This summary is limited to the expanded paid leave and payroll tax provisions of the Families First Coronavirus Response Act as those are the topics about which we anticipate receiving the most questions in the immediate future. The bill provides job-protected leave under the Family and Medical Leave Act (FMLA), paid sick leave for certain full- and part-time employees, and grants tax credits to employers to recoup the cost of the leave provided. The bill also affords $1 billion to states for emergency unemployment insurance, provided that the states comply with certain requirements.
The following leave requirements only apply to companies with less than 500 employees, and the bill contains an express exception for employees who are health care providers or emergency responders. Such employers must provide up to 12 weeks of job-protected leave under the FMLA. The first 2 weeks of leave are unpaid; the following 10 of those 12 weeks must be paid leave at a rate of no less than two-thirds of the employee’s regular rate of pay. To qualify, employees must have been on the payroll for 30 days, and they must use the leave for a qualifying reason, including to adhere to a quarantine recommendation following exposure or exhibitions of symptoms of Covid-19, or to care for a quarantined family member or child whose school or daycare has closed. The employee has the option to use available PTO or sick leave before receiving FMLA paid leave, although the employer may not require them to do so. Upon the employee’s return from leave, the same or equivalent job position must be available to them; however, if a company has less than 25 employees and the employee’s job ceases to exist due to the pandemic, the small business is only required to must make reasonable efforts to restore the employee’s position for one year.
In addition to the expanded FMLA leave, employers must make 2 weeks (or 80 hours) of paid sick leave available for full-time employees who are diagnosed with Covid-19, who are seeking a medical diagnosis or care after having exhibited symptoms, who are under quarantine because of exposure to or symptoms of the coronavirus, or who are caring for a quarantined family member or child out of school or daycare. Employers must compensate employees for any paid sick time taken at regular rates of pay up to a daily maximum of $511; provided, however, that if employees are on leave to care for a family member, they are only entitled to two-thirds of their regular rate of pay. Part-time employees are entitled to 2 weeks of sick leave at rates based on their number of hours worked over an average two-week period.
Employers who already provide paid leave to employees must provide this new mandatory paid leave in addition to any paid leave that they already provided, and employers may not change their existing leave policies after the date of enactment of the law. Employers cannot require that their employees use existing paid leave before using paid leave as created by the bill.
Employers who pay emergency sick or FMLA leave pursuant to the law can claim refundable tax credits against the employer portion of Medicare and Social Security employment taxes. These tax credits are equal to 100% of the leave wages paid to employees in the prior quarter, but the credit is capped at $200 per day per employee and $10,000 for all calendar quarters. If the credit exceeds the employer’s tax liability for a particular quarter, the excess credit is refundable to the employer in that quarter. The tax credit provisions are set to expire on December 31, 2020.