Emergency Leave Under The Families First Coronavirus Response Act

Posted by: Gail Whaley on Tuesday, March 31, 2020

On March 18, the federal government approved the Families First Coronavirus Response Act (FFCRA). The new law takes effect on April 1, 2020 and ends on December 31, 2020. There is no retroactive effect.

The FFCRA provides significant new benefits to employees in terms of Emergency Paid Sick Leave (EPSL) and Emergency Paid Family Medical Leave Act (EFMLA) leave.  Importantly, the law provides 100% payroll tax credits for employers meant to reduce the cost burden. 

Below we will discuss some provisions of this new law, including a limited small business exemption.  However, this article does not cover the myriad details found in the FFCRA. The Department of Labor has released FAQ answering many employer questions.  These are frequently updated – please check the above website regularly for any new information.

For additional information on the payroll tax credit, see the IRS news release.


EMERGENCY PAID SICK LEAVE

Employers with fewer than 500 employees must provide all employees with up to 80 hours of emergency paid sick leave benefits to be used for COVID-19 related absences where an employee is unable to work or telework, pro-rated for part time employees. This is a lump sum of hours available to use right away once the law is in effect.  This leave is in addition to any other leave.

Employers who violate the EPSL law or who discriminate, discharge, discipline or retaliate against employees who take this leave will be subject to federal penalties, including steep penalties associated with failure to pay minimum wage.

Employers of health care providers and emergency responders may exempt individual employees.  Additionally, as described below, there is a limited small business exception.

Covered Reasons for Leave, Amount of Payment, Cap on Payment

Employees can use EPSL if they are unable to work or telework because of any of the six covered reasons below.  The rate of pay and maximum amount paid will vary based on the reason for the leave.

Covered Reason For Leave:
Unable to work or telework because:

Rate of Pay

Cap on Payments

(1) The employee is subject to a Federal, State, or local quarantine or isolation order related to COVID–19

The employee’s regular rate of pay (as determined under section 7(e) of the Fair Labor Standards Act of 1938 (29 U.S.C. 207(e)).

$511 per day and $5,110 in the aggregate

(2) The employee has been advised by a health care provider to self-quarantine due to concerns related to COVID–19

The employee’s regular rate of pay (as determined under section 7(e) of the Fair Labor Standards Act of 1938 (29 U.S.C. 207(e)).

$511 per day and $5,110 in the aggregate

(3) The employee is experiencing symptoms of COVID–19 and seeking a medical diagnosis.

The employee’s regular rate of pay (as determined under section 7(e) of the Fair Labor Standards Act of 1938 (29 U.S.C. 207(e)).

$511 per day and $5,110 in the aggregate

(4) The employee is caring for an individual who is subject to an order as described in subparagraph (1) or has been advised as described in paragraph (2).

Two-thirds of the employee’s regular rate of pay.

$200 per day and $2,000 in the aggregate

(5) The employee is caring for a son or daughter of such 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.

Two-thirds of the employee’s regular rate of pay.

$200 per day and $2,000 in the aggregate

(6) The employee is experiencing any other substantially similar condition specified by the Secretary of Health and Human Services in consultation with the Secretary of the Treasury and the Secretary of Labor.

Two-thirds of the employee’s regular rate of pay.

$200 per day and $2,000 in the aggregate

EMERGENCY FAMILY AND MEDICAL LEAVE ACT

The new law also includes a significant amendment and expansion of the Family and Medical Leave Act (“FMLA”) through December 31, 2020. The current employee threshold for FMLA coverage would change from only covering employers with 50 or more employees to instead covering those employers with fewer than 500 employees.  Not all FMLA requirements would apply to employers who were never subject to FMLA before – only the Emergency FMLA requirements.

Qualified Reasons for the Leave

 EFMLA leave can be used for a “qualifying need” related to a public health emergency concerning COVID-19, as declared by federal, state, or local authorities. 

  • A “qualifying need” is limited to circumstances where the employee is unable to work or telework due to the need to care for a child under 18 if the child’s school or child care is closed due to a Coronavirus-related public health emergency.

Amount of Leave and Pay

Up to 12 weeks of leave can be used for a qualifying need. While current FMLA is unpaid, EFMLA under this new Act provides for paid leave during this emergency.

First 10 Days of Emergency FMLA

Unpaid.  Employee may choose (but employer cannot require) to use accrued vacation, personal leave or sick time, including EPSL.

After 10 days of Emergency FMLA

Paid at rate of 2/3 of employee’s regular rate of pay and the number of hours the employee would normally be scheduled to work for each day of leave that an employee takes- up to 12 weeks.

If varying schedules, use same method as or Emergency Paid Sick Leave

Cap on Pay

Not to exceed $200/day and $10,000 aggregate.

 


Small Business Exemption

"An employer, including a religious or nonprofit organization, with fewer than 50 employees (small business) is exempt from providing:

  • EPSL due to school or place of care closures or child care provider unavailability for COVID-19 related reasons (reason #5 in the EPSL chart); and
  • EFMLA due to school or place of care closures or child care provider unavailability for COVID-19 related reasons when doing so would jeopardize the viability of the small business as a going concern.

 A small business may claim this exemption only  if an “authorized officer” of the business has determined that one of the following three conditions exists:

  1. The provision of EPSL or EFMLA would result in the small business’s expenses and financial obligations exceeding available business revenues and cause the small business to cease operating at a minimal capacity;  
  2. The absence of the employee or employees requesting EPSL or EFMLA would entail a substantial risk to the financial health or operational capabilities of the small business because of their specialized skills, knowledge of the business, or responsibilities; or  
  3. There are not sufficient workers who are able, willing, and qualified, and who will be available at the time and place needed, to perform the labor or services provided by the employee or employees requesting EPSL or EFMLA, and these labor or services are needed for the small business to operate at a minimal capacity.

 

TAX CREDITS FOR EMPLOYERS PROVIDING PAID SICK and EMERGENCY FMLA

The FFCRA provides a series of quarterly refundable tax credits for employers who are required to provide the EPSL and EFMLA leaves. These tax credits are allowed against the employer portion of Social Security taxes. While this limits application of the tax credit, employers will be reimbursed if their costs for qualified sick leave or qualified family leave wages exceed the taxes they would owe.

Employers receive 100% reimbursement for paid leave pursuant to the Act.

  • Health insurance costs are also included in the credit.
  • Employers face no payroll tax liability.

According to the IRS, the reimbursement will be quick and easy to obtain:

  • An immediate dollar-for-dollar tax offset against payroll taxes will be provided
  • Where a refund is owed, the IRS will send the refund as quickly as possible.

“To take immediate advantage of the paid leave credits, businesses can retain and access funds that they would otherwise pay to the IRS in payroll taxes. If those amounts are not sufficient to cover the cost of paid leave, employers can seek an expedited advance from the IRS by submitting a streamlined claim form that will be released [in early April].”

Prompt Payment- Information from the IRS

The below information is directly from the IRS as of  March 20, 2020:

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.

Tax Credit Examples

The following examples are from the IRS.

  • If an eligible employer paid $5,000 in sick leave and is otherwise required to deposit $8,000 in payroll taxes, including taxes withheld from all its employees, the employer could use up to $5,000 of the $8,000 of taxes it was going to deposit for making qualified leave payments. The employer would only be required under the law to deposit the remaining $3,000 on its next regular deposit date.
  • If an eligible employer paid $10,000 in sick leave and was required to deposit $8,000 in taxes, the employer could use the entire $8,000 of taxes in order to make qualified leave payments and file a request for an accelerated credit for the remaining $2,000.

 

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