Congress recently passed the Families First Coronavirus Response Act, or FFCRA, which requires public employers and private employers with fewer than 500 employees to provide emergency paid sick leave and expanded family and medical leave to employees affected by COVID-19. Employers are also required to post a notice about the new provisions in a conspicuous place on their premises or by emailing or direct mailing the notice to employees. This FFCRA’s paid leave provisions take effect on April 1, 2020 and remain in effect until December 31, 2020.
A sample notice poster available for your use can be found here.
Paid Sick Leave
Under the new act, covered employers must provide two weeks (up to 80 hours) of paid sick leave at the employee’s regular pay rate, up to $511 per day, if the employee is unable to work because he or she is quarantined by federal, state, or local government order or by the advice of a health care provider. Employees are also entitled to the same paid sick leave if he or she is experiencing COVID-19 symptoms and seeking a medical diagnosis.
Events that qualify for paid sick leave at the employee’s regular pay rate include:
- If an employee is subject to a federal, state or local COVID-19 induced quarantine or isolation order
- If an employee is advised by a health care provider to self-quarantine due to COVID-19
- If an employee is experiencing COVID-19 symptoms and is seeking medical diagnosis
Employers must also provide two weeks (up to 80 hours) of paid sick leave at two-thirds the employee’s regular pay rate, up to $200 per day, if the employee is unable to work because he or she is caring for a child whose school or child care provider is closed or unavailable for reasons related to COVID-19. The same rule applies if the employee is caring for an individual who is subject to quarantine by federal, state or local law or on the orders of a health care provider.
Events that qualify for paid sick leave at two-thirds the employee’s regular pay rate include:
- If an employee is caring for an individual who is subject to a COVID-19 related federal, state or local quarantine or isolation order, or who is directed to self-quarantine on the advice of a health care provider.
- If an employee is caring for a child whose school or child care provider is closed or unavailable due to reasons related to COVID-19.
All employees are eligible for two weeks of paid sick leave under the act. Full-time employees are eligible for up to 80 hours of emergency sick leave, and part-time employees are eligible for the average number of hours they receive in a two-week period.
Expanded Paid Family and Medical Leave
Covered employers must also provide employees that it has employed for at least 30 days with up to an additional 10 weeks of paid expanded family and medical leave at two-thirds the employee’s regular rate of pay, up to $200 per day, if the employee is unable to work because he or she is continuing to care for a child whose school or child care provider is closed or unavailable for COVID-19 related reasons.
Events that qualify for expanded paid family and medical leave under the act include:
- If an employee is caring for a child whose school or child care provider is closed or unavailable due to reasons related to COVID-19
Which Businesses Must Comply with the Act?
The FFCRA applies to private employers with fewer than 500 employees and all public employers. Some exceptions include:
- Employers of health care providers or emergency responders may elect to exclude such employees from eligibility for the paid leave provided under the Act.
- Small businesses with fewer than 50 employees may qualify for an exemption from the requirement to provide leave due to school closings or child care unavailability if the leave requirements would jeopardize the business’s viability.
- Federal employees covered by Title II of the Family and Medical Leave Act, which already allows up to 12 weeks of leave for employees to care for themselves or an immediate family member who is ill, are not covered by the expanded family and medical leave provisions of the FFCRA.
What Steps Does My Business Need to Take to Comply with This Act?
First, employers are required to post a notice about the new provisions in a conspicuous place on their premises or by emailing or direct mailing the notice to employees. A sample notice poster can be found here, which can be used to satisfy this requirement.
Second, employers should direct employees as to how to notify the employer for paid sick leave or paid family and medical leave due to COVID-19.
“Employers can choose to require a doctor’s note from employees claiming illness related to COVID-19, but it is not a requirement,” said Lane Fenner, Senior Vice President of Operations at XMI. “However, employers should keep in mind that during an emergency health crisis, medical professionals may not be able to provide notes in a timely manner.”
An email notification from the employee explaining his or her absence may suffice, but to ensure all necessary information is gathered, employers should consider creating and disseminating a leave request form, such as this one.
“Once the employer receives notice from the employee, they should immediately notify their HR business partner to ensure the employee is set up to receive the proper pay. Failure to do so could result in delays or forfeiture of employer tax credits,” said Fenner.
What if My Business Already Offers Paid Leave?
If an employer already has paid leave benefits in place, employees may not use both the employer’s preexisting leave entitlements and FFCRA paid leave concurrently for the same hours. Employers may elect to supplement the amount employees receive from FFCRA leave with their own preexisting leave entitlements; however, any supplemental payments made to employees in excess of FFCRA’s requirements are not eligible for tax credits.
Under FFCRA, employees can choose to use existing paid vacation, personal, medical or sick leave from a preexisting paid leave policy in lieu of emergency paid sick leave under the FFCRA.
Employees may use emergency paid sick leave under the FFCRA before they use any granted or accrued paid leave currently offered by an employer.
How Will My Business Pay for This Paid Leave?
To alleviate the strain on small businesses, covered employers are eligible to claim a dollar-for-dollar tax credit reimbursement for all qualifying wages paid under the FFCRA between April 1, 2020 and December 31, 2020. These payroll tax credits are paid back to the employer through reductions in 941 (Employer Paid Social Security and Medicare) tax payments. If an employer doesn’t have enough Social Security of Medicare tax available for an immediate refund, the IRS will issue a credit to the employer as quickly as possible. A streamlined claim form and further IRS guidance is forthcoming.
Businesses with fewer than 50 employees can also apply for exemptions from the leave provisions related to school and childcare closures if the provisions jeopardize the viability of the business. More criteria and clarification about this exemption is forthcoming from the U.S. Department of Labor.
What Documents Do I Need to Claim My Tax Credit?
In order to claim a tax credit under the FFCRA for your payment of sick leave or expanded family and medical leave wages, it is important that you retain appropriate documentation to substantiate your claim. Consult applicable IRS forms for instructions and information about the appropriate procedures to follow to claim the tax credit. IRS guidance and applicable IRS forms are forthcoming.
Ask employees to provide documentation to support paid sick leave claims. For example, if an employee takes expanded family and medical leave to care of a child whose school or child care provider is closed or unavailable, ask your employee to provide a notice or letter published on a government, school, or daycare website, in an email, or on another form of communication provided by the establishment.
For more resources and up-to-date information about the Families First Coronavirus Response Act, visit the following websites:
- General Information: Families First Coronavirus Response Act
- Questions & Answers: Families First Coronavirus Response Act
- FAQs About Notice Requirements
- IRS Announcement IR-2020-57: Coronavirus Related Paid Leave
XMI is currently working with its vendor partners to update systems and processes to address this legislation. We will continue to provide further guidance and updates, as needed. If you have questions about the FFCRA and how it will impact your business, please contact us.