Paid leave rules in the Family First Coronavirus Response Act (FFCRA) will begin on April 1. Herrman & Herrman explains what that means for you:
- The FFCRA applies to any leave taken between that date and December 31 of this year. It is not retroactive to any date before April 1.
- There are 2 main benefits in the FFCRA: The Emergency Family Medical Leave Expansion Act (FMLA), and The Emergency Paid Sick Leave Act
- The FMLA Expansion and Emergency Paid Sick Leave Acts only apply to employers with fewer than 500 employees.
- There is an exemption for small businesses if providing paid sick leave for child care and expanded FMLA leave at a business with fewer than 50 employees would put the viability of the business at risk. To use this exemption, the employer would document why they meet the criteria. More details will be available soon on this subject.
FMLA Expansion (FFCRA Division C)
FMLA leave is available for eligible employees who take leave for a “qualifying need related to a public health emergency.” Essentially, the employee cannot work, either on location or from home, because they must care for a child who is under 18 because their school or daycare is not available because of the public health emergency.
An employee must have been employed at least 30 calendar days to be eligible, a change from the one year required before the FMLA expansion. It applies to companies with 50 or more employees, but under the FFCRA, FMLA paid leave applies to all employers unless they have an exemption.
Example: Your child’s school or daycare is closed and you have been working for your employer for 31 calendar days. You are eligible for FMLA leave because of the Coronavirus pandemic.
The first 10 days of leave are unpaid. Afterward, the employer must pay two-thirds (⅔) of the employee’s normal rate of pay for the hours that employee either was or would have worked normally up to $200 per day or $10,000 total for the duration of the leave. Upon return, employers are required to bring the employee back to their original position, except for employers with fewer than 25 employees in some circumstances. For those employers, they may choose not to bring an employee back if the position no longer exists due to economic conditions caused by a public health emergency during said leave. However, the employer must still make efforts to re-hire the employee at an equivalent position.
An employer cannot require an employee to substitute any other kind of leave for FMLA leave. They may, however, allow the employee to use other types of paid leave with full pay in lieu of the 10 day unpaid portion of FMLA leave. Employees must, and should, give as much notice as possible if the reason for the leave is known in advance.
Emergency Paid Sick Leave (FFCRA Division E)
Employers must provide paid sick leave immediately, without a 10 day waiting period as provided in the FMLA Expansion, if the employee is unable to work either on location or from home because they:
- Are subject to a quarantine or isolation order related to Coronavirus,
- Have been told to self-quarantine by a health care provider related to Coronavirus,
- Are experiencing symptoms of COVID-19, the illness caused by Coronavirus,
- Are caring for someone subject to a quarantine or isolation order or someone who has been told to self-quarantine by a health care provider.
- Are caring for their child if the child’s school or childcare has been closed or is otherwise unavailable because of Coronavirus.
Employees who work full-time are eligible for up to 80 hours of paid sick time. Part-time employees are eligible for paid sick time equal to their average number of hours worked during a two week period. Paid sick time is available immediately, regardless of how long the employee has been with the employer. Employers may not require the employee to use other types of leave provided by the employer before using Emergency Paid Sick Leave and may not deny leave given before the Act went into effect.
New Emergency Paid Sick Leave requirements go into effect April 1. The leave provided does not roll over from year to year and is not payable when the employee leaves their position. An employer may not discriminate or retaliate against an employee for using emergency sick leave, however they may require reasonable notice procedures to continue to receive paid sick leave.
If an employer fails to pay sick time under Emergency Sick Leave it is considered the same as failure to pay minimum wage under the Fair Labor Standards Act, which allows for damages up to twice the amount owed plus attorneys’ fees. (Subject to 30 day non-enforcement period).
All businesses covered by emergency paid sick leave must post this notice, no matter the size of the company. The notice may be emailed or directly mailed to employees, or posted on internal or external websites. It does not have to be shared with employees who have been laid-off.
Businesses with fewer than 50 employees can receive an exemption from required leave relating to school or child care if the requirement jeopardizes the viability of the business. More details from the Department of Labor are forthcoming.
Pay under FMLA and Emergency Paid Sick Leave Expansions
Employers are required to pay an employee based on the number of hours the employee would have been scheduled to work, whether full-time or part-time, even if it is more than 40 hours in a given week, however, may not exceed 80 hours in a two week period. If an employee takes 45 hours of paid sick leave one week, they must take 35 the following week. The total number of hours paid under emergency sick leave is 80. A part-time employee may take emergency sick leave for a number of hours equal to what the employee would have normally worked per day in a two week period. After that two-week period, they may take expanded family and medical leave for that same number of hours per day for up to ten weeks.
If the employee taking sick leave is unable to work either on location or at home because they are subject to a quarantine (federal, local, or state) related to Coronavirus, have been advised to self-quarantine by a health care provider related to Coronavirus, or are experiencing COVID-19 symptoms (the illness caused by Coronavirus) and are seeking medical diagnoses, the employee will receive the greater of either their regular rate of pay or federal, state, or local minimum wage up to a maximum of $511 per day, or $5,110 over the entire 10 week period.
If the employee is taking sick leave because they are caring for someone who is subject to a quarantine (federal, local, or state) related to Coronavirus, have been advised to self-quarantine by a health care provider related to Coronavirus, or are experiencing COVID-19 symptoms (the illness caused by Coronavirus) and are seeking medical diagnoses, the employee will be entitled to two-thirds (⅔) of the greater of either their regular rate of pay or federal, state, or local minimum wage up to $200 per day or $2,000 over the 10 week period.
An employee who is taking expanded FMLA leave may take paid sick leave, or may substitute vacation time, personal leave, or medical or sick time they have under their employer’s policy. They would be paid two-thirds (⅔) of their normal rate of pay for the following 10 weeks so long as the rate of pay is at or above federal, state, or local minimum wage. The employee will not receive more than $200 per day or $12,000 total for the 12 weeks of both paid sick leave and expanded FMLA leave when the employee is on leave to care for their child because of school or child care closures due to Coronavirus.
Using Both Emergency Paid Sick Leave and FMLA Leave
An employee might be able to use both types of leave for up to 12 weeks. They may take both to take care of their child whose school or child care is closed because of Coronavirus. The first 2 weeks are under Emergency paid Sick Leave, covering the first 10 work days of expanded FMLA leave (Normally unpaid). After the first two weeks, the employee would receive two-thirds (⅔) of their regular rate of pay over the next 10 weeks. An employee is only able to use the 10 weeks of expanded FMLA leave to care for a child whose school or child care has closed because of Coronavirus.
Employer Reimbursement for Payment to Employees
Tax credits against the employer’s excise tax will be allowed as provided by Division G. Employers will receive 100% reimbursement for paid leave under the FFCRA. Health insurance costs are included in the credit, and the employer will have no payroll tax liability. There will be an immediate equal 100% offset against payroll taxes.
To take advantage of paid leave credits now, an employer can access funds that they would otherwise be used for payroll taxes. If that does not cover the cost of paid leave, employers can seek an expedited advance from the IRS by submitting a claim. Employers will still be required to withhold federal income (FICA) taxes from their employees’ paychecks. Employers must deposit the taxes with the IRS and file quarterly payroll tax returns.
Eligible employers who pay sick leave or child care leave can retain an amount of payroll taxes equal to the amount of qualifying sick and child care leave they have paid, rather than depositing payroll tax returns to the IRS. Taxes available for retention include FICA taxes, both the employee and employer share of Social Security and Medicare taxes.
If there are not sufficient funds from payroll taxes to cover the cost of sick and child care leave, employers can file an accelerated request for payment from the IRS. These requests should be processed in two weeks or less.
Example Scenarios
Example 1: If an employer paid $5,500 in sick leave and would deposit $10,000 in payroll taxes from employees, the employer could use $5,500 of the $10,000 to make leave payments and pay the remaining $4,500 to the IRS on their next regular deposit.
Example 2: If an employer paid $10,000 in sick leave and was required to submit $5,500 in taxes, the employer could use all $5,500 to pay leave payments and file an accelerated request for payment for the remaining $4,500.
Example 3 (Salaried Employee): An employee must take leave because their child’s school has been closed. If an employee earns $50,000 per year, they would receive $128.85 per day (two thirds their normal pay) beginning April 14. If the school is closed until May 29, the employer would pay the employe for 34 days, or a total of $4,380.90
Example 4 (Hourly Employee): An employee who makes $15 per hour and works 5 hours per day must take leave because their child’s school has been closed since March 19. The FFCRA begins April 1 and the employees unpaid leave is April 1 through April 11. The employee would use all Emergency Sick Leave before beginning FMLA leave at two-thirds (⅔) their normal pay or $50.25 per day (up to $200 per day or $10,000 total). If a small business of fewer than 50 employees has an exemption, the employee would not be entitled to any compensation.
Example 5 (Hourly Employee with Childcare Duties): An employee’s child’s school has been shut down by government closure since March 16, 2020 and the employee, who earns $18 an hour and regularly works 8 hours a day and 40 hours a week, took off work that day to care for the employee’s under 18-year-old daughter. The FFCRA becomes effective April 1, 2020. The employee’s 10-day unpaid leave period is from April 1, 2020 through April 11, 2020. During this time, the employee complies with all eligibility requirements under the Emergency Paid Sick Leave and the business is not an employer with fewer than 50 employees that has been approved for an exemption for these employees, and eligible to receive 7 workdays of pay during that time period / 8 hours a day (assuming the employee was scheduled to work weekdays only) for a total of 56 hours and $672 (at the employee’s 2/3 hourly rate). As of April 12, 2020, the employee also would be eligible for the FMLA Expansion, but would have 24 hours remaining under the Emergency Paid Sick Leave Act. Employee would use remaining 24 hours of Emergency Sick Leave through April 14, 2020 and, beginning, April 15, 2020, be eligible for the 2/3 rate under the FMLA Expansion, which would continue for up to $200 a day / $10,000 in total benefit.
In the event the business is a small employer with fewer than 50 employees and properly applies for and received an exemption under the Emergency Sick Leave (assuming that the Secretary of Labor allows it), the employee (so long as employed by the employer for 30 days and off work due to a child’s school closure or impossibility) would not be entitled to any compensation until eligible under the FMLA Expansion as the Emergency Sick Leave would not be available.
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