March 16, 2020
As you have most likely heard, the House of Representatives passed the Families First Coronavirus Response Act (
FFCRA H.R. 6201
) in response to the coronavirus (COVID-19). The Senate is expected to vote on the Act this week. President Trump is likely to sign the bill if it is passed in the Senate and remains intact. FFCRA is not final nor has it been signed into law. The final Act could be very different.
This bill responds to the coronavirus outbreak by providing paid sick leave, free coronavirus testing, additional food assistance and unemployment benefits, and it requires employers to provide additional protections for health care workers. The bill also provides FY2020 appropriations to the Department of Health and Human Services for nutrition programs that assist the elderly.
The supplemental appropriations provided by the bill are designated as emergency spending, which is exempt from discretionary spending limits. The bill modifies USDA food assistance and nutrition programs to:
- allow certain waivers to requirements for the school meal programs,
- suspend the work requirements for the Supplemental Nutrition Assistance Program (SNAP, formerly known as the food stamp program), and
- allow states to request waivers to provide certain emergency SNAP benefits.
In addition, the bill requires the Occupational Safety and Health Administration (OSHA) to issue an emergency temporary standard that requires certain employers to develop and implement a comprehensive infectious disease exposure control plan to protect health care workers.
The bill also includes provisions that:
- establish a federal emergency paid leave benefits program to provide payments to employees taking unpaid leave due to the coronavirus outbreak,
- expand unemployment benefits and provide grants to states for processing and paying claims,
- require employers to provide paid sick leave to employees,
- establish requirements for providing coronavirus diagnostic testing at no cost to consumers, treat personal respiratory protective devices as covered countermeasures that are eligible for certain liability protections, and temporarily increase the Medicaid federal medical assistance percentage (FMAP).
Available Tax Deductions and Credits
FFCRA currently includes tax deductions and credits that are designed to fully compensate the employer for any funds expended pursuant to the bill. Steven Mnuchin, treasury secretary, claimed in a
on March 14, that 100% of the cost of the paid leave will be paid by the federal government via tax credits.
Employers would receive a quarterly credit against the tax imposed by section 3111(a) of the Internal Revenue Code of 1986 in the amount equal to 100% of the qualified paid sick leave wages paid to employees or qualified family leave wages.
Treasury Secretary Steven Mnuchin stated that the Treasury Department will be issuing guidance allowing companies with cash flow issues to get the money in advance from the IRS.
Family and Paid Leave
FFCRA provides for two types of paid leave for employees of all business with 500 or fewer employees.
- 12 Weeks (10 Paid) of Public Health Emergency Leave. The first two weeks are not paid. The next 10 weeks would be paid by the employer at two-third of the employee's "regular pay rate." based on the number of hours the employee would otherwise be normally work. This would apply to employees that need to be absent because either they or a family member that they must care for has COVID-19.
- 80 Hours of Emergency Paid Sick Leave. Employers would have to provide a bank of 80 hours of paid leave to full-time employees to use as a result of absences related to COVID-19. Part-time employees would receive an amount prorated to their regular work schedule.
The FMLA definition of an eligible employee includes a one-year and 1,250-hour service requirement. FFCRA broadens eligibility for Public Health Emergency Leave to any employee who has been employed for at least 30 calendar days.
School Closing and Child Care
FFCRA would allow employees to take Emergency Paid Sick Leave and/or Public Health Emergency Leave if their child’s school is closed. These benefits would generally apply to employees who need to care for a child under 18 years of age if their school or place of care has been closed, or the childcare provider is not available because of COVID-19.
In its current form, the paid leave provisions of the FFCRA are temporary. They would go into effect 15 days after the President signs the bill into law, and they would be available until December 31, 2020.
Employees who are laid off before the FFCRA is passed would not be entitled to Paid Sick Leave or Public Health Emergency Leave under the bill. Even if the law is passed, the paid leave provisions would not kick in for 15 days.
FMLA makes clear that an employee on leave is entitled to no greater protection from a layoff as any other employee [see 29 C.F.R § 825.216(a)(1)]. An employee whose position is eliminated while on leave would therefore not be entitled to continue the leave or be reinstated to their position.
It is not clear if the current FMLA standard regarding layoffs/position eliminations would also apply to employees taking Public Health Emergency Leave. Additional guidance is needed from the Department of Labor regarding this issue if the FFCRA passes in its current form.
Stay healthy and safe,
Martin C. McCarthy, CPA, CCIFP
McCarthy & Company, PC
Disclaimer: This alert is for informational purposes only and does not constitute professional advice. Information contained in this communication is not intended or written to be used as tax advice, and cannot be used by the recipient to avoid penalties that may be imposed under the Internal Revenue Code. We strongly advise you to seek professional assistance with respect to your specific issue(s).