On March 18, 2020, the Families First Coronavirus Response Act (FFCRA) was signed into law by President Trump. The FFCRA becomes effective April 2, 2020 and expires on December 31, 2020 – it is not retroactive. Among its various provisions, the FFCRA addresses paid sick leave, family paid leave, and related tax credits for eligible employers. Eligible employers are businesses and tax-exempt organizations with fewer than 500 employees.
Paid Sick Leave
In accordance with the FFCRA, employers are required to provide emergency paid sick leave (up to 80 hours) if an employee is unable to work (in office or from home) due to any of the following qualifying COVID-19 precautions:
- The employee is subject to a federal, state, or local quarantine or isolation order.
- The employee has been advised by a health care provider to self-quarantine.
- The employee has symptoms and is seeking medical diagnosis.
- The employee is caring for an individual that is subject to a quarantine or isolation order, or has been advised to self-quarantine by a health care provider.
- The employee must care for their child as a result of a school closure or the unavailability of a childcare provider.
- The employee is experiencing any other substantially similar condition to the illness, as specified by the Secretary of Health and Human Services.
If a full-time employee is unable to work as a result of reasons 1 through 3 above the employer is required to pay 100% of their regular rate (or the minimum wage, whichever is greater), up to $511 per day/$5,110 in the aggregate. Full-time employees unable to work as a result of reasons 4 through 6 are entitled to receive two-thirds of their regular pay, up to $200 per day/$2,000 in the aggregate. Part-time employees should be paid a number of hours equal to the average number of hours they work over a two-week period. The length of time the employee has been employed with the business is not relevant for COVID-19 related emergency paid sick leave.
Expanded Family Leave
In accordance with the FFCRA, eligible employees may take up to 12 weeks of job protected family leave if they are unable to work (in office or from home) due to the need to care for their child as a result of a school closure or the unavailability of a childcare provider stemming from a declared COVID-19 emergency. Eligible employees include those who have been employed for at least 30 calendar days.
The first ten days of family leave will be unpaid unless the employee has accrued vacation, personal, or medical/sick leave time available and elects to use it. After the initial ten days, employers must pay the employee an amount not less than two-thirds of their regular rate of pay (or minimum wage, whichever is greater), up to $200 per day/$10,000 in the aggregate.
In cases where the viability of the business would be in jeopardy, employers with fewer than 50 employees are eligible for an exemption from the requirement to provide leave for childcare purposes.
Employer Reimbursement/Credit For Certain Employment Taxes
Employers are entitled to 100% reimbursement for paid leave. Employers who pay qualifying sick leave or family leave for childcare will be able to retain payroll taxes equal to the amount of qualified leave paid. Payroll taxes available for retention are as follows:
- Federal income taxes
- The employee’s share of Social Security and Medicare taxes
- The employer’s share of Social Security and Medicare taxes for all employees.
To the extent there are not sufficient payroll taxes to cover the cost of the paid leave, employers will be able to file a request for an accelerated payment from the IRS. Guidance on reimbursement for employer paid emergency sick leave and family leave is expected to be announced next week.