Coronavirus Update: FFRCA and CARES Act: What You Need to Know04/03/2020
On March 18, 2020, President Trump signed into law the Families First Coronavirus Response Act (FFCRA), which created two new emergency paid leave requirements in response to the current pandemic:
- “The Emergency Paid Sick Leave Act” (EPSLA), which entitles certain employees to take up to two weeks of paid sick leave; and
- “The Emergency Family and Medical Leave Expansion Act” (EFMLEA), which amends the Family and Medical Leave Act, (FMLA), and permits certain employees to take up to twelve weeks of expanded family and medical leave, ten of which are paid, for specified reasons related to COVID-19.
On March 27, 2020, President Trump signed into law the Coronavirus Aid, Relief, and Economic Security Act, (CARES Act), which amends the EPSLA and the EFMLEA. In general, the FFCRA requires covered employers to provide eligible employees up to two weeks of paid sick leave at full pay, up to a specified cap, when the employee is unable to work because the employee:
- is 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 due to concerns related to COVID-19; or
- is experiencing COVID-19 symptoms and seeking a medical diagnosis.
The FFCRA also provides up to two weeks of paid sick leave at partial pay, up to a specified cap, when an employee is unable to work because of:
- a need to care for an individual subject to a Federal, State, or local quarantine or isolation order related to COVID-19;
- who has been advised by a health care provider to self-quarantine due to concerns related to COVID-19; because of a need to care for the employee’s son or daughter whose school or place of care is closed:
- whose child care provider is unavailable, due to COVID-19 related reasons; or
- because the employee is experiencing a substantially similar condition.
The FFCRA also requires covered employers to provide up to twelve weeks of expanded family and medical leave, up to ten weeks of which must be paid at partial pay, up to a specified cap, when an eligible employee is unable to work because of:
- a need to care for the employee’s son or daughter whose school or place of care is closed; or
- whose child care provider is unavailable, due to COVID-19 related reasons.
Healthcare providers ARE EXCLUDED from receiving paid sick leave and expanded family and medical leave.
Under the FFCRA, covered private employers qualify for reimbursement through refundable tax credits as administered by the Department of the Treasury, for all qualifying paid sick leave wages and qualifying family and medical leave wages paid to an employee who takes leave under the FFCRA, up to per diem and aggregate caps, and for allocable costs related to the maintenance of health care coverage under any group health plan while the employee is on the leave provided under the FFCRA. For information on the tax credits, see www.irs.gov/forms-pubs/about-form-7200 and www.irs.gov/pub/irs-drop/n-20-21.pdf
The FFCRA contains job protection and non-retaliation provisions. Employers with 25 or more employees are required to return the employee to the prior position or a substantially equivalent position. There are some exceptions if the position doesn’t exist due to economic circumstances This exclusion is subject to the employer making reasonable attempts to return the employee to an equivalent position and requires an employer to make efforts to return the employee to work for up to a year following the employee’s leave. As with other employment laws, employers are prohibited from discriminating or retaliating against employees for taking either of these leaves.
FREQUENTLY ASKED QUESTIONS:The Department of Labor is continuing to issue guidance and interpretation of the FFCRA on a regular basis. We will continue to monitor, interpret, and provide you with the update information as it continues to unfold.
The FFCRA covers private employers with fewer than 500 employees and certain public employers. Small employers with fewer than 50 employees may qualify for an exemption from the requirement to provide paid leave due to school, place of care, or child care provider closings or unavailability, if the leave payments would jeopardize the viability of their business as a going concern.
1. WHAT EMPLOYERS ARE COVERED BY THE FFRCA?
2. WHAT ARE EMPLOYERS REQUIRED TO PROVIDE UNDER THE EPSLA?
- Employers are required to provide full-time employees 2 weeks (80 hours) of paid sick leave for specific circumstances related to COVID-19: 1) for the employee’s own quarantine or isolation order, 2) employee’s self-quarantine after being advised by a medical professional, 3) an employee exhibiting symptoms of corona and/or seeking a medical diagnosis for corona, 4) caring for someone who is quarantined (not limited to family members), 5) caring for a child whose school has been closed as a result of the COVID-19 pandemic or the child care provider is not available due to the public health emergency, or 6) the employee is experiencing any other substantially similar condition.
- Part-time employees are entitled to the number of hours of paid sick time equal to the number of hours they work, on average, over a 2-week period.
- An employee is immediately eligible for this paid time off upon hire – there is no 30 day waiting period as the EFMLA.
- There IS an exception for employers who are healthcare providers or emergency responders.
- How much are you required to pay?
- For the employees’ own condition (1, 2, or 3), employers must pay the employee’s regular rate subject to a maximum of $511 per day and $5,110 in the aggregate.
- For taking care of others (4, 5, or 6), employers must pay the employee at two-thirds the employee’s regular rate, subject to a maximum of $200 per day and $2,000.
- Remember…a regular rate of pay is not just an employee’s hourly rate. It may also include bonuses and commissions.
- This is in addition to any paid sick leave currently provided by you. An employer cannot change its current paid leave policy after enactment to avoid these obligations.
- Failure to pay sick leave will be treated as the failure to pay wages under the Fair Labor Standards Act.
3. WHAT ARE EMPLOYERS REQUIRED TO PROVIDE UNDER THE EFMLA?
- Even if you have less than 50 employees, and were never covered by the Family and Medical Leave Act (FMLA), you are required to provide 12 weeks of job-protected paid leave—of which the first 10 days may be unpaid.
- Employees may use accrued personal or sick leave during the first 10 days, but employers may not require employees to do so.
- Employees are eligible for this FMLA leave if they have worked at least 30 calendar days. This is a change from the regular FMLA requirements.
- This leave can ONLY be taken to care for a child whose school has been closed as a result of the COVID-19 pandemic or the child care provider is not available due to the public health emergency.
- After the first 10 days, employers must pay employees at two thirds the employee’s regular rate for the number of hours the employee would otherwise have been scheduled. Employees who work part time or irregular schedule are paid based on the average number of hours the employee worked prior to taking this FMLA. Paid leave is capped at $200/day and a $10,000 cap on the aggregate amount of paid leave to the employee.
- Remember a regular rate of pay is not just an employee’s hourly rate. It may also include bonuses and commissions.
- Employers cannot require an employee to use accrued paid leave concurrently with unpaid leave.
4. BUT I’M A SMALL BUSINESS, AM I STILL REQUIRED TO COMPLY?An employer, including a religious or nonprofit organization, with fewer than 50 employees (small business) is exempt from providing (a) paid sick leave due to school or place of care closures or child care provider unavailability for COVID-19 related reasons and (b) expanded family and medical leave due to school or place of care closures or child care provider unavailability for COVID-19 related reasons when doing so would jeopardize the viability of the small business as a going concern. A small business may claim this exemption if an authorized officer of the business has determined that:
- The provision of paid sick leave or expanded family and medical leave would result in the small business’s expenses and financial obligations exceeding available business revenues and cause the small business to cease operating at a minimal capacity; or
- The absence of the employee or employees requesting paid sick leave or expanded family and medical leave would entail a substantial risk to the financial health or operational capabilities of the small business because of their specialized skills, knowledge of the business, or responsibilities; or
- There are not sufficient workers who are able, willing, and qualified, and who will be available at the time and place needed, to perform the labor or services provided by the employee or employees requesting paid sick leave or expanded family and medical leave, and these labor or services are needed for the small business to operate at a minimal capacity.
Employers should not send any materials to the DOL when seeking an exemption but you should document why the business meets this criteria. Employers should keep any and all documentation when evaluating whether you are a small business.
For more information on the COVID-19 related small business loans, see www.sba.gov/page/coronavirus-covid-19-small-business-guidance-loan-resources
5. I EMPLOY HEALTHCARE PROVIDERS. ARE MY EMPLOYEES ENTITLED TO LEAVE UNDER THE FFRCA or the EPLSA?
No. Healthcare providers ARE EXCLUDED from receiving paid sick leave and expanded family and medical leave. A healthcare provider is:
- anyone employed at any doctor’s office, hospital, health care center, clinic, post-secondary educational institution offering health care instruction, medical school, local health department or agency, nursing facility, retirement facility, nursing home, home health care provider, any facility that performs laboratory or medical testing, pharmacy, or any similar institution, employer, or entity.
- any permanent or temporary institution, facility, location, or site where medical services are provided that are similar to such institutions.
- any individual employed by an entity that contracts with any of the above institutions, employers, or entities institutions to provide services or to maintain the operation of the facility.
- anyone employed by any entity that provides medical services, produces medical products, or is otherwise involved in the making of COVID-19 related medical equipment, tests, drugs, vaccines, diagnostic vehicles, or treatments.
- any individual that the highest official of a state or territory, including the District of Columbia, determines is a health care provider necessary for that state’s or territory’s or the District of Columbia’s response to COVID-19.
6. ARE EMPLOYERS REQUIRED TO PROVIDE PAID LEAVE FOR EMPLOYEES ALREADY LAID OFF OR FURLOUGHED?
- Terminations or closures PRIOR to April 1st: If you terminate an employee, close your business for lack of work, or close pursuant to a Federal, State, or local directive (such as a shelter in place order), you are NOT required to provide any of the paid time off under the FFCRA.
- Terminations or closures AFTER April 1st BUT BEFORE an employee goes on leave: If AFTER April 1st, you terminate an employee, close your business for lack of work, or close pursuant to a Federal, State, or local directive (such as a shelter in place order), you are NOT required to provide any of the paid time off under the FFCRA.
- Close WHILE an employee is on leave: If you close for lack or work or pursuant to a Federal, State, or local directive (such as a shelter in place order), you ARE required to pay for any paid leave BEFORE you closed. As of the date you close, you are NOT required to provide any of the paid time off under the FFCRA.
- Furloughs: You are not required to pay any of the paid time off for furloughed employees.
- Rehires: If you rehire an employee prior to December 31, 2020, you may be required to pay the employee under the FFCRA for leave taken AFTER the employee is rehired.
NO. To the extent employees are able to work remotely, paid leave under the FFCRA is not available.
7. WHAT IF MY EMPLOYEES WORK REMOTELY (TELEWORK), AM I REQUIRED TO PROVIDE ANY OF THE PAID LEAVE UNDER THE FFCRA?
8. CAN EMPLOYEES USE THE PAID LEAVE INTERMITTENTLY?YES – but ONLY if the employee is working remotely, or taking leave due to school or place of care closures or child care provider unavailability for COVID-19 related reasons AND the parties agree.Absent agreement, no leave under the FFCRA may be taken intermittently. The Department of Labor
An employee IS entitled to the 80 hours of Paid Sick Leave REGARDLESS of any leave taken under FMLA. BUT, if you have 50 or more employees and were already covered by FMLA, the employee’s available leave depends on how much leave the employee has already taken under FMLA. Alternatively, if an employee takes leave under the Emergency Family and Medical Leave Act, the employee’s available FMLA will be reduced by the amount of time taken under the Emergency Family and Medical Leave Act.
9. HOW MUCH TOTAL TIME OFF IS AN EMPLOYEE ENTITLED?
10. WHAT OTHER OBLIGATIONS DO EMPLOYERS HAVE UNDER THE FFCRA?
- Notice: Employers are required to email or post a notice informing employees of their rights. Here’s a copy of the Notice:
- Documentation: Employers should create forms or request documentation to support the requested leave, including the employee’s name, qualifying reason for requesting leave, statement that the employee is unable to work, including telework, for that reason, and the date(s) for which leave is requested. Documentation of the reason for the leave will also be necessary, such as the source of any quarantine or isolation order, or the name of the health care provider who has advised you to self-quarantine. For example, this documentation may include a copy of the Federal, State or local quarantine or isolation order related to COVID-19 applicable to the employee or written documentation by a health care provider advising the employee to self-quarantine due to concerns related to COVID-19. If one of your employees takes leave to care for his or her child whose school or place of care is closed, or child care provider is unavailable, you must require your employee to provide you with appropriate documentation in support of such leave, just as you would for conventional FMLA leave requests. For example, this could include a notice that has been posted on a government, school, or day care website, or published in a newspaper, or an email from an employee or official of the school, place of care, or child care provider.
This documentation will be critical to claiming a tax credit. You may want to check with your accountant for additional guidance for the needed documentation to support a tax credit.
Employers should also prepare documentation demonstrating the small business exemption.
- How long should you keep all documentation? 4 years.
11. WHAT IF EMPLOYERS PAY EMPLOYEES MORE THAN WHAT IS REQUIRED UNDER THE FFCRA?You are allowed to pay your employees more. But, you cannot claim, and will not receive tax credit for, those amounts in excess of the FFCRA’s statutory limits.
12. WHAT IF I HAVE MORE THAN 500 EMPLOYEES, AM I REQUIRED TO COMPLY WITH THE FFCRA?NO.
13. WHAT IF I HAVE MORE THAN 500 EMPLOYEES, AND VOLUNTARILY CHOOSE TO PROVIDE THE BENEFITS UNDER THE FFCRA?You are allowed to pay your employees more. But, you cannot claim, and will not receive any tax credit.
14. WHAT DO EMPLOYERS AND EMPLOYEES NEED TO KNOW ABOUT THE CARES ACT?The CARES Act also contains a host of provisions that affect health care and insurance benefits and changes the rules HSAs and withdrawals from retirement accounts. It also significantly broadens available benefits. Additionally:
- It allows employers and self-employed individuals to defer payment of the employer share of the Social Security tax they otherwise are responsible for paying to the federal government with respect to their employees. Deferred employment taxes be paid over the following two years, with half of the amount required to be paid by December 31, 2021 and the other half by December 31, 2022.
- It provides a refundable payroll tax credit for 50% of wages paid by employers to employees during the COVID-19 crisis for employers whose:
- operations were fully or partially suspended due to a COVID-19-related shut-down order; or
- gross receipts declined by more than 50% when compared to the same quarter in the prior year.
- The credit is provided for the first $10,000 of compensation, including health benefits, paid to an eligible employee and is provided for wages paid or incurred from March 13, 2020 through December 31, 2020.
- Employers of any size may apply for relief loans to support, wages, the cost of health benefits, the cost of retirement benefits, the cost of vacation, family, and sick leave, or the payment of state or local taxes assessed on employee compensation, mortgage interest, rent, utilities, and premiums for COBRA.. Employers with 500 or fewer employees are eligible to receive a loan to cover costs incurred by the employer between February 15 and June 30, 2020.
- Small businesses may take out loans through December 31, 2020 and cover employees making up to $100,000 per year; loans taken for this purpose may be forgiven if the business maintains an average monthly number of employees during the covered period (between February 15 and June 30) that is no less than the number it had before the crisis began, among other requirements. Firms that have laid off employees may qualify for forgiveness if employees are rehired by April 1, 2020.
- Midsize to large employers (500 to 10,000 employees) including nonprofit organizations may also qualify for loans related to losses incurred as a result of the pandemic. Loan recipients must retain at least 90% of the workforce, at full compensation and benefits, until September 30, 2020, among other requirements.
- Employers may also student loan repayment benefits to employees on a tax-free basis, up to $5,250 annually toward an employee’s student loans, and such payment would be excluded from the employee’s income.