On March 18, 2020, President Trump signed into law H.R. 6201: The Families First Coronavirus Response Act. The Act has many provisions, including increasing Medicaid funding, expanding unemployment benefits, and providing Coronavirus testing at no cost to consumers. The Act also includes an amendment to the Family and Medical Leave Act of 1993 – referred to as the Emergency Family and Medical Leave Expansion Act (the “FMLA Expansion Act”) and a new Emergency Paid Sick Leave Act.
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. If you are an employer who employs less than 500 people, this is how the FMLA Expansion Act and Emergency Paid Sick Leave Act will affect you. Also, as an employer, you are required to notify your employees of their rights by posting the Employee Rights poster on your company intranet (if you have one) or anywhere you normally post workplace posters.
Tip: Refer to HUB International’s FFCRA Easy to Use Flowchart for Guidelines
Paid Family Leave
Eligible employees may take up to 60 days of leave if they are unable to work (including telework) because they must care for their child who is under 18 years of age and whose school or place of childcare has closed due to the COVID-19 public health emergency. The initial ten days of leave do not have to be paid by the employer, but the employee may elect to use their accrued paid sick leave and/or accrued vacation during this otherwise unpaid period. After the initial 10-day period, an employee is entitled to receive from the employer two-thirds of their normal wages for the number of hours they would be regularly scheduled to work, up to a maximum of $200 per day and $10,000 in total. To be eligible, the employee must have worked for the employer for at least 30 calendar days.
Note: There is an exception to exclude certain health care providers and emergency responders from the definition of an eligible employee and to exclude businesses with fewer than 50 employees when the imposition of such requirements would jeopardize the viability of the business as a going concern.
Remember, this is what employers must provide at a minimum–individual companies may offer additional benefits. Also remember that this legislation does not apply to employers who employ 500 people or more.
Paid Sick Leave
All employees of employers with fewer than 500 people, regardless of the length of tenure with their employer, are eligible for paid sick leave under the Emergency Paid Sick Leave Act.
The employee may take ten days of paid sick leave (80 hours or the number of hours a part-time employee works over a two-week period) if they are unable to work (including telework) because:
- The employee is subject to a Federal, State, or local quarantine or isolation order related to COVID–19.
- The employee has been advised by a health care provider to self-quarantine due to concerns related to COVID–19.
- The employee is experiencing symptoms of COVID–19 and seeking a medical diagnosis.
- The employee is caring for an individual who is subject to an order as described in (1) or has been advised as described in (2) above.
- The employee is caring for a child of such employee if the school or place of care of the child has been closed, or the childcare provider of such child is unavailable, due to COVID–19 precautions.
- The employee is experiencing any other substantially similar condition specified by the Secretary of Health and Human Services in consultation with the Secretary of the Treasury and the Secretary of Labor.
For qualifying reasons 1, 2, and 3 (above), employees will receive paid sick leave at their regular rate up to a maximum of $511 per day and $5,110 in total. For qualifying reasons 4, 5, and 6 (above), eligible employees will receive paid sick leave at two-thirds of their regular rate up to a maximum of $200 per day and $2,000 in total. There are no certification requirements, but an employer may require an employee to follow reasonable notice procedures. An employer may not discipline, discharge, or discriminate in any manner against an employee who takes this sick leave. This paid sick leave must be made available in addition to any paid sick leave an employer might already provide on its own or as required by local or state law. Again, it does not apply to companies with 500 employees or more.
Employer Tax Credits
Employers will be provided refundable tax credits against their employer portion of Social Security taxes for 100% of the qualified family leave and sick leave wages paid in accordance with the Act.
The Act authorizes employers to receive additional payroll tax credits for group health plan costs and the 1.45% Medicare payroll tax on wages paid to employees.
Employers must include the amount of the credits in their gross income. Also, no credit is allowed for wages for which a credit is claimed under IRC Sec. 45S (“Employer Credit for Paid Family and Medical Credit”).
The credits are available only for the period beginning April 1, 2020 and ending on December 31, 2020.
Tax Credits for the Self-Employed
The Act also provides a tax credit for family and sick leave for eligible self-employed individuals that may be taken against the self-employment tax. Eligible self-employed individuals are entitled to a credit equal to the individual’s “qualified sick leave equivalent amount,” which is equal to: (i) the number of days (up to 10) during the taxable year the individual cannot work for any reason that would entitle the individual to benefits under the Emergency Paid Sick Leave Act and (ii) multiplied by the lesser of:
- $511 per day for an individual who is sick or quarantined, or $200 per day for an individual caring for another person or is on leave because of a Health and Human Services-specified condition; or
- 100% of the average daily self-employment income for the year for an individual who is sick or quarantined, or 67% of the average daily self-employment income for an individual who is caring for another person or is on leave because of a Health and Human Services-specified condition.
A credit is also available for 100% of an individual’s “qualified family leave equivalent amount,” which is equal to: (i) the number of days (up to 50) during the taxable year that the individual cannot work for reasons that would entitle the individual to the benefits of the FMLA Expansion Act if the individual were an employee, (ii) multiplied by the lesser of:
- $200; or
- 67% of the individual’s average daily self-employment income for the year.
1. The Journal of Accountancy
2. The National Law Review