Families First Coronavirus Response Act Signed Into Law; Requires Employers to Provide Paid Leave
by Mandy Hicks
English, Lucas, Priest & Owsley, LLP (ELPO Law) announced today that Congress has passed a new law, which President Donald Trump signed on March 18, expanding paid sick leave and family leave for employees of companies with fewer than 500 employees who have been impacted by the coronavirus pandemic. The Act takes effect no later than April 2, 2020.
The Act provides for free COVID-19 testing, food assistance, and unemployment benefits. Additionally, the Act makes available a number of tax credits to employers and self-employed individuals to help cover the costs associated with the COVID-19 outbreak. But the widest impact may come from its leave provision requirements of certain employers with less than 500 employees.
The Act requires that companies give full-time employees 80 hours of paid sick leave and also provide part-time employees the number of hours equal to the average hours that such employee works over a 2-week period. It applies to any employee who has been diagnosed with coronavirus or is experiencing symptoms of the virus and is seeking a medical diagnosis; is subject to Federal, State or local quarantine; is being advised by a health care provider to self-quarantine; is caring for someone in quarantine or is caring for a child under 18 whose school or place of care is unavailable due to coronavirus precautions.
There are caps on the payouts: $511 per day for employees with the virus or in quarantine and $200 per day for employees caring for someone in quarantine or a child, and a $10,000 cap for all calendar quarters.
Wages paid under this provision are exempt from the employer’s portion of Social Security tax, and an additional payroll tax credit is allowed in the amount of Medicare tax paid on those wages. A refundable tax credit is also available for employers equal to 100% of qualified family leave wages required to be paid by the employer for each calendar quarter. If the credit exceeds the employer’s total liability for all employees for any calendar quarter, the excess credit is refundable to the employer. A refundable tax credit is available for employers equal to 100% of qualified paid sick leave wages paid by an employer for each calendar quarter.
Under the Act, FMLA requirements have also been expanded, allowing for employees who are caring for a minor child to receive two-thirds of their average earnings for up to 10 weeks. Employees are eligible for this expanded benefit if they are unable to work either onsite or remotely as a result of a minor child’s school or day care remaining closed due to COVID-19. The maximum amount of this expanded benefit is capped at $10,000 per individual. Similar to the emergency paid sick leave benefit above, wages paid under this provision are exempt from the employer’s portion of Social Security tax, and an additional payroll tax credit is allowed in the amount of Medicare tax paid on those wages.
An employee is eligible for such expanded benefit if they have been employed for at least 30 calendar days by the employer when leave is requested. Similar to traditional FMLA leave, any leave claimed under this provision is job-protected, and an employer must return the employee to the same or equivalent position upon a return to work.
The Act empowers the U.S. Department of Labor to issue further regulations to exempt small employers with fewer than 50 employees; however, at this time no such regulations have been issued. The U.S. Treasury is expected to use its regulatory authority to advance funds to some small businesses to cover the cost of providing paid sick leave.
Finally, the Act provides funding for economic assistance and requires health plans to cover COVID-19 testing at no charge.
A notice on these updates must be posted for employees, and the Secretary of Labor is tasked with releasing the model notice by March 25.
The duration of the paid sick leave and FMLA expansion is temporary and expires December 31, 2020.
The Act is the first relief measure passed in response to the COVID-19 outbreak in the United States; however, it is expected that more aid will be forthcoming.
For legal questions related to this update, FMLA, and other employment issues, call 270-781-6500.