On March 18, 2020, President Trump signed the Families First Coronavirus Response Act (FFCRA or Act) to provide relief to those impacted by COVID-19.
The act requires employers with less than 500 employees to provide family medical leave and paid sick leave to employees for COVID-19 related reasons. Employers will receive 100% reimbursement for qualified paid leave by taking refundable tax credits to offset payroll taxes due.
Employers should start working with their payroll providers to find out how to track emergency leave benefits paid to employees and how to obtain all available credits allowed under the Act.
The sick leave mandate takes effect no later than April 2, 2020 and expires December 31, 2020. Employers have a 30-day grace period to make a good-faith effort to come into compliance with the Act before enforcement begins. After that time employers who violate the provisions of this Act will be subject to penalties and fines under the Fair Labor Standards Act.
Employers have a 30-day grace period to make a good-faith effort to come into compliance with the Families First Coronavirus Act before enforcement begins.
The paid leave benefits fall into two categories (each detailed below):
1) The Emergency Paid Sick Leave Act
2) Emergency Family and Medical Leave Expansion Act
THE EMERGENCY PAID SICK LEAVE ACT
Covered employers: Those with fewer than 500 employees.
Covered employees: Both full-time and part-time employees.
- Full-time – eligible for 80 hours of leave
- Part-time – eligible for average hours worked over a two-week period (for variable schedules, the average hours per day over the previous six months)
An employee qualifies for paid sick time 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
- has been advised by a health care provider to self-quarantine related to COVID-19
- is experiencing COVID-19 symptoms and is seeking a medical diagnosis
- is caring for an individual subject to an order described in (1) or self-quarantine as described in (2)
- is caring for a child whose school or place of care is closed (or child care provider is unavailable) for reasons related to COVID-19
- is experiencing any other substantially-similar condition specified by the Secretary of Health and Human Services, in consultation with the Secretaries of Labor and Treasury.
- For items 1-3, the employer is required to pay the employee’s regular rate of pay capped at $511 per day or $5,110 in the aggregate (over a two-week period).
- For items 4-6, the employer is required to pay two-thirds of the employee’s regular rate of pay capped at $200 per day or $2,000 in the aggregate (over a two-week period).
EMERGENCY FAMILY AND MEDICAL LEAVE EXPANSION ACT
Covered employers: Those with fewer than 500 employees.
Covered employees: Both full-time and part-time employees employed for at least 30 days.
An employee qualifies for expanded family and medical leave if the employee is unable to work (or telework) due to the need to care for a child whose school or place of care is closed (or child care provider is unavailable) for reasons related to COVID-19. Currently, a qualifying need does not apply to the care of any person other than a minor child of the employee.
The employer is required to pay two-thirds of the employee’s regular rate of pay capped at $200 per day or $10,000 in the aggregate (over a twelve-week period). The first 10 days may be unpaid; however, the employee may elect to substitute any accrued paid leave (PTO, vacation, or sick time) to cover some of the 10-day unpaid period. The employee may also qualify for paid sick leave in item #5 above during the first 10 days. In total, the cap for paid family and medical leave is $12,000 (two-weeks for paid sick time, and ten weeks for paid family and medical leave).
Are there Exemptions for Businesses with less than 50 Employees?
Small businesses with fewer than 50 employees may qualify for exemption from the requirement to provide leave due to school closings or childcare unavailability if the leave requirements would jeopardize the viability of the business as a going concern. The Department of Labor will issue further emergency guidance in this area in the days to come.
What Tax Credits Will Employers Receive?
- Employers will receive 100% reimbursement for all qualified sick leave and family medical leave paid for each quarter (including a portion of the health insurance costs allocable to the paid leave).
- The credit will be applied dollar-for-dollar against payroll taxes owed by the employer. If the cost of paid leave exceeds the amount of payroll taxes due, employers can seek an expedited advance from the IRS by submitting a streamlined claim form that will be released soon.
- Self-employed individuals will receive equivalent credits.
Other Provisions for Employers to Keep in Mind
- Post in easy-to-view places on the premises of the employer a notice of the FFCRA requirements. The Secretary of Labor will make the notice available soon.
- Continue to pay sick leave for any existing employer plans in addition to the recently enacted emergency legislation.
- Require an employee to use other available paid time off (PTO, vacation, existing sick leave) before the emergency leave made available in this Act.
- Require an employee to find a replacement worker for themselves during the leave.
- Terminate an employee for seeking benefits under the Act.
We are awaiting further guidance on the Families First Coronavirus Response Act and will post updates as we receive them. If you have any initial questions, please contact DHJJ by emailing us at firstname.lastname@example.org.