Congress passed, and the president signed into law, the Families First Coronavirus Response Act on March 18. The law allows employees paid time to care for themselves or loved ones and includes provisions for new tax credits to offset employers’ costs. But the immediate need to pay employees on leave may still be difficult for families struggling with monetary losses.
Immediate time off
The law affects employers with fewer than 500 employees. Under specified circumstances, they must provide up to 80 hours of paid sick leave for full-time employees. Part-time employees need to be provided paid sick leave for the average number of hours worked over a two-week period.
An employee qualifies for the leave when he or she is unable to work — or telework — because of circumstances related to the coronavirus. These include:
- Experiencing symptoms and pursuing medical treatment,
- Being subject to a quarantine/isolation order or advisement,
- Caring for someone under a quarantine/isolation order, or
- Caring for a child whose school or daycare has been closed because of the outbreak and no alternative care is available.
An employee’s service time doesn’t affect whether he or she may take the leave, and employers aren’t allowed to stipulate that employees must use other paid leave before the paid sick time.
When leave is taken for an employee’s own illness or quarantine, employers generally must pay the employee at his or her regular rate, though no higher than $511 per day up to a total of $5,110. When taking leave to care for someone else or under other permitted circumstances, pay must be remitted at two-thirds of the regular rate, with maximums of $200 per day and $2,000 total.
Longer term leave
The law requires employers with less than 500 employees to provide their employees with service time of at least 30 calendar days (including those working under multi-employer collective agreements and whose employers pay into a multi-employer plan) with up to 12 weeks of job-protected leave, a portion of which must be paid. (This is an amendment to the Family and Medical Leave Act.)
The leave is to be provided for employees who can’t work — or telework — because of a need to care for a minor child whose school or daycare has been closed or is otherwise unavailable because of the coronavirus. It also includes employees who themselves have a COVID-19 diagnosis or are caring for a family member with a positive diagnosis. The first 10 days of the leave may be unpaid, though the 10 days might qualify for paid sick leave as described above. After 10 days, applicable employers must provide paid leave at two-thirds of an employee’s usual rate up to a maximum of $200 per day and $10,000 total per employee.
Note that certain exemptions and special rules may apply regarding both short- and long-term leave, and the U.S. Department of Labor will likely issue guidance in the coming days or weeks.
We urge you to consult our Knowledge Center to stay up to date.
Who is paying for this?
While this legislation imposes a significant mandate on small employers, it has and even more significant mechanism for 100% employer reimbursement! The legislation provides a REFUNDABLE tax credit, dollar for dollar, to the employer. The exact mechanism for claiming the refundable credit is to be announced by the Internal Revenue Code.
HWS clients, contact us if you are paying emergency paid sick or family leave so we can update your account to keep proper records, and assist you with the reimbursement process.
Assess the impact
The Families First Coronavirus Response Act applies to paid leave taken after April 1, 2020. HomeWork Solutions can provide further details on how it may affect you.