On March 19, 2020, President Trump signed into law the Families First Coronavirus Response Act (“FFCRA”). Among other things, this law created new paid leave requirements: (1) Emergency Paid Sick Leave and (2) Public Health Emergency Leave. Below you will find answers to frequently asked questions from employers regarding this new law.
What are the paid sick leave requirements under the FFCRA?
FFCRA requires that employers provide full-time employees with eighty (80) of paid sick leave to be used by the employee if he/she is unable to work (or telework) due to a need for leave because:
(1) The employee is subject to a federal, state, or local quarantine or isolation order related to COVID-19;
(2) The employee has been advised by a health care provider to self-quarantine because of COVID-19;
(3) The employee is experiencing symptoms of COVID-19 and is seeking a medical diagnosis;
(4) The employee is caring for an individual subject or advised to quarantine or isolation;
(5) The employee is caring for a son or daughter whose school or place of care is closed, or child care provider is unavailable, due to COVID-19 precautions; or
(6) The employee is experiencing substantially similar conditions as specified by the Secretary of Health and Human Services, in consultation with the Secretaries of Labor and Treasury.
Part-time employees are also entitled to paid sick leave equal to the number of hours they work, on average, over a 2-week period. This paid sick leave does not carry over year-to-year and expires on December 31, 2020.
Paid sick leave must be paid at the employee’s regular rate of pay, but compensation can be capped at $511 per day ($5,110 in the aggregate) if leave is taken for the employee’s own quarantine or symptoms and $200 per day ($2,000 in the aggregate) if leave is taken to care for another.
Employers are also prohibited from:
(1) Requiring employees, as a condition of providing paid sick leave, to find a replacement employee to cover their missed shifts;
(2) Requiring employees to use other paid leave before using paid sick leave provided under FFCRA; or
(3) Retaliating against any employee, who takes paid sick leave or files a complaint about the FFCRA.
What are the public health emergency leave requirements under the FFCRA?
The FFCRA amended the Family and Medical Leave Act (FMLA) to provide employees with 12 weeks of job-protected emergency FMLA leave if the employee is unable to work (or telework) due to a need for leave to care for the son or daughter under 18 years of age of such employee if the school or place of care has been closed, or the child care provider of such son or daughter is unavailable, due to a public health emergency. Employees are eligible for this leave if they have worked for the employer for at least 30 calendar days.
The first ten (10) days of leave may be unpaid, but an employee may elect to use accrued vacation, paid time off, or other sick leave during this period of time. The remaining leave would be paid by the employer at two-thirds (2/3) of the employee’s regular rate. The compensation must be based on the number of hours the employee would otherwise normally be scheduled to work. Paid leave for this reason can be capped at $200 per day and $10,000 in the aggregate.
Which employers are covered by the FFCRA?
FFCRA applies to all businesses with fewer than 500 employees.
When does the law go into effect?
The law is effective within 15 days of when it was signed, which means it will be in effect April 1, 2020.
Are there any exclusions?
Employers of employees who work as health care providers or emergency responders, may elect to exclude those employees from these requirements. The law does not provide a definition for either type of employee, but it is anticipated that the Department of Labor (DOL) will provide further regulations on this issue in the near future.
The DOL further has authority to except small businesses with fewer than 50 employees from the emergency FMLA requirements “when the imposition of such requirements would jeopardize the viability of the business as a going concern.” Again, the DOL is expected to issue regulations further explaining these provisions.
What are the available tax credits under the FFCRA?
The FFCRA provides a tax credit equal to one hundred percent of qualified sick leave wages and one hundred percent of paid family leave wages required to be paid under the FFCRA for any quarter through 2020, subject to the following limitations: For purposes of calculating the tax credit, qualified sick leave wages are limited to $511 per day per employee and cannot exceed 10 days for all calendar quarters; and paid family leave is limited to $200 per day per employee and cannot exceed $10,000 for all calendar quarters.
The tax credit is increased by the amount of qualified health plan expenses (i.e., employer-paid health insurance premiums) properly allocable to leave paid pursuant to FFCRA. In addition, the tax credit is increased by the amount of the employer’s share of the Medicare component (1.45%) of FICA on paid leave required by the FFCRA. Finally, employers will not be required to withhold the employee’s share or pay the employer’s share of the Social Security tax (6.2%) on FFCRA paid leave.
The credit reduces the employer’s share of Social Security tax liability. If the amount of the credit exceeds the employer’s share of Social Security tax liability, the excess amount would be treated as a refundable credit. However, if the employer has an existing outstanding employment tax liability, the IRS has discretion to apply the excess amount to the outstanding employment tax liability.
What should I be doing now?
For now, employers should be in good communication with their leadership teams and advisors, including employment lawyers and tax professionals who can assist with crucial planning in the days ahead. The DOL is required to distribute a notice (workplace poster) along with regulations for the FFCRA. The Secretary of Labor is expected to publish the poster within 7 days of the law’s enactment. Once we have the poster and DOL regulations, we will know more about the specific procedures and documentation that will be required under the FFCRA. The DOL will also observe a temporary period of non-enforcement for the first 30 days after the FFCRA takes effect as long as the employer has acted reasonably and in good faith to comply with the Act. “Good faith” exists when violations are remedied and the employee is made whole as soon as practicable by the employer, the violations were not willful, and the Department receives a written commitment from the employer to comply with the Act in the future.
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