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March 2020

COVID-19: A Guide for Arizona Employers

March 31, 2020

Based on our conversations with clients over the past few weeks, we know many Arizona employers are being forced to make difficult decisions.  Whether you employ one or 1,000 employees, the impact of the COVID-19 pandemic has likely impacted your business in unforeseen ways.  We have prepared this update to assist your decision making.  If you have additional questions, please reach out to us, or visit our COVID-19 Hub.

Arizona’s Fair Wages and Healthy Families Act

As you may know, on March 11, 2020, Arizona Governor Ducey declared a public health emergency in Arizona to address COVID-19.  Also, to reduce the spread of COVID-19, Arizona public schools are currently closed for the rest of the school year.  On March 30, 2020, the Governor issued a “Stay home, Stay healthy, Stay connected” order, which begins at 5:00 p.m. on March 31, 2020, and orders all Arizonans to limit their time away from their home. 

What many employers may not know is that Arizona’s Fair Wages and Healthy Families Act (the “Arizona Act”) requires employers to pay employees accrued earned paid sick leave in situations involving public health emergencies or school closures related to COVID-19.  Unlike the recent federal legislation we discuss below, the Arizona Act applies to all Arizona employers.  Under the Arizona Act, Arizona employers are required to pay accrued sick leave to eligible employees if:
  • The employer’s business has closed or is closed in the future by order of a public official due to COVID-19;
  • An employee has to stay home to care for their child[ren] because schools and daycares are closed due to COVID-19; and
  • Employees have to stay home to care for themselves or their family member due to exposure to COVID-19.

For a more complete summary of the Arizona Act, please review our previous posts:

Families First Coronavirus Relief Act

The federal government enacted new laws on March 18, 2020, which apply to many Arizona employers that employ fewer than 500 employees.  The Families First Coronavirus Response Act (FFCRA)[1] has two important sections requiring covered employers to provide paid time off to their employees: (1) the Emergency Paid Sick Leave Act (EPSLA); and (2) the Emergency Family and Medical Leave Expansion Act (EFMLEA).[2]  The FFCRA becomes effective as of April 1, 2020; Arizona employers should become familiar with these laws and post the notices described below quickly. 

  • Effective date. The FFCRA’s paid provisions are effective April 1, 2020 for leave taken through December 31, 2020.
     
  • Large business exemption. Employers who employ 500 or more employees are excluded from the requirements to provide paid sick days to their employees.
     
  • Doing the math.
    • In calculating whether an employer has more than 500 employees, an employer should include employees on leave, temporary employees who are jointly employed, and day laborers supplied by a temporary agency.
    • Independent contractors are not considered employees for purposes of the 500-employee threshold.
    • Generally, two or more entities are separate employers unless they meet the integrated employer test under the FMLA.[3]  If an employer meets the requirements of the integrated employer, then employees of all entities making up the integrated employer are counted in determining employer coverage.
    • For joint employers, all common employees should be counted in determining whether paid sick leave must be provided.
       
  • Small Business Protection. Employers with fewer than 50 employees may be eligible for an exemption from the requirements to provide leave to care for a child in cases where the viability of the business is threatened.[4]
     
  • Healthcare and first-responder exemptions.  The Department of Labor has discretion to offer a hardship waiver to businesses involved in healthcare and first responder activities.[5]
     
  • Post Notices by April 1.[6] By April 1, covered employers must post notices of the FFCRA requirements in a conspicuous place on their premises, by emailing or direct mailing the notice to employees, or posting the notice on an employee information internal or external website.  The posters can be found here:
    • English-Language Poster can be found here.
    • Spanish-Language Poster can be found here.
       
  • Documentation of leave. Employers should require employees to provide documentation of the reason for the leave under:
    • the EPSLA for the qualifying reason for requesting leave, a statement that the employee is unable to work or telework, and the dates for which leave is requested; and
    • the EFMLEA for documentation of school or daycare closure. 

Employers must retain this documentation if the employer intends to claim a tax credit for leave payments.

  • Medical benefits. If an employer provides group health coverage that an employee has elected, employees are entitled to continued group health coverage during their paid sick leave and expanded family and medical leave on the same terms as if the employee continued to work.
     
  • Guidance.  The Department of Labor has issued guidance and FAQs on the FFCRA here.
     

Breaking Down the EPSLA’s Paid Sick Leave Benefits

  • Employees entitled to paid sick leave. All full-time employees are entitled to 80 hours of paid sick leave and part-time employees are entitled to an amount equal to the number of hours the employee works, on average, over a two-week period.[7] 
     
  • Paid sick leave is available in specific situations. An employee qualifies for paid sick leave if the employee is unable to work (or telework) due to a need for leave because:
    • The employee is subject to a Federal, State, or local quarantine or isolation order related to COVID–19;
    • The employee has been advised by a healthcare provider to self-quarantine due to concerns related to COVID– 19;
    • The employee is experiencing symptoms of COVID– 19 and seeking a medical diagnosis;
    • The employee is caring for an individual who has been ordered to quarantine or isolation or has been advised by a healthcare provider to self-quarantine;
    • The employee is caring for his/her child because the school or place of care closed due to COVID–19 precautions; or
    • The employee is experiencing any other substantially similar condition specified by the Secretary of Health and Human Services.
       
  • Pay rates for paid sick leave.
    • Employees taking sick leave due to the employee’s own health condition related to COVID-19, receive paid sick leave at the employee’s regular rate or the minimum wage (which ever higher) with a maximum of $511 per day or $5,110 total over the entire paid sick leave period. 
    • Employees taking sick leave for other COVID-19 related reasons receive paid sick leave at 2/3rds of their regular rate or minimum wage rate with a maximum of $200 per day, or $2,000 over the entire two week period. Those reasons include:
      • to care for another individual due to concerns related to COVID-19,
      • due to the closing of the school or place of care of a child  due to COVID-19, or
      • because of a condition determined to be “substantially similar”.
         

Breaking Down the EFMLEA’s Expanded Family and Medical Leave Benefits

  • Expands the Family and Medical Leave Act. Through the EFMLEA, the FFCRA amends and creates new obligations for employers under FMLA.[8]
     
  • Employees eligible for expanded family and medical leave.
    • Employees are eligible to use leave if they have been employed for 30 or more calendar days prior to the date from which leave is being requested.
    • Employees are eligible to use leave who need to care for a child whose school or place of care has been closed, or the child care provider of the employee’s child is unavailable, due to COVID-19.
       
  • Pay rates for expanded family and medical leave. 
    • First 10 days (two weeks) are unpaid (except employee may take emergency paid sick leave or may substitute any accrued vacation, person, medical or sick leave available under employer’s policy)
    • For following 10 weeks, employee must be paid at a rate that is not less than two-thirds of an employee’s regular rate of pay for the number of hours the employee would otherwise be normally scheduled to work with a maximum of $200 per day and $10,000 in the aggregate.
       
  • Use of other leave. Employees may elect to substitute any accrued vacation leave, personal leave, or medical or sick leave for unpaid leave.  However, an employer may not require an employee to substitute any accrued vacation leave, personal leave, or medical or sick leave for unpaid leave.
     
  • Job protection. The regular requirements of the FMLA apply and the emergency leave is job-protected and an employer must return the employee to the same or equivalent position upon their return to work.  This job restoration does not apply to highly compensated "key" employees or employers with less than 25 employees if the employee’s job no longer exists due to the COVID-19 outbreak and certain hardship conditions exist.  
     
  • Intermittent leave. An employee may be eligible for intermittent leave under EFMLEA if the employer agrees to provide it.
    • Teleworking: An employee may be eligible to take intermittent leave while teleworking.  Intermittent leave while teleworking may be taken in any increment agreed upon between the employer and employee.
    • Leave to care for child whose school/day care is closed. Employees taking leave to care for his/her child whose school or place of care is closed or whose child care provider is unavailable may, upon agreement with his/her employer, take intermittent leave.  Non-teleworking intermittent paid leave must be taken in full-day increments. 
       

A Note on Tax Credits

  • Payroll taxes. Employer need not deposit payroll taxes on account of paying leave pursuant to FFCRA.[9]
     
  • Tax Credits. Employers (and self-employed) receive 100% reimbursement for paid leave pursuant to the Act, including health insurance costs and payroll tax liability.
     
  • Fast Funds. Employers can take tax credits as immediate dollar for dollar reduction of their payroll tax liability, or if credit exceeds such liability, as immediate refund from IRS. 
     
  • Guidance.  The IRS has issued guidance on COVID-19 tax relief here.
     

In conclusion, as Arizona employers make decisions in response to the COVID-19 crisis, they should continue to comply with all Federal, State, and local labor and employment laws, including anti-discrimination and anti-retaliation laws, as well as wage and hour laws.  If you have questions about how to implement changes to your workforce effectively, we are here to assist. 

Visit our COVID-19 Hub for ongoing updates.

 

[3] Factors considered in the integrated employer test include: (i) common management, (ii) interrelation between operations, (iii) centralized control of labor relations, and (iv) degree of common ownership/financial control. See 29 CFR § 825.104(c)(2).

[4] See IR 2020-57.

[5] See FFCRA § 3105.

[7] See FFCRA § 5102(b)(2).

[8] See 29 U.S.C. § 2612.

[9] See IR 2020-57.

COVID-19 Task Force

Lori N. Brown



COVID-19 Task Force
Employment Law