Families First Coronavirus Response Act

What’s in it for businesses?

the Families First Coronavirus Response Act (FFCRA or Act) mandates the payment of paid family leave and sick pay due to COVID-19 by certain employers not previously required to pay for these items.

The new law requires small employers who have fewer than 500 employees to provide limited paid-leave benefits to employees for up to 12 weeks to those who are affected by the coronavirus. Small employers will be given new tax credits and federal payroll-tax relief to help pay for the new mandatory benefits.

An eligible* employee can receive paid sick leave when previously not offered due to the new act, however, the first 10 days for which an employee takes leave may consist of unpaid leave. An employee may use any accumulated vacation time, personal leave, or medical or sick leave for unpaid leave.

Note: The Act specifically prohibits employers from requiring employees to exhaust their existing PTO before using any new Paid Sick Leave.

Although the first 10 days of leave may be unpaid, during the remaining leave (up to 10 weeks) the employees must be paid at least two-thirds (2/3) of their regular pay rate (not to exceed $200 per day and $10,000 in total).

Emergency Paid Sick Leave

Employers must also provide employees with two weeks (80 hours) of Paid Sick Leave at the employee’s regular pay rate if the employee is unable to work (or work from home) for any of the following reasons:

• is subject to a federal, state, or local quarantine order because of COVID-19
• has been advised by a health care provider to self-quarantine
• is experiencing symptoms of COVID-19 and is seeking a medical diagnosis
• is caring for an individual who is subject to quarantine or who has been advised to self-quarantine
• is caring for a child (under 18), if the child’s school has been closed, or the child-care provider has closed due to the pandemic.

The Paid Sick Leave is limited to $511 per day for up to 10 days (up to $5,110 in total) for an eligible employee in quarantine or those seeking treatment due to the coronavirus.

If the employee is caring for an individual who is subject to quarantine or is caring for a child whose school or child-care provider is closed, paid sick time must only be paid at a rate of two-thirds the employee’s regular rate and is limited to a max of $200 per day and $2,000 in aggregate.

Tax Credits

To help cover the cost of all this, small business employers are eligible for a new tax credit. A small business employer can collect a tax credit equal to 100% of qualified emergency sick-leave and family-leave payments made by the employer. Employers must also pay the 1.45% Medicare tax component of the federal payroll tax, but they can claim credit for this as well. Sick-leave and family-leave payments mandated by the Act are exempt from the 6.2% Social Security tax component of the employer’s federal payroll tax that normally applies to wages.

Please note:

The credit only covers leave payments made during the period beginning on a date specified by the Secretary of the Treasury and ending on December 31, 2020. The beginning date will be within 15 days of March 18 – the date the law was passed.

The credit is not available to employers that are already receiving the pre-existing credit for paid family and medical leave under Internal Revenue Code Section 45S.

If you have less than 50 employees you are included in the “less than 500 employees” categories BUT the legislation empowers the Department of Labor to exempt small businesses with less than 50 employees if the imposition of the Act’s requirements would “jeopardize the viability of the business[.]”

*
Eligible = an employee who has been employed for at least 30 calendar days by the employer