Last week, the President signed into law the Families First Coronavirus Response Act (H.R. 6201) in response to COVID-19. The Act implements three parts: The Emergency Family Medical Leave Act, Paid Leave Act, and Tax Credits for Employers providing such leave. These take effect April 2, 2020.
Emergency Family Medical Leave Act. Essentially, the law expands the Family Medical Leave Act to allow workers to take leave to care for their minor child as result of school or childcare service being closed by authorities due to the COVID-19 emergency. The expansion applies to employers with fewer than 500 employees and who have been on the payroll for at least 30 calendar days. The first 10 days of the leave are unpaid, after that an employer must pay 2/3 of the eligible employee’s regular rate of pay. This would be based on the number of hours the employee regularly works.
Employers with fewer than 25 employees are not obligated to reinstate the employee after leave or if the position has been eliminated due to financial conditions as result of COVID–19. Rates are capped at $200/day or $10,000 total per employee.
Under the original FMLA, a covered employer is one who employs 50 or more than employees in 20 or more weeks in the preceding calendar year. This is great expansion of that the FMLA that could prove to be burdensome on some smaller employers. We can expect further guidance from the Secretary of Labor regarding the exemptions to small business with fewer than 50 employees.
Paid Sick Leave. Companies with fewer than 500 employees must provide all full-time employees with up to 80 hours of paid sick leave if the employees are unable to work (or telework) due to COVID-19. They must provide part-time employees with the number of hours of paid leave equivalent to what the employee works in a two-week period.
Qualifying reasons for paid sick leave are detailed in the act, but they include:
- the employee being subject to a federal, state, or local quarantine
- the employee being subject to self-quarantine by advice of health care provider
- the employee experiencing symptoms of COVID-19, and seeking a medical diagnosis
- caring for an individual subject to quarantine or isolation order
- caring for their child if their school or day care has been closed, or child care provider is unavailable due to coronavirus precautions;
- or is experiencing any other substantially similar condition specified by the Secretary of Health in consultation with the Secretaries of Treasury and Labor.
- Paid leave must be at the regular rate of pay, or minimum wage, whichever is greater, if the employee is taking leave for one of the first three reasons (up to $511/day, $5,110 over the benefit period); and will receive 2/3 of the pay for the last three qualifying reasons (up to $200/day, $2,000 over the benefit period).Tax Credits To help pay for these leaves, the employers will be provided a payroll tax credit. Each quarter in which leave is provided, covered employers under the act will be provided a tax credit equal to 100 percent of the qualified sick leave wages and qualified family leave wages paid by the employers including costs associated with providing and maintaining group health plan during the paid leave.Additionally, employers can take an immediate tax credit by retaining the payroll taxes (Federal income taxes, social security, medicare taxes) equal to the amount of qualifying sick and child care leave paid. If the amount of leave exceeds the amount of payroll tax owed, the employer can apply for a refund of payroll taxes owed. Essentially, this allows the employer to use payroll tax credits for the payment of sick leave.
We can expect further guidance on the tax credits from the IRS in the next few weeks.
Please contact me if you need assistance in adjusting your current leave policies to comply with these new acts.