As the impact of the Coronavirus pandemic grows, many businesses are facing challenges to remaining open and staffed properly. In response, on March 18th 2020, Congress passed the Families First Coronavirus Response Act (FFCRA). While we are still waiting for guidance from the IRS and the DOL on how to implement the act, and some provisions are still not clear, we want to provide a high level summary of the main elements of the FFCRA. Due to the complexity of the FFCRA, even this high level review is lengthy. Please do take the time to read it through. Also, please remember that we are not providing legal advice. We are doing our best to explain the act in a practical easy to understand format.
Our payroll and tax software vendors are working to build the needed functionality, but are also waiting on the IRS and DOL for instructions before that can be completed. We will share information about how we will configure the system to meet the requirements when they complete their work. In the interim, we may need to do our best and then make corrections after the fact as needed.
Please note that the FFCRA does not apply to employees who are laid off or can’t work because the business is closed. Those employees should apply for unemployment.
The act contains two separate new leave provisions that will affect MOST employers. Beginning April 2nd and running through the end of this year, the provisions are:
Emergency Sick Leave Provision –
The Act requires most employers with less than 500 employees to provide two weeks of “paid sick time” to most employees who are unable to work or telework for reasons related to COVID-19 .
Emergency FMLA Leave Provision –
The FFCRA also amends the Family Medical Leave Act (FMLA). Previously employers with less than 50 employers were not subject to FMLA, but now employers with less than 500 employees must provide up to 12 weeks of FMLA leave to employees who can’t work or telework because they are needed to care for a child due to the closure of their school or day care facility.
There is a program in place to reimburse employers for the cost of these special leaves. Employers will be entitled to a tax credit for 100% of the amount required to be paid for Emergency Sick Leave. The credit will be taken from payroll taxes on a per pay period basis.
The two weeks emergency paid sick leave is required to be paid to employees who meet one of 6 conditions no matter how long they have been employed. Note that there are limited exceptions for certain health care workers and emergency responders.
The employee qualifies if he/she:
(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 due to concerns related to COVID-19;
(3) Is experiencing symptoms of COVID-19 and is seeking a medical diagnosis;
(4) Is caring for an individual who is subject to an order described in category (1) above or has been advised as described in category (2) above;
(5) Is caring for a son or daughter of the 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; and/or
(6) Is experiencing any other substantially similar condition specified by the Department of Health and Human Services in consultation with the Departments of the Treasury and Labor.
Full-time hourly or salary employees are entitled to 80 hours of paid sick leave. Other employees are allowed hours equal to their average two week hours that they would normally be scheduled to work.
For employees in categories 1, 2 or 3 listed above, Emergency Sick Leave will be paid at the employee’s regular rate or minimum wage, whichever is higher. There is a limit of $511 per day and $5110 in total.
For employees in categories 4, 5 or 6 listed above, Emergency Sick Leave must be paid at two thirds their regular rate with a daily cap of $200 and $2000 in total.
By March 25th, the DOL will provide required model notice for employers to print and post. Employees on Emergency Sick Leave can be required to provide reasonable regular notice to continue receiving the benefit.
Additionally, The FFCRA requires employers with less than 500 employees to provide Emergency FMLA leave to any employee employed 30 calendar days or more if the employee is unable to work or telework because their son or daughter under age 18 is unable to go to school or day care due to a COVID-19 related “public health emergency”.
During the first two weeks of this special FMLA leave which is unpaid, the EMPLOYEE can choose to use regular accrued paid leave. Or, if the absence is for reason 5 listed above, they can choose to take the two weeks emergency sick leave provided for in the FFCRA. Employers can’t force the employee to use their accrued time, however, if they meet reason 5 above. Otherwise the first two weeks of FMLA will be unpaid.
After the first 10 days the employer must pay employees at two thirds their regular rate of pay. You are not required to pay the employee for more hours than they would otherwise be normally scheduled to work.
The paid FMLA is limited to $200 per day and $10,000 in total over 10 weeks.
We know there will be many questions and we will address those as more information is made available to us. The IRS has yet to instruct us on how to handle tax deposits and credits, how to apply for a refund if the reimbursement needed is more than the tax credit will allow and much more. There will need to be changes to quarterly forms and in the payroll software to handle the needed calculations.
Here is the link to the DOL explanation.
All of this will be forthcoming over this week and next and we will share anything else we learn.
In the meantime, we hope everyone will stay safe and follow all recommendations to lessen the impact of COVID-19. Together we can get through these unprecedented times.