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Paid Leave and Tax Credits under The Families First Coronavirus Response Act
March 20, 2020
As we continue to review the new legislation, we are providing updates. Please click Employment Aspects of Families First Coronavirus Response Act (FFCRA) for the most update to date analysis.
On March 19, 2020, the Families First Coronavirus Response Act (“FFCRA”) was signed into law. The Act responds to certain economic impacts, as well as the nutritional and medical needs, created by the Coronavirus spread. The Secretary of Labor shall soon issue regulations, guidance, standards, and model notices to carry out the law by its effective date, which shall be no later than April 1, 2020.
The purpose of this Employment Law Alert bulletin is to inform employers and employees of their respective rights and obligations under the Act, specifically with regards to types of paid leave it provides to employees and tax credits it provides to employers in order to offset the costs of providing said leave. The Act applies to companies with 500 employees or fewer. Additional information will become available after the Secretary of Labor issues additional guidance.
Contact your attorneys at Rothman Gordon P.C. with any questions regarding compliance with the FFCA and the protection of your rights.
Changes to FMLA to Expand Eligibility and Provide Paid Leave
Division C. of the FFCRA is titled the Emergency Family and Medical Leave Expansion Act. It amends the existing Family and Medical Leave Act (“FMLA”) to expand the rights of certain employees affected by the Coronavirus public health emergency and provide them with paid leave.
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- Expanded FMLA Eligibility
- Eligible employees are those who have been employed for at least 30 calendar days by the employer from whom leave is being requested (this is different than the usual FMLA requirement that employees work for the employer at least a year).
- Employers with fewer than 500 employees are covered (this is different than the usual FMLA application to employers with 50 or more employees).
- Employees qualify if they are unable to work, either by physically reporting or teleworking, due to the need to care for a child under 18 years of age if the child’s school or place of childcare has been closed or if the normal childcare provider of the child is unavailable due to the Coronavirus.
- Expanded FMLA Eligibility
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- Public Emergency Health Leave Benefits for Employees
- First 10 days of public health emergency leave are unpaid.
- Employees may use other vacation, personal, or paid sick leave for any leave that otherwise would be unpaid.
- Paid public health emergency leave shall be at least 2/3 of their regular rate of pay at the number of hours that normally would be worked.
- If an employee does not work normal hours, calculation of paid public health emergency leave is determined based on the average number of hours an employee is scheduled to work per day over the 6 month period ending on the date on which the employee begins the leave (including any hours for which the employee took leave during that 6 month period).
- The benefit is not to exceed $200 per day or $10,000 total.
- Restoration to Employee Position:
- Employers with fewer than 25 employees can deny an employee restoration to his/her position if:
- The employee took leave for public health crisis-related reasons;
- The position no longer exists due to economic conditions or other changes in the employer’s operating conditions that affect employment and were caused by the public health crisis;
- The employer makes reasonable efforts to restore the employee to an equivalent position but ultimately cannot do so; and
- The employer makes reasonable efforts to contact the employee if an equivalent position becomes available at a later date.
- The period for which this is applicable is 1 year beginning on the earlier of the date on which the qualifying need for the public health emergency leave concludes or 12 weeks after the date on which the public health emergency leave begins.
- Employers with fewer than 25 employees can deny an employee restoration to his/her position if:
- Public Emergency Health Leave Benefits for Employees
Emergency Paid Sick Leave Benefits
Division E. of the FFCRA is titled the Emergency Paid Sick Leave Act and sets forth criteria under which certain must provide eligible employees with 2 weeks of paid sick leave. The Act applies to companies with 500 employees or fewer. The benefits provided under this Act end on December 31, 2020.
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- Eligibility
- Employees unable to work (or telework) for one of the following reasons are entitled to paid sick leave:
- Eligibility
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- Employee is subject to federal, state, or local quarantine related to Coronavirus;
- Employee has been advised by a healthcare provider to self-quarantine due to Coronavirus;
- Employee is experiencing Coronavirus-related symptoms and is seeking medical diagnosis;
- Employee is caring for an individual who is subject to a federal, state, or local quarantine order or that individual has been advised to self-quarantine due to Coronavirus;
- Employee is caring for a child whose school or childcare facility has been closed or the child’s regular childcare provider is unavailable due to Coronavirus; or
- Employee is experiencing any other substantially similar condition specified by the Secretary of Health and Human Services in consultation with the Secretary of Treasury and Secretary of Labor.
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- Paid Leave
- Covered full-time employees will be provided with 80 hours of paid sick time while part-time employees will be provided with a number of hours equal to the number of hours that they work on average over a two-week period.
- Paid sick time will not carry over from 1 year to the next.
- Paid sick time will cease beginning with the employee’s next scheduled shift immediately following the termination of the need for sick time.
- Employers cannot require employees using paid sick leave to find a replacement employee to cover for them while absent.
- Such leave will be available for immediate use and employers cannot require employees first to use other leave already provided by the employer prior to using paid sick leave provided under the Act.
- No Retaliation
- Employers cannot discharge, discipline, or discriminate against employees who used leave in accordance with the Act.
- Caps on Paid Leave
- Employees personally affected by Coronavirus are capped at $511 per day and a total of $5,110. Employees absent due to caring for a child or due to the closure of the child’s school, daycare, or absence of a child’s regular childcare provider are capped at $200 per day and a total of $2,000. Employees who are absent due to the closure of a child’s school, daycare, or absence of a child’s regular childcare provider shall receive 2/3 of their regular pay, up to $200 per day.
- Notice Obligations
- Employers must post a notice advising employees of their rights under the Act .
- Violations
- Violations under the Act are subject to the penalties provided by the Fair Labor Standards Act (FLSA).
- Possible Exemptions for Small Employers
- Employers with fewer than 50 employees may be exempted by the Secretary of Labor if compliance would jeopardize the viability of the business.
- Health care providers and emergency responders may be excluded at the election of their employers.
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Tax Credits for Employers for Paid Sick Leave and Paid Family and Medical Leave
Division G of the FFCRA provides tax credits for each calendar quarter for businesses and organizations which incur expenses arising from paid emergency leave and paid sick leave benefits for employees under the FFCRA, as well as expanded health plan costs.
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- Credit for Public Health Emergency Leave and Paid Sick Leave
- A refundable tax credit for 100 percent of the Public Health Emergency Leave and Paid Sick Leave paid by the employer for each calendar quarter through December 31, 2020.
- These tax credits can be applied against the tax imposed for employer’s Social Security and Railroad Retirement payroll taxes.
- Credit for Public Health Emergency Leave and Paid Sick Leave
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- Limits
- Refundable Tax Credits for Paid Family and Medical Leave
- The amount of qualified paid family and medical leave wages taken into account for the tax credits is limited to $200 per day per employee and capped at $10,000 per employee for all calendar quarters.
- Refundable Tax Credits for Paid Sick Leave
- If an employee is subject to quarantine or an isolation order, has been advised by a health care provider to self-quarantine, or is experiencing coronavirus symptoms and is seeking a medical diagnosis, the amount of qualified sick leave wages taken into account for the tax credits is capped at $511 per day per employee.
- If an employee is caring for another individual or child or because they experience a substantially similar illness, the amount of qualified sick leave wages taken into account for the tax credits is capped at $200 per day per employee.
- For a calendar quarter, the total number of days that the employer can take into account for tax credits with respect to a particular employee for that quarter may not exceed 10 days, less the number of days taken into account for that employee for all previous quarters.
- Refundable Tax Credits for Paid Family and Medical Leave
- Documentation
- No credits will be allowed unless the employer maintains the documentation required by the Secretary of Treasury.
- Credit for Health Plan Expenses
- Employers will receive tax credits for contributions to an employee’s health plan coverage while the employee is on paid sick leave or public health emergency leave, as well as the amount of certain employer group health plan expenses that are properly allocated to the qualified emergency leave and sick leave wages.
- Limits
For questions relating to the Families First Coronavirus Response Act, contact us online, contact a Rothman Gordon attorney directly or call (412) 338-1100.