement provisions. Including a disclaimer in employee handbooks and applicable policies to the effect that, in the event applicable law is more generous, the company will comply with that law, can also be helpful, given how quickly the laws are changing. Experienced employment law counsel can assist in navigating this rapidly changing legal landscape.
