Please note this article was published on March 18, 2020 and guidance may have changed by the time you read this. We will endeavor to post updates as we receive them.
In recent weeks, we have been bombarded with information about coronavirus. Many of our corporate clients are asking for help understanding what is expected of them, and what relief is available. Here, senior associate Elannie Damianos addresses some of the most important points as they relate to employers and employees, as stated in the H.R. 6201 or Families First Coronavirus Response Act (FFCRA). The FFCRA, passed by the House of Representatives on March 14, was passed by the Senate today (March 18) and will be signed into law by President Trump imminently.
What does the Families First Coronavirus Response Act provide?
In its mission to support those affected by the coronavirus outbreak, the FFCRA establishes:
- Free testing for COVID-19;
- Expanded unemployment benefits to workers and emergency administration grants to states for processing and paying claims;
- A federal emergency paid leave benefits program to provide payments to employees taking unpaid leave due to the coronavirus outbreak;
- A requirement for employers to provide paid sick leave to employees; and
- A company payroll tax credit for required paid sick leave.
At first glance, we see that the FFCRA provides employees with paid sick or medical leave through the use of two new provisions: the Emergency Family and Medical Leave Expansion Act (EFMLEA), and the Emergency Paid Sick Leave Act (EPSLA).
The Emergency Family and Medical Leave Expansion Act (section 3102)
The EFMLEA expands the existing federal medical leave program, which already provided up to 12 weeks of job-protected leave to workers, with no pay requirement. Under the new House bill, employers with fewer than 500 employees would be required to provide up to 12 weeks of job-protected medical leave during which time they would have to pay employees at least two-thirds of their regular pay. This expansion of the current federal medical and family leave program is valid for one year and available to workers affected by the public health emergency.
Who is eligible for Emergency Paid Leave Benefits?
The “qualifying need” outlined in section 110 of the FFCRA is limited to circumstances where an employee is unable to work (or telework) due to a need to care for a minor if the child’s school or place of childcare has been closed or is unavailable due to the public health emergency.
What is paid?
The State will pay eligible individuals for each 30-day period (not to exceed three periods) for which the eligible individual has filed an application. The amount for each 30-day period is equal to two-thirds of the individual’s average monthly earnings up to a limit of $4,000.
The paid leave benefit is reduced by $1 for each dollar of state or private paid leave received by the individual. So if an employer is already providing sick leave, this will be deducted from the benefit. The benefit period begins January 19, 2020, and ends one year after the enactment of the law.
Emergency Paid Sick Leave Act (section 5102)
According to the nonprofit organization taxfoundations.org, the bill generally requires private employers with fewer than 500 employees (exempting those above 500 employees), and covered public employers, to provide paid sick time to an employee who is unable to work or telework because:
- The employee is subject to a federal, state, or local quarantine or isolation order related to COVID-19;
- The employee has been advised by a healthcare provider to self-quarantine because of COVID-19;
- The employee is experiencing symptoms of COVID-19 and is seeking a medical diagnosis;
- The employee is caring for an individual subject or advised to quarantine or isolation; or
- The employee is caring for a son or daughter whose school or place of care is closed, or childcare provider is unavailable, due to COVID-19 precautions.
There is an exemption for small businesses with fewer than 50 employees (section 110) from these requirements if they jeopardize the viability of a business as a going concern.
What is paid?
In general, an employee will be entitled to sick pay as follows:
- 80 hours for full-time employees;
- For part-time employees, the average hours worked over a two-week period.
The EPSLA bars employers from discriminating against an employee who takes advantage of benefits provided by the EPLSA (section 5104). Employers are also prohibited from retaliating against an employee who files a complaint or initiates a proceeding under the EPSLA.
If an employer violates the EPSLA, they will be subject to substantial penalties as outlined by the Fair Labor Standards Act. This includes fines, imprisonment, damages to the employee amounting to double the unpaid wages and reasonable attorney’s fees and court costs. This is not a small point and we advise clearly communicating the consequences of retaliatory behavior to your senior management team or those in a position to make decisions.
Company payroll tax credit (section 7001)
The expansion of paid leave programs comes at a time when businesses are experiencing cashflow constraints as consumers stay home, or restrict operations, as with, for example, restaurants and bars.
To offset this increase in business costs, Division G of the bill would provide a quarterly tax credit to employers (and certain self-employed individuals) to offset the cost of paid sick leave and paid family leave. Specifically, employers would be eligible for a refundable tax credit of 100 percent of qualified sick leave wages paid and family leave wages paid against their employer-side payroll tax liability.
We appreciate that much of this can be overwhelming, but we’re here to help. If you need advice on any of the issues surrounding the impact of coronavirus on your employees and business overall, please contact Rooney Nimmo senior associate Elannie Damianos or your usual contact within the firm.
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