Families First Coronavirus Response Act Expands Employee Leave and Employer Tax Credits

The Families First Coronavirus Response Act was signed by the president on March 18, 2020. The Act is just one of several promised in the coming weeks to fortify the US economy during the coronavirus pandemic. Among other things, this law provides funding for increased coronavirus testing as well as for student lunches since schools are closed. Most notably for employers, the Act adopted the Emergency Paid Sick Leave Act (EPSLA), the Emergency Family and Medical Leave Expansion Act (EFMLEA) and created tax credits for employers who provide paid leave during this national emergency. It targets protection of employees’ jobs who are directly impacted by COVID-19. The government, in essence, is completely or partially funding employee wages and health insurance during this time.

The two portions of the Act, described separately below, apply to employees and self-employed individuals who:

  1. A) Are subject to a federal, state or local quarantine or isolation order related to COVID-19;
  2. B) Have been advised by a health care provider to self-quarantine due to concerns related to COVID-19; or
  3. C) Are experiencing symptoms of COVID-19 and seeking a medical diagnosis
  4. D) Are caring for someone described in criteria A or B above
  5. E) Are unable to work from home and are home caring for their minor child(ren) because their school or daycare is closed due to COVID-19
  6. F) Are experiencing a similar condition specified by Secretary of HHS

Emergency Paid Sick Leave Act (EPSLA)

The law requires all employers with fewer than 500 employees to provide emergency paid sick leave for 10 business days equal to 100% of their normal wage. The employer will receive a corresponding payroll tax credit equal to 100% of the wages paid under this program up to $200 per day unless the person meets criteria A, B, or C above, in which case the cap is increased to  $511 per day. In addition, although unclear at this point, it appears the credit is increased for the amount of employer-paid qualified health plan expenses (health insurance premiums) attributable to the employee for the sick leave.

Emergency Family and Medical Leave Expansion Act (EFMLEA)

The law requires all employers with fewer than 500 employees to provide emergency sick leave for 12 weeks equal to two thirds of their normal wage if the employee has to care for their child pursuant to criteria E above instead of working. The employer will receive a corresponding payroll tax credit equal to 100% of the wages paid under this program up to $200 per day limited to $10,000 per employee. As noted above, it appears the credit will be increased for  qualified health plan expenses, but this provision is unclear at this point. The first two weeks can be unpaid, and the employer cannot require that the employee use PTO for this time.

Which companies does this apply to?

While most other FMLA (Family and Medical Leave Act) provisions apply an exception to employers with fewer than 50 employees, these new provisions, both EPSLA & EFMLEA, apply to all employers with a limited exception for those with fewer than 50 employees where doing so would create a going concern issue for the employer. This exception is supposed to be described in regulations, but when that may happen is very unclear.

Which employees are eligible for EPSLA?

Employees who have been with the company for 30 or more days who meet criteria A, B, C, D, E or F  above.

Which employees are eligible for EFMLEA?

Employees who have been with the company for 30 or more days who meet only criteria E above.

What should employers do?

At this time there is little in the way of detailed guidance, but the credit is expected to be received and refunded with quarterly payroll returns. The provisions are to go into effect no later than April 2, 2020, but at the time we write this, the actual effective date has not been set. We expect payroll providers to publish information for employers on how to administer this very soon. Self-employed individuals will receive a similar benefit, though more slowly, on their 2020 income tax return. Employers and self-employed individuals alike are welcome to contact a WBL advisor for guidance and more information. We will continue to stay up to date and pass along information as it becomes available.

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