COVID-19 Relief

President Trump Signs the Families First Coronavirus Response Act (FFCRA)

On March 18, 2020, President Trump signed into law the Families First Coronavirus Response Act (H.R. 6201) that responds to the coronavirus (COVID-19). In addition to expansion of unemployment benefits and provision of grants to states for processing and paying claims as well as establishment of requirements for providing coronavirus diagnostic testing at no cost to consumers, major provisions applicable to employers follows:

Employer’s Requirement to Provide Paid Sick Leave

Employers are required to provide to each employee employed by the employer paid sick time to the extent that the employee 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 due to concerns related to COVID-19.
  3. The employee is experiencing symptoms of COVID-19 and seeking a medical diagnosis.
  4. The employee is caring for an individual who is subject to an order as described in EPSLA.
  5. The employee is caring for a son or daughter of such employee if the school or place of care of the son or daughter has been closed, or the child care provider of such son or daughter is unavailable, due to COVID-19 precautions.
  6. 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.

A full-time employee is entitled to eighty (80) hours of paid sick time.  For a part-time employee, the hours of sick paid time is equal to the number of hours that such employee works, on average, over a two (2) week period.

Paid sick leave is calculated based on the employee’s required compensation and the number of hours the employee would otherwise be normally scheduled to work, except that in no event shall such paid sick time exceed $511 per day, and $5,110 in aggregate, for reasons of leave that include 1, 2, and 3 (as previously described).  For reasons 4, 5, and 6 (as previously discussed), paid sick time shall not exceed $200 per day and $2,000 in aggregate. 

Under the Act, the paid sick time shall be available for immediate use by the employee regardless of how long the employee has been employed by an employer.  The employer may not require an employee to use other paid leave provided by the employer to the employee before the employee uses the paid sick time afforded under the Act.

The requirement impacts private employers with fewer than 500 employees; private employers with 500 or more employees are exempt from this requirement.  Hardship waivers may be available to exempt small businesses with fewer than 50 employees from the sick pay requirements under the Act.

Provisions of the Act become effective not later than 15 days after the date of enactment, April 2, 2020, and expires on December 31, 2020.

Emergency Family and Medical Leave Expansion Act

The Act expands the FMLA Act of 1993 for COVID-19, which has an effective date beginning April 2, 2020, and ending on December 31, 2020.

Under the Act, an eligible employee is an employee who has been employed for at least 30 days by the employer with respect to whom leave is requested.  Paid leave is available to eligible employees who are unable to work (or telework) due to a need for leave to care for minor children resulting from closure of schools or child care providers. 

The affected employers are generally those with fewer than 500 employees.

The first ten (10) days of leave may consist of unpaid leave; however, an employee can elect to substitute accrued vacation leave, personal leave, or medical or sick leave for unpaid leave taken during the initial ten (10) day period. 

Subsequent to the initial ten (10) day period, paid leave for an employee is calculated based on two-thirds of the employee’s regular rate of pay and the number of hours the employee would otherwise be normally scheduled to work.  Paid leave shall not exceed $200 per day and $10,000 in aggregate.

Tax Credits for Paid Sick and Paid Family and Medical Leave

Employers who are subject to the required paid sick leave and paid family and medical leave provisions of the Act are allowed a credit for each calendar quarter of an amount equal to 100% of the qualified leave wages paid by the employer for such calendar quarter. 

Credits in excess of liabilities due may be refundable.

Credit amounts are increased by so much of the employer’s qualified health plan expenses as are properly allocable to the qualified paid sick leave wages and qualified family leave wages for which such credits are allowed, subject to limitations.

Wages taken into consideration for purposes of these tax credits are not eligible wages under Internal Revenue Code Section 45S dealing with employer credit for paid family and medical leave.

Self-employed persons may be eligible for a credit against their self-employment taxes in an amount equal to the qualified sick leave or qualified emergency family and medical leave equivalent amounts as non-self-employed persons.

Special Provisions Related to Tax on Employers

Any wages required to be paid by reason of the Act shall not be considered wages for purposes of Section 3111(a) of the Internal Revenue Code of 1986 (employer excise tax for old-age, survivors, and disability insurance) or compensation for purposes of Section 3221(a) of such Code.

The credits for required paid sick leave and paid emergency family and medical leave shall each be increased by the amount of the tax imposed by Section 3111(b) of the Internal Revenue Code of 1986 on qualified sick leave wages, or qualified family leave wages, for which the credits are allowed.

Disclaimer

This information is not intended and does not constitute a comprehensive assessment of all provisions of FFCRA, including applicability and application thereof.  For more information please contact your Arnett Carbis Toothman Advisor.