Last night, Congress passed and the President signed H.R. 6021, “Families First Coronavirus Response Act,” the first coronavirus economic relief package. It will become effective 14 days from today. There are some important paid sick leave and paid family leave provisions that will make your organizations eligible for a tax credit for that full amount. Information about the bill’s provisions as applicable to employers, including specific information about the tax credits, can be found here, (House Ways and Means Committee) here, (Fisher Phillips Law Firm) and here. (Congressional Research Service) Please read and share these resources with your HR and Finance teams.
Below is a summary of the provisions. Please be aware that these only apply to private businesses and non-profits with a staff of 500 or less:
Paid Family Medical Leave
The bill provides 12 weeks of job-protected paid Family and Medical Leave Act (FMLA) leave—of which the first 10 days may be unpaid—for employees of employers with fewer than 500 employees.
Employees may use accrued personal or sick leave during the first 10 days, but employers may not require employees to do so.
This leave benefit covers employees who have been working for at least 30 calendar days.
This leave is to be used to care for their minor child whose school or place of care has been closed due to a COVID-19-related public health emergency
After the first 10 days, employers must compensate employees in an amount that is not less than two-thirds of the employee’s regular rate of pay, up to $200 a day. These pay requirements apply to only the COVID-19-related leave reasons listed above.
The provisions will go into effect 15 days after the date of enactment and expire on December 31, 2020.
Paid Sick Leave
Employers with fewer than 500 employees will be required to provide full-time employees 2 weeks (80 hours) of paid sick leave for specific circumstances related to COVID-19 (e.g., self-isolating, doctors’ visits, etc.) Part-time employees are entitled to the number of hours of paid sick time equal to the number of hours they work, on average, over a 2-week period.
Employers must compensate employees for any paid sick time they take at their regular rates of pay, up to $511 per day.
Employers will be required to post a notice informing employees of their rights to leave.
As currently drafted, the bill expressly provides that it does not preempt existing state or local paid sick leave entitlements.
The provisions will go into effect 15 days after the date of enactment and expire on December 31, 2020.
Unemployment Insurance
The bill provides $1 billion in emergency unemployment insurance (UI) relief to the states: $500 million for costs associated with increased administration of each state’s UI program and $500 million held in reserve to assist states with a 10 percent increase in unemployment. Besides the necessary increase in unemployment, in order to receive a portion of this grant money, states must temporarily relax certain UI eligibility requirements, such as waiting periods and work search requirements.
Tax Credits For Paid Sick And Paid Family And Medical Leave
A series of refundable tax credits will be available for employers who are required to provide the Emergency Paid Sick Leave and Emergency Paid Family and Medical Leave described above. These tax credits are allowed against the employer portion of Social Security taxes. While this limits the application of the tax credit, employers will be reimbursed if their costs for qualified sick leave or qualified family leave wages exceed the taxes they would owe.
Specifically, employers are entitled to a refundable tax credit equal to 100% of the qualified sick leave wages paid by employers for each calendar quarter in adherence with the Emergency Paid Sick Leave Act. The qualified sick leave wages are capped at $511 per day ($200 per day if the leave is for caring for a family member or child) for up to 10 days per employee in each calendar quarter.
Similarly, employers are entitled to a refundable tax credit equal to 100% of the qualified family leave wages paid by employers for each calendar quarter in accordance with the Emergency Family and Medical Leave Expansion Act. The qualified family leave wages are capped at $200 per day for each individual up to $10,000 total per calendar quarter. Only those employers who are required to offer Emergency FMLA and Emergency Paid Sick Leave may receive these credits.