Family First Coronavirus Response Act Key Takeaways
1. Emergency Paid Sick Leave Act
The Act provides up to two weeks of paid sick leave to all employees of employers with fewer than 500 employees. The Act covers both full-time and part-time employees, although part-time employees may not be entitled to a full two weeks of paid leave. Part-time employees are entitled to paid leave equal to the number of hours they work on average over a two-week period.
Paid leave is triggered by one of the following reasons:
An employee is subject to a federal, state or local quarantine order related to COVID-19. (Unless we receive additional guidance to the contrary, we are taking the position that Illinois businesses that were shut down as a result of the Governor’s stay-at-home order are subject to this)
An employee has been advised by a healthcare provider to self-quarantine as a result of exposure to COVID-19.
An employee is experiencing symptoms of COVID-19 and is seeking a medical diagnosis.
An employee is caring for an individual who is subject to a self-quarantine or isolation order or has been advised by a healthcare provider to self-quarantine.
An employee is caring for a child whose school has been closed.
An employee has any other qualifying condition under rules to be set forth by the Secretary of the Treasury or the Secretary of Labor.
The Act requires the Secretary of Labor to issue regulations to help employers calculate paid sick leave no later than April 2, 2020. In addition, the amount of paid sick leave is capped.
2. Emergency Family and Medical Leave Expansion Act
The Act provides
up to 12 weeks of Family and Medical Leave
if an employee is unable to work because the school or day care facility for a child under the age of 18 has been closed or the child’s babysitter or nanny is unable to work as a result of a COVID-19 emergency declared by the federal, state or local government. In order to be eligible, an employee must have worked for at least 30 days for the employer. In addition, the first 10 days of leave may be unpaid. The Act simply adds another reason an employee may take Family and Medical Leave. It does not increase the amount of leave available to an employee beyond what is already available under current law. Employers with fewer than 50 employees are eligible for an exemption from the requirements to provide leave to care for a child whose school is closed, or child care is unavailable in cases where the viability of the business is threatened. The exemption will be available on the basis of simple and clear criteria that make it available in circumstances involving jeopardy to the viability of an employer's business as a going concern. Labor will provide emergency guidance and rule making to clearly articulate this standard.
3. Employer Reimbursement
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.
Self-employed individuals receive an equivalent credit.
Paid Sick Leave Credit
For an employee who is unable to work because of Coronavirus quarantine or self-quarantine or has Coronavirus symptoms and is 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.
For an employee who is caring for someone with Coronavirus, or is caring for a child because the child's school or child care facility is closed, or the child care provider is unavailable due to the Coronavirus, eligible employers may claim a credit for two-thirds of the employee's regular rate of pay, up to $200 per day and $2,000 in the aggregate, for up to 10 days. Eligible employers are entitled to an additional tax credit determined based on costs to maintain health insurance coverage for the eligible employee during the leave period.
Child Care Leave Credit
In addition to the sick leave credit, for an employee who is unable to work because of a need to care for a child whose school or child care facility is closed or whose child care provider is unavailable due to the Coronavirus, eligible employers may receive a refundable child care leave credit. This credit is equal to two-thirds of the employee's regular pay, capped at $200 per day or $10,000 in the aggregate. Up to 10 weeks of qualifying leave can be counted towards the child care leave credit. Eligible employers are entitled to an additional tax credit determined based on costs to maintain health insurance coverage for the eligible employee during the leave period.
Prompt Payment for the Cost of Providing Leave
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
with the IRS.
Under guidance that will be released soon, 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 provided by the IRS.
4. Non-Enforcement Period
Labor will be issuing a temporary non-enforcement policy that provides a period of time for employers to come into compliance with the Act. Under this policy, Labor will not bring an enforcement action against any employer for violations of the Act so long as the employer has acted reasonably and in good faith to comply with the Act. Labor will instead focus on compliance assistance during the 30-day period.
The government is working on additional provisions and the information provided thus far is still being clarified. This summary is current as of March 23, 2020.