What is it?
The Families First Coronavirus Response Act (FFCRA), which the President signed on March 18, 2020, is emergency legislation intended to help employers maintain pay for employees who cannot work due to COVID-19 reasons.
What does it do?
The FFCRA vastly expands areas of Paid Sick Leave and the Family Medical Leave Act (FMLA) as set forth below. Although these provisions are potentially onerous and expensive, covered employers will receive tax credits to cover 100% of the actual expense they incur within the maximum leave pay caps set forth below. Fortunately, employers can apply these tax credits towards ongoing payroll taxes, which will provide prompt relief for expenses incurred in providing the paid leave. See below for further information on how the tax credits work.
When does it apply?
The effective dates of these provisions are from April 1, 2020 through December 31, 2020 and the paid leave obligations and tax credits only apply to qualified time off taken within this date range.
Who does it apply to?
These provisions apply only to employers with fewer than 500 employees. Employees included in this count are: full-time and part-time regular employees, employees on leave, employees who are jointly employed with another employer (such as a staffing agency), and day laborers supplied by a temporary agency. Independent contract workers are not included in this count. The 500 employee count is determined at the time that the leave starts.
A corporation (including its separate establishments or divisions) is generally considered to be a single employer and its employees must each be counted towards the 500-employee threshold. However, if an operation includes multiple corporations or entities, the integrated employer test is applied. Employees of all entities making up an integrated employer will be counted in determining headcount for employer coverage. Factors utilized to determine if the integrated employer test applies are:
- Common management,
- Interrelation between operations,
- Centralized control of labor relations, and
- Degree of common ownership or financial control.
What are the specifics?
The FFCRA has two main components: Emergency Paid Sick Leave and Emergency Family Medical Leave. Both are detailed below:
Emergency Paid Sick Leave Act (EPSLA):
Qualifying reasons for paid sick leave: A covered employer must provide to each employee paid sick leave time to the extent that the employee is unable to work (or telework) due to a need for leave because:
- The employee is subject to a Federal, State, or local quarantine or isolation order related to COVID-19.
- The employee has been advised by a health care provider to self-quarantine due to concerns related to COVID-19.
- The employee is experiencing symptoms of COVID-19 and seeking a 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 health care provider to self-quarantine due to concerns related to COVID-19.
- The employee is caring for their own child if the school or place of care of the child has been closed, or the child care provider of such child is unavailable, due to COVID-19 precautions.
- The employee is experiencing any other substantially similar condition specified by the Secretary of Health and Human Services in consultation with the Secretary of the Treasury and the Secretary of Labor.
Eligibility: All employees of a covered employer that meet the qualifying reasons above are eligible to use this leave, regardless of how long they have been employed.
Amount and payment of sick leave:
- Full-time employees receive up to 80 hours of paid sick leave at the employer’s regular rate of pay if any of the qualifying reasons (1), (2) or (3) above apply, or 2/3 of the regular rate if qualifying reasons (4), (5) or (6) above apply.
- Part-time employees receive paid sick leave hours equal to the number of hours that such employee works, on average, over a 2-week period.
- Maximum pay caps: The amount of sick leave to be paid is capped at $511 per day (up to $5110 total per employee) for qualifying reasons (1), (2) or (3), or $200 per day (up to $2000 total per employee) for qualifying reasons (4), (5) or (6).
- Calculating the pay rate: The regular rate of pay is calculated per the Fair Labor Standards Act (but no less than the highest applicable minimum wage). For a part-time employee whose schedule varies from week to week to such an extent that the employer is unable to determine with certainty the number of hours the employee would have worked if such employee had not taken paid sick time, the regular rate of pay is based on twice the number of hours that an employee was scheduled to work per workweek, over the prior six-month period, or fourteen times the average number of hours that the employee was scheduled per calendar day, over the prior six-month period.
Timing of paid sick leave and other terms:
- The paid sick leave is available for immediate use by the employee for the purposes described above, regardless of how long the employee has been employed.
- End of sick leave- Paid sick leave provided to an employee under this Act will cease beginning with the employee’s next scheduled work shift immediately following the termination of the need for paid sick leave.
- Paid sick leave time does not carry over from one year to the next and is provided in addition to any paid sick leave that the employer already provides, like state-mandated or local sick leave.
- An employer may not require, as a condition of providing paid sick time under this Act, that the employee involved search for or find a replacement employee to cover the hours during which the employee is using paid sick time.
- An employer may not require an employee to use other paid leave provided by the employer to the employee before the employee uses the paid sick time under this Act.
- The employee should give reasonable notice of the need to take the leave, if practicable. See below for the documentation required as part of a request.
Emergency Family and Medical Leave Act (EFMLA): (limited to leave to care for a child based on school closures and the like)
Coverage/eligibility: Like the EPSLA, employers with fewer than 500 employees are covered under this Act, even employers who were not otherwise covered under the original FMLA. Additionally, the universe of eligible employees is expanded to those who were employed with the employer for at least 30 days prior to the start of the leave (compared to one year for the typical FMLA claim). This is a significant expansion of covered employers and employees over those covered by the original FMLA.
Qualifying reasons for Emergency Family and Medical Leave: This leave is provided to an employee who is unable to work (or telework) due to a need for leave to care for a child under 18 years of age of such employee if the school or place of care has been closed, or the child care provider of the employee’s child is unavailable, due to a public health emergency. The employee should give reasonable notice of the need to take the leave, if practicable.
Amount and payment under EFMLA:
- Covered employees may take up to 12-weeks of job-protected leave as needed for the qualifying reason.
- The first 10 days of the leave may be unpaid, but during this 10-day period, the employee may elect to use any accrued paid leave (such as sick leave under EPSLA or other paid sick leave, vacation or PTO).
- After the 10-day waiting period, employees are entitled to 2/3 of the employee’s regular rate of pay for the number of hours the employee would otherwise be scheduled to work. This amount of pay is capped at $200 per day and an aggregate of $10,000 per employee, meaning the leave can be used for up to 10 weeks.
- In the case of an employee whose schedule varies from week to week to such an extent that an employer is unable to determine with certainty the number of hours the employee would have worked if such employee had not taken leave, the calculation of pay is based on the average number of hours that the employee was scheduled per day over the 6-month period ending on the date on which the employee takes such leave, including hours for which the employee took leave of any type.
- For employers with 25 or more employees, the employee has the same reinstatement rights to the same or equivalent position as are provided per the original FMLA.
- For employers with fewer than 25 employees, the original FMLA reinstatement rights do not apply IF:
- the position held by the employee when the leave commenced does not exist due to economic conditions or other changes in operating conditions of the employer that affect employment;
- the non-existence of the position is caused by a public health emergency during the period of leave;
- the employer makes reasonable efforts to restore the employee to a position equivalent to the position the employee held when the leave commenced, with equivalent employment benefits, pay, and other terms and conditions of employment;
- if the reasonable efforts of the employer described above fail, the employer makes reasonable efforts to contact the employee if a position with equivalent employment benefits, pay, and other terms and conditions of employment becomes available, and if such contact occurs within the 1-year period beginning on the earlier of: the date on which the qualifying need related to a public health emergency concludes; or the date that is 12 weeks after the date on which the employee’s leave commences.
Other General Information Applicable to EPSLA and EFMLA Leaves:
Telework ability- Note that both the EPSLA and EFMLA only apply to employees who are NOT able to work remotely, or telework. Under these Acts an employee is able to telework (and therefore not eligible for paid leave under FFCRA) if: (a) his or her employer has work for the employee to perform; (b) the employer permits the employee to perform that work from the location where the employee is being quarantined or isolated; and (c) there are no extenuating circumstances that prevent the employee from performing that work.
Small Business Exception to EPSLA and EFMLA: An employer with fewer than 50 employees is exempt from providing EPSLA and EFMLA leave under the childcare-related reasons only when doing so would jeopardize the viability of the business as a going concern. The employer is excepted by showing:
- providing the paid leave would result in the business’s financial obligations exceeding available business revenues and cause the small business to cease operating at a minimal capacity; OR
- the absence of the employee requesting the leave would entail a substantial risk to the financial health or operational capabilities of the business because of their specialized skills, knowledge, or responsibilities; OR
- there are insufficient workers who are able, willing, and qualified, and available as needed, to perform the work provided by the employee requesting the leave, and these services are needed for the business to operate at a minimal capacity.
Required Notice to Employees: Employers are required to post, in conspicuous places on the employer’s premises, notices to employees regarding their rights under the FFCRA in accordance with the information provided in the Department of Labor’s model notice—available on the Department of Labor’s website. If employees are on furlough or leave of absence, or not otherwise on the employer’s premises to see this notice, the employer should disseminate the notice to such employees through another means, such as mail, email or through an accessible employee information portal.
- Employee request for leave: The employee requesting FFCRA leave must provide a signed statement containing: (1) the employee’s name; (2) the date(s) for which leave is requested; (3) the COVID-19 qualifying reason for leave; and (4) a statement representing that the employee is unable to work or telework because of the COVID-19 qualifying reason. Additional documentation may be required depending on the qualifying reason for leave.
- Employer response to request: The Department of Labor did not impose specific notice obligations for the employer, such as notices of eligibility, rights and responsibilities, or written designations with leave use counts against allowances.
- Document retention: The employer is required to retain all documentation provided regarding a request for leave or supporting documentation for four years, regardless of whether leave was granted or denied.
Tax Credits: Employers can retain payroll taxes, which they would typically pay to the IRS on a quarterly basis, in an amount equal to the amount paid to employees for qualifying leave.
- Employers may access those funds immediately, and they may take the funds from withheld income or employment tax liabilities that they would otherwise be required to pay to the IRS, including withheld federal income taxes, the employee share of Social Security and Medicare taxes and the employer share of Social Security and Medicare taxes. The employer can pull from its share of taxes for all of its employees, not just the taxes for the employees who are actually taking the emergency leave.
- If there are insufficient federal employment taxes to cover the amount of the credits, the employer may request an advance payment of the credits from the IRS through a Form 7200. The IRS expects to begin processing these requests during April 2020.
We created a Frequently Asked Questions from questions we receive from our clients concerning the application of the FFCRA that are not addressed in our original analysis above.