Unemployment has increased dramatically in the last weeks during this coronavirus national emergency and employers are on edge. The Federal government, however, has already enacted one important piece of legislation and continues to work on more measures to aid employers and employees.
The Families First Coronavirus Response Act (the "Act") was passed by Congress and signed by the President on March 18, 2020. The provisions of the law take effect April 2, 2020, and will remain in effect until December 31, 2020. This legislation has specific provisions applying to employers with 500 employees or less.
Three of the most important sections in the Act relevant to employers include:
- Emergency Paid Sick Leave
- Emergency Family Leave
- Employer Tax Credits
Below is a brief overview of what employers need to know about the Family First Coronavirus Response Act with specific reference to the above three sections.
Emergency Paid Sick Leave
If your business has fewer than 500 employees, each employee will be eligible for paid sick leave under this Act. This section applies regardless of how long an employee has been with you. But an employee can only invoke the emergency paid sick leave for one of the following reasons:
- The employee is quarantined or isolated due to federal, state, or local measures.
- The employee was told to self-quarantine by a health care provider.
- The employer experiences symptoms of COVID-19 and is seeking a diagnosis.
- School and daycares are closed, and the employee must care for a child at home and cannot work remotely.
- The employee experiences substantially similar conditions, the meaning of which the Secretary of Health and Human Services will clarify.
Starting April 2nd, all eligible employees are entitled to some Federal Paid Sick Leave. The calculations of the paid leave, however, are different for employees who take the leave based on the possibility or confirmation of having the coronavirus versus those who take the leave based on the need to care for a family member who may have it or a child home due to closed schools and daycares.
- For those employees sick with or possibly infected with COVID-19, they are eligible for ten days (up to 80 hours based on full- or part-time work) of Federal Paid Sick Leave at the full regular rate (maximum of $511 per day and $5,110 in total). The employee can use paid sick leave or paid time off (PTO), too.
- For those employees caring for others, they will receive paid sick leave at two-thirds their regular pay rate but not to exceed $200 per day and $2,000 total. In addition, the employee can use paid sick leave or paid time off (PTO).
Employer Requirement: Employers cannot make employees first:
- give notice; or
- use their PTO or sick leave.
Also, employers are required to post a notice advising employees of their rights.
Emergency Family Medical Leave
The Act also includes the Emergency Family and Medical Leave Expansion Act. This section provides an additional source of leave for parents of children whose schools and daycares are closed due to the COVID-19 crisis.
Before the coronavirus pandemic, the Family and Medical Leave Act provided qualifying employees a means to take unpaid leave to recover from their own health condition, to care for a family member with a health condition, or to care for a newborn baby or an adopted or foster child. This law applies to employers who have 50 or more employees.
For a temporary time, this law is expanded to cover employers with less than 500 employees. An employee can take up to 12 weeks of leave. The first ten days (up to 80 hours, depending on an employee's regular schedule) is Federal paid sick leave. After the initial ten days, the employer must pay the employee two-thirds of the employee's normal wages for the number of hours the employee would regularly work. The paid leave is capped at $200 per day and $10,000 total.
The Secretary of Labor, however, has the ability to exempt some businesses of 50 or fewer employees if it becomes a question of viability.
Under this expanded version of the Family Medical Leave Act, an employee qualifies for unpaid leave of up to 12 weeks if:
- the employee is unable to work, including remote or telework; and
- the employee must care for a child under 18 years of age because the child's school or daycare is closed due to the COVID-19 emergency.
Employer Responsibility: After the leave has expired, the employer must restore the employee back to the same or equivalent position.
Employer Tax Credits
Employers are eligible for a refundable tax credit against their employer portion of Social Security taxes for 100%. This tax credit applies only to qualifying paid sick leave and family leave wages. This portion of the Act is meant to cover wages the employer had to pay to employees while they took time off.
The Social Security taxes, however, would have to be paid back in 2021 and 2022. Thus, an employer can elect not to take the credit for any given quarter up to the end of December 2020.
The Key Takeaway
The above overview is just that, an overview. The Family First Coronavirus Response Act is a 250-page document full of a lot of specific information for specific employers and industries. Plus, each state, like California, is implementing its own measures. The world has changed, and so too has the way employers operate – whether it's during this pandemic or after it's gotten under control.