H.R. 6201: The Families First Coronavirus Response Act
Employers with fewer than 500 employees need to be acutely aware of the paid-leave provisions in H.R. 6201, the Families First Coronavirus Response Act, passed by Congress and signed into law by President Trump on March 18, 2020.
Division C – Emergency Family and Medical Leave Expansion Act (Emergency FMLA)
What employers are subject to Emergency FMLA?
- All employers with fewer than 500 employees.
- An employer with fewer than 25 employees may take advantage of a limited exemption regarding restoration of employment.
- The Department of Labor may make exceptions for the paid-leave provisions for certain businesses with fewer than 50 employees.
- Healthcare providers and emergency responders are permitted to opt out of Emergency FMLA applicability.
What employees are eligible for Emergency FMLA?
- The employee must have been employed for at least the past 30 calendar days.
- The employee must have a “qualifying need related to a public health emergency,” defined as one of the following:
- The employee is unable to work (or telework) due to a need for leave to care for the son or daughter under 18 years of age of such employee if the school or place of care has been closed; or
- The child care provider of such son or daughter is unavailable, due to a public health emergency.
What benefits are employee entitled to under Emergency FMLA?
Emergency FMLA requires some paid leave, which is an expansion of the employee’s traditional FMLA right to be restored to a previous position during a period of unpaid leave. Upon a “qualifying need relating to a public health emergency,” the employee is eligible to receive the following:
- 10 days of unpaid leave during which the employee may elect to use accrued sick or paid time off days. An employer cannot require an employee to use accrued sick time of paid time off in lieu of this benefit.
- After 10 days of unpaid leave, the employee is entitled to a 10-week period of paid leave at a rate of two-thirds of the employee’s regular rate of pay, multiplied by the employee’s normal amount of hours, capped at $200 per day, or $10,000 in the aggregate.
Division E – Emergency Paid Sick Leave Act (“EPSLA”)
What employers are subject to the EPSLA?
- Like Emergency FMLA, all employers with fewer than 500 employees are subject to the EPSLA.
- The Secretary may also exempt health care providers, emergency responders, and employers with fewer than 50 employees (if the requirement would jeopardize the viability of the business).
- Because there is overlap between Emergency FMLA and EPSLA, the Secretary may also issue regulations to ensure consistency between the two acts.
- The Secretary of Labor will provide a notice that employers must post concerning an employee’s EPSLA rights.
What employees are eligible for leave under the EPSLA?
- There is no length-of-employment prerequisite under EPSLA; brand-new hires are eligible.
- An employee is eligible for benefits for any of the following reasons:
- The employee is subject to a Federal, State, or local quarantine or isolation order related to COVID-19;
- The employee has been advised by a health care provider to self-quarantine due to concerns related to COVID-19;
- The employee is experiencing symptoms of COVID-19 and seeking a medical diagnosis;
- The employee is caring for an individual who is subject to an order as described in subparagraph (1) or has been advised as described in paragraph (2);
- The employee is caring for a son or daughter of such employee if the school or place of care of the son or daughter has been closed, or the child care provider of such son or daughter is unavailable, due to COVID-19 precautions; or
- The employee is experiencing any other 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.
What benefits are employees entitled to under the EPSLA?
- Beginning within 15 days after enactment, a full-time employee is eligible to receive 80 hours of paid sick leave.
- A part-time employee’s hours are based upon the employee’s 2-week average (or a 6-month average under certain circumstances).
- The paid-leave period ends upon the employee’s first shift after the need for leave is resolved. Additionally, the EPSLA expires on December 31, 2020.
- The rate of pay cannot exceed $511 per day, if the cause is eligibility items (1) – (3) above. It cannot exceed $200 per day, if the cause is eligibility items (4) – (6) above.
- This leave is in addition to (and not replacement of) any leave that was already in place prior to enactment of the Act, but an employee may use the company-plan leave prior to the EPSLA leave.
- An employee is not entitled to credit for unused EPSLA leave upon termination of employment or otherwise.
Division G – Tax Credits for Paid Sick and Paid Emergency FMLA Leave
What tax credits are employers entitled to for paid sick leave wages under the EPSLA?
An employer will receive a refundable payroll tax credit (i.e., the employer share of Social Security taxes) equal to 100 percent of the sick-leave wages paid under the EPSLA. The employer’s credit shall not exceed $200 per day, or $511 per day if the cause is sick leave eligibility items (1) – (3) above.
The aggregate number of days taken into account for any calendar quarter shall not exceed 10 more than the aggregate number of days taken into account for all preceding calendar quarters, i.e., 10 days in Q1, 20 days in Q2, and so on. The credits are refundable, but also taxable as income.
There is a similar provision to assist self-employed individuals, who may receive the lesser daily rate of: (a) $200 or (b) 67% of the average daily pay. The aggregate number of days taken into account for the taxable year are days that the individual is unable to perform services, not to exceed 10 more than the aggregate number of days taken into account for all preceding taxable years.
What tax credits are employers entitled to for paid sick leave wages under Emergency FMLA?
An employer will receive a refundable payroll tax credit (i.e., the employer share of Social Security taxes) equal to 100 percent of the family-leave wages paid under Emergency FMLA. The employer’s credit shall not exceed $200 for any day of wage payment per employee, or $10,000 in the aggregate per employee for a tax year. The credits are taxable, but not considered “wages” for employment tax purposes.
There is a similar provision to assist self-employed individuals, who may receive up to 50 days of pay at the lesser daily rate of: (a) 67% of the average daily pay or (b) $200 per day.
The Next Stage of COVID-19 Legislation
The third stage of the coronavirus legislation is set to begin. Maj. Leader Mitch McConnell will launch those discussions with the White House immediately, with the goal being to assist specific industries and individuals with immediate cash.
The Employment Attorneys at Cavitch are monitoring COVID-19 developments closely and are here to advise you regarding the impact on your business. If you have questions, call (216) 621-7860 to speak with an employment attorney.