Under the Families First Coronavirus Response Act, effective April 1, 2020, through December 31, 2020, employers with less than 500 employees are required to pay both sick and family leave to employees who can’t work because of Covid-19. If you own a business and have employees, this can and probably will affect you.
Employers must provide 2 weeks paid sick leave for any employee who can’t work or telework because:
- 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 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 an 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.
- 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.
The paid leave dollar amount in cases (1)-(3) above is the employee’s normal rate of pay not to exceed $511/day. The paid leave amount in cases (4)-(6) above is 2/3rds of the employee’s normal rate of pay not to exceed $200/day. Only 10 days of sick leave is required. An employer can’t require employees to find a replacement worker or use other sick or PTO time before this sick time.
Employers must provide 12 weeks of family leave for any employee who has been employed for at least 30 days, who is unable to work or telework due to caring for a child under age 18 because the child’s school or daycare is closed. The first two weeks of this leave can be unpaid, but in reality, those two weeks are paid under (5), above. The next 10 weeks must be paid up to 2/3rds of the employee’s normal rate of pay not to exceed $200/day.
Tax credits to offset required paid leave
Employers can take tax credits equal to the sick or family leave paid listed above against their payroll tax deposits (Form 941 taxes). In addition, employers don’t have to pay the matching social security and Medicare tax normally required on sick or family leave wages paid. Finally, the tax credit can be increased by any group health insurance paid by the employer on behalf of any employee who misses work time due to the circumstances above. However, these tax credits can only be claimed if an employer actually pays sick or family leave to an employee as required above. Self-employed persons can also claim a tax credit if they are unable to work and would qualify for the sick or family leave if they were an employee
The mandatory paid leave is only required for employees employed as of April 1, 2020, who qualify for leave under the act. According to the DOL, “small businesses with fewer than 50 employees will be eligible for an exemption from the leave requirements relating to school closings or child care unavailability where the requirements would jeopardize the ability of the business to continue. The exemption will be available on the basis of simple and clear criteria that make it available in circumstances involving jeopardy to the viability of an employer’s business as a going concern. The Department of Labor will provide emergency guidance and rulemaking to clearly articulate this standard.” Finally, here is a link to a poster all employers must post conspicuously in their workplace to inform their employees of their rights to this paid leave. Here is a link to question and answer guidance provided by the Department of Labor in relation to the mandated paid leave: https://www.dol.gov/agencies/whd/pandemic/ffcra-questions
This law was passed on March 18th and guidance was only recently issued. Even so, numerous questions are yet to be answered so we expect more guidance is forthcoming. In addition, the government is nearing passage of a $2 trillion stimulus package, which will have even more tax provisions. Yippee! We will do our best to keep you informed. As always, please call if you have any questions concerning this or any other items which may affect you.
Here is a helpful link