In full disclosure, I started writing this blog several times but each time I stopped. I either talked to a client and realized I had more questions than answers or the Department of Labor revised a previous regulation. I quickly learned that the only certain thing about this new law was the certainty that we would learn more! Now, the dust has settled (somewhat). Here is a synopsis of the law. Understanding the law is vital to properly administer it.
I highly recommend employers become familiar with the following websites (these websites provided the majority of the following information):
These websites provided the vast majority of the what is written in this blog.
What is the Families First Coronavirus Response Act (FCCRA)?
On March 18, 2020 President Trump signed the Families First Coronavirus Response Act (FFCRA) into law. This law contains far-reaching paid leave requirements under its two main provisions: (1) Emergency Paid Sick Leave (E-PSL) and (2) Emergency Family Medical Leave (E-FMLA). All employers with less than 500 employees, as well as government employees, are required to comply with this law (with a few exceptions) in response to the COVID-19 pandemic. The Department of Labor’s (DOL) Wage and Hour Division (WHD) administers and enforces this law’s paid leave requirements. The FFCRA went into effect on April 1, 2020, and it will run through December 31, 2020.
Small and midsize employers (up to 500 employees) will receive a tax credit equal to 100% of the amount for providing emergency paid leave as per the provisions spelled out in the FFCRA. This includes a portion of the costs of providing group health plan coverage that are allocable to associated leave payment. These tax credits are up to the FFCRA defined per employee limits.
Who qualifies for Emergency Paid Sick Leave and Emergency FMLA?
Emergency Paid Sick Leave (E-PSL):
Employees who cannot work or telework because…
- The employee is subject to a COVID-19 quarantine or isolation order;
- The employee has been advised by a healthcare provider to self-quarantine due to a COVID-19 concern;
- The employee is symptomatic of COVID-19 and seeking a medical diagnosis.
- The employee is caring for an individual described in (1) or (2) seen above;
- The employee is caring for a child whose school or childcare facility is closed due to COVID-19;
- The employee is experiencing any other substantially similar condition specified by the Department of Health and Human Services in consultation with the Treasury and Labor Departments. (The DOL has not specific any other “substantially similar conditions” to date.)
Emergency Family Medical Leave (E-FMLA):
Employees who cannot work or telework due to a need to care for their child(ren) under the age of 18 if the child(ren)'s school, day care, or childcare provider is closed due COVID-19
NOTE: Workers must have worked at least 30 days to qualify for E-FMLA.
How much pay will qualifying employees receive under the FFCRA?
Emergency Paid Sick Leave (E-PSL):
- Employees will receive two weeks of paid sick leave (FT employees receive 80 hours of paid leave; PT employees receive the average number of hours worked over a two week lookback period of paid leave).
- For employees eligible for reasons 1-3 of the E-PSL provision, they will be paid 100% of their regular pay up to $511 per day ($5,110 in the aggregate).
- For employees eligible for reasons 4-6 of the E-PSL provision, they will be paid 2/3rds of their regular pay up to $200 per day ($2,000 total).
Emergency Family Medical Leave (E-FMLA):
- The first 10 days of E-FMLA are unpaid; however, the employee may use other forms of paid leave (e.g.—E-PSL, accrued and unused vacation and/or sick time).
- Employees will be paid 2/3rds of their regular pay up to $200 per day ($10,000 total).
Can employers receive tax credits for paying out paid leave under the FFCRA?
As part of the FFCRA, tax credits exist to offset the costs associated with providing paid leave. Companies with less than 500 employees will receive these tax credits for any employee receiving paid leave (E-PSL or E-FMLA) between April 1st, 2020 and December 31st, 2020. These tax credits are equal to 100% of the amount paid in E-PSL and E-FMLA. This includes a portion of costs related to group health plan coverage allocable to such leave payments. Tax credits will not exceed the FFCRA-established per employee thresholds as listed in the “Benefits Received / Pay Information” section of this guidebook.
How do employers claim tax credits for paying out leave under the FFCRA?
Employers can claim the tax credits by demonstrating that the amounts paid to employees for E-PSL and E-FMLA qualify under the FFCRA. In addition, employers must show that the paid leave was within the pay limits defined in the FFCRA. Employers must provide signed documentation containing:
- The employee’s name
- Date(s) for requested leave
- COVID-19 qualifying reason for leave
- Employee statement providing the reason why the employee cannot work/telework due to the COVID-19 qualifying reason (e.g.-name of the governmental entity ordering quarantine; health care professional advising self-quarantine; if the person subject to quarantine or advisory to quarantine is not the employee, the person’s name/relationship to the employee; for a school/childcare closing or a childcare provider unavailable, name and age of the child(ren), name of the school/childcare provider along with a representation that no other person will provide car for the child during the period the employee is on paid leave and if the child is over 14 years of age, a statement for the special circumstances requiring care)
As per IRS guidelines, to collect related tax credits, employers must collect and maintain records include the following information:
- Documentation to show how the employer determined the amount of qualified sick and family leave wages paid to employees that are eligible for the credit, including records of work, telework and qualified sick leave and qualified family leave.
- Documentation to show how the employer determined the amount of qualified health plan expenses that the employer allocated to wages.
- Copies of any completed Forms 7200, Advance of Employer Credits Due To COVID-19, that the employer submitted to the IRS.
- Copies of the completed Forms 941, Employer’s Quarterly Federal Tax Return, that the employer submitted to the IRS (or, for employers that use third party payers to meet their employment tax obligations, records of information provided to the third party payer regarding the employer’s entitlement to the credit claimed on Form 941).
Many more questions exist, but this overview provides a solid foundation for any HR or business leader needing a quick understanding of the Paid Leave provisions within the Families First Coronavirus Response Act (FFCRA).
This series explores HR-related areas needing consideration as leaders deal with the current COVID-19 disruption. Check out parts 1, 2, and 3:
Hang in there! This will pass! We are in this together!
Need assistance with addressing short and long term HR needs for your business? Contact me at email@example.com, and we will address them proactively.
Disclaimer: This blog is not legal advice, but merely informed opinion or general information meant for no particular purpose. Issues addressed in this blog often implicate federal, state, and local labor and employment laws. This blog is not intended as a substitute for legal advice. Readers should consult labor and employment counsel to determine whether their particular policies, procedures, decisions, or courses of action comply with such laws.