What exactly is included in the Families First Coronavirus Response Act?
The Families First Coronavirus Response Act (FFCRA) is made up of two parts.
First, it establishes an emergency two-week pool of paid sick leave (ERPDSLA) for employees who meet specific criteria. This sick leave will be initially paid by the employer, but the employer portion of Social Security Tax can be later reduced by the amount paid. This is a dollar-for-dollar tax credit, meaning the Federal Government ends up paying for the paid sick leave taken by your employees. If the credit exceeds an employer’s normal tax payment, then they will be reimbursed for the excess.
Secondly, the act expands FMLA to include provisions for paid leave related to COVID-19 childcare. Eligible employees may take 12-weeks of leave without being subject to discrimination because of the leave and without being required to find a replacement worker. There is no FMLA payment provision for the first 10 days of leave (although the employee may use ERPDSLA or employer-provided PTO during this time). After the first 10 days, the leave is paid for the remaining 12-week period. Once again, the federal government will reimburse employers for the paid portion of this leave as a credit to the employer portion of social security tax.
Does the Act apply to all employers?
No. The new paid sick leave pool is for public sector companies or private-sector companies with 500 employees or less. Also, if your company is 50 employees or less, and you can show that the viability of your business would be threatened by offering this new sick leave, then you are exempt.
As such, the Act is truly aimed at helping small and mid-sized businesses weather the storm.
What are the employee eligibility requirements for the Paid Sick Leave?
The paid sick leave is available to both full-time and part-time employees. Full-time employees receive 80 hours to use over a 2-week period. Part-time employees receive a number of hours based on their average work schedule, which again should be used over a 2-week period.
What is the rate of pay for the Paid Sick Leave?
There are two categories of eligibility, which provide different hourly rates of pay.
If an employee meets any of the following criteria, then they are eligible for 100% of their hourly rate* (capped at $511 per day):
- Subject to a federal, state, or local quarantine or isolation order related to COVID-19.
- Advised by a healthcare provider to self-quarantine due to concerns related to COVID-19.
- Experiencing symptoms of COVID-19 and seeking a medical diagnosis/testing.
Alternatively, if an employee meets any of the following criteria, then they are eligible for two-thirds of their hourly rate* (capped at $200 per day):
- Caring for an individual who meets the first set of criteria (quarantined or seeking diagnosis)
- Caring for their child and their school or childcare has been closed due to COVID-19 precautions.
*In both cases, if the employee’s base rate of pay is under the federal, state, or local minimum wage, then the minimum wage should be used in place of their normal rate of pay.
Can I require my employees to take their standard sick/vacation time before using this new government pool?
No. Employees have the right (but not the obligation) to take the new paid sick leave pool before using their traditional employer-provided time-off.
An employee in the second tier of eligibility may wish to take their traditional time-off in order to be paid at a full rate instead of two-thirds. Also, an employee may wish to use their traditional time-off in order to avoid a cap on the payments. Regardless, eligible employees have the right to choose which type of time-off they will take.
What exactly is the expansion to FMLA?
The expansion to FMLA is completely separate, but related, to the additional sick leave pool described above. FMLA has been a longstanding tool that allows employees to take leave from their job to care for family members without facing discrimination for the leave and without being forced to find a replacement worker. The government has added a new provision to FMLA to expand eligibility. An employee is now eligible for FMLA if they are caring for a child that has been impacted by a school or care facility closure as a result of the COVID-19 health emergency.
Significantly: The Act also provides 10 weeks of paid leave under FMLA (the first 2 weeks must be unpaid).
Is this expansion of FMLA available to all employers and employees?
No. As with the leave, the expansion applies to employers with fewer than 500 employees and also provides and exemption for employers with fewer than 50 employees if the viability of the business would be threatened.
Employees are only eligible if they have worked for their employer for more than 30 days, regardless of how many hours they have worked.
How many hours are provided under the FMLA expansion?
The job protections under FMLA apply for 12 weeks. The first 2 weeks do not have a payment provision, but the final 10 weeks are paid. FMLA leave cannot extend past 2020.
Employees can use either their normal employer-provided time-off or else this new national sick leave pool for the first two weeks of FMLA. As such, we expect many interested employees will take up to 12 weeks of paid leave from their workplace, starting with 2 weeks paid through the new paid sick leave pool (or their traditional time-off balance) and the final weeks are paid through FMLA.
Full-time employees are granted 40 hours per week. For part time employees, the number of hours is based on the hours the employee would have been scheduled to work. For variable-schedule employees, employers should use the average number of hours that an employee has worked for the previous 6-month period.
What is the rate of payment for employees paid under FMLA?
The first two weeks of FMLA do not have a payment provision. After the first two weeks, employees are eligible to receive two-thirds their regular rate of hourly pay, not to exceed $200 per day or $10,000 for the entire leave.
Is an employer allowed to “lay-off” an employee while they are on FMLA?
As with traditional FMLA regulations, employers with over 25 employees are not permitted to discriminate against employees for taking FMLA. Employers may not eliminate an employee’s position or terminate an employee because they have elected FMLA. An employer may terminate an employee on FMLA-protected leave if the termination is for reasons completely unrelated to the leave (pre-existing intent, discovery of other cause, or significant change in business plans).
What should I do as an employer to prepare myself for these changes?
First, announce to your employees the availability of a new pool of time-off in addition to whatever your company normally offers. This is a two-week pool and it is available in 2020 for employees who meet the criteria. Also, inform them of the expansion to FMLA that is also available to them.
Secondly, set up additional time-off codes within your payroll system in order to track this new time-off. We recommend that you create two separate codes for the sick leave (one for each type of eligibility) and one for the paid FMLA. Greenshades will work with you to ensure the codes are set up properly and will be properly recognized when completing your taxes.
Third, coordinate with your tax partner (such as Greenshades) to ensure you will make reduced 941 payments and properly report the credit on your 941 returns. It is imperative to document, pay, and report properly in order to take advantage of this relief.
What is the timeframe for these provisions?
These provisions go into effect on April 1st, 2020. They expire on December 31st, 2020.