The Families First Coronavirus Response Act, a bill containing economic measures as a response to the spread of COVID-19, was passed by the House of Representatives and the Senate, and it will now go to the President for his signature. It’s anticipated that the President will sign this bill into law and that more virus-related bills will follow.
The Act contains two segments concerning employee leave that businesses and employees should be aware of: the Emergency Family Medical Leave Expansion Act and the Emergency Paid Sick Leave Act. Below, we’ve provided an overarching summary of these provisions.
Emergency Paid Sick Leave Act
The Emergency Paid Sick Leave Act (EPSLA) provides that employers with fewer than 500 employees must provide paid sick leave to employees who, regardless of how long they’ve worked for the company, are unable to work (or telework) for the following reasons related to COVID-19.
- The employee is subject to a Federal, State or local quarantine or isolation order
- The employee has been advised by a healthcare provider to self-quarantine due to concerns related to the virus
- The employee is experiencing symptoms of the virus and seeking a medical diagnosis
- The employee is caring for another individual who falls into categories 1 or 2, above
- The employee is caregiving for a child of the employee if their school or place of childcare has been closed or is unavailable due to the virus
- The employee is experiencing any other substantially similar condition specified by the Secretary of Health and Human Services
For sick leave, full-time employees (regardless of how long they have been employed), are entitled to 80 hours of paid sick leave. Part time employees are entitled to an equivalent number of hours that the employee works over a two-week period, on average.
Employers must pay the leave at the employees’ normal rates if leave is taken by reason of paragraphs 1 through 3 above, subject to a per employee maximum of $511 per day and $5,110 in total. If leave is taken by reason of paragraphs 4 through 6 above, the leave must be paid at a rate equal to at least 2/3 of his or her normal rate, subject to a per employee maximum of $200 per day and $2,000 in total.
Employers of healthcare workers or first responders may elect to exclude their employees from benefits under the Act.
The Secretary of Labor may provide exemptions to employers with fewer than 50 employees if providing leave to employees would jeopardize the viability of the business as a going concern.
Emergency Family Medical Leave Expansion Act
The Emergency Family Medical Leave Expansion Act (EFMLEA) applies to all businesses with fewer than 500 employees and is an expansion of the Family and Medical Leave Act of 1993 (FMLA). This provision expands employee qualifications for leave.
Under this provision, an employee can qualify after working for their employer for at least 30 days if the employee is unable to work (or telework) due to a need to care for a child under the age of 18 if their school or place of childcare has been closed or is unavailable due to a public health emergency related to COVID-19.
The EFMLEA provides for 10 days of unpaid leave. After the first 10 unpaid days of EFMLEA leave, (for which employees may use any other paid time off or the 80 hours of paid sick time provided by the EPSLA), employers must pay employees no less than 2/3 of the employee’s regular rate for his or her usual hours worked. The benefits under the Act are limited per employee to $200 per day and $10,000 in total. Notably, the current version of the EFMLEA removed the previous requirement included in earlier drafts that employers provide 10 weeks of paid leave. Instead, the current draft substituted the $10,000 cap on total benefits.
For part-time or employees who work variable hours, the leave is calculated based on the average hours that the employee was scheduled per day over the six month period prior to the employee taking leave under the Act. If the employee did not work over the previous six months, benefits are calculated based on a reasonably expected average hours per day that the employee would normally be scheduled to work at the time of hiring.
As with the EPSLA, The Secretary of Labor may provide exemptions to employers with fewer than 50 employees if providing leave to employees would jeopardize the viability of the business as a going concern, as well as allowing employers of healthcare workers or first responders to exclude their employees from benefits under the Act.
Employer Tax Credits
Additionally, the Act provides for tax credits to employers to offset the cost of wages that were paid to employees as part of the bill’s family leave and sick leave provisions, through the end of 2020. The credit for sick leave paid under the EPSLA is equal to the actual wages paid by the employer, subject to a limit of $511 per day, per employee, if paid for reasons of paragraphs 1 through 3 above. The credit is limited to $200 per day if the sick leave is used to care for another individual or child under paragraphs 4 through 6 above.
The credit for leave paid under the EFMLEA is limited for each employee to $200 per day, with a maximum of $10,000 per employee.
Additionally, the Act allows an additional payroll tax credit for any group health plan expenses that are related to the sick leave or emergency family medical leave benefits paid.
The credits are reported quarterly on the employer’s payroll tax return and are refundable to the extent that the credit exceeds the employer’s payroll tax liability.
The Act also provides for similar benefits for self-employed individuals who would be eligible for EPSLA benefits had they been an employee of a business, via refundable payroll tax credits.
Finally, the Act makes these same wages not subject to the employer’s share of the Social Security portion of FICA tax (6.2% of wages).
This article reflects our views at the time this article was written and should be used as reference only. We recommend that you talk to your Warren Averett advisor, or another business advisor, for the most current information or for guidance specific to your organization.