Emergency Paid Sick Leave

On Wednesday, President Trump signed into law The Families First Coronavirus Response Act which includes multiple provisions including paid emergency leave. Below are key highlights of the legislation:

EMERGENCY PAID SICK LEAVE ACT (EPSLA)

This bill requires employers with fewer than 500 employees to provide paid sick leave to employees who are forced to stay home due to quarantining or to care for a family member ("qualified paid sick leave") or to care for a child if the school or place of care is closed ("qualified family leave"). The required paid sick leave is in the following amounts:

The new law covers all employees of such employers without regard to length of employment or number of hours previously worked. It also states that employers may not require employees to use other paid leave provided by the employer before they use the emergency sick pay.

Employers will be required to post a notice about EPSLA where other required employment postings are located. After the first day an employee receives the emergency sick pay, the employer may require the employee to provide reasonable notice in order to continue receiving the benefit.

The bill compensates employers and the self-employed for this paid leave in the form of a refundable tax credit against payroll taxes. Generally, employers can claim a tax credit of up to $200 per day for each employee caring for a sick family member and up to $511 per day for each employee who is sick against the employer's aggregate social security or tier 1 railroad retirement tax liability. The credit is limited to 10 days per employee.

THE EMERGENCY FAMILY AND MEDICAL LEAVE EXPANSION ACT

This bill amends the FMLA to require employers with fewer than 500 employees to provide:

Any employees of a covered employer who have been employed for at least 30 calendar days are eligible for public health emergency leave (PHEL). Eligible employees are allowed to substitute accrued vacation, personal leave, or medical or sick leave for unpaid PHEL.

Employers can claim a federal tax credit up to $200 per day, per employee, with an aggregate cap of $10,000 per employee against the employer's aggregate social security or tier 1 railroad retirement tax liability. The tax credit determination for an eligible self-employed individual is more complicated but generally follows the same framework as that for an eligible employer.

EPSLA and EFMLEA become effective no later than 15 days after the date it is enacted and expires December 31, 2020. The Department of Labor is tasked with issuing rules and guidelines for employers within the 15-day period. The DOL can also issue rules to exempt small businesses with fewer than 50 employees from the requirement to provide paid leave to care for a child who is out of school, if this would jeopardize the viability of the business.

Both EPSLA and EFMLEA have exceptions for health care providers and emergency responders.

The new law provides numerous requirements, limitations and definitions relating to the application of the mandate, as well as the credit. HLB Gross Collins, P.C. will continue to monitor additional guidance that clarifies The Families First Coronavirus Response Act and its implementation and will provide future updates and developments.

HLB Gross Collins, P.C. is committed to bringing you the most up-to-date and accurate information. We will continue to share relevant information as the COVID-19 situation continues to develop. Please note that this information may change from the time of publication, as the news is evolving on a daily basis. As with any business, tax, or financial guidance, you should always consult a professional to determine applicability to your specific situation.