Families First Coronavirus Response Act & Emergency Paid Leave
On March 18, President Trump signed the Families First Coronavirus Response Act. A major provision of this act was the amendment of the current Family Medical Leave Act to cover Emergency Paid Leave and Public Health Emergency Leave. The Act is meant to offset the effects on individual employees forced to miss work due to the coronavirus epidemic. It also outlines provisions for calculating and counteracting some of the burden of cost for their employers. Below is a breakdown of how Emergency Paid Leave works.
Emergency Paid Leave provides:
- Paid leave for someone exposed to or exhibiting symptoms of the Coronavirus
- Paid leave to care for a family member exposed to or exhibiting symptoms of the Coronavirus
- Paid leave to care for a son or daughter if the school or place of childcare is unavailable due to a public health emergency
Who does this affect?
Employers with less than 500 employees.
Are small employers exempt?
If you have fewer than 50 employees, small business employers are exempt if they can show that the imposition of this requirement would jeopardize the viability of their business.
What employees are eligible?
All employees, full and part-time, regardless of the length of employment.
How is the paid leave calculated?
- Employees that are quarantined due to personal exposure to or contracting of COVID-19 will be paid up to 80 hours at their regular rate of pay. This is capped at $511 per day or $5,110 in total per employee.
- Employees that are caring for someone that is quarantined or home with children that have no school or childcare will be paid at 2/3 of their regular rate of pay. This is capped at $200 per day or $2,000 in total per employee.
- Part-time employees are subject to the same paid leave for two weeks calculated using their average weekly hours.
- It is important to note that this emergency paid leave is in addition to any other sick leave provided by the employer.
Public Health Emergency Leave further expands on these provisions.
What employees are eligible?
Any employee that has been employed for at least 30 days and is unable to work due to the need to care for children as a result of school or childcare closures.
How is the paid leave calculated?
The first 10 days of leave are unpaid (although any accrued leave can be used during this period). After 10 days, the employee will be compensated at 2/3 of his normal rate for 10 weeks. Paid leave cannot exceed $200 a day or $10,000 for the leave period.
Part-time employees are subject to the same paid leave for ten weeks calculated using their average weekly hours.
Doesn’t this impose a significant burden on the employer?
Employers will receive a tax credit for any wages paid related to these two types of emergency leave. Generally, the credit will be applied against payroll taxes paid in the calendar quarter, and refunds will be issued. Employers should discuss these details with their tax advisor.
Additionally, employers can seek reimbursement for the cost of providing health insurance for employees that are out on leave.
Employers must fund these costs upfront, but they should be fully reimbursed by the IRS within 3 months.
What do employers need to do now?
Talk to their tax advisor. These are new provisions, and the specifics continue to evolve.
Document employee leave and the associated reason for the leave. This affects their rate of pay and the duration of the paid leave.
If you have fewer than 50 employees, you must be able to show that complying with the emergency leave procedures creates a threat to the viability of your business in order to avoid paying employee leave under these provisions.
The act goes into effect on April 2 and expires on December 31, 2020.
Trying to protect your employees while keeping your business afloat during this unprecedented time requires persistence and creativity. We’re here to help. Please contact your GP advisor or request a consultation to get started.