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:
- 80 hours for full-time employees at employee's regular rate of pay capped at $511 per day.
- The equivalent of two weeks of pay for part-time employees, based on their prior two-week average at employee's regular rate of pay capped at $511 per day; and
- Two-thirds of the foregoing amounts for leave required when the employee is caring for an individual who is under a government-ordered quarantine or a quarantine recommended by a health care provider, or because of a need for childcare resulting from school closures, capped at $200 per day.
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:
- 10 days of unpaid public health emergency leave (PHEL), when most covered employees would get paid leave under the EPSLA; and
- Paid leave for any such continued leave at two-thirds of the employee's normal pay rate, capped at $200 per day for a maximum of $10,000. PHEL is limited to leave when an employee must care for a child under 18 years old because of a school closure or other lack of childcare caused by COVID-19. The paid leave continues until the public health emergency has ended or 12 weeks.
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.