On March 18, 2020, President Trump signed into law the Families First Coronavirus Response Act (“FFCRA”), a COVID-19 aid package that includes important changes to paid-leave policy for many organizations throughout the country. This will take effect on April 1, 2020 and last until December 31, 2020, ushering in an emergency expansion of the federal Family and Medical Leave Act and federal paid sick leave, and expanded unemployment insurance provisions. The U.S. Department of Labor recently released a preliminary “Questions and Answers” page.
Below is a summary of the FFCRA and how it may affect your business:
The Act requires that employers with less than 500 employees provide full-time employees with an additional 80 hours of paid sick leave. For part-time employees, the amount of sick leave granted will be the number of hours equal to the hours worked during an average two-week period. For part-time employees with irregular schedules, employees are entitled to the average number of hours the employee was scheduled per day over a six month period (or if the employee has not worked for that long, the reasonable expectation of the average number of hours per day that the employee would be scheduled to work).
Employers must provide this emergency paid sick time when the employee is unable to work (or telework/remote work) because the employee is:
Employees must be paid at their regular rate of pay for reasons 1-3 above. However, that pay cannot exceed $511 per day ($5,110 in the aggregate). For reasons 4-6 above, the pay must be two-thirds of the regular rate of pay, but cannot exceed $200 per day ($2,000 in the aggregate). Emergency paid sick leave does not carry over from year to year.
The leave is available for immediate use by the employee when the law takes effect, regardless of how long the employee was employed. The leave is provided in addition to any existing paid leave previously provided by employers.
Employees will be required to post the emergency paid sick leave requirements notices for employees.
The Act also provides refundable quarterly tax credits for employers required to pay sick leave under these conditions. These credits are allowed against the employers’ portion of Social Security taxes. Employers are entitled to credit for qualified sick leave wages, up to $511 per day, or $200 per day if the leave is for caring for a family member or child, for up to 10 days. This amount of tax credit is equal to 100% of the qualified sick leave wages paid by the employer each quarter, in accordance with the Act.
The Act also temporarily provides emergency FMLA leave for a “qualified need related to public health emergency.”
Expanded Coverage and Eligibility: The current employee threshold for coverage is for employers with 50 or more employees. However, the Act expands coverage so as to cover any workplace with fewer than 500 employees. Employee eligibility requirements for emergency FMLA are also lowered such that any employee who has been employed for at least 30 days prior to the designated leave may be eligible. However, the Secretary of Labor is authorized to issue regulations to exclude certain health care providers and emergency responders and to exempt small businesses with fewer than 50 employees from its requirements when they would jeopardize the viability of the business.
Reason for leave: The employee may take emergency FMLA leave (up to 12 weeks of job-protected leave) when the employee is unable to work (or telework) due to a need to care for the employee’s child under 18 years of age if the school or place of care has been closed or the child care provider is unavailable due to a public health emergency (i.e. an emergency related to COVID-19).
Paid leave: The first 10 days of emergency FMLA leave may be unpaid. Employees may elect to substitute any accrued paid leave (such as vacation, personal leave or paid sick leave) for any portion of that 10 day period.
After the first 10 days, the employer must pay full-time employees two-thirds of their regular rate of pay for the hours that would be normally scheduled. Employees who work part-time, irregular schedules are entitled to a rate based on the average number of hours worked over a six-month period. If they haven’t worked that long, then they are entitled to the average number of hours per day that the employee would normally be scheduled to work. Paid leave under this law is capped at $200 per day and $10,000 in the aggregate, per individual.
Job Protection: The emergency leave is protected, and an employer must return the employee to the same or equivalent position upon his/her return. However, small employers with less than 25 employees are exempted if the position does not exist due to economic conditions or other changes in operating conditions of the employer that affect employment and are caused by a public health emergency during the period of leave. Additionally, the employer must make reasonable efforts to restore the employee to an equivalent position. If the employer is unable to find such an equivalent position, the employer must make reasonable efforts to contact the employee if an equivalent position becomes available within a year.
Tax Credits: Like paid sick leave, employers will be provided with quarterly tax credits for paid family leave, allowing credits against the employers’ portion of Social Security taxes. Employers are entitled to credit for qualified family leave wages, up to $200 per day for each individual and $10,000 total with respect to all calendar quarters. Again, this entitles employers to a refundable tax credit equal to 100% of the qualified family leave wages paid by employers for each calendar quarter in accordance with the Act.
The Families First Act also provides $1 billion for emergency grants to states for activities related to processing and paying unemployment insurance benefits under certain conditions. Half of the resources will be used to provide immediate additional funding to all states for administrative costs, while the other half will be reserved for emergency grants to states that experience an increase in unemployment of at least 10 percent compared to the same quarter of the previous year. Those states will be eligible to receive an additional grant to assist with costs related to the unemployment spike and must take steps to ease eligibility requirements.
Employees may apply for Unemployment Insurance (UI) benefits if they are unemployed, which includes reasons such as: 1) reduced hours due to the quarantine; 2) separation from employer during the quarantine; 3) subject to a quarantine required by a medical professional or state or local health officer. Eligible individuals can receive benefits that range from $40-$450 per week. Depending on the maximum award for the employee’s UI claim and their weekly benefit amounts paid, the number of weeks they can potentially receive benefit payments ranges from 13 to 26 weeks if they are paid at their full weekly benefit amount for each of those weeks.
We are here to answer any questions or concerns you may have regarding new policies and employment throughout the pandemic. Let us know how we can assist you.
By Michael Karikomi, April 7, 2020.