On Wednesday, March 18, 2020, the Families First Coronavirus Response Act H.R. 6201 was signed into law by President Trump after the Senate passed the bill by a 90-8 vote. The Act contains provisions for paid leave for employees, tax credits for business owners, COVID-19 testing, unemployment insurance and additional funding for government programs. The bill takes effect no later than April 1, 2020, and it will sunset on Dec. 31, 2020. 

The bill has two separate provisions that impact private entities, covered public employers and individuals that employ fewer than 500 employees as it pertains to paid leave.

Amended Family and Medical Leave Act (FMLA)

This amendment allows U.S. workers, including those employed by such entities, to take up to 12 weeks of paid job-protected leave. Upon the expiration of leave, employer must restore employee to their prior position, or one of equivalent pay and benefits.

Conditions: 

An eligible employee is one who is unable to work or telework due to a need to care for a child, under 18 years of age, because that child's school or place of care has closed or the child's childcare provider is unavailable due to a public health emergency with respect to COVID-19.

The first 10 days of the emergency FMLA leave is not required to be paid by the employer. However, the employee can voluntarily elect to substitute this time with other paid time off (required paid sick leave, sick time, vacation, etc.) that they have earned or are eligible for; employers cannot require an employee to use their paid time off during these 10 days. Thereafter, the employee must be paid for each subsequent day of leave by their employer.

Calculations:

Payment would be calculated based on the number of hours the employee would normally be scheduled to work and would not be less than two-thirds the employee's regular rate of pay; not to exceed $200 per day and $10,000 "in the aggregate."

Exemptions:

The bill exempts employers that employ fewer than 25 employees from the job-protected aspect of the emergency FMLA leave provided a specific set of conditions are met, including if a leave-taking employee's position is eliminated due to "economic conditions" or other changes that affect the employer's operations resulting from the public health emergency. 

The bill allows the Secretary of Labor to exempt healthcare workers, emergency responders and employers with fewer than 50 employees from the emergency FMLA leave requirement, "when the imposition of such requirements would jeopardize the viability of the business as a going concern."

Reimbursements to Employer:

The bill stipulates that employers receive 100% reimbursement for paid leave pursuant to the Act who are providing the paid FMLA (Child Care Leave Credit) including Health Insurance Premiums paid by the employer while employee is on FMLA and/or Required Paid Sick Leave under IR-2020-57. To take immediate advantage of the paid leave credits, businesses can retain and access funds that they would otherwise pay to the IRS in payroll taxes. If those amounts are not sufficient to cover the cost of paid leave, employers can seek an expedited advance from the IRS by submitting a streamlined claim form that will be released next week. Self-employed individuals will be eligible to file for equivalent credit. The details and documentation are still to be finalized. Be sure to consult with your CPA and payroll provider to seek guidance for proper handling of these reimbursements.

Required Paid Sick Leave

The bill mandates that private employers with fewer than 500 employees, and covered public employers, provide paid sick time to workers immediately. Full-time employees are entitled to 80 hours of such leave, while part-time employees are entitled to time equal to the number of hours, they work on average over a two-week period. This required paid sick leave is in addition to any vacation, sick, personal or PTO time already provided by the employer.  

Conditions:

Under the FFCRA, an employee qualifies for paid sick time if the employee is unable to work (or unable to telework) due to a need for leave because the employee:

(1) If the worker is sick with or has been quarantined due to COVID-19, or is experiencing symptoms of the disease and seeking medical attention.

(2) If the worker is caring for a family member that is sick with or has been quarantined due to COVID-19, or is experiencing symptoms of the disease and seeking medical attention.

(3) If the worker is caring for a child in the event of a school closure or unavailable childcare provider, among other situations. 

(4) is caring for an individual subject to an order described in (1) or (2)

(5) is caring for a child whose school or place of care is closed (or childcare provider is unavailable) for reasons related to COVID-19; or

(6) is experiencing any other substantially similar condition specified by the Secretary of Health and Human Services, in consultation with the Secretaries of Labor and Treasury.

Under the FFCRA, an employee qualifies for expanded family leave if the employee is caring for a child whose school or place of care is closed (or childcare provider is unavailable) for reasons related to COVID-19.

An employer may not require, as a condition of providing the paid sick time, that an employee search for or find a replacement to cover for the hours during which the employee is using the paid sick time. 

Calculations:

Full-time employees are entitled to 80 hours of such leave, while part-time employees are entitled to time equal to the number of hours they work on average over a two-week period.  This required paid sick leave is in addition to any vacation, sick, personal or PTO time already provided by the employer. The leave doesn't carry over from one year to the next.

• Not to exceed $511 per day and $5,110 “in the aggregate” for Condition (1), (2), (3) 
• Not to exceed $200 per day and $2,000 “in the aggregate” for Condition (4), (5), (6)

Payment would be calculated based on the employee's "required compensation" (i.e. the employee's regular rate of pay or the federal, state or local minimum wage, whichever is greater) and the number of hours the employee would otherwise be scheduled to work. Pay standards differ in certain situations, such as if an employee is using the time to care for a family member.

Exemptions:

As with the amended FMLA provision, the bill contains language allowing the Secretary of Labor to exempt healthcare workers, emergency responders and small businesses with fewer than 50 employees from the paid sick leave requirement.

Reimbursements to Employer:

The bill stipulates that employers receive 100% reimbursement for paid leave pursuant to the Act who are providing the Required Paid Sick Leave (Paid Sick Leave Credit) including Health Insurance Premiums paid by the employer while employee is on FMLA and/or Required Paid Sick Leave under IR-2020-57. To take immediate advantage of the paid leave credits, businesses can retain and access funds that they would otherwise pay to the IRS in payroll taxes. If those amounts are not sufficient to cover the cost of paid leave, employers can seek an expedited advance from the IRS by submitting a streamlined claim form that will be released next week. Self-employed individuals will be eligible to file for equivalent credit. The details and documentation are still to be finalized. Be sure to consult with your CPA and payroll provider to seek guidance for proper handling of these reimbursements.

UPDATE: Get the latest on The Families First Coronavirus Response Act H.R. 6201