On March 18th, 2020, Congress enacted into law H.R.6201 Families First Coronavirus Response Act. This act contains various provisions to help employees and employers deal with the financial impact of the COVID-19 pandemic.
The Families First Coronavirus Response Act, although enacted as of March 18th, 2020 does not take effect until April 1st, 2020. Benefits paid under the Act are not retroactive. The specific guidelines for calculating the amount of paid sick time employers must pay employees have yet to be issued, however, initial guidance provides maximum benefit amounts and qualification criteria. The specific guidelines will be issued no later than April 2nd. Until then, there is uncertainty to how the process will work or when employers can expect to receive funds from the government (we have addressed key questions and considerations at the end of this post).
Among the provisions included in the act, two key areas that may have substantial impact on you are the Emergency Paid Sick Leave and Emergency FMLA Expansion.
BENEFITS
Depending on the reason sick leave is taken, benefits under the Emergency Paid Sick Leave Act (EPSLA) include:
a) Compensation at regular rate of pay, up to maximum of $511 per day, for a maximum of two weeks (up to 80 hours); or
b) Compensation at 2/3 of regular rate of pay up to maximum of $200 per day for a maximum of two weeks (up to 80 hours)
Benefits under the Emergency Family and Medical Leave Expansion Act (EFMLEA) do not start until after 10 days of leave and are only applicable in one specific situation. Benefits under EFMLEA include:
a) Compensation at 2/3 of regular rate of pay up to maximum of $200 per day for a maximum of ten weeks
Qualifying Criteria
There are six qualifying reasons under which an employee is eligible for compensation under the EPSLA:
1) Employee is subject to Federal, State, or local quarantine or isolation order related to COVID-19
2) Employee has been advised by health care provider to self-quarantine due to COVID-19 concerns
3) Employee is experiencing COVID-19 symptoms AND seeking a medical diagnosis
4) Employee is caring for individual who is subject to 1 or 2 above
5) Employee is caring for child whose school or place of care is closed due to COVID-19
6) Employee is experiencing similar condition as specified by Sec. of Health & Human Services
There is one qualifying reason for benefits under the EFMLEA:
1) Employee is caring for child whose school or place of care is closed due to COVID-19
Key Questions and Considerations
1) Can I require my qualifying employees to take their existing sick time, vacation time, or other accrued time off prior to paying them under this Act?
a. As of April 1, 2020, no, an employer may not require an employee to use other paid leave provided by the employer prior to using the paid sick time under the EPSLA.
2) Do the Sedgwick county “Stay at Home Order” and the many similar orders in other jurisdictions qualify employees for reason 1 (local quarantine or isolation order) above?
a. This is still unclear, but our understanding as of this writing is no. Quarantine and isolation orders are specific to individuals or groups of individuals and restrict the physical space people are allowed to occupy. Currently, the Sedgwick County Stay at Home Order contains sufficient exceptions that do not truly restrict the space people can occupy. The CDC defines quarantine and isolation as follows:
i. Quarantine separates and restricts the movement of people who were exposed to a contagious disease to see if they become sick.
ii. Isolation separates sick people with a quarantinable communicable disease from people who are not sick.
3) How and when will employers be paid by the government for benefits paid to employees under the Act.
a. This also remains unclear. Currently the expectation is to receive a refundable tax credit on a future (potentially Q2) payroll tax return. There have been mentions of prepayments prior to the filing of the payroll tax return, however, employers will likely have to pay the applicable wages, benefits and taxes from their own funds for a period of time.
4) What amounts will the government reimburse versus what amounts will the employer still be liable for.
a. We understand that the government will reimburse employers for compensation paid to employees under the Act. There is an additional credit eligible employers may receive to cover the costs of maintaining health insurance coverage for eligible employees during the leave period. A reduction of the standard tax deposits by the amount of expected credit for amounts paid under the Act may be allowed in the pending regulations.
5) I have less than 50 employees, am I automatically exempted from the requirements of the Act?
a. No. Employers with less than 50 employees may qualify for exemption if the leave requirements would jeopardize the viability of the business as a going concern (i.e. compensating employees under the Act would risk the business going out of business). If you believe you qualify for an exemption, you must document the reasons why you believe your business meets the criteria set forth by the Department (rules will be issued no later than April 2nd), but do not send any materials to the Department of Labor when seeking a small business exemption. This Act is a newly mandated benefit that applies to companies with even a single employee.
This is not intended to serve as legal advice and is informational in nature. Always consult legal counsel on complex new rules like these. If you have specific questions relating to your company, payroll, or payroll tax returns as they relate to this Act, please do not hesitate to contact us to discuss. This post will be edited or replaced as appropriate as new guidance emerges.
Employees with 500 or more employees are exempt, but this exemption is for individual companies except where the Department of Labor’s joint employer rules act to combine certain companies.