The Families First Coronavirus Response Act (FFCRA), is new legislation designed to help employees who must miss work due to the COVID-19 outbreak and provide tax breaks to employers for providing paid leave. The law will become effective April 1, 2020 (according to the most recent update from the Department of Labor).
Who is a Covered Employer: The FFCRA has two main leave components: expanded FMLA and emergency paid sick leave. Both components apply to private employers with fewer than 500 employees. Small businesses with fewer than 50 employees may qualify for exemption from the requirement to provide leave due to school closings or childcare unavailability if the leave requirements would jeopardize the viability of the business. Initial details about how to qualify for this type of exemption are available here: https://www.dol.gov/agencies/whd/pandemic/ffcra-questions.
Paid Sick Leave
Generally, the law states that covered employers must provide the follow types of paid leave to all qualified employees:
- Two weeks (up to 80 hours) of paid sick leave at the employee’s regular rate of pay where the employee is unable to work or telework because the employee is quarantined (due to Federal, State, or local government order or advice of a health care provider), and/or experiencing COVID-19 symptoms and seeking a medical diagnosis; or
- Two weeks (up to 80 hours) of paid sick leave at two-thirds the employee’s regular rate of pay because the employee is unable to work because of a bona fide need to care for an individual subject to quarantine (due to Federal, State, or local government order or advice of a health care provider), or care for a child (under 18 years of age) whose school or childcare provider is closed or unavailable for reasons related to COVID-19
Qualifying Reasons for Paid Sick Leave:
Under the FFCRA, an employee qualifies Paid Sick Leave if the employee is unable to work and unable to telework due to a need for leave because the employee:
(1) is subject to a Federal, State, or local quarantine or isolation order related to COVID-19;
(2) has been advised by a health care provider to self-quarantine related to COVID-19;
(3) is experiencing COVID-19 symptoms and is seeking a medical diagnosis;
(4) is caring for an individual subject to an order described in (1) or self-quarantine as described in (2); or
(5) is caring for a child whose school or place of care is closed (or childcare provider is unavailable) for reasons related to COVID-19
A covered employer must provide to employees that it has employed for at least 30 days:
- Up to an additional 10 weeks of expanded FMLA at two-thirds the employee’s regular rate of pay where an employee is unable to work due to a bona fide need for leave to care for a child whose school or childcare provider is closed or unavailable for reasons related to COVID-19.
Qualifying Reasons for Expanded FMLA Leave:
As noted above, an employee qualifies for expanded family and medical leave if the employee is unable to work and unable to telework due to a need for leave because the employee is caring for a child whose school or place of care is closed (or childcare provider is unavailable) for reasons related to COVID-19.
Guidance has not yet been published on whether employees will be required to provide some type of certification in order to qualify for paid sick leave and emergency FMLA. Regular FMLA does require certification or other documentation, so something similar is likely to be required.
The law does not allow for retroactive pay, so any paid time off and associated tax credits would begin on that date. This paid leave is also separate from any other leave offered by the employer, so you can not require employees to use PTO or other paid time in lieu of this leave. A layoff is not a qualifying event that triggers coverage under the law. Employers should be cautious in laying off workers who may qualify for this type of leave to avoid retaliation or discrimination claims.
The Department of Labor has stated that they will not enforce penalties for not complying with the new law for 30 days after it is enacted, as long as an employer is putting forth a good faith effort to comply. This means that if mistakes are made in trying to figure out exactly how to comply with the new law, employers will be given a chance to fix them without penalties.
The Department of Labor has provided a notification poster for employers. This must be posted by April 1, 2020.
Tax Credits for Employers:
The law includes employer tax credits equal to the cost of providing paid leave to employees. Eligible employers are also entitled to an additional tax credit based on costs to maintain health insurance coverage for the eligible employee during the leave period.
Under guidance expected to be released this week, eligible employers who pay qualifying sick or child care leave will be able to retain an amount of the payroll taxes equal to the amount of qualifying sick and child care leave that they paid, rather than deposit that amount with the IRS.
Helpside is actively working out the details of tracking paid sick leave and expanded FMLA as well as the tax credit procedures for our clients and will provide updates as soon as possible.
Here is some more helpful information from the Department of Labor: