The Families First Coronavirus Response Act (the “Act”) was approved on March 18, 2020, taking effect from April 2 until December 31, 2020. Below is a summary of its provisions concerning Emergency Family Leave, Emergency Sick Leave and Employer Tax Credits.
Emergency Family Leave
The Act applies to employers with less than 500 employees. These employers would have to provide as many as 12 weeks of job-protected leave for employees who are unable to work because they have to care for a child younger than 18 whose school or day care has closed because of the coronavirus.
The first 10 days of leave need not be paid, but the employee could choose to use accrued vacation days, personal leave, or other available paid leave for unpaid time off. After such period, the employer must pay at least two-thirds of their normal pay rate, capped at $200 per day or $10,000 in total.
Small businesses with less than 50 employees may be exempt under certain circumstances from the paid leave requirements when the imposition of such requirements would jeopardize the viability of the business as a going concern and certain health-care providers and emergency responders may be excluded from paid leave benefits.
Emergency Sick Leave
Applies to employers with less than 500 workers. These employers would have to pay for immediate sick leave to employees who are unable to work.
Employees of eligible employers may receive two weeks (up to 80 hours) of paid sick leave at 100% of the employee’s pay where the employee is unable to work because the employee is quarantined, and/or experiencing COVID-19 symptoms and seeking a medical diagnosis.
An employee who is unable to work because of a need to care for an individual subject to quarantine, to care for a child whose school is closed or child care provider is unavailable for reasons related to COVID-19, and/or the employee is experiencing substantially similar conditions as specified by the U.S. Department of Health and Human Services can receive two weeks (up to 80 hours) of paid sick leave at 2/3 the employee’s pay.
Workers would have to be paid at least their normal wage or the federal, state, or local minimum wage, whichever is greater.
Leave assistance is capped at $5,110 ($511 per day for 10 days) for a worker’s quarantine or diagnosis and at $2,000 ($200 per day for 10 days) to provide care for another individual or child under certain conditions.
Small businesses with less than 50 employees may be exempt under certain circumstances from the paid leave requirements when the imposition of such requirements would jeopardize the viability of the business as a going concern and certain health-care providers and emergency responders may be excluded from emergency sick leave benefits. An employer could be subject to civil penalties for a violation of paid sick leave requirements.
Employer Tax Credits
The Act provides refundable tax credits to employers to cover wages paid to employees while they are taking time off under the bill’s sick leave and family leave programs. Employers will take a credit against their payroll tax payments for the amounts paid under the program, rather than deposit them with the IRS.
The payroll taxes that are available for 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 sick and family leave, employers will be able file a request for an accelerated payment from the IRS. The IRS expects to process these requests in two weeks or less. The details of this new, expedited procedure will be announced shortly by the IRS.
The United States Department of Labor will be issuing a temporary non-enforcement policy that provides a period of time for employers to come into compliance with the Act. Under this policy, an enforcement action will not be brought against any employer for violations of the Act so long as the employer has acted reasonably and in good faith to comply with the Act.
This publication is a summary of recent pronouncements referred to herein and is not intended to substitute legal advice. We encourage you to contact us or your tax advisor if you have any questions or need assistance regarding any of the matters presented herein. An attorney-client relationship with Pellot-González, P.S.C. cannot be formed by reading or responding to this memorandum. Such a relationship may be formed only by express agreement with Pellot-González, P.S.C.
