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The Families First Coronavirus Response Act: What does it mean for US Employers

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The Families First Coronavirus Response Act: What does it mean for US Employers

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 80 hours of paid sick leave to full-time employees that are unable to work (or telework) because of certain COVID-19 related reasons.
  • 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:
    • An employee is experiencing symptoms related to COVID-19 and is seeking a medical diagnosis.
    • An employee or a family member whom the employee cares for is quarantined due to COVID-19.
    • An employee's child's school or daycare is closed.
  • 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, not the exceed $511 per day or $5,110 total, unless they are taking sick leave to care for a child or family member, then pay rates under EFMLA (see below) apply.
  • If an employer has less than 50 employees and believes the viability of their business would be threatened by offering this sick leave, they are exempt.

For help on this in Dynamics GP payroll and Comprehensive Leave Manager, see this blog

Emergency Family and Medical Leave Expansion

  • Private employers with fewer than 500 employees and government employers are required to provide 10 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:
    • 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.

Tax Credits for Paid Sick and Paid Family and Medical Leave

  • 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.

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

Obviously, questions remain. How do we calculate the 500-employee threshold? Can this coronavirus paid sick leave be taken intermittently? Do we need a doctor’s note? More guidelines to assist employers are scheduled to be issued by the Secretary of Labor no later than 15 days after the Act’s enactment, by April 1, 2020. You can also watch for more updates on our quick COVID-19 facts blog.

We are actively working on keeping this information updated and coming up with best practices in Microsoft Dynamics Payroll, and how our Leave Management Solutions can possibly help you with these new regulations. Subscribe to our email communications (Check all that are relevant to you - specifically Payroll news for Dynamics GP) and stay tuned for further developments!

Written by Integrity Data

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