On March 18, 2020, the President enacted the Families First Coronavirus Response Act, H.R. 6201, (FFCRA). The FFCRA imposes new requirements on certain employers to provide emergency paid sick leave and expanded family and medical leave needed for coronavirus-related reasons. Significantly, the FFCRA also provides tax credits to reimburse employers, dollar-for-dollar, for these costs. The FFCRA’s provisions become effective April 1, 2020, and applicable to leave between April 1, 2020, and December 31, 2020.1
Key provisions of the FFCRA applicable to employers, include:
- New Emergency Paid Sick Leave (EPSL)
- Expanded Family Medical Leave (EFMLA) Requirements
- Tax Credits for Paid Sick Leave and Child Care Leave
- Updated Payroll Tax Guidance
Employers must act quickly to conform their policies to ensure that they are administered in accordance FFCRA.
Emergency Paid Sick Leave (EPSL)
Private employers with fewer than 500 employees and all governmental entities must provide EPSL to any employee(s) unable to work (or telework) because of illness or quarantine, if such employee(s):
- is ordered into a coronavirus quarantine or isolation;
- has been advised by a health care provider to self-quarantine in lieu of coronavirus concerns;
- is experiencing coronavirus symptoms and is pursuing a medical diagnosis;
- caring for someone described in (1) or (2) above;
- caring for a minor child whose school or childcare location is closed—or the child care provider is otherwise unavailable in lieu of coronavirus concerns; or
- 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.”
Duration of Leave
- Full-time employees are eligible to receive up to 10 days (80 hours) of EPSL
- Part-time employees are eligible for leave which is equivalent to their average hours worked in a two-week period
Calculation of Pay
- For reasons (1) – (3): Employees will be paid at the greater amount of either their regular rate or the applicable minimum wage—up to $511 per day and $5,110 in the aggregate (over a 2-week period).
- For reasons (4) – (6): Employees will be paid at the greater amount of either 2/3 their regular rate or 2/3 the applicable minimum wage—up to $200 per day and $2,000 in the aggregate (over a 2-week period).
Expanded Family Medical Leave (EFMLA)
Private employers with fewer than 500 employees and all governmental entities must provide up to 12 weeks of FMLA (10 of which are paid and subject to a cap, i.e. EFMLA) to any employee(s) who has been employed for a minimum of 30 days and is unable to work (or telework) because he or she must care for a minor child due to school closures or childcare unavailability resulting from the corona virus emergency. FFCRA provides that after the first 10 days of this EFMLA (which may be unpaid), the leave must be paid at a rate of two-thirds of the employee’s regular rate of pay. The amount is ultimately capped at $200 per day, or $12,000 in the aggregate.
Note for EPSL and EFMLA
Generally, most federal government employees are covered by Title II of the Family and Medical Leave Act. Title II was not amended by FFRCA; thus, these employees are not covered by the expanded family and medical leave provisions of the FFCRA. However, such federal employees are still covered by the paid sick leave provision.
EXEMPTION: Small businesses (defined as having fewer than 50 employees) may qualify for exemption from the requirement to provide leave resulting from school closures or childcare unavailability if the business can demonstrate that the leave requirements would jeopardize the viability of the business as a going concern.
- One may be eligible for both EPSL and EFMLA leave, but only for a total of twelve weeks of paid leave.
- One may take both EPSL and EFMLA to care for your child whose school is closed or lacks other childcare options, due to COVID-19 related reasons.
The FFCRA also provides affected employers with payroll tax credits that will fully reimburse (dollar-for-dollar) them for providing employees with new EPSL and FMLA. On March 20, 2020, the IRS announced that:
[E]mployers will be able to claim these credits based on qualifying leave they provide between the effective date and Dec. 31, 2020. Equivalent credits are available to self-employed individuals based on similar circumstances.
Paid Sick Leave Credit
- For an employee who is unable to work due to COVID-19 quarantine or self-quarantine, or is symptomatic and seeking a medical diagnosis, “eligible employers may receive a refundable sick leave credit for sick leave at the employee’s regular rate of pay, up to $511 per day and $5,110 in the aggregate, for a total of 10 days.”2
- For an employer who is caring for someone infected, or a minor child because of school closure or unavailable childcare, eligible employers may claim a credit for 2/3 of the employee’s regular rate of pay—capped at $200 per day and $2,000 in the aggregate for up to 10 days.
- Note that employers are further entitled to an additional tax credit which is computed based on health insurance maintenance coverage costs during the leave period.
Child Care Leave Credit
- The IRS announcement clarifies that in addition to the paid sick leave credit, for employees unable to work because they must care for a minor child as a result of school closure or unavailability of child care, employers are eligible for a credit equal to 2/3 of the employees regular pay—up to $200 per day or $12,000 in the aggregate.3
- The employer may count up to 10 weeks of the corresponding leave towards this credit.
- Eligible employers are also entitled to an additional tax credit which is computed based on health insurance maintenance coverage costs during the leave period
Payroll Tax Implications
The March 20, 2020, IRS announcement also indicated that guidance is expected soon which is supposed to provide that eligible employers paying ESPL or EFMLA “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.”4 The payroll taxes able to be retained include:
- withheld federal income taxes,
- the employee share of Social Security and Medicare taxes, and
- the employer share of Social Security and Medicare taxes.5
This analysis is not legal advice. It is provided for informational purposes only. This analysis does not constitute legal advice and is being provided on an informational basis only. For advice about whether and how you or your business can benefit from this topic, please contact your legal counsel.
- The Department of Labor published guidance indicating that the effective date is now April 1, 2020. See https://www.dol.gov/agencies/whd/pandemic/ffcra-questions.
- The IRS announcement caps the amount aggregate amount at $10,000. It appears that the Department of Labor guidance recently increased the overall pay and tax credit. See, e.g., https://www.dol.gov/agencies/whd/pandemic/ffcra-questions, https://www.dol.gov/agencies/whd/pandemic/ffcra-employer-paid-leave, and https://www.dol.gov/agencies/whd/pandemic/ffcra-employee-paid-leave.