Coronavirus Legislation and Executive Order 20-69

March 31, 2020

In the last few days Congress enacted two significant pieces of legislation in response to the Coronavirus pandemic.  The Families First Coronavirus Response Act (FFCRA) was signed by the President on March 17th. This law includes the Emergency Paid Sick Leave Act and the Emergency Family and Medical Leave Expansion Act.  On March 27th, Congress passed the ‘‘Coronavirus Aid, Relief, and Economic Security (CARES) Act,’’ which includes certain provisions related to employee retirement plans.  In addition, Florida Governor Ron DeSantis issued Executive Order 20-69, suspending certain requirements for local government public meetings.   A summary of the provisions of the FFCRA and CARES Act that relate to local governments, and Executive Order 20-69 follows.

Families First Coronavirus Response Act

There are two components of the FFCRA concerning paid leave for employees. One expands the existing Family and Medical Leave Act (FMLA), and the other requires certain employers to provide paid leave to employees under certain circumstances related to COVID-19.  The FFCRA’s paid leave provisions are effective on April 1, 2020, and apply to leave taken between April 1, 2020, and December 31, 2020.  The following is a brief summary of the eligibility and benefits provisions under both.

Emergency Paid Sick Leave Act

Benefits and Eligibility

Under the Emergency Paid Sick Leave Act, employers must provide up to 10 days of paid leave for employees unable to work due to COVID-19.  Employers cannot require employees to use their accrued leave before receiving paid sick leave pursuant to the FFCRA. The amount of compensation to which an employee is entitled while on leave depends on the circumstances of the employee’s absence.  An employee who is unable to work (or telework) because he or she:

  • is subject to a Federal, State, or local quarantine or isolation order related to COVID-19;
  • has been advised by a health care provider to self-quarantine due to concerns related to COVID-19; or
  • is experiencing symptoms of COVID-19 and is seeking medical diagnosis, is entitled to receive for each applicable hour (subject to the limits below) the greater of:
  • the employee’s regular rate of pay,
  • the federal minimum wage in effect under the FLSA, or
  • the applicable State or local minimum wage.

The maximum amount to which an employee would be entitled is $511 per day, or $5,110 total over the entire 10 day paid sick leave period.

An employee who is unable to work (or telework) because he or she is:

  • caring for an individual who is subject to a Federal, State, or local quarantine or isolation order related to COVID-19 or an individual who has been advised by a health care provider to self-quarantine due to concerns related to COVID-19;
  • caring for his or her child whose school or place of care is closed, or child care provider is unavailable, due to COVID-19 related reasons; or
  • experiencing any other substantially-similar condition that may arise, as specified by the Secretary of Health and Human Services,

is entitled to compensation at 2/3 of the greater of:

  • the employee’s regular rate of pay,
  • the federal minimum wage in effect under the FLSA, or
  • the applicable State or local minimum wage.

Under the circumstances described in paragraphs (4)-(6) above, the employee is subject to a maximum compensation of $200 per day, or $2,000 over the entire 10 day period. Note, however, the maximum compensation for leave taken under paragraph (5), when taken in conjunction with the FMLA expansion described below, is $200 per day and $12,000 over 12 weeks ($2,000 limit under Emergency Paid Sick Leave Act and $10,000 limit under the Emergency Family and Medical Leave Expansion Act – see below).

Applicability

All employees meeting the circumstances above are eligible for emergency paid leave; regardless of their length of service or number of hours per week the employee works. The paid leave requirements apply to private employers with fewer than 500 employees and all public agencies.  A ‘public agency’ includes the federal government, states, and political subdivisions of states (according to Department of Labor guidance, “political subdivisions” includes entities created by the state or administered by individuals who are responsible to public officials or the general electorate). The Secretary of Labor has the authority to issue regulations to exclude certain health care providers and emergency responders from the definition of ‘employee’ under this Act by allowing their employers to opt out of the paid sick leave requirements.

The law will apply to leave taken between April 1, 2020 and December 31, 2020 and is not retroactive. Any paid leave granted by an employer prior to the effective date of the law, even if for a covered reason under the law, does not reduce the amount of paid sick leave otherwise available to an employee under the FFCRA. Nor is an employer required to provide FFCRA benefits for leaves of absence taken prior to April 1, 2020.

Emergency Family and Medical Leave (FMLA) Expansion Act

Benefits and Eligibility

The Emergency Family and Medical Leave Expansion Act amends the Family and Medical Leave Act (FMLA) to create a new category of protected leave for employees with a ‘qualifying need’ related to COVID-19. A qualifying need under this provision means the employee cannot work (or telework) due to the need to care for a son or daughter under 18 years of age if the child’s school or place of care has been closed and a child care provider is unavailable because of COVID-19.

Under the FMLA expansion, the first 2 weeks (10 days) of leave necessitated by a public health emergency related to COVID-19 is unpaid.  An employee may use emergency paid leave for the first ten days (as provided above) or may elect to use their accrued sick or vacation leave during that time period.

Leave after the first ten days must be paid at a rate of at least two-thirds the employee’s regular rate of pay based on the employee’s regular schedule.  However, paid leave pursuant to the FMLA expansion cannot exceed:

  • $200 per day.
  • $10,000 in total.

The total amount of available leave time under the FMLA is unchanged by the emergency expansion (12 weeks in a 12-month period). The FMLA expansion does not create a separate leave period for COVID 19-related leave. So, if FMLA leave has already been used for other purposes by an employee during the FMLA year, the amount of FMLA leave available (if any) for COVID 19-related reasons would be reduced by that amount.  Employees must provide notice to their employers as soon as practicable when the need for leave is foreseeable.

Applicability

An issue that has been raised many times prior to COVID-19, is whether units of local government with fewer than 50 employees are subject to the FMLA. Under section 101(4)(A)(iii) of the FMLA all public agencies are subject to the FMLA, without regard to the number of employees.  However, employees of an employer with fewer than 50 employees are excluded from the definition of ‘eligible employee’ under 101(2)(B)(ii), of the FMLA.  So, while all public agencies are subject to FMLA, if a public agency has fewer than 50 employees, none of its employees are ‘eligible employee’ entitled to coverage under FMLA.

This issue is resolved for purposes of COVID-19-related leave under the FFCRA. In lieu of the definition of ‘eligible employee’ under section 101(2)(A), and the exclusion under section 101(2)(B)(ii), cited above, for purposes of COVID-19 related leave, the term ‘eligible employee’ means any employee who has been employed for at least 30 calendar days by the employer. The effect of this language is to preempt the 50-employee limit and apply the Emergency FMLA Expansion to employees of all units of local government, regardless of the number of employees.

The definition of ‘eligible employee’ under the FMLA expansion was further revised under the CARES Act.  The term ‘employed for at least 30 calendar days’ will also include an employee who was laid off by the employer on or after March 1, 2020, had worked for the employer for at least 30 of the 60 days before the employee’s layoff, and is rehired by the employer.

An employer of health care providers or emergency responders may elect to exclude those employees from application of the FMLA expansion provisions.

Additional Information Regarding FFCRA

For both the FMLA Expansion and Paid Sick Leave, overtime should be included when calculating the average number of hours an employee works in a week, but not for determining the employee’s rate of pay.

For purposes of determining entitlement to paid sick leave because of an inability to work due to a ‘Federal, State, or local quarantine or isolation order related to COVID-19, a ‘stay-at-home’ order is probably not sufficient.  Whether such an order can be relied on would depend on the language and the enforceability of the order.

Employers must require documentation to support an employee’s reason for leave. The documentation should include the qualifying reason, a statement from the employee that he or she is unable to work, and the dates paid sick leave are requested.  Documentation would include a physician’s note, a quarantine order, or similar.  Submission by email would be appropriate.

If the employee and employer agree, an employee’s existing accrued sick and vacation leave, earned under existing employer leave policies, may be used to supplement any amounts of paid leave up to the employee’s regular rate of pay.

The Department of Labor will be issuing rules with respect to the Emergency Paid Sick Leave Act and the Emergency Family Medical Leave Expansion Act by April 1.  The Department has already posted some guidance in the form of notices for posting on job sites and answers to frequently asked questions. All materials can be found at https://www.dol.gov/agencies/whd/pandemic. Posters may be posted on employer websites for employees who are working remotely.

Coronavirus Aid, Relief, and Economic Security (CARES) Act

The ‘‘Coronavirus Aid, Relief, and Economic Security Act’’ (‘‘CARES Act’’ or “Act”) was passed by Congress and signed into law on March 27, 2020.  The CARES Act includes special rules for use of retirement funds and a waiver of certain requirements for retirement plans.  A summary of those provisions follows.  The entire Act can be accessed at: https://www.documentcloud.org/documents/6819239-FINAL-FINAL-CARES-ACT.html

Tax-favored Withdrawals from Retirement Plans

The CARES Act permits early “coronavirus-related” withdrawals from certain retirement plans in which employees have individual accounts, such as 401(a) defined contribution plans, 457 plans, and 403(b) plans.  The maximum annual aggregate amount that an employee may withdraw is $100,000.  Withdrawals from defined benefit pension plans are not allowed.

In general, the 10% additional tax on early distributions from qualified retirement plans under Section 72(t) of the Internal Revenue Code will not apply to any “coronavirus-related” distribution. While a distribution would still be taxable, no additional penalties would be imposed.  To avoid income taxes on a coronavirus-related distribution, an employee can make additional contributions up to the amount of the distribution, at any time during a 3-year period beginning the day after the distribution is received.  If contributions are made toward repayment of a coronavirus-related distribution, the amount repaid will not be considered taxable income.

A “coronavirus-related distribution’’ means any distribution from an eligible retirement plan made between January 1, 2020 and December 31, 2020 to an individual:

  • who is diagnosed with SARS-CoV-2 or COVID-19,
  • whose spouse or dependent is diagnosed with SARS-CoV-2 or COVID-19, or
  • who experiences adverse financial consequences as a result of being quarantined, being furloughed or laid off or having work hours reduced due to such virus or disease, being unable to work due to lack of child care due to such virus or disease, closing or reducing hours of a business owned or operated by the individual due to such virus or disease, or other factors as determined by the Secretary of the Treasury.

The administrator of an eligible retirement plan may rely on an employee’s certification in determining whether any distribution is a coronavirus-related distribution.

The term ‘‘eligible retirement plan’’ means:

  • an individual retirement account described in section 408(a),
  • an individual retirement annuity described in section 408(b),
  • a qualified trust under section 401(a) which is exempt from tax under section 501(a),
  • an annuity plan described in section 403(a),
  • an eligible governmental deferred compensation plan described in section 457(b), and
  • an annuity contract described in section 403(b).

Employees who take a coronavirus-related distribution may spread the amount received over a three year period beginning with the current year, for federal income tax purposes.

Loans from Qualified Plans

The CARES Act increases the maximum loan amount for qualified individuals from qualified employer plans.  Under current law a loan can be made in an amount (when combined with all outstanding loans) up to the lesser of:

  • $50,000 reduced by the excess of the highest outstanding balance of loans during the last year, over the outstanding balance of loans on the date the loan was made, or
  • one-half of the present value of the employee’s non-forfeitable accrued benefit, or $10,000 (whichever is greater).

Under the CARES Act, a loan can be made in an amount (when combined with all outstanding loans) up to the lesser of:

  • $100,000 reduced by the excess of the highest outstanding balance of loans during the last year, over the outstanding balance of loans on the date the loan was made, or
  • the present value of the employee’s non-forfeitable accrued benefit, or $10,000 (whichever is greater)

The loan must be made to a qualified individual during the 180-day period beginning on the date of enactment of the CARES Act.   A ‘‘qualified individual’’ means an individual

  • who is diagnosed with SARS-CoV-2 or COVID-19,
  • whose spouse or dependent is diagnosed with such virus or disease by such a test, or
  • who experiences adverse financial consequences as a result of being quarantined, being furloughed or laid off or having work hours reduced due to such virus or disease, being unable to work due to lack of child care due to such virus or disease, closing or reducing hours of a business owned or operated by the individual due to such virus or disease, or other factors as determined by the Secretary of the Treasury.

A “qualified employer plan” includes 401(k) and 403(b) defined contribution plans, 457 deferred compensation plans, and the Federal Employees Retirement System.

For qualified individuals with an outstanding loan on or after the effective date of the Act, if the due date for repayment occurs during the period beginning on the effective date of the Act and ending on December 31, 2020, the due date shall be delayed for 1 year.  All subsequent repayments of such loans must be adjusted to reflect the delay in due date.  In determining the 5-year period and the term of a loan, the period beginning on the effective date of the Act and ending on December 31, 2020 must be disregarded.

Employers should review the terms of their plans to determine if the loan provisions of the Act are applicable.  The Act does not require plans to provide loans to qualified individuals if loans are not permitted under the terms of the plan.

Temporary Waiver of Required Minimum Distribution Rules

The minimum distribution requirements under Section 401(a)(9) of the Code do not apply for calendar year 2020 to

  • a defined contribution plan described in 401(a), 403(a) or 403(b),
  • an eligible deferred compensation plan described in section 457(b), or
  • an individual retirement plan.

Required minimum distribution rules generally provide that an employee must begin taking distributions from a qualified plan by the later of a certain age or termination of employment. The SECURE Act recently amended Section §401(a)(9) to allow retirees to delay taking required minimum distributions (RMDs) until age 72, replacing the prior age of 70 and ½.  Under the Act, employees or beneficiaries are not required to begin receiving distributions during calendar year 2020, notwithstanding the required distribution rules.

Effective Date

The amendments made by this section shall apply for calendar years beginning after December 31, 2019.

Governor’s Executive Order Suspending Sunshine Law – Public Meeting Requirements

On March 20, 2020 Florida Governor Ron DeSantis issued Executive Order 20-69, which temporarily suspends the Sunshine Law requirement that a quorum of a governmental body be physically present at a public meeting.  In doing so, the Governor removed a legal obstacle that has until now prevented local government boards from holding their meetings telephonically or by using other electronic means.

Executive Order 20-69 suspends requirements that a quorum of a public body must be physically present and meet at a specific public place in order for their actions to be binding. Instead, it allows local government bodies to use telephonic and videoconference systems to hold meetings, provided the statutory requirements of 120.54 (5)(b)2, Florida Statutes are met.   Accordingly, the notice for these meetings must include the following information:

  • Notification that the board will be meeting by means of communication media technology;
  • Description of the ways in which members of the public may attend the meeting; and
  • The name of the locations, if any, where media technology facilities will be available to the public.

All other requirements of the Florida Constitution, the Sunshine Law, and the Americans with Disabilities Act (ADA) regarding public access to meetings remain in full force and effect.  Therefore, local governments should take steps to ensure that all members of the public have full access to public meetings held electronically, including streaming the meetings on multiple electronic platforms (Zoom, Skype, Facetime), providing accommodations to those who require them, and allowing public comment on agenda items either by e-mail, dedicated telephone line or other electronic means before and during the meeting.

Executive Order 20-69 expressly refers to all “local government bodies” and therefore applies to all bodies elected and appointed by local governments, which includes advisory boards, committees, task forces and local pension boards.  However, the order is limited to allowing local boards to meet electronically.  It does not require public boards to meet during the state of emergency, nor does it prevent a local government from postponing some or all of its regularly scheduled meetings if it believes it cannot meet these legal requirements or if it determines that holding certain meetings at this time is not in the best interest of its residents.

For local governments that have established pension plans for firefighters and/or police officers under Chapters 175 or 185, Florida Statutes, the independent boards of trustees for these plans are subject to the Sunshine law and are therefore subject to Executive Order 20-69.  These boards have a statutory requirement to meet at least quarterly.  See F.S. §§ 175.061(3) and 185.05(3).  Depending on board meeting schedules and the duration of the current state of emergency, police and fire pension boards may be required by law to meet electronically, even if the local government has taken steps to postpone some or all of its public meetings.

Executive Order 20-69 will expire upon termination of Florida’s state of emergency due to COVID-19

If you have any questions concerning any of these laws or orders, please contact Jim Linn at jlinn@llw-law.com, Glenn Thomas at gthomas@llw-law.com or Janice Rustin at jrustin@llw-law.com.