In order to support employees who may be out with illness or other issues related to COVID-19, there is a new federal law effective April 1, 2020 that will require businesses to pay 80 hours of extra sick time, and an additional 10 weeks in certain circumstances. Here’s what you need to know and how to prepare.
Families First Coronavirus Response Act at a Glance
This new law is called the Families First Coronavirus Response Act (FFCRA). The FFCRA was signed into law by President Trump on March 18, 2020 in order to address the financial burden that many Americans are facing due to Covid-19.
The first thing to note is that this law was written over a period of about one week. For that reason, there’s not a lot of clarification, and there are A LOT of unknowns as to how to interpret it. The Department of Labor has come out with a few clarifications as of this writing on March 27, 2020, but there are still questions. We are expecting more clarification this week and next, and we will update the post as we know more.
My goals today are:
- To give you an overview of the pieces of the law that are relevant to employers;
- To give you the information you need to take your next steps in putting this into place;
- To give you links to the correct places to get more information.
THE GENERAL DETAILS
Why: The goal of this new law is to provide paid sick leave to employees who need it for Covid-19-related reasons.
Who: This affects all employers in the United States who have fewer than 500 employees. There are some exceptions for businesses under 50 employees, but I will get into that more later.
When: This will go into effect on April 1, 2020.
What: There are three pieces of the FFCRA that are immediately relevant to employers:
1) Emergency Paid Sick Leave – Employers with under 500 employees will be given tax credits so they can provide up to 80 hours of sick leave to full-time employees, pro-rated for part-time employees. There are six specified allowable reasons that an employee could use this sick leave – I will elaborate more on this below. Employers with active employees (i.e. not already laid off) will be required to provide these 80 hours. Employees are eligible on day one of employment.
2) Emergency Family and Medical Leave Expansion Act – Employers with under 500 employees will be given tax credits so they can provide up to 12 weeks of leave (only ten of which are paid leave). There is one allowable reason an employee might qualify for this paid leave: if they are unable to work (or telework) because the employee is caring for their child (18 years or younger) because the school is closed or the childcare provider is unavailable due to a public health emergency. Employers with active employees (i.e. not already laid off) will be required to provide these 12 weeks. An eligible employee is anyone that has been on the employer’s payroll for 30 calendar days.
3) Tax Credits for Employers – If you are required to provide paid leave under (1) or (2), then you will be eligible for a 100% payroll tax credit on the wages paid for leave. You will be able to deduct this from the payroll taxes you would have paid at your normal payroll time. If you aren’t paying enough in payroll taxes to cover your expenditure, the IRS will accept applications for reimbursement which you should receive within two weeks of applying. Further clarification of this process will most likely be available on or shortly before April 1, 2020.
That’s a lot of information to digest. Put more simply, there are two paid leave programs, both of which you (the employer) will pay to the employee, and which will be immediately (or quickly) reimbursed to you by the IRS.
You can think of the paid leave programs chronologically:
The first thing an employee would qualify for is Emergency Paid Sick Leave. The employee will qualify for this for the first two weeks they are out on leave. It pays up to 80 hours and must be paid for the amount of time they would normally work in a week. For example, if they are always scheduled for 30 hours per week, you would pay them up to 60 hours, total.
Emergency Paid Sick Leave – Qualifying Reasons
Qualifying reasons for this paid sick leave include:
1) The employee is subject to a federal, state, or local quarantine or isolation order related to the coronavirus (Note: We don’t yet know whether this applies to a Stay at Home or Shelter in Place order. We’re hoping to have DOL guidance very soon.)
2) The employee has been advised by a health care provider to self-quarantine due to coronavirus
3) The employee is experiencing symptoms of coronavirus and seeking a medical diagnosis
4) The employee is caring for an individual who is subject to an order described in (1) or has been advised as described in (2)
5) The employee is caring for their minor child because the school is closed or the childcare provider is unavailable due to coronavirus
6) The employee is experiencing a similar condition specified by the Secretary of Health and Human Services (this is a catch-all to account for future needs as events unfold)
Once an employee has reached the end of their qualification for Emergency Paid Sick Leave, they may be eligible for Emergency FMLA. Again, the one-and-only reason that would qualify someone for this paid leave and that is if they are unable to work (or telework) because the employee is caring for their child (18 years or younger) because the school is closed or the childcare provider is unavailable due to a public health emergency. An employee is eligible for this leave for 12 weeks total, but you do not start paying them for the leave until after 10 days.
With these two types of leave taken in chronological order, Emergency Paid Sick Leave and then Emergency FMLA, an employee could receive a total of 12 weeks of paid leave.
Employers under 50
As you may know, FMLA generally does not apply to employers with under 50 employees. If you are a small employer with under 50 employees, you will remain exempt from the normal FMLA regulations. This Emergency FMLA is the only piece of FMLA you will need to carry out.
According to guidance posted by the Department of Labor on March 25, 2020, “Small businesses with fewer than 50 employees may qualify for exemption from the requirement to provide leave due to school closings or child care unavailability if the leave requirements would jeopardize the viability of the business as a going concern.” We don’t yet have clarification from the Department of Labor on how a business would go about applying for this exemption but will update you here when they publish instructions.
How to Calculate Payments
The Department of Labor has very clear instructions on how much you should pay your employees. I won’t go too deeply into that here, as it is not the intent of this article. Please visit the Department of Labor FFCRA Q&A (questions number five and six) for more information on how to calculate wages. Note that although you may pay an employee as much as you want, there is a maximum that is eligible for reimbursement, which is explained in detail by the department of labor here, under the “Calculation of Pay” section.
Beginning April 1, 2020, employers are required to post this new notice where your employees can see it. If your employees are working remotely, you are allowed to send it via email, mail, or post it to a company intranet where they can see it. If you need more guidance on how to post the notice, you can find it here.
Let us know in the comments section how you are doing with these, and other changes you’ve been facing over the past few weeks. If you would like help implementing this, or you have other questions, please contact us via the contact form on this website. We look forward to hearing from you either way!
This article is meant for informational purposes only and should not be taken as legal advice. Only your attorney can give you legal advice.