As part of the federal response to the ongoing COVID-19 crisis, Congress passed and the president signed the Families First Coronavirus Response Act (FFCRA; also known as Phase Two Stimulus). The law was signed on March 18 and will take effect on April 1, 2020. A critical provision of the FFCRA is an expansion of family and medical leave (FMLA) to cover those impacted by COVID-19. This provision could have substantial impacts on Waco businesses.
Below is a brief series of questions to help businesses understand if they are impacted by this provision and if so, how. There is a grace period: provided they are making good-faith efforts to comply, employers have until April 30, 2020 to fully meet the requirements.
Is my business included in the family and medical leave expansion?
Yes, if you have less than 500 employees. Some businesses with fewer than 50 employees may be exempted from these requirements, but detailed guidance on these exemptions is not yet available (expected April 2020).
Who do I need to offer expanded family and medical leave to?
All employees who meet the following conditions are covered:
- is quarantined or has been advised to self-quarantined by a health care provider (quarantined) NOTE: being under a shelter-in-place order does not yet constitute a quarantine.
- is experiencing symptoms of COVID-19 and is seeking a medical diagnosis (symptoms)
- needs to remain home to care for an individual who has been quarantined (quarantine care)
- needs to remain home to care for a child (child care)
- is experiencing substantially similar conditions (substantially similar)1
Employees who have been employed for more than thirty days are covered for a substantially longer leave for child care.
How long is the leave and at what pay rate?
- For those in the quarantined and symptoms categories, the leave is two weeks at regular rate of pay.
- For those in the quarantine care, child care, and substantially similar categories the leave is two weeks at two-thirds rate of pay.
- For those in the child care category who have been employed for more than thirty days, the leave is ten weeks at two-thirds rate of pay.
How can I pay for this?
To cover the cost of this provision, the FFCRA grants employers a refundable tax credit for each employee covered under the family and medical leave expansion.
- For employees in the quarantined and symptoms categories, the credit is the employee’s regular rate of pay, up to a limit of $511 per day and $5,100 total
- For employees in the quarantine care, child care, and substantially similar categories, the credit is two-thirds of the employee’s regular pay limited to $200 per day and $2,000 total
- For employees in the child care category who have been employed for more than thirty days, the credit is two-thirds of the employee’s regular pay limited to $200 per day and $10,000 total
How do I collect this credit?
The employer will be allowed to take these dollars out of payments it would normally make to the IRS for income taxes and payroll taxes in order to cover the credit laid out above. If keeping these payments doesn’t cover the amount needed, the IRS will allow employers to file for payment from the IRS. They anticipate such payment requests will be processed in two weeks or less. Guidance detailing these processes is expected this week or next, as of March 24, 2020.
If the employer is in need of capital to bridge the gap between paying employees on leave and receipt of the tax credit, please visit the Small Business Administration website dedicated to COVID-19. Information regarding economic injury disaster loans can be found there.
Is there a non-enforcement (grace) period?
For employers found to be acting in good faith, there is a thirty-day grace period from the date the FFCRA went into effect.
Where can I find more information?
- U.S. Congress – Families First Coronavirus Response Act
- IRS – Coronavirus Tax Relief
- IRS – New Release regarding FFCRA and Family and Medical Leave
- Department of Labor – COVID-19 and the Workplace
- Department of Labor – Families First Coronavirus Response Act: Employer Paid Leave Requirements
- CDC – COVID-19 Resources for Businesses and Employers
- SBA – SBA – COVID-19: Small Business Guidance & Loan Resources