The Senate overwhelmingly passed and President Trump signed a coronavirus package Families First Coronavirus Response Act (the “Act”). This bill provides assistance and relief in multiple areas:
- Family and medical leave
- Sick leave for employees
- Tax credits to employers and self-employed individuals providing the leave
- Impacts on employer-sponsored health plans.
The rules of the Act apply only to the time period that begins on a date selected by the Secretary of the Treasury, which is during the 15-day period beginning on the date of the enactment of this Act (March 18, 2020), and ending on December 31, 2020.
What does the “Families First Coronavirus Response Act” do?
The new law authorizes the Labor Department to exclude health-care providers and emergency responders, and exempt businesses with fewer than 50 employees from the requirements if offering the leave would “jeopardize the viability of the business.” It falls on the DOL’s Wage and Hour Division to issue rules interpreting what constitutes jeopardizing business viability. At the present time, those rules are being drafted.
Family and medical leave
One of the portion of The Act is referred to as the “Emergency Family and Medical Leave Expansion Act” (EFMLEA). This requires employers with fewer than 500 employees to provide both paid and unpaid public health emergency leave to certain employees through December 31, 2020. The emergency leave generally is available when an employee who has been employed for at least 30 days is unable to work or telework due to:
- a need for leave to care for a son or daughter under age 18 because a school or place of care has been closed, or a childcare provider is unavailable, or
- due to an emergency with respect to COVID-19 that is declared by a federal, state, or local authority.
The first 10 days of leave may be unpaid (or use existing accrued vacation, sick or personal leave) and then paid leave is required, calculated based on an amount not less than two-thirds of an employee’s regular rate of pay and the number of hours the employee would otherwise be normally scheduled to work, not to exceed $200 per day and $10,000 in the aggregate. Certain exemptions and special rules apply, and a tax credit may also be available (see below).
Eligible employees who take emergency paid leave are entitled to be restored to the position they held when the leave commenced or to obtain an equivalent position with their employer. This provision in the Act applies differently for employers with fewer than 25 employees and there are additional rules regarding job restoration for such employers.
Emergency paid sick time
Another section of the Act is referred to as the “Emergency Paid Sick Leave Act” (EPSLA). This section states that private employers with fewer than 500 employees (and public employers of any size) must provide 80 hours of paid sick time to full-time employees who are unable to work (or telework) for specified virus-related reasons. Part-time employees are also protected and are entitled to utilize sick time based on their average hours worked over a 2-week period. This amount is immediately available regardless of the employee’s length of employment.
The maximum amounts payable vary based on the reason for absence. Employees who are:
- subject to a quarantine or isolation order
- advised by a health provider to self-quarantine
- experiencing symptoms and seeking diagnosis
must be compensated at their regular rate, up to a maximum of $511 per day ($5,110 total).
Employees that find themselves:
- caring for an individual described in one of the three categories above
- caring for a son or daughter whose school is closed or child care provider is unavailable, or
- experiencing a “substantially similar condition” specified by the government
must receive two-thirds of their regular rate, up to a maximum of $200 per day ($2,000 total).
Employers cannot require employees to find a replacement worker or use other sick leave before this sick time. An employer may not require an employee to use other paid leave benefits that are provided by the employer before using the paid sick time described above.
The Act requires the Secretary of Labor to issue guidelines to assist employers in calculating paid sick time within 15 days of the bill’s enactment. Employers may exclude health care providers and emergency responders, and the DOL can issue regulations exempting businesses with fewer than 50 employees. The sick leave mandate takes effect not later than 15 days after March 18, 2020 (the date of the Act’s enactment) and expires December 31, 2020.
Employers shall post and keep posted, in conspicuous places, notice of the emergency paid sick leave requirements made available under the Act. Within the seven days of the passage of the Act, the Secretary of Labor will provide a model notice for use by employers.
Employers may not discharge, discipline, or discriminate against any employee who (a) takes paid sick leave or (b) has filed a complaint or proceeding or testified in any such proceeding related to the benefits and protections provided by the Act.
Tax credits to employers and self-employed individuals providing the leave
The Act provides tax credits to employers to cover wages paid to employees while they are taking time off under the above described EPSLA and EMFLEA. The credits are comprised of these components:
- The EPSLA credit for each employee is equal to the lesser of the amount of his leave pay or either (1) $511 per day while the employee is receiving paid sick leave to care for themselves, or (2) $200 if the sick leave is to care for a family member or child whose school is closed. An additional limit applies to the number of days per employee: the excess of 10 days over the aggregate number of days taken into account for all preceding calendar quarters.
- The EMFLEA credit for each employee is the amount of his leave pay limited to $200 per day with a maximum of $10,000.
- The amount of the EPSLA and EMFLEA credits are increased by the portion of the employer’s “qualified health plan expenses” that are properly allocable to qualified sick leave wages or qualified family and medical leave wages. Qualified health plan expenses means amounts paid or incurred by the employer to provide and maintain a group health plan, but only to the extent such amounts are excluded from the gross income of the employee.
The credits are refundable to the extent they exceed the employer’s payroll tax. Employers don’t receive the credit if they’re also receiving the credit for paid family and medical leave in Code Sec. 45S.
Self Employed Individuals
. The Act also provides for similar refundable credits against the self-employment tax. It covers 100% of a self-employed individual’s sick-leave equivalent amount, or 67% of the individual’s sick-leave equivalent amount if they are taking care of a sick family member, or taking care of a child following the child’s school closing for up to 10 days. The sick-leave equivalent amount is the lesser of average daily self-employment income or either (1) $511/day to care for the self-employed individual or (2) $200/day to care for a sick family member or child following a school closing, paid under the EPSLA.
Self-employed individuals can also receive a credit for as many as 50 days multiplied by the lesser of $200 or 67% of their average self-employment income paid under the EMFLEA.
Other Aspects of the Law
. Failure by employers to abide by the provisions of the Act described above could be considered a violation of the Fair Labors Standards Act and be subject to the penalties thereunder. The Act also has provisions related to Nutrition and Agriculture programs, Covid-19 testing, health care worker protections, Medicaid funding and unemployment insurance.
There will likely be many updates and clarifications with respect to this Act, and Briggs & Veselka will certainly work to make our clients aware of any such information.