More Relief – Families First Coronavirus Response Act

Thursday, April 9, 2020 – The Families First Coronavirus Response Act (Act) provides American businesses with fewer than 500 employees* funds to provide employees with paid leave, either for the employee’s own health needs or to care for family members.  The law went into effect on April 1, 2020, and expires on December 31, 2020.

Included in the legislation:

National Paid Sick Leave for Workers – National Paid Sick Leave allows your employees to get paid sick leave for either of these two reasons:

• They’re sick and quarantined from COVID-19
• They’re taking care of a family member who is sick or impacted with COVID-19

When a full-time employee is impacted or sick from COVID-19 and quarantined, they can receive up to 80 hours of paid sick leave at 100% of pay over a two-week period.  Part-time employees can receive an average amount of hours they would have worked over a two-week period.

When a full-time or part-time employee needs to take care of someone who is sick or impacted with COVID-19, they can receive up to 80 hours of paid sick leave at 2/3 of the employee’s average rate of pay.

As the COVID-19 situation continues to evolve, the stipulations for taking paid leave may change.

Public Health Emergency Leave Under the FMLA – Although the Family and Medical Leave Act traditionally has required employers to provide unpaid leave for qualifying circumstances, the Act amended the FMLA to add a paid-leave requirement related to COVID-19.

After 10 days of unpaid leave, a period of paid leave would follow for employees who need to care for children younger than 18 whose school or child-care facility is closed because of the virus or whose child-care provider is unavailable because of the outbreak.

This leave provision is available to all employees who have worked for you for at least 30 days regardless of number of hours worked. Employees can elect to use another form of leave to cover the first 10 days of unpaid leave, including the new National Paid Sick leave, but are not required to do so.

Federal tax credit pays for the cost to provide leave – Apply for these tax credits when you run payroll.

• An immediate dollar-for-dollar tax offset against payroll taxes will be provided.
• Where a refund is owed, the IRS will send the refund. The IRS expects to process these requests in two weeks or less.
• This includes any health care premiums you pay on behalf of your employees.

Examples of how this will work:

If an eligible employer paid $5,000 in sick leave and is otherwise required to deposit $8,000 in payroll taxes, including taxes withheld from all its employees, the employer could use up to $5,000 of the $8,000 of taxes it was going to deposit for making qualified leave payments.  The employer would only be required under the law to deposit the remaining $3,000 on its next regular deposit date.

If an eligible employer paid $10,000 in sick leave and was requirement to deposit $8,000 in taxes, the employer could use the entire $8,000 of taxes in order to make qualified leave payments and file a request for an accelerated credit for the remaining $2,000.

Equivalent child care leave and sick leave credit amounts are available to self-employed individuals under similar circumstances.  These credits will be claimed on their income tax return and will reduce estimated tax payments.

This is just a general synopsis of the Act.  More information can be found by visiting the U.S. Department of Labor and IRS websites.  

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*If you have fewer than 50 employees, you may be able to get a waiver exempting your business from these new requirements.