A Summary: Families First Coronavirus Response Act

On March 18, 2020, H.R.6201 The Families First Coronavirus Response Act was signed into law to provide economic relief to businesses and individuals during the COVID-19 pandemic. The legislation provides paid sick leave, free coronavirus testing, expands food assistance programs, extends unemployment benefits, and requires employers to provide additional protections for health care workers. The law takes effect on April 2, 2020, and will remain effective until December 31, 2020.

The legislation is broad and includes relief acts in a number of areas including:

• Supplemental appropriations to the Department of Agriculture (USDA) for nutrition and food assistance programs and appropriations to the Department of Health and Human Services for nutrition programs that assist the elderly
• Requires the Occupational Safety and Health Administration (OSHA) to issue an emergency temporary standard for infectious disease exposure control plan to protect health care workers
• Establishes a federal emergency paid leave benefits program to provide payments to employees taking unpaid leave due to the coronavirus outbreak
• Expands unemployment benefits and provide grants to states for processing and paying claims
• Requires employers to provide paid sick leave to employees
• Establishes requirements for providing coronavirus diagnostic testing at no cost to consumers
• Treats personal respiratory protective devices as covered countermeasures that are eligible for certain liability protections
• Temporarily increases the Medicaid federal medical assistance percentage

Read the full summary of the Families First Coronavirus Response Act here

The main changes that businesses should be aware of are the federal emergency paid leave benefits program and the requirement for employers to provide paid sick leave to employees.

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Emergency Family and Medical Leave Expansion Act (the “FMLA Expansion Act”)

H.R. 6201 expands the existing Family and Medical Leave Act (FMLA) to include job-protected leave for employees that are unable to work due to child’s school or daycare closure due to COVID-19. Employers with less than 500 employees must offer up to 12 weeks of job-protected leave to employees unable to work (or telework) because they must care for a child (under 18 years old) whose school or care provider is closed due to COVID-19 emergency declared by a federal, state, or local authority. Employers can seek reimbursement for the wages paid to employees taking emergency family and medical leave through tax credits applicable to the employer’s portion of Social Security taxes.

Employees must have been working for the company for at least 30 days to be eligible. The first 10 days of leave may be unpaid. After 10 days of unpaid leave, employers are required to provide paid leave of not less than two-thirds of an employee’s regular rate up to $200 per day or $10,000 total. Pay for hourly employees whose schedules vary is calculated using the average number of hours worked for the prior six months, or the “reasonable expectation” of the number of hours when hired if they’ve been with the employer for less than six months. The employer can require the employee to utilize any accrued vacation leave, personal leave, or other medical or sick leave first.

Generally, after the leave period, the employee is eligible to return to the same or equivalent position with their employer. Certain exemptions to this requirement are available for employers with less than 25 employees.
Small businesses with less than 50 employees may be exempted from the leave requirement by the Secretary of Labor if the requirements would jeopardize the viability of the business.

Emergency Paid Sick Leave Act

This requires employers with fewer than 500 employees to provide paid sick leave to employees if they are unable to work (including telework) due to COVID-19. Employers can seek reimbursement for the wages paid to employees taking emergency paid sick leave through tax credits applicable to the employer’s portion of Social Security taxes.

Full-time employees are to receive 80 hours of paid sick leave. Part-time employees are to receive the equivalent of the number of hours they would work, on average, during a two-week period.

The requirement applies to all employees, regardless of their tenure with the employer and paid sick leave time does not carry over into the next year. The emergency paid sick leave is in addition to any other paid sick leave or PTO already offered by the employer and does not require other paid sick leave or PTO to be used first.

Emergency paid sick leave applies to employees who meet one of the following requirements:

1. The employee is subject to a quarantine or isolation order for COVID-19
2. A health care provider advised the employee to self-quarantine due to COVID-19
3. The employee is experiencing symptoms of COVID-19 and seeking medical diagnosis
4. The employee is caring for an individual who is subject to quarantine or isolation order for COVID-19
5. The employee is caring for their child whose school has been closed or place of care is unavailable due to COVID-19 precautions
6. The employee is experiencing any other substantially similar condition (to be defined by the Secretary of Health and Human Services)

For reasons 1 – 3 above, employees will receive paid sick leave at their regular rate, not to exceed $511 per day and $5,110 total.

For reasons 4 – 6 above, employees will receive paid sick leave at two-thirds of their regular rate, not to exceed $200 per day and $2,000 total.

The Secretary of Labor is required to issue guidelines and additional clarification to assist employers in calculating leave benefits by April 2nd. Additionally, employers must post a notice to employees and The Secretary of Labor is required to create a notice by March 25th.

Small businesses with less than 50 employees may be exempted from the leave requirement by the Secretary of Labor if the requirements would jeopardize the viability of the business.

Employer Tax Credits

H.R. 6201 provides for employer tax credits to offset the costs associated with the new paid public health emergency leave and sick leave required for employees. Employers can seek reimbursement for the wages paid to employees for emergency paid leave and emergency paid sick leave through tax credits applicable to the employer’s portion of Social Security taxes. The amount of the paid sick leave credit that is allowed for any calendar quarter cannot exceed the total employer payroll tax obligations on all wages for all employees. The amount over this limitation is refundable to the employer.

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Final Thoughts

We recommend that you work with your employment lawyer and tax CPA on the implications applicable to your unique situation. Signature Analytics is here to support you and can provide references to our partner network of legal and tax experts.