As many of you know by now, on March 18, 2020, the Senate passed the Families First Coronavirus Response Act, (the “Act”), which was passed by the House last week. President Trump swiftly signed the legislation, which is effective on April 2, 2020. All public employers and private employers with under 500 employees are covered by the Act (the employee-count number is based on the total number of employees that you have, not that RMI has as your co-employer), which provides for emergency paid family and medical leave as well as emergency paid sick leave, among other provisions, including changes to unemployment insurance and food and nutrition benefits. Below is a summary of the key provisions of the Act that relate to paid leave.
Emergency Family and Medical Leave
- Employees are eligible for up to 12 weeks of paid emergency family and medical leave under the Act if they have worked for an employer for at least 30 days, and are unable to work or telework because their minor child’s school or daycare is closed due to a public health emergency (as is the case in many states). If an employee can telework and they refuse, then they would not be eligible under the Act.
- The first 10 days of emergency family and medical leave are unpaid; however, the employee may use any other available paid leave (including the emergency paid sick leave discussed below). After 10 days, employers are required to pay employees at least 2/3 of their regular pay during the leave, up to a maximum of $200/day and $10,000 total. Employers are entitled to a federal tax credit in an amount equal to any emergency family and medical leave wages they are required to pay. By way of example, if you have an employee eligible under the Act who makes $6,000 per month and they’ve already had their 10 days of unpaid leave, then you would be obligated to pay them at least $4,000 per month for the remaining time that they are out of work (up to 12 weeks). Under this example, let’s say that’s one month. Then, let’s assume that your federal tax liability for the year is $50,000. The Act would reduce your federal tax liability to $46,000. If, however, your federal tax liability is less than the amount that you paid the employee for paid leave, then you will receive a refund from the IRS after you file your taxes.
- Health care providers, emergency responders, and employers with fewer than 50 employees may apply for a hardship exemption (the details of which are to be determined through legislative rulemaking).
- Employers with fewer than 25 employees do not have to reinstate an employee if they are experiencing significant economic hardship. However, an employer must make a reasonable effort to reinstate the employee to an equivalent position if one becomes available within one year.
Emergency Paid Sick Leave
- Emergency paid sick leave will be available for employees regardless of tenure, in addition to any other paid leave to which an employee is already entitled. Employers cannot require employees to use other employer-provided paid leave before taking emergency paid sick leave.
- Employees are eligible for emergency paid sick leave if they:
- Are subject to a local, state, or federal quarantine order;
- Have been advised by a medical provider to self-quarantine due to COVID-19 concerns;
- Are experiencing symptoms of and are seeking medical care for symptoms of COVID-19;
- Are caring for an individual for any of the foregoing reasons;
- Are caring for a child whose school has been closed, or whose child care provider is unavailable, due to a public health emergency related to COVID-19; or
- Are 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.
- Full time employees will be eligible for up to 80 hours of paid sick leave, and part-time employees are eligible for a prorated amount based on their average hours worked over a two-week period. If you have employees whose schedule varies so much from week to week that you’re unable to determine their full-time or part-time status, then you must use the average number of hours (including holiday, sick, or vacation hours) that the employee was scheduled per day for the 6-month period immediately preceding the date on which the employee takes leave.
- Employees must be paid their regular rate, up to a maximum of $511 per day and $5,110 total for reasons (1) – (3) above. Employees must be paid 2/3 of their regular rate, up to a maximum of $200 per day and $2,000 total for reasons (4) – (6) above. Employers are entitled to a tax credit in an amount equal to any emergency sick leave wages they are required to pay. For example, if you pay an employee paid sick leave under this Act in the amount of $4000 and your federal tax liability is $50,000, then your federal tax liability would be reduced to $46,000. If, however, your federal tax liability is less than the amount that you paid the employee for paid leave, then you will receive a refund from the IRS after you file your taxes.
- As with the emergency family and medical leave, health care providers, emergency responders, and employers with fewer than 50 employees may apply for a hardship exemption (the details of which are to be determined through legislative rulemaking).
Thank you again for your relationship with Resource Management. We’re committed to helping you navigate this challenging time and to provide you with the support you need. As we receive more detail and clarification on these items, and those related to whether employers will have an obligation or are able to continue benefits for furloughed employees (i.e., those employees who are temporarily off work, but who will be called back to work) or employees who have experienced a reduction in hours to less than 30 hours, we’ll get them out to you ASAP.