On Saturday the US House of Representatives passed HR 6201 – the Families First Coronavirus Relief Act. The bill includes several measures to provide for federally-mandated emergency leave and sick pay for all employees of US businesses. It is anticipated the bill (or a very similar version) will be passed in the Senate this week, and President Trump has indicated strong support for the emergency measures provided in the legislation. Below are some of the most-asked questions by business owners and employers regarding the provisions relating to paid family medical leave and paid sick leave, and our answers:
When does the law go into effect?
Assuming the bill, in some form, is passed by the US Senate and signed by President Trump, the benefits available under the FFCRA will be retroactive to January 19, 2020.
Does the FFCRA apply to my company?
In the House version of this bill, the FFCRA would apply to government employers and any businesses with fewer than 500 employees.
Which employees are eligible?
Employees who have been on the job for at least 30 days and have the right to take up to 12 weeks of job-protected leave under the Family and Medical Leave Act (FMLA) are eligible if the employee is not able to engage in employment due to any of the following reasons:
- The employee has a current diagnosis of coronavirus.
- The employee is under quarantine (including self-imposed quarantine), at the instruction of a health care provider, employer, or a local, State, or Federal official, in order to prevent the spread of coronavirus.
- The employee is engaged in caregiving for an individual who has a current diagnosis of coronavirus or is under quarantine.
- The employee is engaged in caregiving because of the coronavirus-related closing of a school or other care facility or care program for a child or other individual unable to provide self-care.
What is the required benefit?
As it relates to paid family medical leave:
- The bill provides 12 weeks of job-protected paid FMLA leave for employees.
- Employees may use accrued personal or sick leave during the first 14 days, but employers may not require employees to do so.
- The benefit only applies to employees who have been working for at least 30 calendar days.
- After the first 14 days, employers must compensate employees in an amount that is not less than two-thirds of the employee’s regular rate of pay (subject to a $4,000 cap). These pay requirements apply to only the coronavirus-related leave reasons listed above.
As it relates to paid sick leave:
· Employers are required to provide fulltime employees 2 weeks (80 hours) of paid sick leave for specific circumstances related to coronavirus.
- Part-time employees are entitled to the number of hours of paid sick time equal to the number of hours they work, on average, over a 2-week period.
- Employers must compensate employees for any paid sick time taken at regular rates of pay.
How does this affect existing sick pay and vacation pay company policies?
The bill requires employers to continue to offer (and not reduce) any existing vacation and sick pay benefits currently provided to employees in addition to this new requirement. The bill also expressly provides that it does not preempt existing state or local paid sick leave entitlements.
What else are employers required to do?
Employers are required to notify each employee of the benefit rights under the Act and to include such information in any employee handbook. Employers are further required to post and keep posted a notice setting forth excerpts from, or summaries of, the pertinent provisions of the bill. The bill requires the Secretary of Labor to publish a model notice within 7 days after the date of enactment.
How is the government assisting employers?
The House bill provides for refundable tax credits for paid sick leave and family and medical leave. Specifically, the bill provides for:
- A refundable tax credit equal to 100% of qualified paid sick leave wages that are paid by an employer.
- A refundable tax credit equal to 100% of qualified family leave wages that are paid by an employer. The amount of qualified family leave wages taken into account for each employee is capped at $200 per day and $10,000 for all calendar quarters.
- The tax credits are allowed against the employer portion of Social Security taxes. If the credits exceed the employer’s total Social Security tax liability for all employees for any calendar quarter, the excess credit is refundable to the employer by treating it as an overpayment on those taxes.
Also, qualified employers (those who employ 50 or fewer employees) who use additional paid sick time under the bill during a public health emergency will be reimbursed by the Secretary of the Treasury for wages paid to employees for the periods during which employees used the additional paid sick time. To be eligible to receive such reimbursement, an employer must submit an affidavit to the Secretary of Labor attesting the employer provided such additional paid sick time, and related records showing the period of and wages associated with the additional paid sick time. Once the Secretary of Labor determines the employer provided additional paid sick time to an employee, the Secretary will transmit the affidavit and records to the Secretary of the Treasury, and that Secretary shall provide timely reimbursement to the employer.
What if I am self-employed?
The bill provides virtually the same benefits for self-employed individuals.
Stay tuned. The House bill is not law yet and leaves many questions unanswered. For example, it’s unclear what the enforcement mechanism is against employers that are required to provide emergency leave but have less than 50 employees. Treasury Secretary Steven Mnuchin has described the bill as the 2nd inning of a baseball game, promising more to come. Likewise, regulatory authorities will be writing regulations to carry out the law. As this evolves it’s important for employers and employees to keep abreast of the requirements and we will continue to update our clients.