Families First Coronavirus Response Act, Emergency Paid Sick Leave & Family Medical Leave
The Families First Coronavirus Response Act (FFCRA) was signed into law last night. This will bring new benefits for employees affected by the Coronavirus and requirements for employers. This law becomes effective 15 days after signing, so that looks to be Thursday, April 2, 2020. The benefits to be paid by employers are to be reimbursed in full with tax credits against their payroll tax liabilities.
Many details are currently unclear, with some wording that is ambiguous and even contradictory. But here is what we are seeing today:
(1) On April 2, certain employees will be eligible for new benefits from their employers. These will be those that are sick and/or subject to quarantine or self-quarantine with confirmed or suspected Coronavirus.
(2) Additionally, employees who will be caring for a sick child or other family members due to the virus or will be caring for a child due to school and/or daycare closures.
Then there are two separate provisions of FFCRA, “Emergency Paid Sick Leave” and “Emergency Paid Family Leave”. Here is where we are seeing the most initial confusion, as the wording in the two provisions, and the benefits to provide seem to overlap. We expect to get clarity on this in the coming days, and before the benefits will be paid out.
The Emergency Paid Sick Leave act grants sick employees 80 hours of fully paid time off to be treated for COVID-19, to seek a diagnosis or preventive care, or to self-quarantine. They would be eligible to receive full compensation for the typical number of hours that they work in a typical two-week period. Additionally, employees are eligible for two weeks (up to 80 hours) to be paid at two-thirds of their normal compensation to care for a family member or to care for a child whose school has closed or their child care provider has become unavailable due to COVID-19.
Next, the Emergency Paid Family Leave provides longer-term benefits for employees to care for children in the event of a school closure or their child care provider is unavailable due to COVID-19. In this circumstance, the employee will be eligible to receive up to 12 weeks of job-protected leave, the first two of which will be unpaid leave, followed by 10 weeks of paid leave.
Employers will foot the cost of these new mandated benefits but will be fully reimbursed by the federal government within 3 months. The amounts eligible to be reimbursed included the wages paid under these provisions plus the employer’s cost of providing health insurance during the leave period. They will get a tax credit against their payroll tax, so this will work for both for-profit and non-profit enterprises. They will submit their expenses for reimbursement as part of their payroll tax payments, and if the costs exceed the payroll tax liability, they will get a refund from IRS, presumably with the filing of their quarterly Form 941.