By Lisa Purichia
Partner, Director of Accounting & Retirement Plan Services
[email protected]
Author’s Note: This is VERY IMPORTANT information for employers. Additional supporting regulations and guidelines are to be issued this week. This is effective April 1, 2020.
Our Federal Government is moving FAST with relief measures, and we are doing our best to keep you informed. We will update you when the additional guidance promised for this week is issued.
On March 18, 2020 the President signed into law the Families First Coronavirus Response Act (FFCRA). This Act will extend additional assistance and protections to individuals and businesses affected by the COVID-19 crises. The Act requires employers with less than 500 employees to provide a certain amount of paid sick and paid leave (Leave) to employees affected by COVID-19 and provides affected employers with a corresponding employment tax credit. In addition, the FFCRA temporarily expands the Family and Medical Leave Act (FMLA) requirements to offer protected Leave related to the coronavirus. The FFCRA’s paid Leave provisions are effective on April 1, 2020 and apply to Leave taken between April 1, 2020 and December 31, 2020.
The Act contains three sections of significant interest for employers:
- Emergency Paid Sick Leave
- Emergency Family and Medical Leave Expansion Act
- Tax Credits for Paid Sick and Paid Family and Medical Leave
The Act provides that covered employers must provide to all employees:
- Two weeks (up to 80 hours) of paid sick leave at the employee’s regular rate of pay (up to a maximum of $511 per day) when the employee is unable to work because the employee is quarantined (pursuant to Federal, State, or local government order or advice of a healthcare provider), and/or experiencing COVID-19 symptoms and seeking a medical diagnosis; or
- Two weeks (up to 80 hours) of paid sick leave at two-thirds the employee’s regular rate of pay (up to a maximum of $200 per day) because the employee is unable to work because of a bona fide need to care for an individual subject to quarantine (pursuant to Federal, State, or local government order or advice of a healthcare provider), or care for a child (under 18 years of age) whose school or childcare provider is closed or unavailable for reasons related to COVID-19.
A covered employer must provide to employees who have been employed for at least 30 days:
- Up to an additional 10 weeks of paid expanded family and medical leave at two-thirds the employee’s regular rate of pay where an employee is unable to work due to a bona fide need for Leave to care for a child whose school or childcare provider is closed or unavailable for reasons related to COVID-19.
Covered Employers: applies to certain public employers and private employers with fewer than 500 employees under the provisions of the FFCRA. PLEASE NOTE: Employees on leave, temporary employees jointly employed by the employer and another employer, and day laborers supplied by a temp agency should be included in the 500 number.
Small businesses with fewer than 50 employees may qualify for exemption from the requirement to provide Leave due to school closings or childcare unavailability if the Leave requirements would jeopardize the viability of the business as a going concern. More information and guidance on this factor is expected to be released in the next week.
Emergency Paid Sick Leave applies to employees who are unable to work (or telework – work remotely) and who meet any of the following conditions:
- Is subject to a Federal, State or local quarantine or isolation order related to COVID-19;
- Has been advised by a health care provider to self-quarantine related to COVID-19;
- Is experiencing COVID-19 symptoms and is seeking a medical diagnosis;
- Is caring for an individual subject to an order described in (1) or (2) above;
- Is caring for a child whose school or place of care is closed (or childcare provider is unavailable) for reasons related to COVID-19; or
- Is experiencing any other substantially similar condition as specified by Health and Human Services.
Emergency Family and Medical Leave Expansion Act applies to employees who have been employed for at least 30 calendar days and are unable to work due to the employee is caring for a child whose school or place of care is closed (or childcare provider is unavailable) for reasons related to COVID-19.
Tax Credits for Paid Sick and Paid Family and Medical Leave is for covered employers for all qualifying wages paid under the FFCRA. Under guidance that is to be released this week, eligible employers who pay qualifying sick or childcare leave will be able to retain an amount of the payroll taxes equal to the amount of qualifying sick and childcare leave they paid, rather than deposit them with the IRS.
The payroll taxes that are available for retention include withheld federal income taxes, the employee share of Social Security and Medicare taxes and the employer share of Social Security and Medicare taxes with respect to all employees.
If there are not sufficient payroll taxes to cover the cost of qualified sick and childcare leave paid, employers will be able to file a request for a refund from the IRS or apply as an overpayment. The IRS expects to process these requests in two weeks or less. More details of this new process are to be announced this week.
Non-Enforcement Period
The U.S. Department of Labor (DOL) will be issuing a temporary non-enforcement policy that provides a period of time for employers to come into compliance with the Act. Under this policy, DOL will not bring an enforcement action against any employer for violations of the Act so long as the employer has acted reasonably and in good faith to comply with the Act. The DOL will instead focus on compliance assistance during the 30-day period.
Employers Required to Display Information Poster
The U.S. Department of Labor released the required notification poster for the FFCRA that is to be posted in workplaces and distributed to remote workers. Here is the link: https://www.dol.gov/sites/dolgov/files/WHD/posters/FFCRA_Poster_WH1422_Non-Federal.pdf
Additional Information and Guidance Forthcoming
Additional information is expected to come out on the tax credits this week. If we can assist you further with how these may affect you or your business, please call Lisa Purichia (317) 608-6693 or email [email protected].