Families First Act

On March 18, 2020, The Families First Coronavirus Response Act (FFCRA or the Act) was signed into law and will now go into effect on April 1, 2020.  The Act establishes an Emergency Paid Sick Leave (EPSL) and temporarily expands the existing Family Medical Leave Act of 1993 (FMLA).  Additionally, it provides employers tax credits related to the two leave provisions.  The Department of Labor’s Wage and Hour Division administers and enforces the new law’s paid leave requirements.  Please see the provided link to the Department of Labor for additional information: https://www.dol.gov/agencies/whd/pandemic/ffcra-employee-paid-leave.  

The Emergency Paid Sick Leave and the expanded FMLA only apply to certain public employers, and 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 child care unavailability if the leave requirements would jeopardize the viability of the business.  Per the Department of Labor, to elect this small business exemption, employers should document why their business with fewer than 50 employees meets the criteria set forth by the Department, which will be addressed in more detail in forthcoming regulations. Employers should not send any materials to the Department of Labor when seeking a small business exemption for paid sick leave and expanded family and medical leave.

The Act is in effect until December 31, 2020, and the leave provisions under the Act are not retroactive prior to April 1, 2020.     

What’s in this article? See the links below:

Emergency Paid Sick Leave (EPSL)

Emergency Family Medical Leave Expansion Act

What this means for employers?

Emergency Paid Sick Leave (EPSL)

The Families First Coronavirus Response Act requires employers with fewer than 500 employees to provide Emergency Paid Sick Leave (EPSL) of up to 80 hours to each employee regardless of how long  they have been employed by the company.  Under the Act, employees qualify for EPSL if they are unable to work (or telework) due to any of the following reasons:

1. Employee is subject to a federal, state or local quarantine or isolation order related to COVID-19.

2. Employee has been advised by a health care provider to self-quarantine due to COVID-19 concerns.

3. Employee is experiencing symptoms of COVID-19 and seeking medical diagnosis.

4. Employee is caring for an individual subject to a quarantine or isolation order, or who has been advised to self-quarantine.

5. Employee is caring for a child whose school or place of care has been closed, or the child care provider is unavailable due to COVID-19 precautions.

6. Employee is experiencing any other substantially similar condition specified by Health and Human Services in consultation with the Department of Treasury and Department of Labor.

Employers are required to pay eligible employees taking leave due to one of the above listed reasons up to 80 hours at the employee’s regular rate of pay.  Pay for part-time employees is calculated on an average of the hours worked over a two week period.  Employees taking leave due to reasons 1 – 3 are eligible for their regular rate of pay up to a $511 per day cap and an aggregate of $5,110 per employee.  Employees taking leave due to reasons 4 – 6 are eligible for two-thirds of their regular rate of pay, subject to a $200 per day cap and a $2,000 aggregate pay per employee. 

The EPSL is in addition to any vacation or sick leave available under an employer’s existing policy.  The EPSL should be made available first, and an employer cannot require an employee to utilize PTO or go unpaid before EPSL. 

Please see the Frequently Asked Questions and Answers provided by the DOL for additional information: https://www.dol.gov/agencies/whd/pandemic/ffcra-questions 

Emergency Family Medical Leave Expansion Act

The Emergency Family Medical Leave Expansion Act is also effective April 1, 2020 and expires on December 31, 2020.  The expanded Act applies to all private employers and certain public employers with fewer than 500 employees.  The Act expands the current Family Medical Leave Act (FMLA) to provide 12 weeks of protected leave to eligible employees who are unable to work (or telework) specifically for the need to care for a child (under 18) due to the child’s school or place of care being closed or a child’s care provider is unavailable due to the public health emergency related to COVID-19.  Qualified employees for the expanded FMLA are those who have worked for the employer for at least 30 calendar days.  

The Expanded FMLA provides an initial 10 days of unpaid leave (for which an employee may choose to utilize the Emergency Paid Sick Leave).  Employers cannot require the initial 10 day period to be unpaid or for an employee to utilize available PTO before the Emergency Paid Sick Leave.   After the 10 day period, employers must allow up to an additional 10 weeks of paid leave.  Employers must pay an employee a rate of at least two-thirds the employee’s regular rate of pay.  The maximum pay is $200 per day, $10,000 aggregate per employee. 

What this means for employers?

The Act also provides payroll tax credits to employers who have paid Emergency Sick Leave or Expanded FMLA wages.  The Treasury, IRS, and DOL have indicated in a news release that employers will receive 100% reimbursement for paid leave pursuant to the Act and that it will include complete coverage.  The guidance currently available indicates the reimbursement will be quick and easy to obtain and that businesses will be able to immediately access funds that would otherwise be paid to the IRS in payroll taxes.

IRS Press Release 2020-57 (dated March 27, 2020) states:

“When employers pay their employees, they are required to withhold from their employees’ paychecks federal income taxes and the employees’ share of Social Security and Medicare taxes. The employers then are required to deposit these federal taxes, along with their share of Social Security and Medicare taxes, with the IRS and file quarterly payroll tax returns (Form 941 series) with the IRS.

Under guidance that will be released next 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 them with the IRS.

The payroll taxes that are available for retention include withheld federal income taxes, the employee share of Social Security and Medicare taxes, and the employer share of Social Security and Medicare taxes with respect to all employees.

If there are not sufficient payroll taxes to cover the cost of qualified sick and child care leave paid, employers will be able file a request for an accelerated payment from the IRS. The IRS expects to process these requests in two weeks or less. The details of this new, expedited procedure will be announced next week.”

The full text of this IRS release is available at 

https://www.irs.gov/newsroom/treasury-irs-and-labor-announce-plan-to-implement-coronavirus-related-paid-leave-for-workers-and-tax-credits-for-small-and-midsize-businesses-to-swiftly-recover-the-cost-of-providing-coronavirus

The tax credit for leave paid under the Expanded FMLA is $200 per day, with a maximum of $10,000 per employee.  Additionally, the tax credit toward the Emergency Paid Sick Leave  is equal to the wages paid of $511 per day, a $5,110 aggregate per employee for leave reasons 1-3 listed above.  The tax credit for leave reasons 4-6 listed above is $200 per day per employee, a $2,000 aggregate for 10 days.