March 22, 2020
On March 18, 2020, President Trump signed the Families First Coronavirus Response Act, which made significant changes to federally-mandated paid time off. Here is a summary of the key changes made by the Act for employers with fewer than 500 employees.
EMERGENCY FAMILY AND MEDICAL LEAVE EXPANSION ACT
- Eligibility: Any employee who has been employed for at least 30 calendar days is now eligible for FMLA leave for the public health emergency created by the COVID-19 pandemic.
> If leave is not requested as a result of the public health emergency, the eligibility provisions of the FMLA (see “Previous Eligibility Requirement” below) continue to apply.
+ Previous Eligibility Requirement: Eligible employees had to be employed for at least 12 months and 1,250 hours of service during previous 12 month period to qualify for coverage under the FMLA.
- Employer Threshold: The FMLA now covers all employers with 500 or fewer employees.
> Previous Employer Threshold: Employers were subject to the FMLA if the employer had 50 or more employees each work day for 20 or more work-weeks during the current or preceding calendar year.
- Qualifying Need for Leave: Leave is also permitted for an employee who is unable to work (or telework) due to the need to provide child care to a child under the age of 18 if the child’s school or child care provider has closed due to the public health emergency.
- Paid Time Off: For leave resulting from the public health emergency, after an initial 10 days of leave (which may be unpaid leave), the employer must provide paid time off to each employee at the rate of 2/3 of the employee’s regular rate of pay, multiplied by the number of hours the employee would otherwise normally work. Paid time off is capped at a maximum of $200 per day and $10,000 in the aggregate. The Paid Time Off requirement extends only to leave resulting from the public health emergency.
> Paid Time Off for employees with varied hours is calculated using the average number of hours that the employee was scheduled to work each day over the 6 month period, ending on the date when the employee takes leave. For employees who were not employed during that previous 6 month period, the number of hours is the employee’s reasonable expectation of hours to be worked at the time of hire.
+ Previous Paid Time Off Requirement: None.
- Restoration to Employment.
> Employers with 25 or more Employees.: Employer must restore employee to the same or equivalent position upon return from leave.
> Employers with 24 or fewer Employees: Same requirement as employers with 25 or more employees, but restoration of employment is not required IF:
- The leave was required for a public health emergency;
- The employee’s position was eliminated due to the public health emergency;
- The employer made reasonable efforts to restore the employee to a reasonably equivalent position; and
- The employer contacts the employee if a reasonably equivalent position becomes available within one year of the earlier of:
- The date on which the public health emergency concludes; or
- The date that is 12 weeks after the date on which the public health emergency leave commences
- Sunset Provision: The Emergency Family and Medical Leave Expansion Act provisions are set tp expire on December 31, 2020.
ENACTMENT OF THE EMERGENCY PAID SICK LEAVE ACT
In addition to the Emergency Family and Medical Leave Expansion Act discussed above, the Families First Coronavirus Response Act also includes a separate paid leave act, the Emergency Paid Sick Leave Act, for employees that have, are experiencing symptoms of, or are caring for a family member with, COVID-19.
- Covered Employer: An employer with fewer than 500 employees.
- Eligible Employee: An employee who is:
- Subject to a federal, state, or local COVID-19 quarantine or isolation order;
- Advised by a health care provider to quarantine due to COVID-19 concerns;
- Experiencing symptoms of COVID-19 and seeking medical diagnosis;
- Caring for an individual subject to a quarantine order;
- Caring for a child if the school or child care provider is closed due to COVID-19; or
- Is experiencing a substantially similar condition specified by the Secretary of Health and Human Services
- Duration of Paid Time Off:
- Full Time Employees: 80 hours.
- Part Time Employees: The number of hours equal to that which the employees works on average over a two week period.
- Amount of Paid Time Off:
- Eligible Employees Under Nos. 1-3 above (Employee Experiencing COVID-19 or Similar Symptoms): Regular rate of pay, capped at $511 per day and $5,110 in the aggregate.
- Eligible Employee Under Nos. 4-6 above (Caring for Others): Regular rate of pay, capped at $200 per day and $2,000 in the aggregate.
- No Effect on Other Paid Sick Leave: Employer must provide paid sick leave under the Emergency Paid Sick Leave Act without requiring the employee to use other sick leave provided by the employer.
- Sunset Provision: The Emergency Paid Sick Leave Act is set to expires on December 31, 2020.
EMPLOYER TAX CREDITS
- FICA and Medicare taxes: Wages paid by reason of the Emergency Paid Sick Leave Act and the Emergency Family and Medical Leave Expansion Act are not subject to FICA or Medicare tax.
- Tax credits: The bill currently provides refundable tax credits to employers equal to the mandated benefits to compensate employers for payments made to affected employees. The credit is applied against the employer’s share of FICA and Medicare tax liability for the quarter in which the sick leave pay is paid. If the total sick leave payments made by the employer exceed its share of such taxes, the difference is refundable. There is no guidance on when the employer can reduce payroll tax deposits to take advantage of this credit.
- Self-employed taxpayers are also allowed a credit against self-employment tax. However, the credit is subject to the daily limit of 67% of average daily self-employment income, or $200. The Bill requires self-employed individuals to maintain documentation to establish self-employment eligibility as prescribed by the Secretary of the Treasury.