To our Clients and Friends:
President Trump signed the Families First Coronavirus Response Act on March 18, 2020 in response to the many economic challenges faced by the US during this global COVID-19 pandemic. The Act takes effect on April 2, 2020 and most of the provisions are set to expire on December 31, 2020.
Several of the Act’s provisions will affect employers:
- Emergency Family and Medical Leave Act (FMLA) Expansion
- Emergency Paid Sick Leave Act
- Employer Tax Credits for Paid Sick and Paid Family and Medical Leave
What follows is the best information we have as of March 20,2020. There are still many questions and there are likely to be modifications. Stay tuned to our Corona Virus Web Resource page for evolving news. Click
EMERGENCY FMLA EXPANSIO
Private employers with less than 500 employees.
Any employee who has been employed for at least 30 days and is unable to work (or telework) due to a need to care for children under 18 years of age, if their school, place of care or child care provider is closed due to a public health emergency (including coronavirus).
The Secretary of Labor has the authority to exempt small businesses with fewer than 50 employees if the requirements would jeopardize the business as a going concern as well as certain healthcare professionals and first responders.
Amount of Leave
Eligible employees may qualify for up to 12 work weeks of leave.
The first 10 days of leave may consist of unpaid leave. The employee may elect to substitute accrued paid time off for unpaid leave. After the initial 10 days the employer must pay employees for each day for the remainder of the leave period, up to certain dollar amounts. The paid leave shall be for an amount not less than two-thirds of the employee’s rate of pay, and at the number of hours the employee is regularly scheduled to work. Paid leave shall not exceed $200 per day or $10,000 in aggregate. Employers subject to multi-employer collective bargaining agreements may have to fulfill these requirements by paying into multi-employer paid leave plans under the collective bargaining agreement.
As a general rule, the employee's job must remain protected while the employee is on leave unless a special exception applies. One exception is for employers with fewer than 25 employees if specific conditions exist.
EMERGENCY PAID SICK LEAVE ACT
Private employers with less than 500 employees and certain public agencies.
Any employee working for an employer, regardless of how long they have been employed by the employer.
Reasons to Take Sick Leave
Employer shall provide each employee with paid sick time if they are unable to work (or telework) due to the following circumstances:
- Being subject to federal, state or local quarantine or isolation order related to COVID-19
- Being advised by a health care provider to self-quarantine due to concerns related to COVID-19
- Experiencing symptoms of COVID-19 and seeking a medical diagnosis
- Caring for an individual who is subject to a federal, state or local quarantine or isolation
- Caring for a child if the child’s school, place of care or child care provider is closed due to a public health emergency, such as COVID-19
- Experiencing any other substantially similar condition as may be specified by the Dept. of Health and Human Services (HHS)
Amount of Paid Sick Leave
Full-time employees may use up to 80 hours this year. Part-time employees may use the number of hours equal to the number of hours the employee works, on average, over a two-week period, which must be used before the end of the year.
Amount of Pay
Paid sick time shall not exceed:
- $511/day and $5,110 in the aggregate for Reasons 1, 2, and 3 above. The pay must be provided at the employee’s regular rate of pay or the minimum wage, whichever is greater.
- $200/day and $2,000 in the aggregate for Reasons 4, 5, and 6 above. The pay must be provided at two-thirds the employee’s regular rate of pay or minimum wage, whichever is greater.
NOTE: The employee may use this paid sick time prior to using other paid time off provided by the employer.
Employers must post a notice regarding employee’s rights under the law. The Dept. of Labor will create a model notice no later than 7 days after the enactment of the Act.
EMPLOYER TAX CREDITS FOR PAID SICK, FAMILY AND MEDICAL LEAVE
The Act includes four new tax credits to help alleviate the cost to employers of the paid leave requirements described above. These credits will be calculated as part of your quarterly payroll tax filings. Your payroll service will likely provide you with specific guidance.
- Payroll credit for required paid sick leave
Employers who pay such leave can take a tax credit for each employee equal to the lesser of the amount of their leave pay or either:
- $511 per employee per day for the quarantine reasons listed in numbers 1 to 3 above, or
- $200 per employee per day if the sick leave is for reasons listed in numbers 4 to 6 above.
An additional limit applies to the number of days per employee, which is the excess of 10 days over the aggregate number of days taken into account for all preceding calendar quarters.
- Credit for sick leave for certain self-employed individuals
A credit similar to the payroll credit for required paid sick leave described above is available for self-employed individuals, subject to the same limits. The credit is taken against section 1402 self-employment tax.
- Payroll credit for required paid family leave
Like the required paid sick leave credit, an employer can take a payroll tax credit each calendar quarter for required family leave payments. The credit amount per employee is their leave pay, limited to $200 per day with an aggregate credit limit of $10,000 per employee.
- Credit for family leave for certain self-employed individuals
A credit similar to the payroll credit for required paid family leave described above is available for self-employed individuals, subject to the same limits. Once again, the credit is taken against section 1402 self-employment tax.
The above credits are increased by the portion of qualified health plan expenses incurred by the employer to provide employee group health plan coverage while employees are paid qualified sick leave wages or qualified family and medical leave wages. This only applies to employer group health plan coverage that is exempt from employee income under section 106(a) (regular exemption for employer-provided health care plans).
The credits are refundable to the extent they exceed the employer’s quarterly payroll taxes. In addition, the employer's gross income must be increased by the amount of the tax credit claimed.
These rules apply only to wages paid for the period beginning on a date selected by Treasury during the 15-day period beginning on the date of enactment (March 18, 2020) and ending on Dec. 31, 2020.
Please contact a member of your DiSanto Priest service team if you have any questions.