President Trump signed the Families First Coronavirus Response Act shortly after it passed through the Senate on March 18, 2020. The legislation, which goes into effect 15 days after enactment, expands FMLA and paid sick leave requirements for employers with 500 employees or less. The employer cost of these expanded programs will be absorbed by available tax credits included in the bill.
The legislation imposes the following temporary modifications:
Changes to FMLA
The Act imposes temporary modifications to the Family and Medical Leave Act (FMLA) that include expanded reasons for leave, as well as pay beyond the normal two weeks (at a reduced rate). Under the Act, normal FMLA pre-requisites and eligibility do not apply.
Employees would be covered by FMLA if they have been employed for at least 30 calendar days and “are unable to work because they need to care for their child, who is under 18 years of age, if the child’s school or place of care has been closed or their childcare provider is unavailable due to coronavirus.”
These extended FMLA benefits are available for up to 12 weeks, 10 of which will be paid at 2/3 of the individual’s average monthly earnings. (The employee is allowed to use paid time off during the initial two weeks.) The Act imposes a cap on how much pay employees can receive if they take FMLA leave to care for a child as a result of the COVID-19 pandemic. The pay is limited to $200 per day and $10,000 in the aggregate.
Emergency Paid Sick Leave Benefit
The Act also requires paid sick leave benefits up to 80 hours for full-time employees (or the equivalent of two weeks for part-time employees) to be paid by the employer to employees impacted by the COVID-19 public health emergency. Eligible employees are those who:
- are subject to a federal, state or local quarantine or isolation order related to coronavirus;
- have been advised by a health care provider to self-quarantine due to concerns related to coronavirus;
- are experiencing symptoms of coronavirus and seeking a medical diagnosis;
- are caring for an individual who is subject to a federal, state or local quarantine or isolation order related to coronavirus OR has been advised by a health care provider to self-quarantine due to concerns related to coronavirus;
- are caring for their child if the child’s school or place of care has been closed, or the childcare provider of the child is unavailable, due to coronavirus precautions; OR
- are experiencing any substantially similar condition specified by the Secretary of Health and Human Services in consultation with the Secretary of the Treasury and the Secretary of Labor.
Paid sick leave will be provided at the 2/3 reduced rate available under FMLA and must be provided in addition to whatever benefit the employer already provides.
The Act caps the compensation employees can receive while out on paid sick leave to:
- $511 per day and $5,110 in the aggregate when the employee is subject to quarantine, has been advised to self-quarantine, or is experiencing coronavirus symptoms and is seeking medical diagnosis (reasons 1-3 above); or
- $200 per day and $2,000 in the aggregate if the employee is caring for someone who is subject to quarantine or has been advised to self-quarantine, caring for a child whose school or child care is closed or unavailable due to coronavirus, or experiencing a substantially similar condition, as specified by regulations (reasons 4-6 above).
The Act applies only to employers with 500 employees or less and remains in place until the end of 2020.
Fortunately, the legislation also includes relief to offset employer costs, including exemptions for small businesses (fewer than 50 employees) and tax credits for all employers who pay employees for leave under the bill’s FMLA and paid sick leave programs.
Click here for more information on these tax credits from Grassi’s tax advisors.