The Families First Coronavirus Response Act (“FFCRA” or “Act”) was signed into law effective March 18, 2020. Of interest to small businesses, the FFCRA contains two acts – the Emergency Paid Sick Leave Act and the Emergency Family and Medical Leave Expansion Act – establishing new layers of paid leave for private employers who employ fewer than 500 employees.
Emergency Paid Sick Leave Act
First, the Emergency Paid Sick Leave Act requires employers to provide full-time employees with up to 80 hours of emergency paid sick leave, and part-time hourly employees an amount based on the hours the employee would normally have worked during a two week period. This is to be paid at the employee’s regular rate of pay if leave is taken due to (i) quarantine or an isolation order related to COVID-19, (ii) self-quarantine at the advice of a health care provider, or (iii) seeking a medical diagnosis while exhibiting symptoms of COVID-19. This is to be paid at two-thirds the regular rate of pay if leave is taken to (a) care for an individual under a quarantine order or in self-quarantine, or (b) care for a child if their school or child-care provider is unavailable due to COVID-19 precautions.
This expansion applies beginning April 1, 2020, and expires December 31, 2020. No length of employment requirements apply. There are per employee caps of $511 per day and $5,110 in the aggregate under (i)-(iii) above, and $200 per day and $2,000 in the aggregate under (a)-(b) above. This paid leave is in addition to an employer’s existing paid leave policies, and is allowed to be used by the employee before any regular employer provided paid leave.
Emergency Family and Medical Leave Expansion Act
Second, the Emergency Family and Medical Leave Expansion Act within the FFCRA amends the Family Medical and Leave Act (“FMLA”) by establishing the right for eligible employees to take up to 12 weeks of job-protected leave to care for a minor child if the child’s school or child care provided has been closed due to the COVID-19 public health emergency. Under this new public health emergency leave provision, the first 10 days are unpaid (during which the FFCRA provisions above would typically apply), but the employer must pay the employee at a rate of two-thirds the employee’s regular rate of pay for the following 10 weeks (a calculation is provided for employees with varying schedules).
This expansion applies through December 31, 2020. An employee must have been employed for 30 days to be eligible, and there are per employee caps of $200 per day and $10,000 in the aggregate. Employers of health care providers and emergency responders may elect to exclude themselves from this provision. Additionally, certain exemptions from the requirement to restore the employee to their prior position or an equivalent position apply to employers with fewer than 25 employees.
Regulations are authorized in the Emergency Family and Medical Leave Expansion Act to exclude certain health care providers (for which an election as addressed above is already allowed), and to provide an exemption for small businesses with fewer than 50 employees if these requirements would jeopardize the viability of the business as a going concern. As of the date of this post there have been no such regulations proposed.
Offsetting Tax Credits to Employers
The FFCRA creates an employer tax credit equal to 100% of qualified sick leave wages paid by an employer, which may be withheld from regular payroll tax remittance and, to the extent that is insufficient, the balance of the credit will be refunded to the employer in an expedited manner. Based on initial guidance from the IRS, “payroll taxes that are available for retention include withheld federal income taxes, the employee share of Social Security and Medicare taxes, and the employer share of Social Security and Medicare taxes with respect to all employees.” The FFCRA also contemplates an additional credit for certain qualified health plan expenses. Note that employers will not owe payroll taxes on the amounts paid under these leave acts . Also, there will be an adjustment when filing employer income taxes so that an employer does not receive a deduction for wages that were offset by these credits.
The Department of Labor has announced that there will be an initial 30-day period of non-enforcement provided the employer has “acted reasonably and in good faith to comply with the Act.” See the Fact Sheet for Employers for more detail.
Employers will be required to post in a conspicuous place on their premises a notice of FFCRA requirements. The form of that notice for non-federal employers is here: https://www.dol.gov/sites/dolgov/files/WHD/posters/FFCRA_Poster_WH1422_Non-Federal.pdf.
If you have questions about any rights and obligations you may have under the FFCRA as an employer, or about implications of COVID-19 with regard to your company’s operations, please contact one of our attorneys.
Update 03/26/20: Updated to add link to the DOL model notice.
Update 03/25/20: Updated based on guidance issued by the Department of Labor to (i) reflect a beginning date of April 1, 2020, (ii) reference the 30-day non-enforcement period, and (iii) reference the mandatory poster requirement.