Understanding The Families First Coronavirus Response Act & Its Impact on Employers
On Mar. 18, 2020 President Donald Trump signed into law House Bill 6201: The Families First Coronavirus Response Act (H.R. 6201). This legislation is a relief package designed to aid U.S. citizens during this unprecedented COVID-19 pandemic.
H.R. 6201 includes two complementary but distinct emergency paid leave provisions, generally applicable to employers with fewer than 500 employees and financed through refundable tax credits. These provisions will become effective no later than 15 days from Mar. 18, 2020, when the bill was signed into law. The provisions expire on Dec. 31, 2020.
The two paid leave provisions within H.R. 6201 are summarized as follows:
Emergency Family and Medical Leave Expansion Act
This provision requires certain employers to provide public health emergency leave under the Family and Medical Leave Act of 1993 (FMLA). The current public health emergency is the COVID-19 emergency declared by Federal, State or local authority.
This specific provision applies when an employee is unable to work or telework due to the need to care for a child under the age of 18, because their school or place of care has been closed, or child care provider is unavailable, due to public health emergency.
A few key differences between this and normal leave protected under FMLA are:
- The first 10 days of leave may be unpaid unless the employee elects to substitute paid leave for these days. The remainder of the 12-week leave must be paid.
- The paid leave must be at least two-thirds of the employee’s regular rate of pay, up to $200/day and $10,000 in the aggregate.
- Employees who have worked for the company for at least 30 days are entitled to this leave, in contrast to FMLA’s 12-month/1,250 hour rule.
The Department of Labor has been authorized to issue exemptions to the following parties:
- Healthcare providers and emergency responders.
- Small businesses with fewer than 50 employees if the imposition of this requirement would jeopardize the viability of the business.
All other employers are required to provide this emergency FMLA leave to their employees if needed.
Emergency Paid Sick Leave Act
This provision requires certain employers to provide up to two weeks of paid emergency “sick” and “caring for” leave. It applies when an employee is unable to work or telework on account of the following COVID-19 related reasons:
- They are subject to – or are caring for someone subject to – Federal, State, or local quarantine or isolation order.
- They have been advised by – or are caring for someone advised by – health care providers to self-quarantine.
- They are experiencing symptoms and are seeking a medical diagnosis.
- They are caring for their child whose school or place of care has been closed, or childcare provider is unavailable, due to COVID-19 precautions.
- They are experiencing a substantially similar condition specified by Health and Human Services in consultation with Treasury and Labor.
The key details to know about this paid sick leave are:
- Employers must pay their full-time employees 80 hours of sick leave.
- Part-time employees are eligible for the average number of hours they work in 2 weeks, based on their schedules in the last 6 months, or reasonable expectation at the time of hire.
- Paid “sick” leave is at the regular rate of pay, capped at $511/day and $5,110 in the aggregate.
- Paid “caring for” leave must be at least two-thirds of the regular rate of pay, up to $200/day and $2,000 in the aggregate.
- Leave must be provided immediately. There is no waiting period.
- This leave cannot be carried over to the next year and unused leave is not required to be paid out after termination of employment.
Regardless of current PTO and paid sick leave policies at a company, every company must provide this paid leave in addition to that which they already provide. Employers may not change their paid leave policies.
The Department of Labor has been authorized to issue exemptions from this provision from the same parties that would be exempted from the paid FMLA provision.
Tax Credits & Grants for Payment of Emergency Leave
Refundable tax credits for the employer portions of the Old-Age, Survivors, and Disability Insurance (OASDI) part of payroll taxes will be provided. These will be used to cover wages paid to employees for time off under the above sick leave and family leave provisions.
The following restrictions apply for the tax credits created in this law:
- Tax credit is limited to the wages required because of these new provisions, i.e. the credit does not apply if paid leave is required under state or local law.
- Tax credit for wages required by the Emergency Family and Medical Leave Expansion Act is capped at $200/day and $10,000 in the aggregate per employee.
- Tax credit for wages required by the Emergency Paid Sick Leave Act is capped at $511/day and $5,110 in the aggregate for an employee’s own sick leave, and $200/day and $2,000 in the aggregate for the employee’s “caring for” leave.
An employer can decline to take the credit for a given quarter. If an employer does this, they will still be eligible for the credit for the next quarter.
On Mar. 20, 2020, the Internal Revenue Service (IRS) and U.S. Department of Labor expanded the credit under H.R. 6201. Payroll taxes that are available for retention include withheld federal income taxes, the employee share of Social Security and Medicare taxes, and the employer share of Social Security and Medicare taxes.
If there are not sufficient payroll taxes to cover the cost of qualified sick and child care leave paid, employers will be able to file a request for an accelerated payment from the IRS. The IRS expects to process these requests in 2 weeks or less. The details of this new, expedited procedure will be announced next week.
Actions Employers Should be Taking
Now that this bill has become law, employers need to act quickly to effect changes within their company. Employers need to amend any policies they have that go against the contents of this law and train their managers on administering leave under this new law.
This article does not constitute legal advice. J. Kent Staffing recommends you contact an employment attorney to fully understand your employer obligations related to this subject.
- “Learn More About The Families First Coronavirus Response Act Webcast.” American Staffing Association, 23 March 2020.
- Magidenko, Evengy; et al. “Senate Passes Family First Coronavirus Response Act: What Employers Need to Know.” The National Law Review, 19 March 2020.
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