Apr 10, 2020

Are your Foreign National Employees eligible for Paid Sick Leave, Unemployment Benefits, and Stimulus Rebates?

Families First Coronavirus Response Act

In an unprecedented effort to help reduce the workplace effects of COVID-19, Congress passed the Families First Coronavirus Response Act H.R.6201  (“FFCRA”) which went into effect on April 1, 2020. The law provides private employers that have fewer than 500 employees with tax credits for the cost of providing employees with paid leave taken for specified reasons related to COVID-19. Covered Employers can keep their employees on their payrolls, while at the same time employees are not forced to choose between their paychecks and taking public health measures to prevent the spread of the coronavirus disease.

Also, the Coronavirus Aid, Relief, and Economic Security (CARES) Act, was signed into law on March 27, 2020, to stimulate the national economy in the wake of the COVID-19 pandemic. The CARES Act provides $2 trillion in direct financial assistance, including paid leave, unemployment insurance (UI) benefits, and rebates to eligible individuals.

Foreign national employees in the United States may be eligible for some or all of the listed benefits, depending on the circumstances. Foreign national employees are non-immigrants, meaning that they are neither U.S. citizens nor lawful permanent residents (green card holders). They usually fall under the H-1B, E, L, O, and the TN temporary work visa categories.

Paid Sick Leave

The paid sick leave provisions of FFCRA is called the Emergency Paid Sick Leave Act (“Sick Leave Act”). The Sick Leave Act only applies to (1) private employers with fewer than 500 employees in the United States (not including employees outside the United States); (2) certain public employers; (3) certain self-employed individuals (collectively “Covered Employers”). In addition, the Sick Leave Act allows employers with fewer than 50 employees to apply to the Secretary of Labor for a hardship exemption.

The Sick Leave Act generally requires that Covered Employers provide employees with two weeks of paid sick leave at the employees’ regular pay rate (subject to certain caps) if the employee is unable to work (or work remotely) due to the following: (1) the employee is subject to a federal, state, or local quarantine or isolation order related to COVID-19; (2) the employee has been directed by a healthcare provider to self-quarantine due to concerns related to COVID-19 infection; or, (3) the employee is experiencing symptoms of COVID-19 and seeking a medical diagnosis. Paid leave under the Sick Leave Act must be granted in addition to any paid leave benefits the Covered Employer already provides, and must be made available for immediate use to employees, regardless of the length of the employees’ employment. Unlike prior regulations regarding sick leave, Covered Employers cannot require employees to use other paid leave benefits before turning to the benefits provided under the Sick Leave Act.

Regardless of immigration status, company policies on remote work, travel, vacation and sick time should be applied equally to all employees. Specifically, foreign national employees should be treated the same and allowed to take sick leave in accordance with the Sick Leave Act, and Covered Employers cannot fire, discipline, or otherwise discriminate against any employee for taking sick leave under the Sick Leave Act, or for filing a complaint related to the Act, regardless of their immigration status. In addition, Covered Employers should ensure equal treatment and policies in regards to sick leave both to their American and foreign national employees.

Unemployment Insurance

Unemployment rates have jumped to unprecedented levels due to the coronavirus as shelter-in-place orders and directives to self-isolate have forced many businesses to shut down temporarily or to furlough their workers. The Department of Labor reported 6.6 million initial unemployment claims in the week ending March 28, doubling the 3.3 million from the previous week’s revised level.

In order to combat this dire unemployment situation, FFCRA provides for an additional 13 weeks of Unemployment Insurance (“UI”) offered by the federal government after state benefits are no longer available through the Emergency Unemployment Compensation program. This means that for a state with 26 weeks of coverage, such as New York, the total would be extended to 39 weeks.

Though the rules regarding UI varies between state to state, the general rule is that employees may receive UI benefits if they were: (i) working legally when they lost their job, (ii) are legally allowed to take a new job, and (iii) meet the “other” requirements for UI benefits.  These “other” requirements include: (i) they were working for a long enough period of time to establish an employment claim, (ii) they have lost employment through no fault of their own; (iii) they must be ready, willing and able to work, and actively looking for work, (iv) they must be ready to start work at once and be physically and mentally capable of working to receive benefits. Undocumented workers are not eligible for unemployment benefits.

Generally, unemployment benefits are considered to be earned benefits through the person’s employment and specific tax deductions and are not generally taken into consideration by the U.S. Department of Homeland Security (DHS) for purposes of making a public charge determination.

Foreign nationals with Employment Authorization Documents, which are not employer specific, should be eligible for UI. Foreign nationals with employer-sponsored work visa status, however, may not qualify for UI since accessing the unemployment benefits requires the worker to be eligible for future employment, As of now, there has been no guidance from the government regarding these requirements, but this may change in the future as the situation unfolds.

Stimulus Rebate Checks

The CARES Act provides a $1,200 stimulus rebate to each eligible individual with adjusted gross income of up to $75,000 ($150,000 for married couples), plus another $500 per child. Reduced amounts will be issued to individuals making up to $99,000 per year ($198,000 for married couples).

At present, it is not clear whether foreign national employees with work visas are eligible for the stimulus rebate checks. The CARES Act specifically excludes “any nonresident alien” from the definition of “eligible individual.” Some have concluded that any foreign national who does not have a green card is not eligible, however, the CARES Act does not actually define the term nonresident alien.

The term “nonresident alien” is notably defined by the Internal Revenue Service (IRS), rather than by an immigration statute. The IRS states that a non-U.S. citizen is considered a nonresident alien unless he or she meets one of two tests: the green card test or the substantial presence test. A foreign national is generally considered a resident alien for tax purposes if he or she meets the substantial presence test for the calendar year, having been physically present in the United States for a designated minimum threshold period.

As the stimulus rebate checks are technically advances on tax credit, arguably the IRS definition of “nonresident alien” should be used to determine eligibility. Based on the IRS definitions, most foreign national employees that meet the green card or substantial presence test would be considered resident aliens, and would presumably be eligible for the stimulus payment.

Nevertheless, we will not know how the IRS is interpreting the term nonresident alien under the CARES Act until it begins issuing stimulus payments. If the IRS determines that the phrase carries a different meaning in the context of the CARES Act, all foreign national employees could be left out.

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