Families First Coronavirus Response Act (FFCRA)
On March 18, 2020, the FFCRA became law, known as Public Law No. 116-127. The FFCRA becomes effective 15 days after enactment, or on April 2, 2020, and terminates on December 31, 2020. On March 20, 2020, the Internal Revenue Service (“IRS”), the U.S. Department of the Treasury (“Treasury”), and the U.S. Department of Labor (“DOL”) provided some preliminary guidance on the recently-enacted FFCRA, which amends and fundamentally expands the FMLA for small- and medium-sized businesses, defined as businesses with fewer than 500 employees. The IRS, Treasury, and DOL did this through IRS Notice IR-2020-57 (“Notice”). You can read the Notice and access additional information by clicking on this link to the IRS website. You can also read the full text of the FFRCA at this link.
The FFCRA applies to small and medium sized businesses, defined as all American businesses or tax-exempt organizations with fewer than 500 employees that are required to provide emergency paid sick leave and emergency paid family and medical leave under the Act. The Act affords employees up to 80 hours of paid sick leave and expanded paid childcare leave when the employee’s children’s schools are closed, or childcare providers are unavailable, due to COVID-19. The Act also creates a refundable paid sick leave credit and paid childcare credit for eligible employers, as well as a break from payroll tax liability.
Here are some key takeaways from the Notice and the new FFCRA:
Does the FFCRA authorize paid sick leave for workers?
The FFCRA provides employees with paid leave either for the employee’s own health needs or to care for family members. More specifically:
- To be “quarantined” within the meaning of the FFCRA means the employee or other person is subject to a Federal, State, or local quarantine or isolation order related to COVID-19, or has been advised by a health care provider to self-quarantine due to concerns related to COVID-19;
- Full-time employees are entitled to paid sick leave for up to 80 hours at 100% of the employee’s pay where the employee is unable to work (or telework) because the employee requires sick leave due to that employee being quarantined or experiencing COVID-19 symptoms and seeking a medical diagnosis, and are entitled to sick leave for up to 80 hours at 2/3 of the employee’s pay if the employee is unable to work (or telework) because the employee requires sick leave due to that employee having to care for an individual who is quarantined, and/or to care for the employee’s child or children whose school is closed or the childcare provider is unavailable as a result of COVID-19, and/or the employee is experiencing any other substantially similar condition specified by the U.S. Secretary of HHS;
- Part-time employees are also entitled to either 100% of the employee’s pay or 2/3 of the employee’s pay, depending on the purpose for the leave, same as a full-time employee, but, instead of 80 hours of pay, the part-time employee’s pay is determined by the number of hours that such employee works, on average, over a two-week period;
- There are caps on the amount of paid sick leave employers must pay to full- and part-time employees, including $511.00 per day and $5,110.00 in the aggregate for paid sick leave for certain purposes (i.e., an employee that is quarantined or experiencing COVID-19 symptoms and seeking a medical diagnosis), and $200.00 per day and $2,000 in the aggregate for paid sick leave for other qualifying purposes (i.e., an employee caring for an individual who is quarantined, and/or for the employee’s child or children whose school is closed or the childcare provider is unavailable due to COVID-19, and/or experiencing any other substantially similar condition specified by the U.S. Secretary of HHS);
- In addition, employees may, in some instances, be entitled to up to an additional 10 weeks of expanded paid family and medical leave (which differs from paid sick leave) at 2/3 the employee’s pay if the employee is unable to work due to a need to care for a child whose school is closed or childcare provider is unavailable for reasons related to COVID-19, but this pay is capped at $200.00 per day and $10,000.00 in the aggregate;
- It does not matter how long the employee has been employed by the employer; the employee is entitled to paid sick leave for immediate use, however, in order to be entitled to the enhanced family and medical leave, the employee must have been employed by the employer for 30 calendar days prior to requesting leave; and
- The Secretary of the DOL shall make publicly available within seven days of the enactment of the FFCRA a model notice required to be posted in conspicuous places on the employer’s premises regarding the requirements described in the FFCRA.
What does the FFCRA provide to help employers?
Enforcement and Penalties
First, a word of caution. Employers may not require an employee to use other paid leave provided by the employer to the employee before the employee uses the paid sick leave under the FFCRA. Nor may employers discharge, discipline or discriminate against an employee who takes leave in accordance with the FFCRA. Finally, employers found in violation of the FFCRA will be subject to the penalties and enforcement described in the Fair Labor Standards Act and the Family and Medical Leave Act. However, the DOL will observe a temporary period of non-enforcement for the first 30 days after the Act takes effect, so long as the employer has acted reasonably and in good faith to comply with the Act.
Employers may receive reimbursement for paid leave pursuant to the FFCRA. More specifically:
- Employers may receive a refundable credit for sick leave at the employee’s regular rate of pay, up to $511.00 per day and $5,110.00 in the aggregate for a total of 10 days per quarter, for an employee who is unable to work because of COVID-19 quarantine or self-quarantine or who has COVID-19 symptoms and is seeking a medical diagnosis;
- Employers also receive a credit for sick leave for at 2/3 of the employee’s regular rate of pay, up to $200.00 per day and $2,000 in the aggregate for up to 10 days per quarter, for an employee who is caring for an individual who is quarantined, and/or for the employee’s child or children whose school is closed or the childcare provider is unavailable due to COVID-19, and/or experiencing any other substantially similar condition specified by the U.S. Secretary of HHS;
- Employers further receive, in addition to the sick leave credit, a refundable family and medical leave credit at 2/3 of the employee’s regular rate of pay, up to $200.00 per day and $10,000 in the aggregate, for an employee who is caring for a child because the child’s school or childcare facility is closed, or the childcare provider is unavailable due to COVID-19, and up to 10 weeks of qualifying leave can be counted towards the childcare leave credit; and
- Employers are further entitled to an additional tax credit determined based on costs to maintain health insurance coverage for the eligible employee during the leave period.
Employers also will be able to obtain tax relief for 100% of the amounts of qualifying sick and family and medical leave that they paid. More specifically:
- Employers also will be able to retain the amount of payroll taxes equal to the amount of qualifying sick and family and medical leave that they paid, rather than depositing such amounts with the IRS;
- The payroll taxes that are available for such retention include withheld federal income taxes, the employee share of Social Security and Medicare taxes, and the employer share of Social Security and Medicare taxes with respect to all employees;
- If there are not sufficient payroll taxes to cover the cost of providing qualified sick and childcare leave paid, employers will be allowed to file a request for an accelerated payment from the IRS, which should be processed in two weeks or less; and
- Employers will be able to claim the paid sick leave and paid childcare leave credits for qualifying leave that they provide to employees between the effective date of the FFCRA (April 2, 2020) and December 31, 2020.
Does the FFCRA offer any relief from its requirements for small businesses?
In cases where the viability of the business is threatened, employers with fewer than 50 employees are eligible for an exemption from the requirement to provide leave to an employee in order to care for a child whose school is closed, or childcare is unavailable. Additionally, employers that employ health care providers or emergency responders may elect to exclude such employees from the coverage of the FFCRA.
More extensive guidance will be issued in the coming days.