On March 18, 2020, the Families First Coronavirus Response Act (FFCRA) was signed into law, and its provisions give many employees paid leave if the employee needs to take time from work due to the coronavirus (also known as COVID-19). In short, the law was created in response to the COVID-19 public emergency, and the paid leave provisions expire December 31, 2020. Below are some fast facts concerning the freshly implemented FFCRA.
- Most employees at small or mid-size companies qualify for paid leave.
- However, companies with more than 500 employees, health care providers and emergency responders are excluded from the law, meaning those employees are not given protection under this law.
- In addition, small businesses with fewer than 50 employees can ask the Department of Labor to be exempted from the law if the business can show that providing leave will jeopardize the viability of the business as a going concern (i.e. put them out of business).
- Companies with common ownership or a common enterprise should be careful about trying to avoid paid leave under the FFCRA. The burden will be on the company to prove it does not qualify, and any public filings or other representations that show otherwise may be used by the Department of Labor to support a broader application.
Emergency Sick Leave
- FFCRA provides qualified employees with two weeks of paid sick leave if they are ill, quarantined, seeking diagnosis or preventative care for reasons related to COVID-19, or experiencing symptoms substantially similar to COVID-19 as specified by the Department of Health and Human Services. An employee qualifies regardless of how long they have been employed by the employer, and they are entitled to take up to 80 hours of paid sick leave.
- Qualified employees are eligible for paid sick leave if they are caring for a sick family member or the family member has been quarantined.
- Qualified employees are eligible if they are caring for minor children because a school and/or a child-care provider is closed.
- The FFRCA is comprehensive because it also provides part-time employees, as well as, self-employed and/or gig workers two-weeks paid leave. Part-time employees are entitled to be paid the amount that they would typically earn in a two-week period. Persons who are self-employed or a gig economy worker can collect their paid leave as a tax credit. In other words, they should calculate their average daily self-employment income for the year and claim the amount they take as a tax credit.
- If an employee is missing work because they are ill or seeking care for themselves, they can receive their full pay up to a maximum of $511 per day.
- If the employee is missing work due to caring for an ill family member or a child due to a school and/or childcare provider being closed, they will receive two-thirds of their regular pay up to $200 per day.
- Employers cannot, however, require employees to use their accrued paid leave (i.e. paid time off, vacation time, sick leave, or other paid leave) in lieu of paid sick leave provided by the law.
Emergency Family Leave
- The FFRCA temporarily expands the Family and Medical Leave Act (FMLA) to include coronavirus related publicly declared emergencies by local, State, or Federal authority. Employees qualify if they have worked for their employer for at least 30 days and are unable to work or telework because the employee must care for a minor child. The FFRCA provides 12 weeks of paid leave to employees who are caring for children because schools are closed, or a childcare provider is unavailable due to COVID-19.
- Employers are not required to pay employees for the first 10 days of leave, but employees can use any accrued paid time off, vacation time, sick leave, or other paid leave during this initial period. Employers cannot, however, require employees to use their accrued paid leave.
- After the initial 10-day period, employees can receive two-thirds of their regular pay up to a maximum of $200 per day.
Employer Tax Credits
- Employers are reimbursed for the full amount of paid leave within three months of such payment in the form of a payroll tax credit. This tax credit is against employer Social Security tax liability equal to 100% of the qualified sick leave wages paid by the employer.
- In addition, the tax credits for employers can be increased to include the amount employers pay for the employee’s health plan coverage while the employee is on leave.
- The employer’s contribution to health insurance premiums during their employee’s leave will also be covered in the reimbursement.
- The amount paid by employers is fully refundable, meaning if an employer pays more in paid leave than they owe in taxes, the government will send the employer a check for the remaining amount.
- This rule also applies for self-employed and gig economy workers.
- Employers may pay employees more than the law requires, but the reimbursements will be limited to the Emergency Sick Leave and Emergency Family Leave rates above plus any increases for health plan coverage.
- An employer is not eligible to receive the tax credit if the employer is already receiving a credit for paid family and medical leave under the 2017 Tax Cuts and Jobs Act. Instead, employers would have to include the credit in its gross income.