In response to the spread of COVID-19, state and federal governments implemented a series of laws, regulations, and executive orders requiring employers, including most RIAs, to provide sick and family leave to certain employees. RIAs and other independent financial advisors must be aware of these new leave obligations and implement policy changes where necessary.
On April 1, 2020, the Families First Coronavirus Response Act (FFCRA) became effective. Under the FFCRA, employers with fewer than 500 employees must provide their employees with up to 12 weeks of family and medical leave to, among other things, care for a child whose school is closed due to COVID-19. Ten weeks of this emergency family and medical leave is paid at up to 2/3 the employee’s regular rate of pay, with certain statutory caps. The employer can choose to pay more than the minimum required, but tax credits to offset any additional expense are capped at the minimum amount.
The FFCRA also requires employers with fewer than 500 employees provide up to two weeks (80 hours) of paid sick leave to their employees for any of the following reasons: the employee is subject to a quarantine/isolation order; the employee was advised by a health care provider to self-quarantine; the employee is experiencing COVID-19 symptoms; the employee is caring for someone who is quarantined or isolating; or the employee is caring for a child because the school or child care center is closed due to COVID-19 concerns.
Importantly, emergency paid sick leave leave must be provided in addition to any existing paid sick leave policies, including those required by state or local laws (e.g. paid sick leave laws in California). Further, RIAs who are already subject to the Family and Medical Leave Act (FMLA),(i.e. they have more than 50 employees) must provide this emergency family and medical leave in addition to leave required by the FMLA.
Firms with fewer than 50 employees, which includes most RIAs and independent financial advisors, may be exempted from providing leave for school or childcare closures if providing the leave would jeopardize the ongoing viability of the business. Specifically, an authorized officer of the business must determine that: providing the leave would causes expenses to exceed revenue; the absence of the employee requesting leave would present a substantial risk to the business because of the employee’s specialized skills, knowledge or responsibilities; or there are not sufficient workers remaining who are able to perform the tasks of the employee requesting leave.
In addition to FFCRA emergency federal leave requirements, individual states and cities are implementing their own leave requirements. New York State, for example, requires employers to provide up to 14 days of paid sick leave and job protection for the duration of the quarantine or isolation, depending on the number of employees and net income of the employer. And Los Angeles signed a Supplemental Paid Sick Leave Ordinance that expands the FFCRA to include all employers, but later suspended the Ordinance and replaced it with a modified version.
Governments across the country have created a patchwork of leave laws and requirements in response to COVID-19. Financial advisors must be aware of this changing landscape to ensure they are complying with applicable federal, state, and local laws, regulations, and executive orders.
Please feel free to reach out to one of the financial advisor attorneys at Breakaway Partners to discuss emergency leave laws or other employment issues related to your advisory firm.