ARPA Includes Voluntary Extension and Expansion of FFCRA Paid Leave

The American Rescue Plan Act of 2021 (ARPA), signed by President Biden on March 11, 2021, includes a voluntary 6-month extension of the refundable tax credits available to employers for providing Emergency Paid Sick Leave (EPSL) and Emergency FMLA (EFMLA) under the Families First Coronavirus Response Act (FFCRA). For employers that want to take advantage of the extension, the ARPA also expands the EPSL and EFMLA paid leave entitlements that must be provided. 


The FFCRA paid leave provisions, which required employers with fewer than 500 employees to provide paid EPSL and EFMLA paid leave, originally expired on Dec. 31, 2020. The tax credits covering the cost of EPSL and EFMLA paid leave were extended through March 31, 2021 (see our post here), helping employers to voluntarily continue providing such paid leave for employees who did not use up all of their paid leave entitlement by December 31, 2020. 

The ARPA Extension and Expansion

An employer’s decision to extend EPSL and EFMLA paid leave is entirely voluntary. Employers are, therefore, not required to take any action in response to this aspect of the ARPA.

However, employers wishing to take advantage of the refundable tax credits will need to comply with the EPSL and EFMLA requirements, as modified by the ARPA. Employers should note the following key points in this regard:

  • The employer must provide every employee with a new grant of 10 days of Earned Paid Sick Leave as of April 1. This is 80 hours for full time employees and is pro rated for part time employees, as under the original FFCRA.
  • The qualifying reasons for leave are expanded. There were originally 5 qualifying reasons for an employee to take EPSL, including
    • three “personal” reasons: the employee is (1) subject to government quarantine or (2) has been advised by a health care provider to self-isolate or (3) is experiencing COVID-19 symptoms and is seeking a diagnosis, and
    • two “caring” reasons: the employee is (4) caring for someone who is subject to one of the three “personal” COVID-19 issues or (5) is caring for a child whose school or place of care is closed  or unavailable due to COVID-19 precautions.
    • EFMLA paid leave (i.e. paid leave after the first two weeks of EPSL) was only available for the two “caring” reasons).
    • The ARPA expands the qualifying reasons for paid leave in two ways:
  • The ARPA makes the three “personal” qualifying reasons for paid EPSL leave also available for paid EFMLA leave.
  • The ARPA adds three new “personal” reasons for taking paid EPSL and EFMLA leave
    • the employee is seeking or awaiting the results of a diagnostic test for, or a medical diagnosis of, COVID–19 and such employee has been exposed to COVID–19 or the employee’s employer has requested such test or diagnosis, or 
    • the employee is obtaining immunization related to COVID–19 or 
    • the employee is recovering from any injury, disability, illness, or condition related to immunization related to COVID-19 
  • The tax credit is available on paid leave taken with respect to the period from April 1 to September 30, 2021. An employer that elects to extend the EPSL and EFMLA paid leave can claim the credit for qualifying leave paid “with respect to the period beginning on April 1, 2021, and ending on September 30, 2021.” This covers leave taken between April 1 and September 30, even if the wages are paid after September 30 (i.e. on the last payroll covering the period up through September 30, 2021)
  • The aggregate amount of EFMLA wages that can be subject to the credit increased from $10,000 per employee to $12,000.
  • The first 10 days of EFMLA leave is now paid leave. Under the original FFCRA the first 10 days of EFMLA leave was unpaid (because it was paid as EPSL). Accordingly, the total available paid EFMLA leave is extended to 12 weeks (from 10). The law therefore appears on its face to require payment of both EPSL and EFMLA leave concurrently during the first 10 days, but this is unlikely the intention. More likely, the intention is to provide an additional 10 days of paid leave in total, on top of whatever an employee had “left over” when their EPSL and EFMLA leave entitlement otherwise expired (December 31, 2020 unless voluntarily extended to March 31, 2021).
  • The employer need NOT have voluntarily extended its EPSL and EFMLA leave policies to March 31, 2021 in order to take advantage of the new extension. expired on 
  • The employer must comply with all of the requirements of the FFCRA paid leave law (notice, documentation of leave requests and approvals, no retaliation for taking leave, etc…)
  • The ARPA explicitly denies a double tax benefit to the employer, providing that the employer’s gross income shall be increased by the amount of the tax credit received.
  • The extension includes a non-discrimination provision that disallows the credit for any employer that discriminates “with respect to the availability of the provision of qualified sick leave wages” in favor of:
    • highly compensated employees (within the meaning of Code section 414(q)), 
    • full-time employees, or 
    • employees on the basis of employment tenure with the employer. 
  • The credit does not apply to amounts that are taken into account as payroll costs in connection with certain specified relief programs:
    • a covered loan under section 7(a)(37) or 7A of the Small Business Act,
    • a grant under section 324 of the Economic Aid to Hard-Hit Small Businesses, Non-Profits, and Venues Act, or
    • a restaurant revitalization grant under section 5003 of the American Rescue Plan Act of 2021. 

Next Steps

Employers wishing to adopt this latest extension and expansion of the FFCRA paid leave program will need to revise their policies and related leave request and leave determination forms and procedures. If you used ERISA Benefits Law’s model EPSL/EFML Policies, Leave Request Form and Leave Determination Form to administer your FFCRA paid leave program in 2020, email your contact at the firm to get details on how we can assist you in efficiently updating those documents to implement the extension.

Families First Coronavirus Response Act Paid Leave – Voluntary Extension Through March 31, 2021

The Consolidated Appropriations Act, 2021 (H.R. 133), which was signed into law on December 27, 2020, includes provisions that allow employers to voluntarily extend their Families First Coronavirus Response Act Emergency Paid Sick Leave and Emergency Paid FMLA leave through March 31, 2021 if they want to.

Importantly, the Act does NOT provide an additional 80 hours of Emergency PSL, and it does NOT provide an additional 10 weeks of EFMLA leave. Employers that decide to extend their leave should consider the following:

  1. Revise the end date in the Policies we previously provided, from December 31, 2020 to March 31, 2021 .
  2. Continue tracking the leave as before, and continue taking the tax credit, up through March 31, 2021, as you did in 2020.
  3. Anyone who used up their paid leave entitlement in 2020 will not benefit from the extension, because they already used it up. Anyone who did not use all the paid leave will have three more months to do so.
  4. Apply the extension to all employees.

DOL Issues Revised FFCRA Leave Regulations in Response to Court Decision

The U.S. Department of Labor’s Wage and Hour Division (WHD) today posted revisions to regulations that implemented the paid sick leave and expanded family and medical leave provisions of the Families First Coronavirus Response Act (FFCRA).

The revisions made by the new rule clarify workers’ rights and employers’ responsibilities under the FFCRA’s paid leave provisions, in light of the U.S. District Court for the Southern District of New York’s August 3, 2020 decision in State of New York v Department of Labor, which found portions of the regulations invalid.


The DOL issued its temporary rule to carry out the paid leave provisions of the FFCRA on April 1, 2020. See 85 FR 19326 (published April 6, 2020); see also 85 FR 20156 (April 10, 2020 correction and correcting amendment to April 1 rule).

On April 14, 2020, the State of New York filed suit in the United States District Court for the Southern District of New York (“District Court”) challenging certain parts of the temporary rule. On August 3, 2020, the District Court ruled that four parts of the temporary rule are invalid:

(1) the requirement under § 826.20 that paid sick leave and expanded family and medical leave are available only if an employee has work from which to take leave;

(2) the requirement under § 826.50 that an employee may take FFCRA leave intermittently only with employer approval;

(3) the definition of an employee who is a “health care provider,” set forth in § 826.30(c)(1), whom an employer may exclude from being eligible for FFCRA leave; and

(4) the statement in § 826.100 that employees who take FFCRA leave must provide their employers with certain documentation before taking leave.

The DOL’s Revised Rules

Today’s revisions to the temporary rules, effective immediately, reaffirm the prior regulations in part, revise the regulations in part, and further explain the DOL’s positions. Specifically, the DOL’s revised rules:

(1) Reaffirm that paid sick leave and expanded family and medical leave may be taken only if the employee has work from which to take leave and explains further why the DOL believes this requirement is appropriate. This temporary rule clarifies that this requirement applies to all qualifying reasons to take paid sick leave and expanded family and medical leave.

(2) Reaffirms that, where intermittent FFCRA leave is permitted by the regulations, an employee must obtain his or her employer’s approval to take paid sick leave or expanded family and medical leave intermittently under § 825.50 and explains further the basis for this requirement.

(3) Revises the definition of “health care provider” under § 825.30(c)(1) to mean employees who are health care providers under 29 CFR 825.102 and 825.125,3 and other employees who are employed to provide diagnostic services, preventive services, treatment services, or other services that are integrated with and necessary to the provision of patient care.

(4) Revises § 826.100 to clarify that the information the employee must give the employer to support the need for his or her leave should be provided to the employer as soon as practicable.

(5) Revises § 826.90 to correct an inconsistency regarding when an employee may be required to give notice of expanded family and medical leave to his or her employer.


ERISA Benefits Law Model Paid Sick Leave and Expanded FMLA Leave Policies, Leave Request and Leave Determination Forms Available

ERISA Benefits Law’s model Paid Sick Leave and Expanded FMLA leave Policies, Leave Request and Leave Determination forms are now available. These documents include:

  • An Emergency Paid Sick Leave And Expanded Family and Medical Leave (EPSL/EFML) Policy setting forth model company policies and procedures governing
    • Employee requests for paid Emergency Paid Sick Leave (EPSL) and Expanded Family and Medical Leave (EFML) pursuant the Families First Coronavirus Response Act (the “Act”);
    • Payment of paid EPSL and EFML and coordination of the two types of leave
    • The limited circumstances under which EPSL and EFML leave can be taken intermittently
    • Coordination of EPSL/EFML with regular FMLA leave (for those employers subject to FMLA)
    • Leave determinations
    • Leave extensions
    • Termination of leave
  • A model EPSL/EFML Leave Request Form for employees to use to request the leave, including the information and documentation they need to provide in support of their request under each category of qualified leave
  • A model EPSL/EFML Leave Determination Form for the employer to use to review and make determinations on employee leave requests, including approving a given number of hours, days or weeks of leave; requesting additional information to make a determination; or deny a leave request

These model policies and forms are designed help employers with fewer than 500 employees make the necessary good faith efforts to implement the Act, and to gather the information and documentation necessary to support the company’s claims for tax credits under the Acts. We also include:

  • a link to the DOL’s Employee Rights: Paid Sick Leave and Expanded Family and Medical Leave under The Families First Coronavirus Response Act notice;
  • instructions for distributing the DOL notice, the Policy and the Leave Request Form to employees; and
  • links to the latest guidance from the DOL and IRS regarding the Acts 

There is a modest fee of $295 to create your company’s individualized version of the Policy and these forms, including designating the company official to whom leave requests should be submitted and the timing of leave requests. 

Note: The model policies and procedures will not be provided under an engagement to provide legal services, and you will not be entering into an attorney-client relationship with me or ERISA Benefits Law when you purchase them.

To create your company’s version of these model documents, enter the information requested in the form below.

Fill out my online form.

When you submit the information, you will be taken to our secure payment page operated by LawPay to pay the $295 fee. Enter your company name in the “Case Name” box and submit your echeck or credit/debit card payment through that site.

You will receive your company EPSL/EFML Policy, Leave Request Form and Leave Determination Form by email sent to the email address you provide within 12 hours.

Department of Labor Guidance on Emergency Paid Sick Leave and Emergency Family and Medical Leave Expansion Acts

The Wage and Hour Division of the Department of Labor today posted additional information on common issues employers and employees face when responding to COVID-19, and its effects on wages and hours worked under the Fair Labor Standards Act (FLSA), job-protected leave under the Family and Medical Leave Act (FMLA), and paid sick leave and expanded family and medical leave under the Families First Coronavirus Response Act (FFCRA).

This updated information includes model notices and guidance regarding implementation of the Emergency Family and Medical Leave Expansion Act, and the Emergency Paid Sick Leave Act.

Fact Sheets

Questions and Answers


Field Assistance Bulletin

Guide to Implementing the Families First Coronavirus Response Act – Webinar

ERISA Attorney Erwin Kratz of ERISA Benefits Law, PLLC discusses the steps private businesses with less than 500 Employees need to take to implement the Emergency Paid Sick Leave Act (EPSLA) and Emergency Family and Medical Leave Act (EFMLEA).

Download a copy of the PowerPoint here

Families First Coronavirus Response Act Enacted – Impact on Employee Benefits

On March 18, 2020 the President signed the “Families First Coronavirus Response Act”, H.R. 6201, which passed the Senate that same day and the House a day earlier. Among other provisions, the Act includes two acts imposing employee benefits requirements on employers with less than 500 employees: the Emergency Family and Medical Leave Expansion Act, and the Emergency Paid Sick Leave Act, as well as tax credits to offset the costs imposed on employers by those two acts.

This post summarizes the two new employee benefits acts. Both acts are effective as of April 1, 2020 (15 days after the enactment of the legislation), and both acts will sunset on December 31, 2020.

The tax credits that employers will be eligible to receive are designed to offset most of the direct costs imposed by these Acts. The tax credits will be applied as a refundable credit against the employer’s quarterly FICA (Medicare and Social Security) taxes. We will provide further update on the tax credits in due course.  For now we are focused on assisting employers to comply with the Act’s requirements by April 1. 

The Emergency Family and Medical Leave Expansion Act (EFMLEA)

The EFMLEA amends FMLA to add paid and unpaid FMLA leave for certain employees effective from April 1, 2020 until December 31, 2020, related to the Coronavirus pandemic. 

When and to Whom does EFMLEA Apply?

The EFMLEA applies only if all the following circumstances apply:

  • an employee who has been employed for at least 30 days 
  • by an employer that employs fewer than 500 employees*
  • requests leave because the employee is unable to work (or telework) due to a need for leave to care for the son or daughter under 18 years of age of the employee if (i) the school or place of care has been closed, or (ii) the child care provider of such son or daughter is unavailable, due to an emergency with respect to COVID-19 declared by a Federal, State, or local authority.

The EFMLEA is effective April 1, 2020 and will sunset on December 31, 2020.  

An employer of an employee who is a health care provider or an emergency responder may elect to exclude such employee from the application of the EFMLEA.

Some notes on the above:

FMLA generally does not apply to employers that employed less than 50 employees during 20 or more workweeks during the current or preceding year. Therefore, the EFMLEA is both broader (applies down to employers with 1 employee), and narrower (does not apply to employers with 500 or more employees) than FMLA. 

EFMLEA leave is not available for employees generally who are asked to stay home due to general business closures, reductions in force or other disruptions caused by the Coronavirus pandemic.  EFMLEA leave only applies to leave to care for a son or daughter due to a school or child car closure due to a declared emergency related to the Coronavirus. For leave related to caring for ones-self or family members related to diagnosis with COVID 19, regular FMLA leave would still apply.

When is EFMLEA Leave Paid vs Unpaid?

EFMLEA leave is unpaid for the first 10 days.  Under the EFMLEA, an employee may elect to substitute any accrued vacation leave, personal leave, or medical or sick leave for unpaid leave during these first 10 days. This means that employers may not deny employees who qualify for EFMLEA leave the use of accrued vacation, PTO and Arizona Paid Sick Time (PST) during the first 10 days of such leave.

After the first 10 days, EFMLEA leave is paid leave under the Act, for the duration of the leave (up to 12 weeks).

During paid EFMLEA leave, employees must be paid an amount not less than 2/3 their regular rate of pay, as determined under the Fair Labor Standards Act, multiplied by the number of hours the employee would otherwise be normally scheduled to work. There are detailed provisions for determining the number of hours normally worked for employees whose schedule varies from week to week such that the employer cannot determine exactly how many hours they would have worked during the applicable week. In no event shall such paid leave exceed $200 per day and $10,000 in the aggregate.

What About Job Restoration Rights?

FMLA generally requires reinstatement after the end of FMLA leave to the same or a substantially similar position. Those same rules will apply to EFMLEA leave, except in the case of employers that employ fewer than 25 employees. For such employers, the general FMLA job restoration rights will not apply to EFMLEA leave if all the following conditions are met:

  • The position held by the employee when the EFMLEA leave commenced does not exist due to economic conditions or other changes in operating conditions of the employer that affect employment and that are caused by an emergency with respect to COVID-19 declared by a Federal, State, or local authority during the period of leave.
  • The employer makes reasonable efforts to restore the employee to a position equivalent to the position the employee held when the leave commenced, with equivalent employment benefits, pay, and other terms and conditions of employment.
  • If the reasonable efforts of the employer fail, the employer makes reasonable efforts to contact the employee if an equivalent position becomes available during the one year period beginning on the earlier of (i) the date the EFMLEA leave ends or (ii) the date that is 12 weeks after the EFMLEA leave begins

The Emergency Paid Sick Leave Act (EPSLA)

The EPSLA takes effect  on April 1, 2020 (15 days after its enactment), and will sunset on December 31, 2020.  The EPSLA requires employers that employ fewer than 500 employees to provide to each employee paid sick time (EPST) to the extent that the employee is unable to work (or telework) due to a need for leave because:

(1) The employee is subject to a Federal, State, or local quarantine or isolation order related to COVID-19.

(2) The employee has been advised by a health care provider to self-quarantine due to 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 subject to an order as described in subparagraph (1) or has been advised as described in paragraph (2).

(5) The employee is caring for a son or daughter of such employee if the school or place of care of the son or daughter has been closed, or the child care provider of such son or daughter is unavailable, due to COVID-19 precautions.

(6) other substantially similar conditions specified by the Secretary of Health and Human Services in consultation with the Secretary of the Treasury and the Secretary of Labor.

How Much EPST is Required?

Full-time employees are entitled to 80 hours of paid sick time. Part-time employees are entitled to a number of hours equal to the number of hours that such employee works, on average, over a 2-week period. EPST is available for immediate use after the effective date of the legislation, regardless how long an employee has been employed.

How Is Emergency Paid Sick Time compensated?

EPST is compensated based on the employee’s regular rate of pay under the FLSA multiplied by the number of hours the employee would otherwise be normally scheduled to work (subject to the same provisions as the EFMLEA for variable hour employees).

For sick time specified in paragraph (1), (2), or (3) (quarantine or seeking diagnosis for COVID 19), 100% of such regular pay is considered, subject to the overall limits set forth below. For sick time specified in paragraph (4), (5), or (6) (caring for others), only 2/3 of the employee’s regular rate of pay is considered.

In no event shall paid sick time exceed—

  • $511 per day and $5,110 in the aggregate for a use described in paragraph (1), (2), or (3) (quarantine or seeking diagnosis for COVID 19) or
  • $200 per day and $2,000 in the aggregate for a use described in paragraph (4), (5), or (6) (caring for others)

Not later than April 1, 2020, the Secretary of Labor shall issue guidelines to assist employers in calculating the amount of paid sick time under the Act.

Other notes regarding the EPSLA:

  • EPST does not carry over from one year to the next.
  • There are notice posting requirements, like with minimum wage and overtime requirements. The DOL will issue the required notice before April 1, 2020.
  • Employers may not retaliate against employees for taking EPST. 
  • Enforcement of the requirement to pay EPST will be under the same provisions that apply under the FLSA for failure to pay minimum wages.
  • The EPSLA shall not be construed to diminish the rights of an employee under an existing employer policy, or under other federal, state or local law. 

There are a lot of issues that will arise as we implement these new requirements, including:

  • adopting and implementing the necessary employer policies and procedures to comply, 
  • coordinating these acts with Arizona’s paid sick time law, and 
  • how other employer actions that will be taking place in the next few weeks and months, like reductions in force and reductions in hours, will be impacted by this legislation. 

Rest assured we are here to help our clients deal with these issues. We will also keep updating our clients as the law develops in this area. In the meantime, as a partner of mine said during the 2009 economic crises, we just have to hold hands and stick together (virtually, of course).

Corinavirus Impact on Arizona Paid Sick Time; Vacation Pay; and WARN Act Compliance

This post addresses the paid sick time, vacation pay, and WARN Act issues that employers should keep in mind as the Coronavirus causes escalating business disruptions, including both voluntary and government-ordered business closures.

We stand ready to assist employers with WARN Act notice, Arizona paid sick time, vacation/PTO and severance compliance issues raised by the business disruptions Arizona businesses are experiencing due to the Coronavirus. In addition, we will continue to update our clients as legislation affecting employee benefits is enacted in response to the Coronavirus outbreak. Together we will weather this storm, like we did in 2001 and in 2009.

Arizona Paid Sick Time

Arizona’s paid sick time law permits employees to use paid sick time for the following circumstances that may apply to the coronavirus outbreak:

  • Closure of the employee’s place of business by order of a public official due to a public health emergency 

Therefore, if the local, state or federal government orders the closure of an Arizona business, you will need to permit employees to receive paid sick time under Arizona law for the time of the closure, up to the amount of paid sick time they have available.

  • An employee’s need to care for a child whose school or place of care has been closed by order of a public official due to a public health emergency

Therefore, most Arizona businesses already need to provide paid sick time leave to parents who need to stay home to care for children whose school or daycare center has been closed by order of the state.

  • Care for oneself or a family member when it has been determined by the health authorities having jurisdiction or by a health care provider that the employee’s or family member’s presence in the community may jeopardize the health of others because of his or her exposure to a communicable disease, whether or not the employee or family member has actually contracted the communicable disease. 

This provision could arguably be construed to cover employees who are staying home and self-quarantining in the current circumstances. Therefore, if an Arizona business voluntarily closes (without being ordered by the state, local or federal authorities to close), it should evaluate whether to permit employees to use paid sick time under Arizona law for the time of the closure, up to the amount of paid sick time the employee has available.

Arizona Employers can Require Employees to Use their Paid Sick Time in Certain Circumstances

While Arizona law does not explicitly provide that an employer can designate leave time as earned paid sick time when an employee has not requested to use earned paid sick time, the Arizona Industrial Commission FAQs explain that the Industrial Commission will not pursue enforcement when an employer designates an employee’s time off from work as earned paid sick time, provided that the employer has a good faith belief that the absence meets the requirements of earned paid sick time usage.  

Therefore, we recommend that if a local, state or federal authority orders your Arizona business to close, you notify all of your employees that you will treat the closure time as paid sick time under Arizona law to the extent employees have paid sick time available.  
Further, if you voluntarily close, without being ordered to, you should give serious consideration to treating the closure time as paid sick time under Arizona law to the extent employees have paid sick time available, and further letting your employees know that if they do not want to take the time off as paid sick time they should let you know (within a short time period, and definitely before your next payroll deadline) that they do not want to use the time as paid sick time.

Paid Vacation or Paid Time Off

Most employers will also allow their employees to use paid time off or vacation to offset earnings losses the employees would otherwise incur during a business shutdown. However, that may not be required – i.e. it may be possible to not permit employees to take the time off as paid leave under the employer’s policy. This is entirely dependent on the provisions of your policy. If you have any questions about this, give us a call.

The WARN Act

The Worker Adjustment and Retraining Notification Act (WARN) protects workers, their families, and communities by requiring employers with 100 or more employees (generally not counting those who have worked less than six months in the last 12 months and those who work an average of less than 20 hours a week) to provide 60 calendar days advance written notice of a plant closing and mass layoff affecting 50 or more employees at a single site of employment. 

WARN requires employers who are planning a plant closing or a mass layoff to give affected employees at least 60 days’ notice of such an employment action. Damages and civil penalties can be assessed against employers who violate the Act.

Fortunately, WARN makes certain exceptions to the requirement of giving employees prior notice when the business closure or layoff occurs due to unforeseeable business circumstances, faltering companies, and natural disasters.  specifically, a government-ordered closure of an employment site that occurs without prior notice may be an unforeseeable business circumstance. Notice to employees and to the Arizona State rapid Response Coordinator is still required.

Pending Legislation Will Add Complexity

Legislation currently pending in Congress may provide emergency paid leave benefits for people dealing with the coronavirus outbreak (paid by the Social Security Administration), amendments to FMLA, and a new federal paid sick leave law. This legislation is in flux. When it becomes law, we will update our clients as to how to deal with it.

Arizona’s New Paid Sick Time Law Goes Into Effect July 1, 2017

Arizona voters recently approved Proposition 206, which will increase the minimum wage to $10 per hour, effective as of January 1, 2017, and provides all Arizona employees (other than employees of the federal or state government) paid sick time (PST) as of July 1, 2017.

This post summarizes the key issues that employers will need to address before July 1, 2017. We will be providing more information and will assist clients in drafting a compliant policy in the coming months, as we expect clarification on the notice requirements in rules that will be issued by the Industrial Commission of Arizona (ICA).

Employers will likely want to create a new PST policy, which they provide to employees before 7/1/2017, and which explains the employees’ rights to PST under the new Arizona statute.

Coordination with Other Policies

In most cases, employers will want to make their PST policy separate from any existing Paid Time Off (PTO) policy, even though the two policies will refer to each other. In addition, existing PTO policies may need to be refined to ensure they work as smoothly as possible with the new PST requirements.

Your PST policy will need to coordinate with your FMLA leave policies, as the two types of leave may overlap in some instances, but they are not synonymous. Employers should also consider coordinating their PST policy with any self funded short term disability policy, to ensure that they do not have to pay out twice for the same leave (once under the STD policy and once under the PST policy)

PTO Accrual

  • If you are an employer of fewer than 15 employees, employees must be allowed to accrue and use up to 24 hours of PST per year and if you are an employer of 15 employees or more, employees must be allowed to accrue and use up to 40 hours of PST per year (the time is accrued 1 hour for every 30 hours worked)
  • FLSA Exempt employees are presumed to work 40 hours per week; unless they actually work less than 40 hours per week in which case they can accrue PST based on actual hours worked.
  • Time taken for PST can also reduce available PTO (if your PTO policy so provides).

Employees can take PST for Four Broad Reasons:

  • Their own mental or physical illness, injury or health condition, need for diagnosis, treatment or care, or for preventive care
  • Care of a family member with the above
  • Absences necessary due to certain domestic violence, sexual violence, abuse or stalking
  • Certain business closures due to public health emergencies.

Optional Policy Provisions

In adopting a PST policy, employers will need to consider the following (we anticipate providing a checklist in the Spring of next year to help clients draft their policy to incorporate these choices):

  • Define a PST year: Your policy will need to define when the PST year begins. We generally recommend January 1, unless your company uses a different month for the beginning of the work year or your welfare benefits plan year.
  • Define the increments in which the employee can use the accrued PST: may be used in the smaller of either an hourly increment or the smallest increment that your payroll system uses to account for absences or use of other time.
  • Termination of Employment: Will you pay employees out for accrued PST upon separation of employment? Most employers will not pay it out.
  • Carryover of PST or payout unused accrued PST at the end of the year? Employers have the option to pay out unused PST at the end of each year, or to carry it over.
    • We recommend that most employers not payout the unused PST and instead allow the time to carryover each year. The employee will continue to accrue additional PST (up to 24 or 40 additional hours). However, the impact of this is limited because:
      • employees cannot use more than 24/40 hours of PST per year, regardless of how much PST they carry over and end up accruing in the new year, and
      • employers do not have to pay out PST upon termination of employment. The carry over therefore simply allows the employee to have the availability to use PST hours that were accrued and unused during the prior year – i.e. to use PST immediately in the subsequent year, as needed. The financial impact can be limited for most employers if their PTO policy is properly drafted to ensure this time is also deducted from an employee’s PTO bank.
  • Delay Availability of PST for New Hires (after 7/1/2017)? Newly hired employees will accrue PST once they commence employment, however employers may require that they wait until 90 calendar days after they commence employment before they can use any accrued PST.
  • Who in your organization will keep record of the PST? : Employers must keep records for 4 years.
  • Will you allow employees to borrow PST?: Most employers will not allow borrowing of PST. However, many will revise the PTO policies to allow borrowing of PTO, if it is used for PST reasons (thereby increasing the likelihood that you will in fact reduce the amount of PTO available by each hour of PST taken).
  • What Procedures will you Adopt for Requiring Notice before an Employee Takes PST (both foreseeable and non-foreseeable)? (and how will you coordinate that with your current policy for requesting PTO)?
    • If you require notice of the need to use PST, even where the need is not foreseeable, your policy must include the procedures for the employee to provided notice.
  • What circumstances will you require proof of the need for PST (other than a request)?
    • You may request “reasonable documentation” that earned PST is used for a proper purpose only where an employee seeks to use three or more consecutive work days of PST.
    • “Reasonable documentation” is defined as “documentation signed by a health care professional indicating that the earned paid sick time is necessary.”
    • Where three or more consecutive PST days are used in cases of domestic violence, sexual violence, abuse, or stalking, the statute provides alternative forms of reasonable documentation that may be requested, such as a police report, a protective order, or a signed statement from the employee or other individual (a list of which appears in the statute) affirming that the employee was a victim of such acts.
    • If you currently require a doctor’s note for any single-day absence you will need to change that practice.

In addition to adopting a policy, and posting a required notice (a model of which the ICA will provide), employee pay statements must include or have enclosed a report of PST to include the following:

  • the amount of PST available;
  • the amount of PST taken to date; and
  • the dollar amount of PST paid year to date

We recommend clients wait until March/April of 2017 before drafting their PST policy and updating their PTO policies, because expected ICA rules will likely provide some guidance on the new law that may impact your policy choices. We anticipate providing clients a checklist in the Spring to select the features they would like in a PST, and to draft policies based on those choices. We expect we will be able to provide that service for a low flat fee. Look for details in the Spring.

COBRA, FMLA and the ACA Employer Mandate

Let’s assume you have diligently designated initial and standard measurement and stability periods to take advantage of the opportunities provided by the final employer mandate regulations to minimize the risk of incurring employer mandate penalties under the ACA (if you have not, let’s do it now – better late than never). But you may not yet have figured out how these designations may impact your FMLA and COBRA administration. To help you do that, let me tell you a story….

Joe Blow worked as a full-time employee for Acme, Inc. for several years. As such, he and his family were covered by Acme’s medical plan. In 2014, Acme designated a November 1 – October 31 standard measurement period, and a January 1 – December 31 standard stability period for ongoing employees such as Joe. In November 2014, Joe was diagnosed with cancer and went out on FMLA leave. In accordance with its long-standing practice, Acme continued Joe’s coverage under the medical plan while Joe was on FMLA leave, until the later of February 28, 2015 (the end of the month in which the 12 week FMLA leave period ended), or the date Joe indicated he would not return to work.

In January 2015, Joe let Acme know that he would return to work on March 1, 2015, but that due to his medical condition he could only work 20 hours per week. Joe was a valuable employee, and Acme wanted Joe to return to work in whatever capacity they could have him. So Acme welcomed Joe’s return.

Now, before the ACA, Acme would have:

  • terminated Joe’s medical coverage upon his return to work,
  • retroactively collected from Joe the employee portion of the premium for his coverage for the FMLA leave period, and
  • offered Joe and his qualified beneficiaries COBRA coverage. The COBRA period would have started running as of March 1, 2015 (the end of the FMLA leave period).

What about after the ACA? When Joe returns to work in March 2015, Acme can no longer terminate his employee coverage, because Joe worked full time during the measurement period that ran from November 1, 2013 to October 31, 2014 (and therefore he satisfies the requirement to be considered a full-time employee for the stability period that runs from January 1, 2015 to December 31, 2015). This would remain true, even if Acme had extended Joe’s leave beyond the FMLA period, into March and April 2015. For example, if Acme had agreed to extend Joe’s leave through April 1, 2015 as an accommodation under the ADA, or if Acme had voluntarily permitted Joe to extend his leave (without terminating employment) through April 1, 2015, Acme would still not be able to terminate Joe’s coverage at the end of the FMLA leave, because of its ACA measurement and stability period designations. Acme needs to continue offering Joe coverage under the Plan through the end of 2015.

What about COBRA after the ACA? Joe works 20 hours per week for the remainder of 2015. Therefore, he does not work sufficient hours during the November 1, 2014 – October 31, 2015 measurement period to be considered a full time employee for the stability period that runs from January 1, 2016 to December 31, 2016, and Acme terminates Joe’s employee coverage as of January 1, 2016.

Under COBRA, the coverage period runs from the date of the qualifying event that leads to a loss of coverage (not from the date of the loss of coverage). Therefore, Joe’s standard 18 month COBRA period would end on August 31, 2016 (18 months after March 1, 2015). So under COBRA, Acme cannot terminate Joe’s COBRA coverage before August 31, 2016.

Alternatively, Acme could design its medical plan to start the COBRA period as of the date coverage is lost (as opposed to the date of the qualifying event). Here, that would give Joe 18 months of COBRA after January 1, 2016. Before it does so, however, Acme needs to make sure that its stop loss insurer is on board (Acme’s plan is self-funded, with a stop loss policy).

As this little tale teaches, regardless of whether Acme’s plan is self-insured or fully insured, and regardless of whether it decides to run the COBRA period from the original qualifying event, or from the loss of coverage at the end of the stability period, Acme should make sure that its insurance policies, plan documents, summary plan descriptions, medical plan eligibility administration, COBRA administration, and leave policies all account for the implications of its designated measurement and stability periods.