This article was originally published on March 17th and is being updated as new information becomes available.
Please note this article is intended to address some of the most common questions we are receiving from clients and is not intended to cover the provisions of the Act fully. The U.S. Department of Labor has developed an extensive Q&A listing on its website which you can access here. The Q&A is updated regularly, so we suggest you review it often. We highly recommend you review the DOL website as it is inclusive of coverage on a wide variety of topics and questions.
What exactly is included in the Families First Coronavirus Response Act (FFCRA)?
On March 18, 2020, President Trump signed the FFCRA into law. In general, the FFCRA requires employers with less than 500 employees to provide a certain amount of paid sick leave to employees impacted by the coronavirus (COVID-19) and provides a tax credit to employers to mitigate the costs of providing the mandated leave. The FFCRA contains three separate sections:
- Emergency Family and Medical Leave Act expansion
- Emergency Paid Sick Leave
- Tax Credits for paid sick and paid family and medical leave
What qualifies as sick leave? I closed my office/place of employment as a preventative measure or to comply with city/state/professional organization recommendations/mandates. Does this count?
Unfortunately, no. The Emergency Sick Leave Act only requires emergency sick leave for employees that cannot work (on premise or remotely) for any of the following reasons:
- The employee is subject to a Federal, State, or local quarantine, or isolation order related to COVID-19
- Employee has been advised by a healthcare professional to self-quarantine due to concerns related to COVID-19
- The employee is experiencing symptoms of COVID-19 and seeking medical diagnosis
- The employee is caring for an individual who is:
- Subject to a Federal, State, or local quarantine or isolation order related to COVID-19 or
- has been advised by a healthcare professional to self-quarantine due to concerns related to COVID-19
- Employee is caring for a son or daughter if the school or place of daycare has been closed, or the childcare provider of the son or daughter is unavailable due to COVID -19 precautions
- The employee is experiencing any other substantially similar condition specified by the Secretary of the Treasury and the Secretary of Labor
Do my employees need to use up all PTO hours before qualified leave starts?
No, employers are specifically prohibited from requiring employees to use up other offered leave before using the sick leave. This qualified leave is in addition to the benefits already provided. The sick leave pay can be paid first, before any accrued PTO, vacation, or employer-provided sick time is used.
What am I required to pay my employees for qualified sick pay?
- If being paid sick pay for circumstances 1, 2, or 3 above, at the employee’s regular rate of pay, subject to a $511 per day maximum for 10 working days ($5,110 in aggregate).
- If being paid sick pay for circumstances 4, 5, or 6 above, at two-thirds of the employee’s regular rate of pay, subject to a maximum of $200 per day for 10 working days ($2,000 in aggregate).
What about paid leave under the Emergency Family and Medical Leave Expansion Act?
In addition to the two weeks’ emergency paid sick leave, the FFCRA requires employers to pay employees who are unable to work (either on-premise or remotely) due to the need to stay home to care for a minor child who is home because the child’s school and/or childcare provider is closed due to COVID-19. Under this provision, employees qualifying for this pay are required to be paid at two-thirds of their regular rate of pay (capped at $200 per day) for ten weeks. The leave is 12 weeks, and the first two weeks are not paid. However, the employee may be paid sick pay as defined above for the first two weeks, or the employee may elect to use accrued paid time off for the first two weeks.
It is important to note that these provisions are different than the provisions of the Family Medical and Leave Act (FMLA) in that employers are required to pay their employees for leave qualifying under the requirements of FFCRA. Other qualifying leaves under FMLA are not required to be paid by employers (however employees may use accrued time off to be paid while on leave). The Expanded FMLA provisions in the FFCRA do not replace any of the requirements in the original FMLA. Employers need to ensure they continue to follow all standards required in the FMLA.
How do I recover the sick pay that I pay to my employees? Will I be able to reduce my estimated income tax payments?
To offset the costs of paid sick leave, employers who are required to pay sick leave to their employees will recover 100% of these payments as a credit on their quarterly payroll tax returns. Your 2020 estimated income tax installments will not change based on paying sick leave to employees.
Do I have to provide the mandated sick or expanded family and medical leave pay for my employees?
Yes. If you employ less than 500 employees, compliance with the Act is required. If you chose not to comply, you will be in violation of the FLSA.
However, there is provision in the Act for the Secretary of Labor to exempt employers that employ less than 50 from the requirements in the Act. The Department of Labor has addressed this question in its Q&A posted on its website. The Q&A can be accessed here.
What about unemployment? How does that factor into this?
Generally speaking, employees can file for unemployment at the time they become unemployed or laid off. In many states, no unemployment benefits will be paid if the employee is still being paid accrued PTO, vacation, or sick pay (including sick pay mandated by the Act). As expected, unemployment offices in states across the nation are seeing an increase in the number of claims, so it is possible payments could be delayed. Each state’s unemployment laws are different. Please refer to your state’s laws or legal counsel.
If your employees file for, and are paid unemployment, your employer experience rate may go up in future years. Indiana Department of Workforce Development announced on March 19, 2020, that it will not assess certain experience rate penalties because of employees who receive unemployment benefits as a result of COVID-19. Many other states are likely to do the same.
If you are a self-funded employer, additional considerations may apply. Please refer to your state’s specific rules.
How can I help my employees?
- Encourage employees to file for unemployment as soon as possible, even if the layoff is expected to be temporary
- Opt to pay accrued PTO (vacation, sick, personal days) to employees. Keep in mind that you cannot pick and choose which employees you pay out accrued PTO for. PTO should be paid out consistently among groups of workers (exempt employees, non-exempt employees, etc.)
What other things do I need to know about the FFCRA?
- FFCRA is effective April 1, 2020
- The requirement to pay sick leave expires on December 31, 2020
- No payout at termination of an employee’s employment
- There is no carry over into 2021
- You are not required to pay leave for more than 80 hours, even if an employee might have worked more than 80 hours for the same period if they had been at work
I have more questions, who can help?
Many employers will have questions related to the Emergency Sick Pay Act, Emergency FMLA Leave Only for Child Care Disruption, and helping their laid-off employees with unemployment claims. Unfortunately, each state has unique labor laws. Each state also has unique rules regarding eligibility for unemployment, when a displaced worker needs to apply for unemployment, benefits available and when benefits are available. All states have information available on their state unemployment webpages that will provide helpful information. If you have specific questions about how to address PTO, laying off workers or terminating employees, we recommend you speak with your legal counsel.
In addition, if your employees have short-term disability insurance benefits, it is important to contact your provider to understand the impact of benefits that may be paid under those policies and how they will interact with the provisions of the Act.
The U.S. Department of Labor issued a Q&A on the FFCRA that answers many questions. The Q&A can be accessed here. The DOL is updating this Q&A frequently.
These are challenging and unprecedented times. The staff at Blue & Co. is committed to walking with our clients through this crisis and providing as much information as we can. Please note that information is changing rapidly. Always consult our website for the most recent information. We also encourage you to review your state’s unemployment laws and consult with legal counsel.
Please continue to monitor our Coronavirus Resources and Information Page for updates.