Last Updated 4/22/2020
On March 18, 2020, President Trump signed the Families First Coronavirus Response Act, H.R. 6201 (FFCRA) into law. The FFCRA is meant to support families that are impacted by the novel coronavirus (COVID-19) pandemic. Per House Appropriations Committee Chairwoman Nota M. Lowey: “Our top priority in this public health emergency must be providing support to the American people… The [FFCRA] will help ensure the physical safety and financial security of our nation’s working families during this time of crisis. With this bill, we can provide paid leave, guarantee free testing, and enhance important benefits for children and families.”
Below is a summary of the provisions that are relevant to US employers, which are effective April 1, 2020, and expire December 31, 2020.
Emergency COVID-19 Paid Sick Leave
Private employers with fewer than 500 employees and government employers are required to provide paid sick leave to full-time employees that are unable to work (or telework) because of certain COVID-19 related reasons. Full-time employees are eligible for up to 80 hours of paid sick time. For part-time employees, paid sick time amounts to the number of hours the employee would work, on average, over a two-week period.
COVID-19 related reasons are:
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.
Experiencing COVID-19 symptoms and is seeking a medical diagnosis.
Caring for an individual subject to an order described in reason 1 or self-quarantine as described in reason 2.
Caring for a child whose school or place of care is closed (or childcare provider is unavailable) for reasons related to COVID-19.
Experiencing any other substantially-similar condition specified by the Secretary of Health and Human Services, in consultation with the Secretaries of Labor and Treasury.
An employer cannot require an employee to use other employer-provided leave available to the employee before the employee uses paid leave available under the FFCRA. Eligible employees are entitled to the greater of minimum wage in your area or their regular hourly rate.
For reasons 1-3 above, not to exceed $511 per day or $5,110 total, unless they are taking sick leave to care for a child or family member.
For reasons 4-6 above, maximum of $200 per day, or $2,000 over the entire two week period.
If an employer has less than 50 employees and believes the viability of their business would be threatened by offering this sick leave, they could be exempt and would need to provide documentation as proof.
Employers should also note that work closures do not trigger the FFCRA paid sick leave.
For help on managing FFCRA paid sick leave in Dynamics GP payroll and Comprehensive Leave Manager, see this blog.
Emergency Family and Medical Leave Expansion (E-FMLA)
Private employers with fewer than 500 employees and government employers are required to provide 12 weeks of FMLA to all employees that have been employed for at least 30 days and are unable to work (or telework) because their child’s school or daycare was closed due to COVID-19. Working under quarantine or caring for a family member affected by COVID-19 is not considered “qualifying needs” for this benefit.
Eligible employees are entitled to two-thirds of their average earnings for up to 10 weeks, capped at $200 a day and $10,000 total per individual. Exceptions include:
The U.S. Department of Labor has authority to issue regulations to exempt small employers with fewer than 50 employees.
Employers in the healthcare and emergency response fields may elect to exclude certain employees from these expanded family and medical leave provisions.
For help on managing FFCRA E-FMLA in Dynamics GP payroll and Comprehensive Leave Manager, see this blog.
How to Determine your Employee Count for FFCRA
The DOL has put out guidance on how to determine if your company is under the 500 employee threshold. In summary, if you are under 500 employees at the time an employee is taking the paid sick or E-FMLA leave, then you are required to provide the leave under FFCRA. Included in your employee count should be all full-time and part-time employees, as well as other employees on any leave and temporary employees. Independent contractors should not be included in the employee count.
Tax Credits for Paid Sick and Paid Family and Medical Leave
Note: This tax credit is for the FFCRA only. The CARES Act outlines a different kind of tax credit, allowing employers to delay tax payments.
See this graphic for a comparison of the tax credits.Employer Payroll Tax Credits
Employers can claim an employer tax credit that includes:
The amount paid for both types of leave. The credit is limited to $511 per day ($5,110 total) if an employee is taking time off to care for themselves or $200 per day ($2,000 total) if the sick leave is to care for an individual who's quarantined or showing symptoms of COVID-19 or a minor child whose school is closed.
Medicare tax paid on both types of leave.
Qualified health plan expenses for employees on either type of leave.
The credit is refundable if it exceeds the amount the employer owes in (quarterly) payroll tax.
Income Tax Credits for Certain Self-Employed Individuals
Self-employed workers, including independent contractors and gig economy workers, also can claim a credit against their regular income taxes related to sick or family leave.
The credit covers 100 percent of self-employed individuals’ daily self-employment income or 67 percent if an individual is taking care of a child whose school is closed. The per-day amount is limited to the lesser of an individual’s average daily self-employment income, or $511 per day if caring for themselves or $200 if caring for a minor child. The number of eligible days is limited to 10 if related to sick leave and 50 if related to family leave.
The Act directs Treasury to provide guidance on what documentation self-employed individuals must submit to claim the credit.
Be Aware: Businesses that take this tax credit would NOT be eligible for forgiveness on the Payroll Protection Program (PPP) loan outlined in the CARES Act from the Small Business Association.
Other Benefits Provided Under the Families First Coronavirus Response Act
The FFCRA also provides for:
Free COVID-19 testing
Access to meals for school-aged children forced to stay home
Extended unemployment insurance and other measures
$15 million to the IRS to carry out the tax-related provisions
FFCRA Leave Documentation and Recordkeeping
The DOL and IRS have come up with guidelines for documenting leave requests under the FFCRA. This documentation can also be used as supporting documentation for FFCRA tax credits on Form 941 and potentially Form 7200. An actual request form should be created for employee use. Integrity Data has come up with forms that we are using for our employees. Samples can be found here: FFCRA Paid Sick Leave Request Form (Sample) and FFCRA E-FMLA Request Form (Sample).
For minimum documentation, an employer will need a signed statement containing the employee’s name, dates of leave, coronavirus-qualifying reason for leave, and a statement that the employee is unable to work or telework. In addition, an employee should also provide the name of the government entity that issued the quarantine/isolation order, or name of the health care provider who advised the self-quarantine. For childcare situations, the employee needs to provide the name of child, the name of school or place of care that closed due to COVID-19 reasons, and a statement mentioning that no other person is available to care for the child during the requested time of leave and no other person will provide care during the leave time. With the care of a child older than 14 during daylight hours, a statement that special circumstances exist requiring the employee to provide care is also needed.
Additional documentation may be requested by the employer, but, as mentioned by CDC, employers should take into consideration the lack of timely responses by health care providers for documentation due to the extreme work volume of their facilities. For childcare situations, additional supporting documentation could be a notice of closure from the applicable childcare facility.
If an employer only receives verbal information from the employee, the employer must document that employee’s request. An additional note for employers providing E-FMLA leave, unlike regular FMLA leave, the employer is not required to provide employees with certain forms such as the designation of leave and the notice of rights.
For the tax credit documentation in addition to the above, employers will need to show how they determined the amount of qualified wages paid (including records of work/telework) and how the employer determined the amount of qualified health plan expense allocated to those wages. Employers are required to maintain documentation regarding leaves and tax credits for four years.
Integrity Data's COVID-19 Response Task Force
We are actively working on keeping this information updated, watch for more on our socials and other COVID-19 related blogs as information is released. Our task force has also come up with best practices to handle these changes in Microsoft Dynamics Payroll, and how our leave management solutions can possibly help you with these new regulations.
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