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Understanding The Families First Coronavirus Response Act & Its Impact on Employers

Posted by: Emma Berdanier on March 23rd, 2020

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 Department of Labor has been authorized to issue exemptions to the following parties:

  1. Healthcare providers and emergency responders.
  2. 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:

The key details to know about this paid sick leave are:

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:

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.


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