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Families First Coronavirus Response Act

Anna Baecker, CPA

March 20, 2020

The President has signed the Families First Coronavirus Act (FFCRA) in an attempt to ease the economic consequences stemming from the COVID-19 outbreak. Among other things, the bill provides family and medical leave and sick leave to employees and offers tax credits to employers and self-employed individuals providing the leave. It becomes effective April 2, 2020 and contains two main components.

Here are the details:

1)       The Emergency Family and Medical Leave Expansion Act (EFMLEA) requires private-sector and tax-exempt employers with fewer than 500 employees to provide both paid and unpaid public health emergency leave through December 31, 2020. The emergency leave is available when an employee who has been employed for at least 30 days is unable to work or telework due to a need to care for a child under age 18 because a school or place of care has been closed or a childcare provider is unavailable. The first 10 days of leave may be unpaid and then paid leave is required, calculated based a minimum of two-thirds of an employee's regular rate of pay and the number of hours the employee would otherwise normally work, not to exceed $200 per day and $10,000 total.

2)       The Emergency Paid Sick Leave Act (EPSLA) requires private employers with fewer than 500 employees and public employers of any size to provide 80 hours of paid sick time to full-time employees who are unable to work or telework for specified virus-related reasons. Part-time employees are entitled to sick time based on their average hours worked over a 2-week period. This time is immediately available regardless of the employee's length of employment, and employers cannot require employees to find a replacement worker or use other sick leave before this sick time. The maximum amounts payable vary based on the reason for absence:

·         Employees who are (1) subject to a quarantine or isolation order, (2) advised by a health provider to self-quarantine, or (3) experiencing symptoms and seeking diagnosis must be compensated at their regular rate, up to a maximum of $511 per day ($5,110 total).

·         Employees caring for an individual described in category (1), (2), or (3), caring for a child whose school is closed or child care provider is unavailable, or experiencing a "substantially similar condition" specified by the government must receive two-thirds of their regular rate, up to a maximum of $200 per day ($2,000 total).

The bill grants the Secretary of Labor the authority to issue regulations exempting: (1) certain healthcare providers and emergency responders from taking leave under the bill; and (2) small businesses with fewer than 50 employees from the requirements of the bill if it would jeopardize the viability of the business. It also provides an exception for employers with fewer than 25 employees, stating that if the employee’s job no longer exists due to the coronavirus pandemic, employers would be required to make reasonable efforts to restore the employee to an equivalent position over a one-year period. We are closely monitoring this legislation and will provide more guidance as we receive it.

For self-employed individuals, the bill covers 100% of a self-employed individual's sick-leave equivalent amount (or 67% of the individual's sick-leave equivalent amount if they are taking care of a sick family member or child following the child's school closing) for up to 10 days. The sick-leave equivalent amount is the lesser of average daily self-employment income or either (1) $511/day to care for the self-employed individual or (2) $200/day to care for a sick family member or child following a school closing. They must maintain documentation to be prescribed by the Treasury to establish their eligibility for the credit.

Refundable Credits:

Employers will receive a refundable tax credit, equal to 100% of qualified family leave wages required to be paid by the EFMLEA and EPSLA.

Actions to Take Today:

Employers should document the reason for the employees’ leave and be in regular contact with their payroll provider to ensure benefits are being calculated accurately.  Self-employed individuals should also document the number of days they are unable to work due to sickness or caring for a child or sick family member. 

Everyday there are updates and guidance being issued.  We will keep you posted as they are announced.