On March 18, 2020, President Trump signed the Families First Coronavirus Response Act (“Act”), which becomes effective April 2, 2020. Important provisions employers must be aware of include the following:
Family Medical Leave Act Extension. Division C of the Act allows employees who have been employed for at least 30 days by an employer with fewer than 500 employees to take up to 12 weeks of leave if they cannot work or telework because they must care for a child whose school or care provider is closed or otherwise not available due to a federal, state, or local restriction precipitated by a public health emergency, including the current COVID-19 pandemic. The Secretary of Labor can exempt employers with fewer than 50 employees if the requirement would jeopardize the viability of the employer’s business, but has not yet issued any guidance on the subject.
Key provisions of Division C include the following:
- The first 10 days off is unpaid, after which, the employer must pay the employee at least two-thirds of their regular pay up to $200 per day or $10,000 total.
- For hourly employees whose schedules vary, the paid leave rate is calculated using the average number of hours the employee was scheduled per day over the six-month period prior to the leave.
- Upon the employee’s return to work, employers with at least 25 employees must generally restore the returned employee to the same or an equivalent position as they had prior to taking leave.
- Employers with fewer than 25 employees need not restore the employee if their prior position doesn’t exist because of changes to employer’s economic or operating condition caused by the pandemic, the employer makes efforts to restore the employee to their prior position, and the employer attempts to contact the employee if a similar position opens up in the next year.
Emergency Paid Sick Leave. Division E of the Act allows employees (regardless of the length of their employment) to take up to 2 weeks of paid sick leave if they cannot work or telework because they (a) are subject to a quarantine or isolation order because of COVID-19, or they are caring for someone who is (b) were told by a health care provider to self-quarantine because of COVID-19, or they are caring for someone who was, (c) are experiencing symptoms of the novel coronavirus and are seeking a medical diagnosis, (d) are caring for a child whose school or care provider is closed or otherwise not available due to a federal, state, or local restriction due to COVID-19, or (e) are experiencing a similar condition due to COVID-19 as specified by the Secretary of Health and Human Services in consultation with the Secretary of the Treasury and the Secretary of Labor. The Secretary of Labor can exempt employers with fewer than 50 employees if the requirement would jeopardize the viability of the employer’s business, but has not yet issued any guidance on the subject.
Key provisions of Division E include the following:
- Full-time employees are entitled to 80 hours of paid sick leave, while part time employees are entitled to the average number of hours they work over a two-week period.
- For hourly employees whose schedules vary, the paid leave rate is calculated using the average number of hours the employee was scheduled per day over the six-month period prior to the leave.
- Employees entitled to paid sick leave due to quarantine or isolation orders, who have been advised by a health care provider to self-quarantine, or are experiencing coronavirus symptoms and seeking medical diagnosis must be paid at their regular rate of pay not to exceed $511 per day or $5,110 in total.
- Employees entitled to paid sick leave for any other reason must be paid at least two-thirds of their regular pay up to $200 per day or $2,000 total.
- Sick leave is not paid out to employees upon termination and may not be carried over to another year if the Act is extended.
- The Secretary of Labor is required to issue guidelines to help employers calculate paid sick leave within 15 days of enactment, as well as a notice that employers must display to inform employees of the availability of paid sick leave within 7 days.
Tax Credits. Division G of the Act provides employers tax credits to offset their costs of compliance with the Act, including (a) a refundable tax credit against employer Social Security payroll taxes worth 100% of paid sick leave and emergency leave wages under the Act, (b) a tax credit for paid sick leave and emergency leave wages, and (c) a tax credit for amounts employers pay for the employee’s health plan coverage while they are on leave.
Key provisions of Division G include the following:
- The amount of paid sick leave credit permitted for any calendar quarter cannot exceed the employer’s total payroll tax obligations and, if it does, the excess amount is refundable to the employer.
- Employers receiving a credit for paid family and medical leave under the 2017 Tax Cuts and Jobs Act cannot receive the above tax credits.
- These rules are subject to additional expected requirements and guidelines from the Treasury Department.
What We Don’t Know: At this point the Department of Labor has not issued any guidance regarding exemptions for employers with fewer than 50 employees or from any government authority regarding whether entities with similar ownership should be aggregated when determining whether the Act applies to them.
If you have any questions about the Families First Coronavirus Response Act, including how it may affect your business, contact us at (312) 216-2720 or firm@marcusboxerman.com.